by Mark Bauman | Jun 22, 2023 | Nursing Home Litigation
The state Supreme Court recently held that arbitration agreements that include a clause specifically designating the National Arbitration Forum as sole arbitrator are invalid. In Wert v. Manorcare of Carlisle PA, LLC,[1] Evonne Wert, on behalf of the decedent, signed an arbitration agreement along with admission paperwork upon admission to Golden Living Center. Following the decedent’s death, her daughter brought a medical malpractice claim against the nursing home alleging abuse and neglect inflicted upon the decedent throughout her stay, which eventually resulted in her death. Golden Living Center filed preliminary objections seeking to enforce the arbitration agreement; however, the trial court overruled the preliminary objections finding that the agreement was unenforceable because it relied, in part, on the National Arbitration Forum (NAF) Code procedures, which were void at the time with respect to consumer arbitration disputes. Golden Living Center appealed the decision arguing that the NAF provision was not integral to the agreement at issue. In reviewing the testimony, the Superior Court found that the arbitration agreement was signed under the belief that all the paperwork needed to be signed in order for the decedent to obtain treatment and care. Therefore, the Superior Court found that the NAF provision was an integral to the agreement and affirmed the trial court’s ruling. Golden Living Center filed a petition for allowance of appeal to the Pennsylvania Supreme Court, which was granted.
On appeal, Golden Living Center argued that the NAF provision of the agreement was ancillary and severable based upon the plain text of the agreement, terms and policy guidelines of the Federal Arbitration Act, and testimony of the plaintiff. They further argued that while the agreement merely agreed to the NAF code of procedure, it did not make the participation of the NAF forum itself essential, i.e., the arbitration could be conducted in any forum, by an agreed upon arbitrator, so long as the NAF code of procedure mandated the proceedings. Further, Golden Living Center argued that the Federal Arbitration Act (FAA), which was incorporated into the agreement, should have been invoked to appoint a replacement arbitrator.
Ms. Wert argued that the NAF provision of the agreement was essential to the agreement because, by its own terms, only the NAF can administer its rules and procedures, therefore making NAF the sole forum of arbitrations under the agreement. She further argued that the FAA section referenced by Golden Living Center is limited to the appointment of an alternative arbitrator, not an alternative arbitration forum and cannot supersede the terms of the agreement.
Justice Stevens wrote the opinion for a plurality of the court. The Court first found that Ms. Wert’s testimony regarding her understanding of the agreement was irrelevant as her failure to read the agreement did not implicate the importance of its NAF provision. The court found that, “premising the integrality of a contractual term on the subjective understanding of a far less sophisticated non-drafting party is ill-advised public policy that would further distort an already lopsided balance of power.”[2] Further, the court noted that a non-drafting party could not use her failure to read as a means of disavowing an otherwise valid arbitration agreement.[3] The court held that because the agreement did not make the NAF’s availability non-essential by specifically varying the terms of the agreement to appoint a replacement arbitrator should there be a lapse in naming an arbitrator, the FAA did not apply to do the same. Further, the court found the agreement unambiguous and, by its own terms, specified that the NAF must administer its code unless the parties agreed to the contrary, which the they did not do in this case. Therefore, the court affirmed the Superior Court’s ruling and remanded for further proceedings.
Justice Eakin wrote a dissenting opinion in which he found that the NAF’s Code of Procedure could have been applied in this case as it is still in existence even though the NAF no longer accepted arbitrations. He found that, even if the NAF provision was found to be unenforceable, the remainder of the agreement should have been enforced and the parties should have been bound to arbitrate the underlying lawsuit by an agreed upon arbitrator applying the NAF Code.
Justice Baer also wrote a dissenting opinion stating that the court’s holding was contrary to the plain language of the agreement, which provided that disputes be adjudicated in binding arbitration, not in the court system. Like Justice Eakin, Justice Baer found that the agreement to arbitration in accordance with the NAF Code of Procedure was valid, even without the NAF’s availability to serve as arbitrator.
The court’s ruling further subjects nursing home arbitration agreements to scrutiny and indicates a necessity for clear and unambiguous language in order for courts to enforce such agreements against non-drafting parties.
[1] 2015 WL 6499141 (Pa. 2015).
[2] Id. at 8.
[3] Id.
by Mark Bauman | Jun 21, 2023 | Legal News, Nursing Home Litigation
In three recent Superior Court cases, binding arbitration agreements between nursing home facilities and their residents have been under scrutiny.
In Bair v. Manor Care of Elizabethtown, PA, LLC,[1] M. Sylvia Bair commenced a wrongful death and survival action as the Executrix of the Estate of Martha A. Edwards against Manor Care in which she alleged neglect and abuse of her mother during her stay in the facility, which ultimately caused her death. Manor Care filed preliminary objections to the complaint seeking to have the case referred to arbitration pursuant to a 2011 arbitration agreement executed by Ms. Bair on behalf of the decedent. Ms. Bair testified at her deposition that she completed admission paperwork on behalf of the decedent and the arbitration agreement was not explained to her. Ms. Bair further testified that she believed the arbitration agreement had to be signed to facilitate her mother’s admission to the facility. Ms. Bair signed the agreement on behalf of the decedent; however, no representative from Manor Care completed or signed the agreement on behalf of the facility. In denying Manor Care’s preliminary objections, the trial court looked to a 2009 arbitration agreement between the parties that was completed, signed, and dated. The court found that this was evidence that one could infer that Manor Care did not intend to be bound by the unsigned, undated arbitration agreement in 2011.
On appeal to the Superior Court, Manor Care argued that the lack of a signature by a facility representative does not render the arbitration agreement unenforceable. Ms. Bair argued that the parties did not agree on the material and necessary details of their bargain as there were blanks on the agreement that were intended to be filled in with the parties names and it was undated. Further, the fact that there was a line for the facility representative to sign and it was blank indicated that there was no mutual assent. The Superior Court agreed with the trial court and found that the arbitration agreement lacked essential terms such as the names of the contracting parties, the date of the agreement, and a brochure that was expressly made part of the agreement. By failing to sign the agreement, Manor Care did not consent to arbitrate any claims between it and Ms. Bair. Finally, the Superior Court found that the prior completed arbitration agreement was evidence that Manor Care typically consented to arbitration by completing the blanks and signing the agreement, which it did not do in 2011.
In Taylor v. Extendicare Health Facilities, Inc.,[2] the Executors of the Estate of Anna Marie Taylor brought a wrongful death and survival action alleging negligence in the care and treatment of the decedent while at Extendicare, which lead to her death. Extendicare filed preliminary objections to have the case moved to binding arbitration, which the trial court overruled finding that the arbitration agreement did not bind the wrongful death beneficiaries.
Extendicare appealed to the Superior Court and argued that since the decedent entered into an arbitration agreement, her beneficiaries were limited to claims that the decedent could have pursued during her lifetime and that all claims must be submitted to arbitration. The Superior Court found that a wrongful death action is a separate action belonging to the beneficiaries and therefore, an arbitration agreement not signed by the beneficiaries is not binding upon them. Thus, the wrongful death beneficiaries could pursue their claims in the Court of Common Pleas. Regarding the survival action, Extendicare argued that even if the wrongful death beneficiaries were not bound by the arbitration agreement, the Executors acting in the shoes of the decedent must be bound by the agreement. In ruling on this issue, the Superior Court looked to Pennsylvania Rule of Civil Procedure 213(e) and the wrongful death statute, which provide that wrongful death and survival actions shall be consolidated for trial to avoid a duplicative recovery.
Lastly, Extendicare argued that the Pennsylvania state law was preempted by the Federal Arbitration Act (FAA); however, the Superior Court agreed with the Executors and found that Pennsylvania Rule of Civil Procedure 213(e) was not intended to undermine the enforceability of arbitration agreements. In doing so, the Court found that there was nothing in the wrongful death statute or the FAA that precluded wrongful death and survival actions from “proceeding together in arbitration when all of the parties, including the wrongful death beneficiaries, agree to arbitrate.”[3] The ruling was further supported by Pennsylvania’s policy consideration regarding consolidating claims in order to avoid duplicative and inconsistent litigation.
The Superior Court affirmed the trial court’s ruling denying Extendicare’s preliminary objections to compel arbitration and stated that, “[i]n so holding, we are promoting one of the two primary objectives of arbitration, which is ‘to achieve streamlined proceedings and expeditious results.’”[4]
More recently, in Wisler v. Manor Care of Lancaster PA, LLC,[5] the Executors of the Estate of Herbert C. Wisler brought a negligence claim against the nursing home, which allegedly resulted in the decedent’s death. Manor Care filed preliminary objections to compel arbitration pursuant to an arbitration agreement entered into by the Executors. At the time that the agreement was signed, the decedent’s son identified himself as the decedent’s power of attorney; however, he did not produce a copy of the power of attorney and could not produce a copy at his deposition. Therefore, the trial court found that he lacked the authority to enter into the arbitration agreement in the first instance, and thus, was not bound by the agreement.
On appeal to the Superior Court, Manor Care argued that the decedent’s son was bound by the arbitration agreement as he entered the agreement in his capacity as the power of attorney. The Superior Court found that Manor Care held the burden of proving that an agency relationship existed between the decedent and the decedent’s son, whether it be express or apparent. Moreover, Manor Care had “a duty to ascertain the nature and extent of the written power of attorney.”[6] In failing to establish either express or apparent agency of the decedent’s son at the time of signing the arbitration agreement, the court held that Manor Care could not compel arbitration in accordance with the agreement. In doing so, the Superior Court unequivocally stated that, “our decision should encourage parties seeking an agreement to arbitrate to ascertain the source of an agent’s authority before allowing the agent to sign an arbitration agreement on the principal’s behalf.”[7]
It is yet to be determined whether the issue of enforceability of binding arbitration agreements between residents and nursing homes will be heard by the Pennsylvania Supreme Court. Nonetheless, the recent case law has clarified the requirements of a nursing home when executing arbitration agreements with residents or residents’ family members.
[1] 108 A.3d 94 (Pa. Super. Ct. 2015) (distinguished by Thi of Pa. at Mountainview, LLC v. McLaughlin ex rel. McLaughlin, 2015 WL 2106105).
[2] 113 A.3d 317 (Pa. Super. Ct. 2015) (distinguished by Golden Gate National Senior Care, LLC v. Beavens, 2015 WL 5000886).
[3] Id. at 325.
[4] Id. at 328 (citing AT & T Mobility LLC v. Concepcion, 563 U.S. 333 (2011)).
[5] No. 1226 MDA 2014, 2015 WL 5215963 (Pa. Super. Ct. 2015).
[6] Id. at 4.
[7] Id. at 7.
by Mark Bauman | Jun 20, 2023 | Legal News, Nursing Home Litigation
In a case of first impression, Philadelphia County Court of Common Pleas Judge Mark I. Bernstein held that a survivorship action, brought in conjunction with a wrongful death claim, must be sent to arbitration pursuant to the federal preemption doctrine.
The underlying case of Lipshutz v. St. Monica Manor involved an elderly woman who was hospitalized following a stroke. Given the cognitive injuries she sustained, she was subsequently transferred to the defendant nursing home. At that time, the plaintiff, the resident’s only living daughter and attorney-in-fact, executed an admission agreement which contained a mandatory arbitration clause. Under the terms of the arbitration clause, any survivorship action brought on behalf of the resident had to be handled out of court in an arbitration setting. Thereafter, the resident died in the nursing home, and her daughter filed suit in the Philadelphia County Court of Common Pleas, setting forth claims sounding in wrongful death and survival. Counsel for the nursing home then moved to bifurcate the claims and move the survival action into arbitration, pursuant to the plaintiff’s arbitration agreement.
Notwithstanding the fact that the Pennsylvania Rules of Civil Procedure require claims for wrongful death and survival to be litigated together, Judge Bernstein held that in the presence of the arbitration agreement, Pennsylvania state law was preempted by the Federal Arbitration Act. As such, he noted that “[w]ere this court to order both the wrongful death claim and survival actions to remain in court, the decedent’s arbitration agreement, valid through her daughter’s signature, would be nullified. Such nullification is pre-empted by the FAA and recent United States Supreme Court interpretations.” According to Judge Bernstein, such interpretations included the recent case of Marmet Health Care Center v. Brown, 132 S. Ct. 1201 (2012), wherein the United States Supreme Court held that nursing home arbitration agreements were entitled to the same protection and enforcement as any other contract, and that no exception may be made for wrongful death or survival claims arising from care rendered in these facilities.
While the Federal Arbitration Act required the plaintiff’s survival action to be removed to arbitration, Judge Bernstein noted that the plaintiff could still pursue her right in court, as well as the rights of other beneficiaries, under a claim for wrongful death.
by Mark Bauman | Jun 19, 2023 | Legal News, Nursing Home Litigation
In an opinion issued on November 21, 2012, the Pennsylvania Supreme Court held that a nursing home and affiliated entities are subject to potential direct liability for negligence, where the requisite resident-entity relationship exists to establish that the entity owes the resident a duty of care. Scampone v. Highland Park Care Center, LLC, No. 16 WAP 2011 (Pa. 2012)(Opinion by Castille, C.J.).
In the underlying case, plaintiff, Richard Scampone, as executor of the estate of Madeline Scampone, asserted claims of negligence under the Survival Act and of wrongful death alleging theories of corporate negligence and vicarious liability against defendants, Highland Park Care Center, LLC, a nursing home; and Grane Healthcare, the corporation providing management services to Highland Park, including periodic visits from nursing consultants, in-house training of nursing and administrative staff, assistance with regulatory compliance, and assistance in formulating policies and procedures. Testimony presented at trial established that during Ms. Scampone’s residency at Highland Park, there was limited personnel to accomplish all of the tasks required by her care plan which resulted in a failure of the staff to provide sufficient water and medication, track the daily activities and report changes in her condition, and to follow doctors’ directions. These failures caused dehydration and permitted a recurring urinary tract infection to progress, affecting Ms. Scampone’s heart and leading to an acute myocardial infarction and related death.
After the conclusion of plaintiff’s evidence at trial, the trial court granted a motion for compulsory nonsuit on the claim of corporate negligence against Grane Healthcare, but permitted the same claim against Highland Park to go to the jury. The jury returned a verdict in favor of the Scampone estate, finding Highland Park directly and vicariously liable for negligence. Following trial, both parties appealed to the Superior Court which affirmed in part, holding that the trial court properly allowed the claim of corporate negligence as to Highland Park. However, the Superior Court reversed the trial court’s improper nonsuit against Grane Healthcare. Thus, the Superior Court found that the plaintiffs should have been permitted to proceed with corporate negligence theories against both defendants and, therefore, remanded the case back to the trial court for a new trial. As a result, Grane Healthcare and Highland Park filed petitions for allowance of appeal to the Supreme Court. The Supreme Court affirmed, in full, the decision of the Superior Court.
In the opinion, the Court addressed the issues of categorical exemption from negligence liability of nursing homes and related entities, as well as claims regarding the specific duties of care of those entities. In so doing, the Court explained the difference between direct corporate liability and vicarious liability, noting that “a plaintiff may proceed against a defendant on theories of direct and vicarious liability, asserted either concomitantly or alternately. Liability for negligent injury is direct when the plaintiff seeks to hold the defendant responsible for harm the defendant caused by the breach of a duty owing directly to the plaintiff.” (citation omitted). On the other hand, under a theory of vicarious liability, a corporation “assumes the risk of its individual agents’ negligence.” (citations omitted). The Court then embarked on a detailed analysis of the history of corporate negligence in Pennsylvania, including its initial application to hospitals in Thompson v. Nason Hospital, 527 Pa. 330, 591 A.2d 703 (1991) and its subsequent “extended” application to HMOs and medical professional corporations in Shannon v. McNulty, 718 A.2d 828 (Pa. Super. 1998) and Hyrcza v. West Penn Allegheny Health Sys., 978 A.2d 961 (Pa. Super 2009), respectively.
In its examination of Pennsylvania case law, the Supreme Court rejected the argument that Thompson and its progeny categorically exempt nursing homes and affiliated entities from corporate negligence liability simply because that prior decisional law was addressed in the particular context of hospitals, HMOs and medical professional corporations. Rather, the Court noted that categorical exemptions exist only pursuant to legislative mandate, a privilege not bestowed upon nursing homes or similar entities.
The Court further rejected the former analysis employed in Thompson and its progeny, which focused on the question of “whether the entity providing medical care had assumed the role of a comprehensive health center responsible for arranging and coordinating the total healthcare of its patients.” (citations omitted). Instead, the Court instructed that the proper inquiry requires a broader, case-by-case analysis of whether the corporate defendant owes a duty of care to the plaintiff pursuant to the following five factors set forth in the post-Thompson case of Althaus v. Cohen, 756 A.2d 1166, 1169 (Pa. 2000): (1) the relationship between the parties; (2) the social utility of the actor’s conduct; (3) the nature of the risk imposed and foreseeabilty of the harm incurred; (4) the consequences of imposing a duty upon the actor; and (5) the overall public interest in the proposed solution. Thus, while the distinctions between a hospital and a nursing home may be relevant to a trial court’s ultimate determination of whether a duty exists, there no longer exists any viable argument for categorical exemption of an entity from potential liability for corporate negligence.
by Mark Bauman | Jun 18, 2023 | Legal News, Nursing Home Litigation
Recent legislation in the U.S. House of Representatives proposes banning mandatory pre-dispute arbitration clauses in nursing home agreements. The proposed Arbitration Fairness Act of 2011 would eliminate the requirement that all claims against the nursing home facility and its employees be brought in front of an arbitrator, instead allowing the individual to choose how they want to proceed after a dispute arises. The intent of the legislation is to ensure that nursing home residents are not unfairly deprived of their constitutional rights by requiring them to give up their “day in court” prior to a claim arising. The next step in enacting the Arbitration Fairness Act of 2011 is approval by the U.S. Senate. If enacted into law, arbitration must be agreed to by both parties to a nursing home action after the dispute arises, or the case will proceed through the court system.
See S. 987 (112th): Arbitration Fairness Act of 2011.
by Mark Bauman | Jun 17, 2023 | Legal News, Nursing Home Litigation
On June 30, 2009, in an opinion offered by the Honorable Richard Lowell Nygaard, the U.S. Third Circuit Court of Appeals permitted an action against a county operated nursing home to proceed under 42 U.S.C. § 1983 for violations of the Omnibus Budget Reconciliation Act of 1987 (OBRA) and the Federal Nursing Home Reform Amendments (FNRA), 42 U.S.C. § 1396r et seq.
The action was brought by the daughter of a resident against a nursing home operated by Allegheny County. The complaint contained two counts, one for wrongful death, the other for survival. It alleged that as a result of the nursing home’s failure to render proper care to her mother, her mother developed decubitus ulcers, became malnourished, and eventually developed sepsis which plaintiff alleged caused her mother’s death.
The case was dismissed pursuant to Fed.R.Civ.P. 12(b)(6) after the nursing home filed a motion to dismiss. The District Court held that there was no private right of action under OBRA and FNRA. Plaintiff appealed to the Third Circuit Court of Appeals.
In finding that there was a private right of action under FNRA, the Third Circuit cited Blessing v. Freestone, 520 U.S. 329 (1997) for the three factors to determine whether a statute conveys a federal right upon an individual. The Third Circuit explained these factors to be 1) whether Congress intended that the statutory provision in question benefits the plaintiff; 2) whether the right asserted was so “vague and amorphous” that its enforcement would strain judicial competence, and 3) whether the statute unambiguously imposes a binding obligation on the states. Noting that all factors had been met, the Third Circuit then inquired into whether the statutes in question unambiguously conferred a substantive right in accordance with the Supreme Court’s decision in Gonzaga Univ. v. Doe, 536 U.S. 273 (2002).
In addressing this issue, the Third Circuit noted that the provisions of FNHRA contained numerous references to rights created and is clearly phrased in terms of persons benefitted, and therefore, held that an action against a county operated nursing home could proceed under 42 U.S.C. § 1983 for violations of OBRA and FNHRA.
Noting that plaintiff had met her burden, the Third Circuit noted that the burden then shifted to defendant to rebut the presumption of an enforceable right under § 1983. However, defendant failed to argue that Congress precluded enforcement of rights conferred by FNHRA, and the Third Circuit’s assessment of the Medicaid Act uncovered no evidence of congressional intent to preclude enforcement of these rights.
