A nursing home arbitration agreement largely reserved the provider’s rights to sue residents while limiting residents’ legal options, causing it to fail a “mutual obligation” requirement, the Arkansas Supreme Court recently ruled .

Shirley Henry charged that her mother received negligent care at Regional Care of Jacksonville Inc. facilities, where she resided on multiple occasions between 2008 and her death in 2012. For each of those stays, an arbitration clause was part of the signed admission agreement, according to court documents.

The Supreme Court upheld a trial court’s decision that the charges do not have to be settled out of court, through arbitration. While the Federal Arbitration Act applies in cases such as these, “courts look to state contract law” in making their rulings, the Sept. 11 decision states. The Regional Care arbitration agreement fails Arkansas’ “mutual obligation” test.

To pass this test, an agreement essentially must obligate both parties to arbitrate their disputes with each other. The agreement in question does not do this, because it demands arbitration of all claims except those over “billing and collecting services.” That is, the nursing home company reserved the right to sue residents’ over the “only likely” claims it would bring, while barring residents from bringing their own likely claims against the provider, wrote Justice Courtney Hudson Goodson, who penned the decision.