Stephen Pokiniewski, Anapol Weiss Stephen Pokiniewski, Anapol Weiss

A recurring issue in cases involving injuries to patients or residents of nursing and rehabilitation facilities is the existence of and the importance to the case of agreements to arbitrate any disputes that arise from the admission. These agreements cover physical injuries that may befall a patient during their admission to the facility. This article will address a number of the legal issues that arise from the now common practice of nursing and rehabilitation facilities requesting patients to execute arbitration agreements at the time of their admission to the facility.

The Usual Scenario

The typical situation involves a person being admitted to a nursing or rehabilitation facility after either a surgery/illness or for long term care. At the time of admission, along with multiple other documents, the patient or a family member is typically asked to sign an agreement setting forth that the patient agrees to arbitrate any dispute arising from the admission, usually with a specified dispute resolution entity. If a patient signs such an agreement she may thereby relinquish her right to have her claim decided by a jury. Often at a later date, the patient or family does not even recall signing such an agreement. Thereafter, the patient suffers an injury allegedly due to the negligence of the facility or its staff (common injuries in these types of cases involve falls and severe pressure ulcers (bedsores), but also often involve other injuries resulting in death. The patient or her family then consults an attorney because of the injury to or death of the patient. One of the first questions that an attorney who is consulted about an injury taking place in a nursing or rehabilitation facility is whether the patient or a family member signed an arbitration agreement.

For a number of years, it has been commonplace for nursing and rehabilitation facilities to request on admission that a patient or resident sign such an agreement. Because this practice was commonplace, in late 2016, the Center for Medicare and Medicaid Services (CMS) had promulgated a regulation setting forth that long term care facilities were not permitted to enter into pre-dispute agreements with their patients for binding arbitration. This rule was stayed before it went into effect in November 2016. In June of 2017 CMS submitted a proposed rule removing the provision prohibiting pre-dispute arbitration, and even permitting the facilities to require patients to sign a binding arbitration agreement as a condition to admission to the facility. Arbitration agreements that I have encountered have set forth even if the patient refuses to sign the agreement, the facility would still accept them as a patient. It will be interesting to see if and when the new regulation goes into effect whether facilities will make signing such agreements a pre-condition to accepting them as a patient.

It is common for the patient or family member simply not to recall whether they signed an arbitration agreement at the time of admission. In that event the attorney should ask the client if they have any of the paperwork from the admission and to check if one of the documents is a signed arbitration agreement. Also, when the medical records are requested, the attorney must specifically ask for any arbitration agreement that the client or family member executed. It is important to have this information as early possible in the review process as the existence of an arbitration agreement will impact the attorney’s decision whether or not to accept the case.

The Law Favors Arbitration Agreements

Once an arbitration agreement is found to exist, there are a number of issues concerning whether it is a valid and enforceable contract that will require any claim brought against the nursing home or rehabilitation facility to be arbitrated. Both Pennsylvania and Federal law favor arbitration agreements, and the U.S. Supreme Court has recently reaffirmed that the Federal Arbitration Act (FAA) pre-empts state law that conflicts with it. Further, the Pennsylvania Supreme Court also recently addressed in Taylor v. Extendicare Health Facilities, No. 19 WAP 2015 (Pa. 2016) the FAA and its pre-emptive scope in connection with a case involving claims for wrongful death and survival. The Taylor court held that since the wrongful death beneficiaries did not agree to arbitrate their claims, those claims could not be subject to arbitration. However, the FAA mandates that the survival claim is subject to the arbitration agreement, and the FAA as a federal enactment supersedes any contrary Pennsylvania law or court procedure. It further rejected the Superior Court’s ruling that both the wrongful death and survival claim had to be litigated in the court action. The survival claim would be referred to arbitration notwithstanding that the decision by the arbitrator would likely be binding on the wrongful death claim.

Legal Challenges to Arbitration Agreements

Despite the existence of the FAA, the patient can still challenge under state contract law whether there exists a valid agreement to arbitrate. The validity of nursing home agreements to arbitrate have been challenged based upon who signed or did not sign the agreement, the authority of the person who signed the agreement, the mental capacity of the patient at the time of her signing the agreement and even the identity of the arbitrator.

In Wert v. Manorcare of Carlisle PA, No. 62 MAP 2014 (Pa. 2015), the Pennsylvania Supreme Court invalidated an arbitration agreement where the agreement designated a now unavailable entity as the exclusive arbitrator. However, the Wert decision was a plurality decision, which is not binding precedent. Moreover, the Superior Court subsequently ruled in MacPherson v. Magee Memorial Hospital for Convalescence, No. 80 EDA 2013 (Pa. Super. 2015), that even where the entity designed in the agreement is not available to act as the arbitrator (in both cases the National Arbitration Forum (NAF)), the Superior Court upheld the arbitration agreement as NAF was not designated as the sole arbitrator. A recent federal district court has followed MacPherson and distinguished the Wert case, holding similar to the MacPherson court that the arbitration agreement is not invalid due to naming NAF as the arbitrator.

An agreement to arbitrate in the appropriate case can be challenged due to the claim of lack of mental capacity of the patient to enter into the agreement at the time of her signing it. It is not uncommon for the patient or resident at the time of admission to the facility and the signing of the arbitration agreement to have significant medical conditions that call into question the patient’s mental capacity to knowingly agree to arbitrate. However, Pennsylvania law places a high burden on the patient when she challenges the validity of an arbitration agreement on basis of lack of mental capacity. In Cardinal v. Kindred Health Care, No. 1547 MDA 2014 (Pa Super. 2017), the Superior Court recently reversed the trial court’s denial of a motion to compel arbitration based on the lack of the patient’s mental capacity. In its decision the Cardinal court set forth that Pennsylvania law requires that patient to prove by “clear, precise and convincing” evidence the patient’s mental incapacity, and “mere weakness of intellect resulting from sickness or old age is not legally sufficient grounds to set aside an executed contract if sufficient intelligence remains to comprehend the nature and character of the transaction.” The Superior Court also rejected the trial court’s finding that the arbitration agreement was neither procedurally nor substantively unconscionable. Finally, the Cardinal court held that pursuant to the Supreme Court’s decision in Taylor, the case would be referred to arbitration despite the existence of a wrongful death claim.

Patients have had success in invalidating arbitration agreements involving the appropriateness of the signatories to the agreement. In Washburn v. Northern Health Facilities, No. 1118 MDA 2014 (Pa. Super. 2015), the Superior Court upheld the trial court’s denial of the facility’s motion to compel arbitration. In that case the patient’s wife signed the agreement to arbitrate and she did not have her husband’s power of attorney nor did she have his specific authority. The Superior Court rejected the facility’s arguments of equitable estoppel and third-party beneficiary. In Wisler v. Manor Care of Lancaster PA, No. 1226 MDA 2014 (Pa. Super. 2015), the signator to the arbitration agreement held a power of attorney for the patient, but the power of attorney did not give the attorney in fact the authority to enter into such an agreement. The trial court on that basis denied the motion to compel arbitration and the Wisler court affirmed that decision. The Superior Court in Bair v. Manor Care of Elizabethtown, PA, No. 435 MDA 2014 (Pa. Super 2015) upheld the trial court’s decision to deny a motion to compel arbitration where no representative of the facility signed the arbitration agreement. Washburn, Wisler and Bair indicated the need to closely review the identity and authority of the persons signing the arbitration agreement.

Stephen J. Pokiniewski Jr., a member of Anapol Weiss, focuses his practice on medical negligence, nursing home and personal injury matters. Pokiniewski is a member of the Pennsylvania Bar Association as well as the American and Pennsylvania Association for Justice as well as the Philadelphia Trial Lawyers Association.