Nursing Home Negligence Litigation and Arbitration Agreements: The Intersection of Contract Law and Negligence Law
Contractual Agreements often contain a provision requiring any legal dispute between the parties to be settled by binding arbitration instead of a lawsuit. More often than not, the terms of the arbitration provision in a contractual agreement are non-negotiable, and very often the parties signing such an agreement do not “come to the agreement” as parties with equal bargaining power. Often times, one of the parties may not even understand the full implication of the arbitration provision should a dispute between the parties ever arise.
We would like to emphasize that alternative dispute resolution procedures such as mediation and arbitration do have their place and can reduce the costs and time associated with prolonged litigation. A serious problem arises, however, where the arbitration agreement attempts to so “overly” protect one of the parties, that the arbitration agreement is invalid based on procedural and substantive unconscionability and/or is contrary to public policy.
Courts have frequently been called upon to determine the enforceability of arbitration agreements. In fact Florida law is very clear that courts have the obligation to determine whether a written agreement to arbitrate is valid when deciding a motion to compel arbitration. See Global Travel Marketing, Inc. v. Shea, 908 So. 2d 392 (Fla. 2005).
Many times arbitration agreements are upheld. Courts will not, however, uphold an arbitration agreement where the arbitration agreement is found to be void as contrary to public policy. Where the Contractual Agreement, which contains an “arbitration agreement” provision, also contains a severability clause, the court may also simply sever the offending arbitration agreement provision from the Contractual Agreement and find that the rest of the agreement is acceptable.
Previous blogs have addressed conduct generally associated with nursing home negligence and/or abuse. Individuals reading this blog may not realize that many nursing homes are now seeking to limit damages awarded to the injured resident for the nursing home’s negligent conduct by requiring the resident and/or his/her legal representative to sign an Arbitration Agreement in connection with admission to the facility. Yes, an admission to a nursing home, generally involves a formal contract, folks. Perhaps not surprisingly, such arbitration agreements have been “attacked” by injured nursing home residents as being void as contrary to public policy and inconsistent with the provisions for patient’s remedies under Florida’s Nursing Home Resident’s Act, also known as the Nursing Home Bill of Rights.
Many times, admissions to nursing homes occur where the resident and family members are making very difficult decisions concerning their elderly or sick family member’s quality of life. Most individuals are not signing nursing homes admissions documents such as arbitration agreements in contemplation of future personal injury litigation because they presume that their loved one will be well taken care of.
What happens if the nursing home resident is a victim of nursing home negligence and/or abuse and an arbitration agreement was signed as part of the admissions process? It all depends on whether the arbitration agreement is valid or invalid. The following discussion contrasts an invalid nursing home arbitration agreement with an acceptable nursing home arbitration agreement according to Florida law.
In a 2006 nursing home negligence case, the Arbitration Agreement used by the nursing home stated that any dispute between the parties would be resolved by arbitration as provided for by the Alternative Dispute Resolution Service Rules of Procedure for Arbitration of the American Health Lawyers Association (“AHLA”). SA-PG-Ocala, LLC v. Stokes, 935 So. 2d 1242 (Fla. 4th DCA 2006). Of course, Ms. Stokes, the nursing home resident, probably had no clue whatsoever as to what rights she had under the Florida Nursing Home Resident’s Act she was signing away by signing the Arbitration Agreement as a condition for her admission to the nursing home.
What she could not have possibly understood is the following arbitration rule used by the AHLA:
[T]he arbitrator may not award consequential, exemplary, incidental, punitive, or special damages against a party unless the arbitrator determines, based on the record, that there is clear and convincing evidence that the party against whom such damages are awarded is guilty of conduct evincing an intentional or reckless disregard for the rights of another party or fraud, actual or presumed. Our emphasis
Stokes at 1242-1243 citing Section 6.06 of the AHLA rules.
The standard for finding negligence in a personal injury lawsuit is preponderance of the evidence, a lower standard of proof relative to the clear and convincing evidence standard. Moreover, the conduct required for establishing negligence in a personal injury lawsuit need not rise to the level of gross negligence or intentional wrongdoing.
The Arbitration Agreement used by the nursing home in the Stokes case attempted to virtually make it impossible for a nursing home patient injured through the negligence of the defendant nursing home to recover reasonable damages for his/her pain and suffering.
Indeed the Stokes court stated that “requiring clear and convincing evidence of intentional or reckless misconduct to recover certain damages would substantially impair negligence actions brought by nursing home patients and would be contrary to the Nursing Home Residents’ Act.” The Court went on to state that “[s]uch Act was enacted to protect nursing home patients. It would be against public policy to permit a nursing home to dismantle the protections afforded patients by the Legislature through the use of an arbitration agreement.” Stokes at 1243.
The nursing home in Stokes attempted to “save” the Arbitration provision by arguing that the offending provision of the AHLA rules could be severed from the arbitration agreement. The Stokes Court dismissed this argument finding that the arbitration agreement did not include a severability clause. As the court stated, “these provisions served to taint the entire agreement and rendered the arbitration agreement completely unenforceable).
It must be emphasized that the Stokes holding is based on very specific facts. That is, the provisions pertaining to the standard of proof and damage awards failed to provide other procedures for typical negligence liability cases. Nor did the arbitration agreement provide for severability. Several other Florida cases have followed the Stokes holding. See e.g., Place at Vero Beach, Inc, v. Hanson, 953 So. 2d 773, 774-775 (Fla. 4th DCA 2007); Fletcher v. Huntington Place, Ltd. Partnership, 952 So. 2d 1225, 1226-27 (Fla. 5th DCA 2007). In these later cases, the court determined that the offending provisions of the arbitration agreement were not severable and that the arbitration agreement was thus invalid.
More recent Florida case law indicates that courts may not always find that a nursing home arbitration agreement is invalid. For example, in Shotts v. Op Winter Haven, Inc., 988 So. 2d 639 (Fla. 2d DCA 2008), the Arbitration Agreement anticipated the use of AHLA procedures but then went onto specify that damages “shall be determined in accordance with the provisions of Florida law applicable to comparable civil action except for [punitive] damages.” Shotts at 644 quoting the nursing home’s arbitration provision.
The Shotts court, finding that this particular arbitration agreement was not unconscionable, noted that “[n]othing suggests that the arbitrators could not easily resolve this case using proper elements of damage under Florida law and with the appropriate burden of proof.” Id.
The Schotts arbitration agreement is distinguishable from the Stokes arbitration agreement for the following reason: it allows the arbitrator to determine negligence liability by the usual preponderance of the evidence standard and to award various types of damages in the event the nursing home is found to be liable for the resident’s injuries.
The Shotts court further held that the offensive clauses within the arbitration agreement were severable provisions. It should be noted that the Shotts court also found that the resident and her legal representative were not “rushed” into signing the agreement and could have obtained assistance from the admissions director had she had had any questions. Shotts at 641.
The take home point is that arbitration agreements will continue to be used by nursing homes to try and limit the damages arising from the facility’s negligent treatment of its residents. If an arbitration agreement is written in such a way so as to violate public policy as in the Stokes case, the court could well find that the arbitration agreement is void.
If an arbitration agreement is found to be void, the resident, or the resident’s legal representative can proceed with a negligence lawsuit in a court of law. Where the offending provision of the Arbitration Agreement can be severed from the rest of the agreement, as in the Shotts case, the resident or the resident’s legal representative will be limited to trying to secure damages in an arbitration proceeding. Many times, the award of damages in an arbitration proceeding for nursing home negligence will be substantially less relative to an award of damages for nursing home negligence by a jury.
We would recommend that the nursing home resident, or his/her legal representative, who is considering seeking damages for the resident's pain and suffering resulting from the nursing home’s negligence, consider consulting with a personal injury attorney to assess the validity of any signed arbitration agreement with the nursing home. If the arbitration agreement is valid, the nursing home resident still has the right to legal representation during the arbitration proceedings.
Disclaimer. The foregoing information is not legal advice, nor should you consider it as such. Should you be considering legal action, you should consider consulting with an attorney of your choosing.
