Nursing Home Admission Agreements: How Facilities Use Contracts to Shift Risk — Lessons from a Recent Iowa Case

Nursing homes are increasingly deploying carefully drafted written agreements to protect their financial and legal interests. These documents often go far beyond standard admission paperwork. Facilities include provisions designed to:

• Create or strengthen filial responsibility obligations, potentially making adult children personally liable for a parent’s unpaid care costs.
• Limit liability for care incidents, falls, neglect, or other adverse outcomes through arbitration clauses, damage caps, or waivers.
• Channel disputes away from courtrooms and into private arbitration, which is often more favorable to the facility.

A recent decision from the Iowa Supreme Court highlights both the power of these agreements and the growing uncertainty families face when challenging them.
In Cole v. Arbor Court Healthcare, LLC, a nursing home resident signed an arbitration agreement shortly before her death. Her husband sued the facility for negligence, gross negligence, wrongful death, and dependent adult abuse. The nursing home initially litigated the case aggressively for months, including participating in pre-trial discovery,  before attempting to compel arbitration.
Her husband opposed the motion, asserting that it was procedurally unconscionable and that the nursing home had waived its contractual right to arbitration. The district court granted the nursing home's motion for arbitration. The Iowa Supreme Court granted the husband's motion for an interlocutory appeal.
The Iowa Supreme Court ruled in favor of the husband on key points:

• The nursing home waived its contractual right to arbitrate by its conduct (continuing to litigate for seven months after the plaintiff refused arbitration).
• Iowa’s previous arbitration-specific waiver test (which required the opposing party to show prejudice) was preempted by the Federal Arbitration Act (FAA). The court followed the U.S. Supreme Court’s decision in Morgan v. Sundance, Inc. (2022), applying ordinary contract waiver principles instead of special rules that favored arbitration.

This case perfectly illustrates the preemption uncertainty now common in long-term care litigation. Iowa’s own state-law protections and procedural rules no longer apply in the same way when federal law (the FAA) governs. What families and their attorneys once relied upon under state law may be overridden, creating unpredictable outcomes depending on the specific facts, facility, and court.The Broader Trend: Facilities Protecting Themselves at Every Turn
Nursing homes routinely present families with multi-page admission packets containing:

• “Responsible party” or guarantor clauses that attempt to impose personal financial liability.
• Mandatory pre-dispute arbitration agreements.
• Releases or limitations on claims related to care quality.

While federal law (under the Nursing Home Reform Act) generally prohibits requiring third-party guarantees as a condition of admission, facilities continue to test the limits with cleverly worded language. When combined with arbitration clauses, these agreements can make it significantly harder for families to hold facilities accountable for substandard care.Bottom Line: Avoiding Institutional Care Is Still the Best Strategy
The increasing sophistication of nursing home admission agreements, coupled with federal preemption of state protections, creates real uncertainty for families. Even with favorable rulings like Cole, litigation is expensive, time-consuming, and unpredictable.
If it is medically and financially feasible, aging in place at home remains the safest and most controllable option.
Proactive elder law planning gives families far more protection and peace of mind than relying on nursing home contracts or hoping for a favorable court outcome after something goes wrong.Practical Steps for Families

• Never sign admission documents on the spot. Have them reviewed by an experienced attorney before signing.
• Explicitly cross out or reject any “responsible party” financial guarantee language and arbitration clauses when possible.
• Document all communications with the facility.
• Build a strong aging-in-place plan now: comprehensive advanced directives in trusts and powers of attorney, guardianship protections, home modifications when necessary, and family caregiving agreements.
• Consider long-term care insurance or hybrid policies as part of your overall strategy.
• Consider and re-evaluate Medicare choices to deploy, if possible, alternatives to institutional care.

We concentrate our practice on helping families avoid or minimize exposure to these institutional risks through thoughtful legal planning.
The regulatory and contractual reality of long-term care is increasingly complex and tilted toward the utilization and protection of institutional facilities. The best defense is preparation and planning to keep your loved one at home whenever possible.

Kentucky Supreme Court Ruling Protects Consumers from Forced Arbitration in Nursing Homes

For families navigating long-term care, a recent Kentucky Supreme Court decision offers a significant win. On August 14, 2025, the court ruled in Lexington Alzheimer’s Investors, LLC v. Norris that a spouse who signed a mandatory arbitration agreement on behalf of a loved one entering a nursing facility is not  bound unless she was explicitly authorized by law or a legal document to execute the agreement on his behalf. This decision could shield consumers from institutions that use arbitration clauses to limit their rights, especially in cases of negligence or abuse. Let’s break down this ruling and explore why it matters for long-term care and aging in place, alongside the broader push by consumer advocates to curb such agreements.

The Case: A Spouse’s Struggle for JusticeIn 2019, Sandra Norris became her husband Rayford’s conservator after his Alzheimer’s diagnosis, appointed by a Tennessee court. Seeking care for Rayford, Sandra admitted him to The Lantern, a private-pay personal care facility in Lexington, Kentucky. The facility required her to sign a mandatory arbitration agreement, a contract forcing any future disputes (like lawsuits) into private arbitration rather than open court. Sandra didn’t specify her signing capacity (e.g., as conservator) when she signed the agreement, and the Tennessee order wasn’t registered in Kentucky, leaving its legal effect unclear. Rayford lived at The Lantern until March 2020, during which Sandra alleged he suffered multiple falls, significant weight loss, and an infected bed sore, ultimately passing away in August 2020.
Sandra sued The Lantern for negligence, medical negligence, and wrongful death. The facility moved to compel arbitration, arguing Kentucky’s Living Will Directive Act (KRS § 311.631) gave Sandra authority to sign the agreement as Rayford’s spouse. Both the circuit court and Kentucky Court of Appeals disagreed, and the Supreme Court upheld their decisions.The Ruling: Arbitration Isn’t a Healthcare DecisionThe Kentucky Supreme Court clarified that the Living Will Directive Act allows a spouse to make healthcare decisions (e.g., consenting to or withdrawing medical treatments) only when a doctor determines the individual lacks decisional capacity. However, signing an arbitration agreement, a legal contract about how disputes are handled, doesn’t qualify as a healthcare decision. Since Sandra wasn’t Rayford’s legally recognized agent, guardian, or surrogate under a valid Kentucky order, and no physician had documented his incapacity, she lacked authority to bind him to arbitration.
The court also dismissed The Lantern’s reliance on the U.S. Supreme Court’s 2017 Kindred Nursing Ctrs. Ltd. P’ship v. Clark ruling, which struck down a Kentucky ruling that authority to bind a principal to arbitration must be explicitly stated in a power of attorney violated the Federal Arbitration Act.  The Kentucky court found its decision rested on a general contract principle (lack of authority), not a statute that discriminated against arbitration, meaning that its holding is consistent with federal law.Why This Case Protects ConsumersThis ruling is a victory for consumers, particularly those relying on institutional care for short or long-term care. Mandatory arbitration agreements often favor institutions by:

• Limiting public lawsuits, keeping negligence cases (like Rayford’s falls or bed sores) out of the spotlight.

• Restricting access to juries, which can award higher damages than arbitrators, who may lean toward businesses.

• Reducing transparency, as arbitration proceedings are private, not public court records.

By invalidating Sandra’s unauthorized signature, the court ensures families can pursue justice in court when care fails, rather than being funneled into a process that may favor the facility. For readers, this decision highlights the need to scrutinize admission contracts.Why Consumer Advocates Favor Limits on Arbitration Agreements

Consumer advocates, including groups like AARP and the National Consumer Voice for Quality Long-Term Care, have long pushed to restrict arbitration in nursing homes. Here’s why:

• Unequal Power Dynamics: Nursing homes often present arbitration agreements during admission, a stressful time when families may feel pressured to sign without understanding the consequences. Advocates argue this coerces consent, especially for vulnerable seniors or their caregivers.

• Lower Accountability: Studies show arbitration awards average significantly less than jury verdicts in nursing home cases, and facilities win 2–3 times more often in arbitration. This can let substandard care slide, as seen with Rayford’s alleged neglect.

• Hidden Abuses: Private arbitration hides patterns of neglect or abuse, preventing public awareness and systemic reform. For example, a 2023 report found 60% of nursing home arbitration cases involved unreported safety violations.

• Legal Barriers: Arbitration clauses can limit appeals or class actions, leaving families like Sandra’s with little recourse against corporate chains, which own 70% of U.S. nursing homes.

• Conflict of Interest: Arbitrators are often chosen by the facility or from a pool tied to the industry, raising bias concerns—unlike impartial judges in court.

Advocates push for federal or state laws requiring opt-in arbitration (not mandatory), clear disclosure, or bans in long-term care, arguing it protects seniors’ rights to fair legal recourse.Implications for Aging in PlaceFor families aiming to age in place, this ruling underscores the importance of legal clarity. If facility care is needed (e.g., as a backup to home care), ensure:

• Legal Authority: Review legal authority to execute agreements.  Although this situation probably worked out for the family, there may be others where the family will want to enforce an agreement.  The door swings both ways; facilities can invalidate agreements made without legal authority, just like a family can.  
• Review Contracts: Scrutinize admission agreements for arbitration clauses and clauses that enforce family responsibility for a person's debts (see, e.g.,  "Promissory Note Executed by Nursing Home Resident’s Daughter Is Not Illegal Third-Party Guarantee" and the discussion in that article regarding institutions seeking to unlawfully enforce filial responsibility).  Consult an elder law attorney to challenge unauthorized terms.
• Alternative Planning: Use Medicare Advantage plans with robust home-based benefits (e.g., telehealth, in-home PT/OT) to delay facility reliance, avoiding such disputes.
• Advocacy: Join family councils or groups like Ohio’s Area Agencies on Aging to push for consumer-friendly policies.

A Call to ActionThe Norris decision empowers consumers by rejecting forced arbitration when legal authority is absent. As nursing home litigation grows, this ruling could deter facilities from overreaching. For Ohio and Missouri families, it’s a reminder to plan ahead. Review your long-term care strategy with an elder law attorney. Don’t let institutions dictate your legal options; act now to protect your future.