By David Seligman

In January and February, 2016 the Fourth, Fifth, Sixth, and Tenth Circuits have issued important precedential opinions concerning mandatory arbitration agreements, and all four opinions find the arbitration requirement to be unenforceable.

Arbitration Agreements Found Inapplicable to Those Not Signatories to the Agreement

In Richmond Health Facilities v. Nichols, 811 F.3d 192 (6th Cir. 2016), the Sixth Circuit upheld Kentucky case law providing that wrongful death actions brought by beneficiaries are not subject to arbitration agreements between the defendant and the decedent because “the decedent never had an interest in the [wrongful death] claim.” Id. at 199. The decision provides important protections in the nursing home context, where beneficiaries rely on wrongful death actions to hold facilities accountable for negligence that causes death. See also NCLC’s Consumer Arbitration Agreements § 7.6.5 (7th ed. 2015).

But the value of the Sixth Circuit’s decision extends far beyond this realm. In Richmond Health, the Sixth Circuit recognized that arbitration is a creature of contract, and that the Federal Arbitration Act has nothing to stay about state laws that make unarbitrable claims that are not subject to binding arbitration agreements between the plaintiff and defendant. That principle has important consequences for state laws that provide unarbitrable qui tam claims to private parties in order for them to bring public enforcement actions on behalf of the state. See Consumer Arbitration Agreements § 1.7.4. Because those actions belong to the state they, like the wrongful death actions in Richmond Health, are not subject to private arbitration agreements between consumers and businesses.

In Al Rushaid v. Nat’l Oilwell Varco, Inc., 2016 WL 660105 (5th Cir. Feb. 17, 2016)—a commercial litigation case involving petroleum producers and drilling equipment manufacturers—the Fifth Circuit addressed whether defendants that had not entered into arbitration agreements with the plaintiff could nonetheless rely on arbitration agreements between the plaintiff and other defendants based on the theory of “equitable estoppel.” The court found that doctrine inapplicable because the plaintiff was not seeking to benefit from the contract that contained the arbitration clause in its suit against the nonsignatory defendants: “[w]hile the action is related to contracts . . . it cannot be said that plaintiffs are seeking direct benefits from the contracts. Id. at *4.

Over the past few years, the “equitable estoppel” theory has been invoked by a multitude of defendants seeking to compel arbitration of claims brought by plaintiffs with whom they have no direct contractual relationship. Consumer Arbitration Agreements § 7.5.3. Perhaps losing sight of the fact that arbitration is a creature of contract and that equitable estoppel is fundamentally an equitable argument that should not support efforts to insulate wrongdoing from liability—some courts have applied the theory in novel contexts, for example in suits against originating banks that facilitate predatory payday lenders. Consumer Arbitration Agreements  § The Fifth Circuit’s opinion might represent a return to traditional conceptions of equitable estoppel.

Arbitration Cannot Prevent Vindication of Federal Statutory Rights

The Supreme Court’s Italian Colors case upheld a waiver of the ability to bring class arbitration even though it prevented vindication of federal statutory rights. The Fourth and Tenth Circuits have recently ruled that this is limited to waivers of class arbitration, and that other limits on arbitration that prevent vindication of federal rights can make the arbitration agreement unenforceable. The “effective vindication” doctrine is alive and well and still operates to invalidate other kinds of unfair terms in arbitration agreements.

In Nesbitt v. FCNH, Inc., 811 F.3d 371 (10th Cir. 2016), a massage therapy school had required its students to give massages to customers without pay. When the students sued for wage-and-hour violations, the school sought to compel arbitration based on a clause that required the students to pay exorbitant arbitration fees pursuant to the American Arbitration Association’s Commercial Rules.

The court held, among other things, that these fees would prevent the plaintiffs from effectively vindicating their rights under the Fair Labor Standards Act. Notably, the court dismissed the defendant’s arguments that the plaintiffs could escape truly unfair fees through AAA procedures that allowed them to obtain a fee waiver or reduction or by recovering costs if they prevailed: no “employee in [the plaintiff’s] position, faced with the mere possibility of being reimbursed for arbitrator fees in the future, would risk advancing those fees in order to access the arbitral forum.” Id. at 377 (internal quotation marks omitted); see also Consumer Arbitration Agreements § 4.5.4.

In Hayes v. Delbert Servs. Corp., 2016 WL 386016 (4th Cir. Feb. 2, 2016), the Fourth Circuit evaluated the enforceability of an arbitration clause in payday loans provided by Western Sky Financial, a tribal lender purporting to operate off of the Cheyenne River Indian Reservation in South Dakota. A prior version of the arbitration agreement at issue had been invalidated by the Seventh Circuit because it designated a tribal arbitration provider that, in fact, did not exist. See § 5.8.1.  The form of the agreement at issue in Hayes designated AAA as the arbitration administrator but provided that tribal law, and not federal law, applied.

Judge Harvey Wilkinson, writing for the court, excoriated the arbitration clause. He observed that although “[a] party to an arbitration agreement may of course agree to waive certain rights as part of that agreement,” including for example the right to a jury trial, “a party may not underhandedly convert a choice of law clause into a choice of no law clause—it may not flatly and categorically renounce the authority of the federal statutes to which it is and must remain subject.” Id. at *8; see also Consumer Arbitration Agreements § 4.4.

The Indy Star reported that Austin Gough, a Kindred nursing home employee, has admitted battering a resident at the facility, Hancock Circuit Court records state.  Gough pleaded guilty March 2 to felony battery against a disabled person. Hancock Commissioner Scott Sirk sentenced him to only one year of home detention, followed by 545 days of sex offender probation, which is a more strict version of probation. Gough is not required to register as a sex offender.

In return for Gough’s guilty plea, prosecutors agreed to dismiss six other felony charges — three counts of sexual battery and three counts of attempted sexual battery — that were pending against him.

Two residents of Kindred Transitional Care and Rehabilitation in Greenfield sobbed last year as they told police that, in separate incidents, Gough had exposed his genitals and asked them to touch him, according to court records. According to the records, the other woman told police Gough was “doing things, with his hands, to her that he shouldn’t have been doing.” She described them as “bad things … sexual things.”  He rubbed himself on one woman’s face — even as she told him “no,” the records state.

A third resident, a man diagnosed with dementia and mental illness, told police that he and Gough had touched each other. The man said Gough was his boyfriend, court records state.


EJInsight reported the disturbing circumstances behind a mentally impaired nursing home resident’s unusual death.  Police have launched an investigation into the death after an antiseptic gauze and other foreign objects were found in his anus. Hospital staff found foreign objects such as gauze, diaper tape and cotton in Wong’s anus during a checkup. Cambridge Nursing Home, where Wong had been a long-time resident, denied there was any abuse of residents by its staff.  They could not explain how the objects got in his anus nor why they did not discover the objects if they were properly caring for him.  The nursing home’s management said that the nursing home’s staff “do not possess the techniques to stuff any objects inside a person’s anus”.

The 60-year-old man, surnamed Wong, died two days after being admitted to the United Christian Hospital (UCH) in Kwun Tong for pnemonia and other symptoms in January, Apple Daily reports.  Wong became mentally handicapped at the age of five after a serious fever, and had had a stroke in 2007 that paralyzed his lower body. Wong’s family members, after being informed of the hospital staff’s discovery, reported the case to the police on Feb. 1, suspecting that he might have been abused.

Last year, photos of elderly residents being made to wait naked for their bath at Cambridge Nursing Home in Tai Po triggered a public outcry.

NPR had a great article about nursing homes abandoning residents at local hospitals driving up the cost of health care. Thousands of nursing home residents are told they cannot return to the facility after going to a hospital.  In most cases, it’s a violation of federal regulations. But those rules are rarely enforced by the states. Nationwide, between 8,000 and 9,000 people complain to the government about nursing home evictions every year. It’s the leading category of all nursing home complaints, according to the federal Administration for Community Living.  So, in California, some nursing home residents are suing the state, hoping to force it to take action.

“One of the plaintiffs is Bruce Anderson. Currently, he lives in a hospital room at Sutter Medical Center in Sacramento. He’s been there since May 28, 2015. That’s when his former nursing home sent him to be treated for pneumonia. When he was cured, the nursing home refused to readmit him. The hospital hasn’t yet found him another nursing home to go to. So the hospital room has been his home for 260 days. The cost to Medicaid to keep him there is about 2.5 times what his nursing home cost.”

According to his former nursing home, Norwood Pines Alzheimer’s Care Center. Anderson was combative, a danger to the staff and other residents. That would have been a legal reason to discharge him. Yet Norwood Pines never tried to do that in the nearly four years Anderson lived there.

Anderson appealed to the California Department of Health Care Services, which oversees Medicaid. The department held a hearing, and she won. Norwood Pines was ordered to readmit her father.  The nursing home still refused.  Anderson wants a federal judge to make the state enforce its own rulings.

Robyn Grant thinks the problem is even larger than reported. Grant would know: She’s the public policy director for the nonprofit National Consumer Voice for Quality Long-Term Care, so she hears about many nursing home evictions around the country like the ones in California.

“A lot of individuals, residents and their families, if they’re told, ‘You have to find another home,’ just accept what the people in authority tell them and don’t think they have any choices,” Grant says. “They may not know that they have rights to challenge that eviction.”

KHOU TV reported the disturbing murder of two nursing home residents bludgeoned to death inside their room at Lexington Place Nursing Home in Houston.  Guillermo Correa, the victims’ roommate was charged with beating the men, Primitivo Lopez and Antonio Acosta, to death with a wheelchair armrest.  Chavez says her family repeatedly requested a room change because her father, a stroke survivor, feared Correa.

“He told them that this guy, he’s crazy, he can kill people. He’s going to kill everybody one of these days,” recalled Acosta’s daughter, Irma Chavez.

A state inspection after the murders found serious problems at the nursing home. That included four issues that inspectors said placed residents in immediate jeopardy of harm or death.

After the murders, Lexington Place changed its name to Brookhollow Heights Transitional Care Center. While the name changed, state records show that the owners stayed the same and the problems continued.

In January, 2015, inspectors found that a severely mentally impaired man was put in a room with a convicted violent sexual predator who was part of the state’s civil commitment program. Investigators say the predator struck again, sexually abusing that roommate.  Inspectors again cited the nursing home for placing residents in immediate jeopardy.

Then, in March 2015, inspectors cited another immediate jeopardy situation. That time it was for failing to write and use policies that forbid mistreatment, neglect and abuse or residents.  In August, Brookhollow Heights was cited for failing to thoroughly investigate and report to the state that a resident was found on the floor bloody, foaming at the mouth and unable to explain what happened.

WJTV reported that Kimberly Lindsey, the Director of Nursing at Adams County Nursing Center, was arrested for embezzlement of a controlled substance.  She is being accused of embezzling Hydrocodone according to Attorney General Jim Hood.

Lindsey turned herself into the Adams County Sheriff’s Office after an indictment by the Adams County Grand Jury. Lindsey’s bond was set at $10,000. Lindsey faces up to five years behind bars and a $1,000 fine if convicted.

The Des Moines Register had a poignant editorial about Iowa politicians selling out vulnerable nursing home residents for nursing home lobbyists and other special interests.

At 5:30 p.m., on the evening of March 29, lobbyists with the Iowa nursing home industry are expected to host their annual reception for state lawmakers at the Embassy Suites in downtown Des Moines.

Last year, these same lobbyists spent more than $12,000 on such a reception. That was almost three times what they spent the previous year, although it’s hard to say what that money paid for since the lobbyists didn’t itemize the expenses on their public-disclosure report to the state.

But in addition to all of the food and drink, that money almost certainly bought the lobbyists a certain amount of — well, let’s call it “good will” — at the Statehouse. And if the Legislature’s actions this year are any indication, the $12,000 was money well spent.

Last month, industry lobbyists at the Iowa Healthcare Association successfully fought to kill legislation that would have improved care for Iowa seniors with Alzheimer’s disease. The bill in question would have required the employees of care facilities and home-care companies to demonstrate a basic level of understanding as to how they should care for people with dementia.

Many care facilities provide their workers with dementia-specific training. But as the lobbyist for the Alzheimer’s Association of Greater Iowa told lawmakers, there’s no follow-through to determine whether these caregivers understand the information they have been given, and the evidence from the state’s own inspectors indicates many of them don’t.

“Current dementia training isn’t working in this state,”  Alzheimer’s Association lobbyist Noah Tabor said. “It’s not the fault of facilities, it’s not the fault of workers, it’s just not working.”

Industry lobbyists countered that if their member companies were required to provide better training for their workers, some would likely become discouraged and simply refuse to accept patients with dementia. This is the industry’s fall-back position on all proposed regulation: “Don’t make us do something we don’t want to do, or grandma will be left to fend for herself.”

In this case, industry lobbyists couldn’t very well oppose the concept of maintaining a well-educated staff to care for grandma, so they also tried to argue that they’re already providing workers with plenty of training and education. Of course, if that was actually the case, the proposed new law wouldn’t be imposing any new burdens on them — a point that Rep. Dave Heaton, a Mount Pleasant Republican, tried to make during a discussion of the bill.

“If you’re doing it, what’s the difference between this and what you’re doing?” he asked.

Heaton’s subcommittee sent the bill to the House Human Resources Committee, which promptly signaled its lack of interest in the matter and buried it. “There were a lot of things in the bill that made the industry uncomfortable,” Heaton said later.

Well, God forbid the Iowa nursing home industry should be made to feel uncomfortable.

Iowa has one of the oldest populations of any state in America. Is it really asking too much of our state legislators to establish a minimum level of expertise in caring for people with dementia?

Apparently, it is. The bill is considered dead, despite its support from the Alzheimer’s Association; the Iowa Caregivers Association; the Iowa Department on Aging; the Iowa Long-Term Care Ombudsman; the Iowa Association of Area Agencies on Aging; AARP of Iowa; and the Iowa Association of Counties.

Lawmakers should think about this when they line up for canapés at their industry-funded reception at the Embassy Suites. And they should think about the fact that the Alzheimer’s Association is a charity that doesn’t have the resources of the Iowa nursing home industry’s lobbyists, just one of whom has an annual compensation package worth $329,000.

They should reflect on the fact that when the Alzheimer’s Association last hosted a reception for lawmakers, they had to do so in the Statehouse rotunda with food that was donated by a few area grocery stores.

And then they should ask themselves which is the more unseemly course of action for a state lawmaker: Eating the free food that a tax-exempt charity had to collect by going hat-in-hand to local retailers, or doing the bidding of industry lobbyists who provide them with hors d’oeuvres and drinks at a downtown hotel?

Perhaps it doesn’t matter. After all, they clearly have no qualms about doing both.

USA Today reported that The Centers for Disease Control and Prevention, in its first ever guidelines for dispensing the morphine-like, addictive drugs, such as MS Contin, is urging doctors to avoid prescribing powerful opiate painkillers for patients with chronic pain, saying the risks from such drugs far outweigh the benefits for most people.  The CDC took the action to combat the nation’s deadly prescription painkiller epidemic. About 40 Americans die each day from overdosing on prescription painkillers, according to the CDC.

The CDC hopes the guidelines will help doctors determine when to begin or continue opiates for chronic pain, which type of painkiller to choose, how long to administer the drugs and how to weigh their risks.  The guidelines carve out an exception for patients receiving cancer treatment or end-of-life care. When doctors determine that such drugs are necessary in other situations, the CDC advises doctors prescribe the lowest possible dose for the shortest amount of time.  “When opiates are used, start low and go slow,” Frieden said, meaning doctors should increase the dose of medication slowly and only when necessary. Doctors should check every three months to see if the benefits of opiates still outweigh the risks, the guidelines said.

We know of no other medication routinely used for a nonfatal condition that kills patients so frequently,” said CDC director Thomas Frieden. “We hope to see fewer deaths from opiates. That’s the bottom line. These are really dangerous medications that carry the risk of addiction and death.”

“For the first time, the federal government is communicating clearly that the widespread practice of treating common pain conditions with long-term opioids is inappropriate,” Kolodny said. “The CDC is making it perfectly clear that medical practice needs to change because we’re harming pain patients and fueling a public health crisis.”

Due to a high risk of overdose, physicians should avoid prescribing opiates at the same time as benzodiazepines, such as anti-anxiety drugs Ativan. Doctors also should prescribe immediate-release opiates, rather than extended-relief tablets that are more likely to be abused.


Although there has never been much evidence that opiates ease chronic pain, doctors were told for decades to consider pain as a “vital sign” that needed to be addressed, wrote addiction medicine specialist Yngvild Olsen,  medical director of Reach Health Services in Baltimore, in an editorial in JAMA.

That advice to manage patients’ pain was accompanied by “misleading marketing of prescription opioids by manufacturers, who minimized the risks of misuse and addiction,” Olsen wrote. The pressure to manage pain led doctors to “miss or dismiss the presence of addiction in their patients,” she added.

Patients should ask questions if their doctors want to prescribe opiates, said Deborah Dowell, senior medical adviser in the division of unintentional injury prevention at the CDC’s National Center for Injury Prevention and Control. Key questions to ask include: Is an opiate necessary? What are the risks? What are the benefits? How long should I take this? Are there alternatives? What we hope to accomplish by using an opiate? How will you know when we’ve met our goal?


The website BoingBoing had the below article on its site.

A federal judge called America’s move to forced arbitration and bans on class-action suits “among the most profound shifts in our legal history.”

The Consumer Financial Protection Bureau (CFPB) is currently floating a rule that would limit forced arbitration, ensuring that people had access to the courts when they were wronged by finance companies. While most of the debate about forced arbitration focuses on unfairness, the outcome of that unfairness is wealth transfer: because forced arbitration takes away your legal rights and bargaining power, it constitutes a parallel system of justice whole laws are literally written by corporations to give them the upper hand when they wrong their workers and customers.

Companies don’t rip off the humans they deal with out of sadism: they do it for profit. Unsurprisingly, the effect of a system that enables firms to profit by taking away rights from workers and customers is to make rich people richer, at the expense of poorer people, who become poorer still.

What kinds of claims are run through the forced arbitration system? Claims for wage theft, where companies literally just refuse to pay workersfor the hours they have worked (as much as $50B/year is stolen this way in America, affecting everyone from Walmart workers to Oakland Raiders cheerleaders); financial fraud, including deceptive loan practices, hidden fees, and payday loans; and antitrust, where companies conspire to fix prices and rig markets — health care and pharma companies are particularly aggressive in insisting on antitrust arbitration provisions in their dealings.

A brief from the The American Constitution Society for Law and Policy lays out the case for forced arbitration as a wealth-transfer mechanism in clear language. Several regulatory and legislative initiatives in the coming months have the power to roll back forced arbitration, but they’ll need public pressure from people who’ve taken a moment to learn about this issue which manages to be devastating and obscure at the same time, a bad combination for public policy outcomes!

The trend toward circumventing courts in favor of arbitration, abetted by increasingly consolidated corporate power and a business-friendly Supreme Court, is literally taking money from the pockets of the middle class and working poor. That’s the conclusion Gupta and Khan draw after an in-depth review of the redistributive effects of these increasingly common contract provisions. Gupta and Khan examine the growing use of forced arbitration and bans on class action lawsuits in a variety of employment and consumer contracts and seek to draw attention to the role that these changes to procedural rules play in creating economic inequality in an era when “there is growing recognition that changes in substantive law and legal regimes helped usher in the extreme levels of inequality we see today.”

Arbitration_as_Wealth_Transfer_1 [Deepak Gupta and Lina Khan/The American Constitution Society for Law and Policy]

McKnight’s reported that another nursing home caregiver was caught on camera abusing a resident.  Rose Dorlean Blaise was charged with one count of battery on the elderly after she was seen abusing a resident at a Florida facility. The video showed Blaise and another CNA taunting, kicking and hitting the resident. Blaise was sentenced to 18 months in prison.

She also will be on probation for five years and have to complete a 26-week batterer intervention program, as well as write an apology letter to the man’s family and forfeit her nursing license.

Illinois, New York, Washington, Texas, Oklahoma and New Mexico allow cameras to be installed in nursing home resident rooms. In Oklahoma, a judgment of $1.21 million was awarded to a family of a resident after a hidden camera caught aides slapping her and throwing her on a bed.

In Utah in February, legislators moved closer to becoming the first state to pass legislation allowing cameras in assisted living resident rooms.