For many operators, arbitration agreements are surely one of the best things to happen in a long time.
Boiled down, such clauses prevent residents or their families from filing lawsuits against facilities. Instead, legal claims are settled by a neutral arbitrator.
These agreements have also gained use in the employment and consumer goods sectors. But for long-term care operators, lawsuit prevention has mostly been the phrase that pays.
It’s not hard to see why. This is, after all, a field where many things can and do go wrong. Under the, ahem, right circumstances, unfortunate developments can lead to massive fines, damages and other legal costs.
It’s pretty clear arbitration agreements have saved the sector millions of dollars in payouts. Maybe billions.
So it might seem a bit strange that retail giant Amazon is deleting arbitration clauses from its contracts.
Why the sudden reversal? Basically, it’s a new legal strategy intended to counter a new legal strategy.
You see, a growing number of law firms are beginning to file mass arbitration claims. That’s exactly what happened in May, when more than 75,000 of these claims alleged that Amazon’s Echo devices were recording people without permission. Amazon’s legal team concluded that such filings could become more expensive to deal with than old-fashioned lawsuits.
It will be interesting to see whether other companies – including a few in this field – also lose that loving feeling. Some firms are already taking a hybrid approach: Requiring employees and customers to speak to a company attorney prior to filing an arbitration claim.
That would seem to be a plausible future scenario for this sector as well. Especially if mass arbitration claims continue to gain traction.
Should the field’s affection for arbitration sour, we might soon hear operators reprising a phrase that seemed all but extinct: See you in court.
John O’Connor is Editorial Director for McKnight’s.