Failure to Ensure Capacity and Understanding in Arbitration Agreements
Summary
Surveyors found that the facility failed to ensure residents had the mental capacity to sign arbitration agreements and did not adequately explain these agreements in a manner or language the residents could understand. In one case, a resident with a BIMS score indicating severe cognitive impairment signed an arbitration agreement, despite the expectation that a power of attorney should have been involved. Interviews confirmed that the resident did not recall signing the agreement or understand its purpose. Another resident, who was cognitively intact according to their BIMS score, signed an arbitration agreement but could not recall if the agreement was explained or if they had signed it. This resident also did not understand what an arbitration agreement was. A third resident, also cognitively intact, misunderstood the arbitration process, believing it involved a judge and a court, and was unsure if they had signed such an agreement upon admission. Staff interviews revealed inconsistent practices in explaining arbitration agreements. The administrator stated that residents were told they did not have to sign if they did not understand, but typically had residents read the agreement themselves rather than providing a thorough explanation. The previous admissions director described explaining the voluntary nature of the agreement and the option to seek legal counsel, but would only involve a responsible party if the resident did not understand. The regional director confirmed that a resident with severe cognitive impairment should not have signed the agreement without the power of attorney.
Plan Of Correction
Tag: F 0847 Administrator or designee will review and explain the arbitration agreement to residents and/or sponsors of #9, #25, and #31 by 6/20/25. The administrator or designee will review the arbitration agreement log with identified residents to ensure choice and understanding by 6/20/25. RDO provided education to administrator on arbitration requirements on 6/5/25. Three new admissions will be audited weekly x4 weeks to ensure understanding and choice in regards to signing arbitration agreements. Results of audit will be provided to QAPI committee for review and recommendations.
Penalty
Resources
Below are regulatory guidelines relevant to this citation:
Failure to fully explain the arbitration agreement and the right to refuse signing. A resident with moderately impaired cognition and two other residents had arbitration agreements signed by their representatives or themselves, but interviews showed they did not understand what arbitration was, did not recall receiving a clear explanation, and did not receive a copy in their admission packet. The SSD said paperwork was sometimes reviewed quickly and copies were not routinely provided unless asked, and the ADM was unsure whether a copy was required.
A resident’s representative signed a binding arbitration agreement form that omitted required disclosures, including the 30-day rescission right and that signing was not required for admission or continued care. The administrator acknowledged the facility’s form lacked some required information, even though the policy contained it, and the admission packet included only a blank arbitration form.
Arbitration Agreements Not Clearly Explained: The facility failed to ensure 3 residents understood the binding arbitration agreement before signing it. Residents with intact cognition or memory stated they did not remember signing the agreement or did not know what it meant, and one resident said she was heavily medicated when admission papers were signed. Staff said the agreement was reviewed during admission, but their explanation did not clearly convey that residents were waiving the right to hire a lawyer and choosing arbitration instead.
Failure to ensure informed consent for ADR agreements: two residents signed ADR forms without understanding that they were waiving the right to litigate in court. One resident was cognitively intact with chronic pain and anemia, and the other had HTN and anxiety disorder. Both later stated they had not received the ADR education they needed and would not have signed the forms if the process and loss of court rights had been explained.
Arbitration Agreement Signed by Resident With Impaired Cognition: A resident with COPD, encephalopathy, bipolar disorder, and schizophrenia had documented fluctuating and severely impaired mental capacity, yet an arbitration agreement was signed with an X by the resident and not by the daughter identified as the emergency contact. The resident said he did not remember signing anything or know what the agreement was, while the daughter said she was not informed or present and believed he lacked the capacity to sign legal documents. The BOM said the agreement was explained and translated before signing, and the DON stated residents should have the capacity to understand legal documents before signing them.
Failure to ensure residents understood binding arbitration agreements: three residents signed arbitration forms without clear evidence they were fully informed or that the resident/POA understood the documents. One resident had severe cognitive impairment and a POA on file, another had a POA who was unavailable during admission, and a third later said they did not recall signing and would not have signed based on the education provided. Admissions staff said they were unaware of the 30-day rescission period and did not complete follow-up conversations.
Failure to Fully Explain Arbitration Agreement
Penalty
Summary
The facility failed to ensure the binding arbitration agreement was fully explained in a manner understood by residents or their representatives, including the right to refuse to sign. Review of the resident listing showed that R31, R6, and R40 had an arbitration agreement response of yes. R31’s MDS identified moderately impaired cognition, and her representative/family member signed the arbitration agreement. During interview, the representative stated she did not know what arbitration was, did not recall the facility explaining it, did not recall signing an agreement, and said the admission folder did not contain a copy of the arbitration agreement. She also stated she wanted a copy to review before the 30-day period ended. R6’s MDS identified intact cognition, and her representative/family member signed the arbitration agreement on the day of admission. During interview, the representative stated she was not sure arbitration had been explained, was not aware she agreed not to use the courts in a dispute, and described the admission day as hectic and overwhelming with many papers to sign. R40’s MDS identified admission to the facility, and she signed an arbitration agreement on the day of admission. During interview, R40 stated she was not aware of what arbitration was, did not recall receiving an explanation, did not recall signing the agreement, and did not receive a copy in her admission folder. The social service designee stated she sometimes went through admission paperwork quickly, did not go into detail, and did not provide a copy unless asked. The administrator stated staff were trained to explain arbitration as using a third party to resolve disputes outside court, but he was not sure whether residents or representatives were required to receive a copy of the agreement, and no policy was provided by the end of the survey period.
Incomplete Arbitration Agreement Form
Penalty
Summary
The facility failed to ensure that the binding arbitration agreement form provided to residents or their representatives contained required information for one sampled resident. The business manager stated she was assigned to develop and implement the facility’s binding arbitration agreement policy in January 2026, and the policy was approved in March 2026. Resident 25’s representative signed the arbitration agreement form on 4/22/26, but the form did not include that the resident or representative had the right to rescind the agreement within 30 calendar days of signing or that signing was not required as a condition of admission or continued care. During a phone interview, Resident 25’s legal representative stated she understood the agreement as a way to try to resolve disagreements or grievances with the provider rather than taking concerns to the state survey agency, but she could not remember whether she was told she was exempt from litigation by signing it. The administrator acknowledged that the facility’s arbitration form did not include some of the required information, explaining that the policy contained the information but the form given to residents or representatives did not. Review of the admission packet showed a blank Arbitration Agreement form was included, but the policy containing the required information was not included in the packet.
Arbitration Agreements Not Clearly Explained
Penalty
Summary
The facility failed to ensure binding arbitration agreements for 3 of 3 residents were clearly explained in a form and manner they understood before they signed them. Resident R63 had intact cognition on the comprehensive MDS, was admitted to the facility on 6/30/26, and signed the [NAME] Senior Living Arbitration Agreement on 7/1/26. During interview on 7/16/26, R63 stated he knew what an arbitration agreement was but could not remember signing one with the facility and did not remember discussing it when he signed a bunch of admission documents. Resident R5 had intact short- and long-term memory on the comprehensive MDS, was admitted to the facility on [DATE], and signed the arbitration agreement on 6/30/26. During interview, R5 stated she did not remember signing an arbitration agreement, and her husband, who was present when she signed the admission papers and during the interview, stated they did not know what an arbitration agreement meant. Resident R120 had intact cognition on the comprehensive MDS, was admitted to the facility on [DATE], and signed the arbitration agreement on 6/30/26. During interview, R120 stated she did not remember what documents she signed on admission and believed legal documents should not be signed when someone is heavily medicated with pain medications. The social service designee stated she reviewed the admission papers, including the arbitration agreement, and explained it as a step forward if residents had a concern with the facility that was not resolved, while the director of social services stated residents should understand they are waiving the right to hire a lawyer and choosing to use an arbitrator before signing.
Failure to Ensure Informed Consent for ADR Agreements
Penalty
Summary
The facility failed to explain the terms of an Alternate Dispute Resolution (ADR) agreement and failed to ensure that residents understood and validly consented before signing. For Resident #32, the record showed a cognitively intact resident with a BIMS score of 15/15 and diagnoses including chronic pain and anemia. Although the ADR agreement stated that the resident consented, the resident later reported not recalling any education about the agreement, could not explain the arbitration process, did not know that signing waived the right to litigation in court, and stated she would not have signed if she had understood that right was being given up. For Resident #94, the record showed diagnoses including essential hypertension and anxiety disorder. The resident signed an ADR agreement, but later stated she had not received any education on the form, did not understand the ADR process, and would never have signed away the right to litigation in court. The NHA initially stated the facility offered arbitration agreements and that she was completing the education for new residents, but later said the RDBD would complete the education if a resident was interested in signing. The RDBD then stated she did not complete the education for Resident #94 and that the Admissions Director was supposed to verbally educate residents and show a video explaining the ADR process; Resident #94 also reported that no video had been provided.
Arbitration Agreement Signed by Resident With Impaired Cognition
Penalty
Summary
The facility failed to ensure that an Arbitration Agreement was executed through an appropriate and informed decision-making process for Resident 32. Resident 32 had diagnoses including COPD, encephalopathy, bipolar disorder, and schizophrenia. The resident’s H&P dated 5/21/2024 indicated fluctuating capacity to understand and make decisions, and the MDS dated 9/27/2024 indicated the resident’s mental capacity was severely impaired and that the resident was partially dependent on staff for activities of daily living. The arbitration agreement dated 10/14/2024 showed an X in the resident signature and initial areas, with two signatures from the BOM in the facility representative area. During interview, Resident 32 stated he did not remember signing any documents and did not know what an arbitration agreement was. Resident 32’s daughter stated she was present at the original admission, did not remember signing or being informed about an arbitration agreement, was not present when the document was signed on 10/14/2024, and stated her father did not have the mental capacity to sign legal documents. The BOM stated the arbitration agreement had been explained to Resident 32 and translated into Spanish by the SSD before the resident signed it, and that no legal documents from the original admission could be located, so admission and legal documents had to be re-discussed with the resident. The DON stated residents are expected to have the mental capacity to understand the purpose and legal implications of documents before signing them, and that when a resident lacks capacity, legal documents such as arbitration agreements should be reviewed with and signed by the resident’s legally authorized representative or responsible party rather than the resident.
Failure to Ensure Residents Understood Arbitration Agreements
Penalty
Summary
The facility failed to ensure residents were fully informed and understood the binding arbitration agreement for 3 of 3 sampled residents reviewed for arbitration. Resident 2 was admitted with adjustment disorder and paranoid schizophrenia, had a BIMS score of 5 indicating severe cognitive impairment, and signed a State Arbitration Agreement despite having a durable POA on record. Staff stated they had family present when the agreement was signed, were unaware the resident had a POA at that time, did not know residents had 30 days to rescind the agreement, and did not conduct a follow-up conversation. The Administrator acknowledged the facility needed a different process to ensure the resident or representative understood the agreement. Resident 33 was admitted with COPD and symptoms involving cognitive function and awareness, had a BIMS score of 13, and signed the arbitration agreement while the resident's medical and financial POA was traveling. The resident stated they were not at their best during admission and did not recall receiving education about the agreement; the POA stated they would not have allowed the resident to sign and was unaware it had been signed. Resident 53 was admitted with anxiety and depression, had a BIMS score of 13, and signed the arbitration agreement, but later stated they did not recall signing it and would not have signed it based on the education provided. Staff stated it was difficult to ascertain cognition during admission, believed the resident could understand and sign, were unaware of the 30-day rescission period, and did not conduct a follow-up conversation.
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