Signing an Assisted Living Agreement in New Jersey: What Estate of Ruszala v. Brookdale Teaches

The short answer: assisted living residency agreements in New Jersey often contain arbitration clauses, and those clauses can be enforced, but New Jersey courts will not enforce terms that gut a family’s ability to prove and be compensated for neglect. The leading decision is Estate of Ruszala v. Brookdale Living Communities, published by the Appellate Division on August 10, 2010. It arose from the deaths of two residents at Brookdale-owned facilities in Burlington County and struck arbitration terms that barred depositions of staff, capped compensatory damages at $350,000, and eliminated punitive damages. The court called them, taken together, “an unconscionable wall of protection for nursing home operators.”

Federal rules adopted in 2019 now limit arbitration agreements in Medicare- and Medicaid-certified nursing homes, but those rules do not reach assisted living, which in New Jersey is licensed by the state and governed largely by contract law. That makes Ruszala the framework that still applies when a family signs an assisted living agreement. This article explains the case and what it means at the admissions desk. Milvidskiy Law Group did not represent any party in the matter.

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What Happened to Anna Ruszala and Pasquale Azzaro

Anna Ruszala was 85 when she moved into Sterling House of Florence in January 2002. Sterling House was an assisted living facility operated by Alterra Healthcare Corporation, a subsidiary of Brookdale Living Communities. By 2006 she was non-ambulatory and slept in a special lowered bed to protect her from falls. On July 11, 2006 she was taken to the hospital after what was initially reported as a fall from a bed about two feet high. The opinion notes that hospital records reflected possible geriatric abuse. She died ten days later at 93. Her niece, Marie Mizerak, who had signed the residency agreement under a power of attorney, sued as executrix.

Pasquale Azzaro was admitted to Clare Bridge of Westhampton, another Alterra facility, in December 2005. He was discharged on January 4, 2006 and died four days later of an acute subdural hematoma, a brain bleed caused by trauma. His wife, Ida Azzaro, had signed his residency agreement. She sued as well.

Both agreements contained arbitration provisions requiring that any claim other than eviction be resolved by binding arbitration rather than in court. The provisions did more than select a forum. They limited discovery to depositions of expert witnesses only, so that no staff member or other fact witness could be deposed. They capped non-economic compensatory damages, the damages for pain, suffering, and loss of enjoyment of life that make up most of a nursing home or assisted living recovery, at $350,000. And they prohibited punitive damages entirely. Brookdale moved to compel arbitration in both cases.

What the Appellate Division Held

The court accepted that arbitration agreements in this setting are generally enforceable under federal and state law. It then examined the specific terms and found three of them substantively unconscionable.

On discovery, the court emphasized that the limit to expert depositions meant a family could never question the staff “directly responsible for the day-to-day care” of the resident or any witness to abuse or neglect. In a case about what happened to a frail, cognitively impaired person behind closed doors, that restriction removed the only means of finding out.

On the damages cap, the court reasoned that a $350,000 ceiling on non-economic damages allowed operators to “budget potential liability as a mere cost of doing business,” which is the opposite of the deterrent the law intends.

On punitive damages, the court held that the prohibition eliminated the community’s ability to express disapproval of “outrageous conduct” and stripped away the deterrent effect that punitive damages exist to provide.

Considered together, the court said, “the restrictions on discovery, limits on compensatory damages, and outright prohibition of punitive damages form an unconscionable wall of protection for nursing home operators.” Rather than void the agreements entirely, the court severed the offending terms. The Ruszala claims were sent to arbitration under full civil discovery rules and without any cap on compensatory damages or bar on punitive damages. The Azzaro case was returned to the trial court for a separate reason: a question about whether Ida Azzaro had authority to bind her husband when she signed, and therefore whether a valid arbitration agreement had been formed at all.

Why the Case Still Governs Assisted Living

In July 2019, the federal Centers for Medicare and Medicaid Services adopted rules for nursing homes that participate in Medicare or Medicaid. Under those rules, effective September 16, 2019, a nursing home may not require a resident to sign an arbitration agreement as a condition of admission or continued care, must give the resident the right to rescind the agreement within 30 days, and may not include language discouraging residents from contacting regulators or the Long-Term Care Ombudsman.

Assisted living facilities are not covered. They are licensed by the New Jersey Department of Health, they generally do not participate in Medicare, and their residency agreements are governed by contract law and the state’s licensing regulations. There is no federal ban on making arbitration a condition of admission to an assisted living facility, and no federal rescission right. What protects assisted living residents from overreaching arbitration terms is the unconscionability doctrine that Ruszala applied. Later New Jersey cases involving nursing homes have continued to enforce arbitration clauses while scrutinizing their terms, and the broader New Jersey rule that a waiver of the right to sue must be clear and unambiguous applies as well.

What to Check Before Signing an Assisted Living Agreement

The admissions process for assisted living is usually rushed. A parent has been discharged from a hospital, a bed is available, and the paperwork is thick. The dispute resolution section is where the Ruszala problems live. Before signing:

• Find the arbitration clause and read it. It may be titled “Dispute Resolution,” “Grievance Procedure,” or “Governing Law.” Look for any limit on discovery, any cap on damages, any exclusion of punitive damages, any shortened time to bring a claim, and any requirement that the resident pay the arbitrator’s fees.
• Ask for it to be removed or made optional. Facilities often agree. If the facility insists that arbitration is a condition of admission, ask for that in writing; it is relevant later.
• Check who is signing and under what authority. The Azzaro half of Ruszala turned on whether a spouse without a power of attorney could bind the resident. A family member should sign only in a capacity they actually hold, as agent under a valid power of attorney or as guardian, and should say so on the signature line. Our article on whether someone with dementia can sign legal documents covers what happens when the resident’s own capacity is in question.
• Keep the full signed agreement, including every addendum and any later amendment. The version in the facility’s file may differ from the one presented at admission.
• Do not let the clause stop you from reporting. Arbitration governs where a lawsuit is heard. It does not limit a family’s right to complain to the Department of Health at 1-800-792-9770, to the Long-Term Care Ombudsman at 1-877-582-6995, or to the police. Any clause that purports to do so should be a red flag about the facility.

Individual Accountability in Assisted Living

Assisted living neglect is prosecuted and licensed individuals are disciplined. In August 2021, the New Jersey Board of Nursing permanently revoked the certification of a homemaker-home health aide who, according to the Attorney General’s release, admitted tying a 71-year-old resident with dementia to a chair with a nightgown at an assisted living facility in Monroe Township so the resident would not move while the aide was in the bathroom. The Board acted on findings of gross negligence and professional misconduct. Criminal charges of endangering and neglect of an elderly, disabled adult were pending at the time of the release, and we have not confirmed their outcome; the aide was entitled to the presumption of innocence on those charges. The point for families is that the state’s licensing boards and prosecutors are avenues of recourse separate from any lawsuit, and that a complaint to them is not affected by an arbitration clause.

Plan Well. Live Better.

The moment to protect a parent from a one-sided residency agreement is before it is signed, and the moment to have a valid power of attorney in place is before the parent needs assisted living. At Milvidskiy Law Group, we help families prepare the documents that give them authority to act, review admission agreements before signing, and understand a resident’s rights, and we refer litigation matters to counsel who handle them. Learn more about our elder law services.

Milvidskiy Law Group did not represent any party in Estate of Ruszala v. Brookdale Living Communities, Inc., or in the Board of Nursing matter described above. This article is drawn from the published opinion of the New Jersey Superior Court, Appellate Division, reported at 415 N.J. Super. 272 (App. Div. 2010), from a New Jersey Office of the Attorney General release, and from federal regulations. It is for general informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. The facts of the case are as recounted by the court. Whether a particular arbitration clause is enforceable depends on its terms and on the law at the time; the authorities described were verified in September 2026 and should be confirmed before relying on them.