New Jersey Law Addressing Mandatory Arbitration Clauses in Nursing Home and Assisted Living Admission Agreements

HNWApplying for Medicaid Long Term Care Benefits

  • nursing homeVirtually all admission agreements to a nursing home or assisted living facility mandate that any and all disputes with patients and family members be resolved through binding arbitration.
  • One recent case offered a very interesting analysis about admission agreements being contracts of adhesion (those that can’t be negotiated and are basically take-it-or-leave-it) given the circumstances of the resident.
  • I suspect that more courts there will use this adhesion analysis in this case to justify taking out arbitration clauses in admission agreements.

It is lawful for an assisted living and/or a nursing home admission agreement to contain an arbitration clause in it, and if they do, NJ courts cannot intervene.  This is because the Federal Arbitration Act makes these clauses valid and enforceable to any contract involving interstate commerce.  The federal law is applicable to a NJ assisted living facility because they contract with out of state suppliers and sometimes take patients from outside the state making them subject to the interstate commerce clause of the constitution as interpreted by the Supreme Courts of both the United States and New Jersey.

However, arbitration clauses that severely limit discovery and compensatory damages and waive punitive damages are considered unconscionable under N.J.S.A. 30:13-8.1 which specifically declares that clauses that limit the right to sue by a resident are void against public policy in nursing home negligence and/or malpractice cases.  The statute is not preempted by the Federal Arbitration Act and the court will direct the arbitrator to allow discovery and consider damages at any amount if litigation takes place.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Medicaid Attorney

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