New Mexico Supreme Court Strikes Down Unfair Arbitration Scheme in Nursing Home Contract

Law Gavel

On April 6, 2020, the New Mexico Supreme Court affirmed that one-sided arbitration schemes will not be enforced in New Mexico.  Treinen Law Office was involved as one of the attorneys for the New Mexico Trial Lawyers Association and the American Association for Justice (“AAJ”).  These groups pointed out to the Court why unfair arbitration schemes should not be tolerated.

The Court found the arbitration scheme unenforceable because it was unjustifiably one-sided.  The nursing home’s arbitration scheme required all of the nursing home patient’s claims to go to arbitration, but carved out for the nursing home all claims related to collections, thus allowing the nursing home to bring the claims it would most want to bring in court, while shunting any claims by the patient into arbitration.

Arbitration schemes are unfair for at least three reasons.  First, studies have shown that the businesses that put arbitration agreements in their contracts win much more in arbitration than they would have had the same claims been brought in court.  These corporations are appearing before the arbitration forum repeatedly, and often paying all or most of the arbitrator’s fees.

Second, arbitration agreements are used to suppress claims.  Consumers often give up their dispute rather than arbitrate in an often secret and unfair forum.  Attorneys for consumers are less likely to proceed if they are only allowed to do so in arbitration, rather than in court.

Third, the founders had good reasons to enshrine the right to a jury trial – a jury of regular people from the same community as the plaintiff – in the Constitution.  Trial by jury is the best way to achieve full justice against powerful corporations.

The Opinion can be found here:

Peavy v. Skilled Healthcare Opinion

 

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