The Inherent Unfairness in Compelling Nursing Home Arbitration

Arbitration Contracts in Nursing HomesThe 7th Amendment to the US Constitution guarantees Americans the right to a civil jury trial for a civil dispute worth more than $20. As nursing home abuse lawyers, we do not sue nursing homes for less than $20, so this applies to every case we have in our office.

This means every American with a civil dispute involving injury or wrongful death has a constitutionally protected right to have their case ruled upon by a jury of their peers. Arbitration destroys this constitutional right and blocks aggrieved citizens from their access to the court system.

Why then would an Arbitration Agreement reached between a large corporation and an elderly nursing home resident be enforced? The answer: unfairness.

What is Nursing Home Arbitration?

An arbitration agreement takes a dispute out of the jurisdiction of the court system and places it behind closed doors in a private arbitration. This is done under the guise of mutual benefits to both parties, however, conducting a nursing home arbitration disproportionately helps the facility and not the aggrieved resident’s family.

Why is Nursing Home Arbitration Bad for Residents and their Families?

Removal from the Public Sphere

Most families bring nursing home wrongful death lawsuits to right a wrong. Rarely is the motivation about money. Our court system is open to the public. Filings are public information and can be viewed by members of the press and the public at large. With a simple google search you can research prior nursing home lawsuits from the comfort of your home. As the cliché goes with transparency, sunlight disinfects.

Contrastingly, a private nursing home arbitration is not public. The press cannot cover the story based on the docket and concerned citizens cannot research private arbitration filings. A private nursing home arbitration allows the nursing home to sweep their wrongdoing under the rug of secrecy.

Taking the Power from the People and Giving it to the Powerful

The idea behind our justice system is trial by jury. This means a jury of your peers should decide your civil dispute. Not a king. Not a president. Not the village elders. Disputes are to be settled by everyday citizens. This is a foundation of our democracy as Americans.

When nursing home corporations negligently kill residents and force closed-door arbitrations, they are taking the power away from the people and placing it in the hands of the powerful. Nursing home arbitrators are usually industry insiders with decades of experience with long term care facilities. These are not neutral laypeople.

Arbitration may make sense in a complex business dispute between sophisticated parties. However, in the context of a matter of public importance, like elder abuse, our Founding Fathers would shudder to think that the people no longer have the power to issue justice in accordance with the 7th Amendment.

Smaller Damage Awards in Arbitration vs. Jury Trial

Nursing home corporations prefer arbitration for one main reason: smaller damage awards.

Jurors are regular citizens. If there is an enraging nursing home abuse case before them, they will often punish the negligent facility with a massive jury verdict, despite the victim’s advanced age.

Arbitrators on the other hand are more conservative. Arbitrators tend to be older, white males. Arbitrators are almost always lawyers or retired judges. They have become indifferent to the human loss involved in nursing home negligence cases. As a result, a Plaintiff may win their arbitration, but the “win” results in a small award when compared to some nursing home jury verdicts.

Uneven Bargaining Power

Arbitration is best used when voluntarily entered into between two corporations. Both parties would have their own attorney review the agreement and make changes to ensure fairness.

The admitting process in a nursing home is anything but the above scenario. During the transfer and admission process, the resident’s life is upended. Upon arrival at their new ‘home’, the resident is thrown a large stack of papers and told to sign on the dotted line. This is a frantic process and no one has counsel present. The lawyers for the nursing home corporation carefully drew up the agreement to serve their interests. There is no one advocating for the resident’s rights.

Free Nursing Home Case Evaluation from our Nursing Home Arbitration Attorneys

Nursing home negligence arbitration question? Unsure if your arbitration agreement is enforceable? The lawyers at Senior Justice Law Firm have handled hundreds of arbitration matters. Contact our experienced legal team for your free case consultation today. We only get paid if you make a recovery on your nursing home arbitration: 1-844-253-8919.

Current State of the Law on Nursing Home Arbitration Agreements 

CMS Flip Flopped on Enforcing Arbitration Agreements

The Centers for Medicare and Medicaid Services issued a memo condemning nursing home arbitration agreements, threatening to withhold federal funding to facilities that use them. Unfortunately, with the regime change in Washington, CMS backtracked and approved of long term care arbitration agreements.

Legal Arguments Against Forced Nursing Home Arbitration Citing Florida Law

Legal Arguments Against Arbitration Agreements in Nursing Homes

Despite the above, our nursing home negligence attorneys have successfully used the following legal arguments to invalidate Arbitration Agreements as unenforceable in Florida courts.

Each case and corresponding arbitration agreement is unique. If you have a legal question on a nursing home or assisted living facility arbitration agreement blocking your access to the court system, contact our skilled attorneys at Senior Justice Law Firm for a free case consultation.

I. An Invalid Provision to the Arbitration Agreement Renders the Entire Agreement to be Unenforceable

It is well established that “there are three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid agreement to arbitrate exists; (2) whether an arbitration issue exists; and (3) whether the right to arbitration has been waived.” Seifert v. U.S. Home Corp., 750 So. 2d 633, 636 (Fla. 1999). If all three elements are not shown, “the motion to compel arbitration must be denied.” Basulto v. Hialeah Automotive, 141 So. 3d 1145, 1152 (Fla. 2014).

When seeking to compel arbitration, the nursing home bears the burden of establishing that an enforceable, valid written agreement to arbitrate exists between the parties. Shearson, Lehman, Hutton, Inc. v. Lifshutz, 595 So. 2d 996, 997 (Fla. 4th DCA 1992).

If the agreement limits a claimant’s damages or ability to conduct discovery, this must invalidate the whole agreement at large.

In Gessa v. Manor Care of Florida, Inc., 86 So. 3d 484, 492 (Fla. 2011), the Florida Supreme Court held that an arbitration agreement within a nursing home resident’s admissions documents was unenforceable where it included provisions that limited noneconomic damages and waived punitive damages. In so holding, the Gessa Court relied upon the Supreme Court’s earlier reasoning in Shotts v. OP Winter Haven, Inc., 86 So. 3d 456 (Fla. 2011), another nursing home arbitration case.

As explained in Gessa and Shotts, limits on noneconomic damages and punitive damages in the nursing home arbitration agreement “directly undermine specific statutory remedies created by the Legislature.” Gessa, 86 So. 3d at 492. The Legislature provided residents of assisted living and nursing home facilities with certain rights, and in order to enforce those rights, the Legislature “also provided for the award of punitive damages for gross or flagrant conduct or conscious indifference to the rights of the resident. Moreover, there was no cap on pain and suffering damages in the statute.” Gessa, 86 So. 3d at 492-93, citing Shotts, 86 So. 3d at 474.

Similar to the nursing home defendants in Gessa and Shotts, facilities often urge the courts to simply sever the offensive provisions and enforce the remainder of the arbitration agreements. Gessa, 86 So. 3d at 489-90. The Florida Supreme Court was not persuaded and instead found that the offensive provisions were not severable. Id.

The presence or omission of a severability clause did not dictate the outcome in Gessa. In fact, the Florida Supreme Court in Gessa specifically noted that many of Florida’s District Courts of Appeal have found the severance of offensive provisions impermissible regardless of the presence or omission of a severability clause and specifically highlighted that “the Fifth District Court of Appeal has held that such a provision is not severable, regardless of whether the agreement contained a severability clause or not.” Gessa, 86 So. 3d at 491, n.5 (citing Fletcher v. Huntington Place Ltd. P‘ship, 952 So. 2d 1225 (Fla. 5th DCA 2007) and SA-PG-Ocala, LLC v. Stokes, 935 So. 2d 1242 (Fla. 5th DCA 2006)).

Instead, the Gessa Court determined that the limitation of liability provisions that capped noneconomic damages and prohibited punitive damages went to the essence of the arbitration agreement, and therefore could not be severed, regardless of the presence or omission of a severability clause. Id.

In determining that the limitation of liability provisions were not severable, the Gessa Court stated: “When viewed jointly, the [] two provisions place a clear upper limit on noneconomic damages and foreclose the prospect of punitive damages altogether. The extent of liability under the agreement is thus, within bounds, reasonably foreseeable. Without these provisions, on the other hand, the extent of liability would be open-ended.” Gessa, 86 So. 3d at 490. The Gessa Court concluded that “[i]n this respect, the two provisions constitute the financial heart of the agreement.” Id.

The Gessa Court further found that if the provisions that limited noneconomic damages and prohibited punitive damages were severed, “the trial court would be hard pressed to conclude with reasonable certainty that, with the illegal provision[s] gone, ‘there still remains of the contract valid legal promises on one side which are wholly supported by valid legal promises on the other’ [] particularly, when those legal promises are viewed through the eyes of the contracting parties.” Id. (citing Shotts, 86 So. 3d at 459).

A TRIAL COURT CANNOT DELEGATE THE ARBITRABILITY DETERMINATION

A trial court cannot delegate the issue of arbitration enforceability because “[t]he trial court and not arbitrators should decide ‘gateway matters’ which include determining the scope of an arbitration provision.” (R. 2, p. 3). This is in conformity with federal case law. See, e.g., Anders v. Hometown Mortgage Servs., Inc., 346 F.3d 1024, 1027 (11th Cir. 2003) (recognizing that the three reasons presented by the residential mortgage borrower as to why he should not be forced to arbitrate his claims the agreement to arbitrate does not reach his claims, that the agreement is unenforceable because he cannot afford arbitration, and that the agreement is invalid because of its remedial restrictions fall[] within the category of ‘gateway matters’ which the Supreme Court has instructed us that courts and not arbitrators should decide”) (citing Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452 (2003) (holding that courts must decide “certain gateway matters, such as whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy”).

II. Arbitration Agreements in Nursing Home Contexts Can be Unconscionable and Unenforceable

Nursing Home Arbitration Agreements with capped damages, limited discovery and limitations on liability may be unenforceable as unconscionable. The Supreme Court of Florida held that courts use the unconscionability doctrine “to prevent the enforcement of contractual provisions that are overreaches by one party to gain ‘an unjust and undeserved advantage which it would be inequitable to permit him to enforce.”’ Basulto v. Hialeah Automotive, 141 So. 3d 1145, 1157 (Fla. 2014). “Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” Id. (citations omitted; emphasis in original). These two aspects are referred to as procedural and substantive unconscionability. Id.

Procedural and Substantive Unconscionability

Procedural unconscionability “relates to the manner in which a contract was entered” and involves consideration of issues such as the absence of a meaningful choice, the bargaining power of the parties, and their ability to know and understand the disputed contract terms. Id; Orkin Exterminating Co. v. Petsch, 872 So.2d 259, 265 (Fla. 2d DCA 2004). Substantive unconscionability relates to “the unreasonableness of the terms” of the agreement and “focuses on the agreement itself.” Basulto, 141 So. 3d at 1157-78 (citing Powertel, Inc. v. Bexley, 743 So. 2d 570, 574 (Fla. 1st DCA 1999)).

In order to avoid enforcement of an arbitration agreement based upon the unconscionability doctrine, the challenging party must demonstrate both procedural and substantive unconscionability. Id. at 1158. When assessing unconscionability, the Supreme Court of Florida has declared that the better approach is to use a balancing, or sliding scale, approach that “recognizes that although the concept of unconscionability is made up of both a procedural component and a substantive component, it often involves an evaluation in which the two principles are intertwined.” Id. at 1160.

The Supreme Court of Florida explained that under the balancing, or sliding scale, approach:

Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.

Id. at 1159 (citations omitted). When a balancing approach is employed, one prong may outweigh the other “provided that there is as least a modicum of the weaker prong.” Id. (citing VoiceStream Wireless Corp. v. U.S. Comm’ns, Inc., 912 So. 2d 34, 39 (Fla. 4th DCA 2005)).

III. Nursing Home Arbitration Agreements Can be Invalidated if the Signor Does Not Have the Legal Authority to Waive the Right to a Jury Trial for the Nursing Home Resident

  • If a family member signs a legal document without the appropriate power of attorney, the nursing home arbitration agreement is likely not enforceable.

Who Can Sign Mom's Arbitration Agreement with Nursing Home?

While arbitration may be a favored means of dispute resolution, the Florida Supreme Court has held that “[n]either the statutes validating arbitration clauses nor the policy favoring [arbitration] provisions should be used as a shield to block a party’s access to a judicial forum in every case.” Global Travel Marketing, Inc. v. Shea, 908 So. 2d 392, 397 (Fla. 2005) (quoting Seifert v. U.S Home Corp., 750 So. 2d 633, 642 (Fla. 1999)). The general rule of construction of arbitration provisions in favor of arbitrability presupposes the existence of an enforceable arbitration agreement between the parties. Liberty Communications, Inc. v. MCI Telecomms. Corp., 733 So. 2d 571, 574 (Fla. 5th DCA 1999).

More importantly, “[t]he general rule favoring arbitration does not support forcing a party into arbitration when that party did not agree to arbitrate.” Nestler-Poletto Realty, Inc. v. Kassin, 730 So. 2d 324, 326 (Fla. 4th DCA 1999). As stated by the Supreme Court of the United States, “arbitration ‘is a matter of consent, not coercion.”’ Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 664 (2010) (quoting Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)).

When seeking to compel arbitration, the movant bears the burden of establishing that an enforceable written agreement to arbitrate exists between the parties. Shearson, Lehman, Hutton, Inc. v. Lifshutz, 595 So. 2d 996, 997 (Fla. 4th DCA 1992). And the Supreme Court of Florida has long held that the party seeking to compel arbitration over the claims of a nonsignatory bears the burden of proving that the signatory had authority to enter into the contract on the nonsignatory’s behalf. Lee v. Melvin, 40 So. 2d 837, 838 (Fla. 1949); Foye Tie & Timber Co. v. Jackson, 97 So. 517, 519 (Fla. 1923); E.O. Painter Fertilizer Co. v. Boyd, 114 So. 444, 446 (Fla. 1927); Vassar v. Smith, 183 So. 705, 706 (Fla. 1938); Cat ‘N Fiddle, Inc. v. Century Ins. Co., 213 So. 2d 701, 704 (Fla. 1968).

If a party has not signed an agreement to arbitrate herself, the question presented is whether the signatory had authority to bind the nonsignatory. See Global, 908 So. 2d at 403-405. This is because arbitration provisions are personal covenants that bind only the parties thereto. See Regency Island Dunes, Inc. v. Foley & Associates Const. Co., Inc., 697 So. 2d 217, 218 (Fla. 4th DCA 1997) (stating “[o]ne who has not agreed, expressly or implicitly, to be bound by an arbitration agreement cannot be compelled to arbitrate.” (citing Tartell v. Chera, 668 So. 2d 1105 (Fla. 4th DCA 1996))). Therefore, anyone who has not agreed expressly or implicitly to be bound by an arbitration agreement cannot be compelled to arbitrate. Karlen v. Gulf & W. Indus., Inc., 336 So. 2d 461, 462 (Fla. 3d DCA 1976). Furthermore, waivers of constitutional rights, such as access to the courts or to a jury trial, must be knowing and voluntary. DeJesus v. State, 848 So. 2d 1276, 1277 (Fla. 2d DCA 2003); Chames v. DeMayo, 972 So. 2d 850, 861 (Fla. 2007).

Stalley v. Transitional Hosps. Corp of Tampa – Arbitration Agreement Struck Down Because Power of Attorney Lacked Authority to Waive Right to Jury Trial

 

The Second District Court of Appeal decision in Stalley v. Transitional Hosps. Corp. of Tampa, Inc., 44 So. 3d 627 (Fla. 2d DCA 2010). is helpful to analyze Florida appellate court rulings on arbitration agreements entered into by family members lacking the legal authority to do so.

In Stalley, after the plaintiff’s estate filed a negligence action against the defendant facility, the defendants filed a motion to compel arbitration, which the trial court granted. 44 So. 3d at 629. On appeal, the 2nd DCA reversed, holding that the trial court erred by finding that the plaintiffs wife had authority to bind him to the arbitration agreement. Id. at 630. In reversing the trial court’s order, this Court noted that there was no power of attorney in effect and “the evidence presented by [the defendants] did not establish one of the required elements for proving an apparent agency, i.e., a representation by [the husband] that [his wife] was his agent.” Id. at 630-31.

Your Florida Nursing Home Arbitration Attorneys – Senior Justice Law Firm

Senior Justice Law Firm

It seems that Florida rulings on the enforceability of nursing home arbitration agreements wax and wane, depending on the ever changing political climate at the federal level. Regardless of whether your claim is subject to a nursing home arbitration agreement, or a civil jury trial, our attorneys primary focus is on Florida nursing home cases. We accept cases from the Panhandle down to the Keys, and we have successfully handled thousands of cases for wrongfully injured or killed clients due to nursing home negligence. This includes cases where our lawyers have successfully argued that a nursing home arbitration agreement was unenforceable, as well as cases where the arbitration agreement was enforced.

Whatever your situation is, nursing home abuse cases are emotionally driven. Let our compassionate and experienced legal team at Senior Justice Law Firm help you and your family get justice. Contact our skilled nursing home arbitration attorneys today for a free case consultation: 1-844-253-8919