BROAD ARBITRATION CLAUSE IN A NURSING HOME CONTRACTS LIMITED TO SIGNOR
In Re Heiney is a recent unreported, memorandum decision in which the Arizona Court of Appeals held that an arbitration agreement was not binding on a decedent’s beneficiaries who had not signed the agreement.
In that case, Richard Heiney was admitted to Desert Cove Nursing Center after being in the hospital with a broken hip. Richard’s wife, Florence, was provided his admission paperwork to sign. She claimed that she signed all of the documents without reading them and that the arbitration clause in the paperwork was not discussed. Richard was hospitalized again and readmitted to Desert Cove. Florence signed his second admission papers as well. She again claimed that no one discussed or called her attention to the arbitration clause in the paperwork. Sadly, Richard died from an infection caused by a pressure ulcer.
The personal representative of Richard’s estate on behalf of herself and other survivors filed a complaint alleging negligence, violation of the Adult Protective Services Act, and wrongful death. Defendants moved to dismiss the complaint, arguing the dispute should be resolved pursuant to the arbitration agreements Florence had signed.
The trial court granted the motion. In doing so, the court held that
(1) the documents were signed well after Richard was admitted, and no one pressured Florence to sign; (2) Florence could not argue there was no knowing waiver of rights because “[s]he testified that she now knows the differences between trial and arbitration, and that she would have known the difference at the time of signing had she chosen to read the arbitration agreement in its entirety”; (3) Florence was not under duress at the time of signing; (4) there was no procedural unconscionability because Florence went through the paperwork one page at a time in a quiet place, she could have taken the paperwork home, she could have had the documents explained to her by an attorney, she was never prevented from fully reading the documents, and she was never told she had to sign; (5) there was no substantive unconscionability because the terms did not unfairly benefit the care center over patients and were binding on both parties; and (6) Florence failed to show that arbitration would be prohibitively costly or deny her access to justice because she had a contingent fee agreement with her attorney.
The trial court then “dismissed the case without prejudice, and provided that the case could be used by the parties for motions of confirmation of an award if warranted. An arbitration hearing was held and the panel unanimously found in favor of Life Care. Life Care filed a request for confirmation of the arbitration award with the trial court, and Plaintiffs filed a motion to reconsider the order to arbitrate. The court denied Plaintiffs’ motion, and granted Life Care’s request for confirmation of the award.” Plaintiffs appealed.
On appeal, the Court of Appeals upheld the arbitration panel’s finding against Florence and the binding nature of the arbitration agreement as it applied to her since she signed the agreement. The Court, however, held that the agreement was not binding on the statutory beneficiaries that had not signed the agreement.
The impact of such a decision (if reported) could have unintended consequences. Namely, the signor could have one outcome in arbitration and the non-signing wrongful death beneficiaries a different outcome in court. As a practical matter, the concern over inconsistent judgments and the cost of litigating substantially similar issues in two different forums could force the parties to agree to have all or some of the common issues decided in one forum – either arbitration or court. It is interesting that the Court of Appeals chose not to publish this decision such that it is not legal precedent. Perhaps it too was concerned with the unintended consequences of its decision on other cases.