Three months after 67-year-old James Asmus was admitted to the Southern Hills Specialty Care nursing home in Osceola, he was dead.
State records indicate that within hours of being admitted to the home in September 2018, he sustained a broken hip in a fall. Immobilized by the resulting surgery, he soon developed pressure sores and within a few weeks, his testicles had turned black and green and were emitting a foul odor.
Asmus was eventually taken by ambulance to a local hospital, where the staff diagnosed gangrene. An emergency room nurse filed a complaint of suspected dependent-adult abuse with state inspectors.
The inspectors interviewed workers at the home and later reported that several nurse aides had been “begging” to have Asmus sent to the hospital after he first showed signs of gangrene. The state inspectors substantiated the complaint involving Asmus’ care, but chose to impose no fines or other penalties.
Asmus’ family is now suing Southern Hills and its parent corporation, Care Initiatives. But like many other Iowa families that have tried to sue a nursing home, they have run into an obstacle.
When Asmus was admitted, one of the documents his wife signed stipulated that any disputes arising from the quality of his care would be settled through arbitration, not through litigation. Essentially, the couple was giving up their right to sue.
Currently, Care Initiatives, which is Iowa’s largest nursing home chain, is being sued by at least nine Iowa families, each alleging negligence or wrongful death. In most of those cases, the company has successfully had the court proceedings halted, at least temporarily, citing arbitration agreements such as the one Asmus signed.
According to plaintiffs’ lawyers, agreements of that type are engineered to favor the nursing homes that drafted them, and they have been signed by close to 70% of all nursing home residents nationally.
A 2019 report by the American Association for Justice says consumers generally have a better chance of being hit by lightning than winning any monetary award through the arbitration process.
The association analyzed nursing home cases handled by the nation’s two premier arbitration services, the American Arbitration Association, or AAA, and JAMS, formerly known as Judicial Arbitration and Mediation Services. The study found:
• Over a five-year period, there were only 16 nursing home cases handled by AAA. Consumers won none of them.
• At JAMS, consumers initiated 52 of 65 nursing home cases, but won only four, for a total award of $780,959.
A spokeswoman for Care Initiatives declined to say why the company uses arbitration agreements or how consumers benefit from them. However, the nursing home industry has long claimed the arbitration process benefits everyone involved.
A 2015 study commissioned by the industry’s main lobbyist, the American Health Care Association, and Aon Global Risk Consulting found claims involving arbitration were generally finalized three months earlier than courtroom litigation, with the nursing home’s expenses reduced by about 7%.
Des Moines attorney Roxanne Conlin, who represents the Asmus family, estimates that almost all Iowa nursing homes now make use of arbitration agreements in which residents forfeit their right to a jury trial.
“That is an outrage,” Conlin says, noting that the arbitrators who make their living hearing such cases might see the same nursing home owners repeatedly, but will never face a particular family more than once.
“The nursing home companies — those are repeat customers for the arbitrators,” she said. “The arbitrator is very unlikely to rule in favor of a one-time-only plaintiff, as opposed to the nursing home industry. That is clearly true. No question about it.”
Conlin says the industry’s claim that arbitration is cheaper and easier than courtroom litigation is “laughable,” and that people who file claims against nursing homes are sometimes obligated to pay for the arbitrator.
“What is a poor person — an elderly person, a disabled person — supposed to do then?” Conlin asks. “This whole arbitration movement — you can be damn sure that if all this was not advantageous to these big corporations, they would not be pushing it. And they are.”
Iowa families can’t sue for neglect, wrongful death
Trial attorney Nick Mauro of Des Moines says the arbitration process often includes a series of procedural hurdles that must be cleared before the claim can even be considered by an arbitrator.
For example, he said, some agreements specify that a family must first get the nursing home’s approval of any medical expert they hire to determine whether the home failed to meet the acceptable standard of care.
Mauro calls arbitration agreements of that kind unconscionable. He points out that most nursing home residents sign the agreement during the admissions process, at a time when they may be dealing with a medical crisis and are in urgent need of a place to live.
Mauro represents Barbara Moore, who was admitted to Wayne County’s Corydon Specialty Care home in 2018, shortly after her left leg was amputated. After her admission, Barbara fell at the home, breaking her right ankle, which resulted in that leg being amputated.
She has sued the home’s owner, Care Initiatives, but the company asked the court last spring to have the matter settled through arbitration, as stipulated in the agreement Moore signed when admitted.
“I have no recollection of signing these documents,” Moore told District Court Judge Patrick Greenwood. “I do not know what arbitration is and no one explained to me what arbitration is … Someone at the care facility should have explained these documents to us so we knew what we were signing.”
Care Initiatives’ attorney, Joseph Thornton, told the judge that courts throughout Iowa had already upheld such agreements, despite being presented with the “same laundry list of objections” by families and their attorneys. Thornton characterized Moore’s claim of not reading or understanding the document as the “desperate grasping of straws to find any argument to get out of arbitration.”
Thornton also pointed out that the arbitration agreement was only a few pages long. “It clearly states that this agreement is voluntary, not required for admission,” he told Judge Greenwood. “This is stated not only at the top of the contract, but in capital letters right above the signature line.”
Mauro argued: “No person in his or her right senses would make this agreement on the one hand and no honest and fair person dealing with a 66-year-old woman being admitted post-amputation would accept it on the other hand.”
Judge Greenwood ruled in favor of Care Initiatives, ordering the matter to be arbitrated while noting that “the text above Barbara’s signature indicates she read the agreement and understood and agreed, or assented, to its terms.”
Among the other Iowans currently attempting to sue Care Initiatives:
• The family of Josephine Moorman sued the company in January of this year for wrongful death. The case alleges that workers at Parkridge Specialty Care in Polk County, where Josephine lived, caused her to fall from a mechanical lift during a July 2019 transfer, breaking her leg and causing a head injury. Last week, a judge granted Care Initiatives’ request to have the dispute resolved largely through arbitration.
• The family of Elizabeth Eickholt sued the company in April 2020. In 2018, Elizabeth was living at Correctionville Specialty Care in Woodbury County when she was admitted to the hospital with a number of medical conditions, then released back to the home with orders the home allegedly failed to follow, leading to her death. In October, a judge agreed to the company’s request that the matter be settled largely through arbitration.
• The family of Samuel Humble sued the company for wrongful death in September 2020. The case alleges that while Samuel lived at Belle Plaine Specialty Care, the Benton County home failed to treat his wounds, failed to transfer him to a higher level of care when necessary and failed to tell his physician of his worsening condition. Last September, a judge agreed to the company’s request that the matter be settled largely through arbitration.
• The family of Silas Gary sued the company in October 2019. The case claims Northcrest Specialty Care in Black Hawk County had failed to put anti-tipping devices on Silas’ wheelchair, which caused him to flip over backwards in the chair, cracking his skull against the floor. Silas later died. Care Initiatives is not claiming an arbitration agreement was ever signed by Silas Gary, and a trial is scheduled for November 2022.
• The family of Adeline Jensen sued Care Initiatives for wrongful death in April 2019. The case alleges the company failed to adequately staff Heritage Specialty Care in Linn County, resulting in Adeline’s decline and her death. Care Initiatives is not claiming an arbitration agreement was ever signed by Adeline, and a trial is scheduled for August 2021.
Trump administration reversed Obama-era ban on arbitration
Although arbitration agreements prevent nursing home residents and their families from suing for wrongful death or negligence, they typically don’t prevent the family from suing for loss of consortium once an arbitrator rules in their favor on the other claims.
That’s because that particular claim is for harm caused to family members, who didn’t waive their right to sue.
As a result, many of the pending lawsuits against Iowa nursing home operators, including some of the cases cited above, have had their loss-of-consortium claims preserved, but placed on hold, by the courts pending an arbitrator’s decision as to whether the home was negligent.
Nationally, the use of arbitration agreements in nursing homes has been a source of controversy for years.
Iowa’s largest nursing home chain is exempt from taxes
Care Initiatives serves nearly 2,800 Iowans living in 44 skilled nursing care locations, eight assisted living facilities, three senior-housing apartment complexes, and six hospice locations.
The company does business as a tax-exempt charity that in 2019 — the most recent year for which figures are available — collected $192 million in revenue.
The company’s tax-exempt status is based on its stated mission of “improving the quality of life for Iowans and their families.” Prior to 2019, Care Initiatives had what it calls “an incentive plan” for division administrators, which provided compensation “based upon the annual profitability of care” in the chain’s nursing homes.
According to federal tax records, CEO Miles King collected more than $593,000 in compensation in 2019. Board members, including Steve Ackerson, the former executive director of the Iowa Health Care Association, are paid up to $175 an hour and work as little as three hours per week.
In 2008, U.S. Sen. Charles Grassley publicly questioned Care Initiatives’ policy of paying its board members, saying, “It is very rare in the charitable sector to see board members compensated — particularly at the level of the board of Care Initiatives.”
At that time, Care Initiatives was paying board members up to $412 an hour.
In 2016, the Obama administration approved a new rule proposed by the Centers for Medicare and Medicaid Services that would have prohibited Medicare-funded homes from having residents sign arbitration agreements.
The American Health Care Association immediately sued CMS and a court blocked the agency’s enforcement of the new rule.
The Obama administration appealed that ruling but shortly after President Trump took office, that appeal was dropped and CMS proposed a new rule that expressly allowed such agreements.
In 2019, that rule was finalized, and it remains in place today. Although it allows arbitration agreements, it prohibits nursing homes from requiring residents to sign them as a condition of admission.
The advocacy group Justice in Aging argues that’s not sufficient to protect consumers since “the circumstances surrounding the admissions process, combined with the enormous disparity of bargaining power,” means that most people are unaware of what they are signing.
Conlin says she’s hopeful CMS will reinstate the ban on arbitration agreements as a condition of accepting Medicare funding, despite the inevitable court challenges.
“I think that can be upheld as an appropriate exercise of executive power,” she said. “I am positive there are wonderful nursing homes staffed by wonderful people. But there are also nursing homes that are understaffed, or they are staffed by people who just don’t care.”