Arbitration in South Carolina

South Carolina Appellate Courts issued two new legal decisions related to the enforceability of arbitration agreements hidden in nursing home admission paperwork.  The Court of Appeals issued an opinion in the nursing home neglect case of Vera Brown. The case name is Rawl v. West Ashley.

Rawl v. West Ashley

“The circuit court found the Agreement was unconscionable because the Agreement was oppressive and one-sided, and there was inherent disparity in bargaining power between the parties. The court noted the Agreement was presented to Brown upon her admission, when she was ill, “on a take-it-or[-]leave[-]it basis,” without Brown’s contribution to the drafting, and without the bargaining power to negotiate. The court found the Agreement “was inconspicuously buried in the admission paperwork and ‘hastily’ presented to Ms. Brown for her signature.”
Defendants claimed that the arbitration agreement was not unconscionable because the resident and her family “voluntarily” agreed to give up their constitutional right to a jury trial. However, the Court disagreed.
“In South Carolina, unconscionability is defined as the absence of meaningful choice on the part of one party due to one-sided contract provisions, together with terms that are so oppressive that no reasonable person would make them and no fair and honest person would accept them.” [cite omitted]. The “[a]bsence of meaningful choice” requirement “speaks to the fundamental fairness of the bargaining process in the contract at issue.” [cite omitted]. Even if an arbitration clause is technically conspicuous, it may be improper if it is “sprung on [a consumer] along with a flurry of other” documents during a hasty transaction. [cite omitted]. “Unconscionability is gauged at the time the contract was made.” [cite omitted]. The following should be taken into account by courts in determining unconscionability: “the nature of the injuries suffered by the plaintiff; whether the plaintiff is a substantial business concern; the relative disparity in the parties’ bargaining power; the parties’ relative sophistication; whether there is an element of surprise in the inclusion of the challenged clause; and the conspicuousness of the clause.” [cite omitted].

Arrendondo v. SNH SE Ashley River Tenant, LLC

The South Carolina Supreme Court issued another important arbitration decision which relied on the plain language of powers of attorney. See Arrendondo v. SNH SE Ashley River Tenant, LLC, Op. No. 28011 (S.C. filed March 10, 2021). This assisted living case involved the alleged enforceability of an arbitration agreement between a facility and the attorney-in-fact/agent of a resident of the facility.
The resident’s family member signed the admission paperwork and then the arbitration agreement. The signatory was both healthcare power of attorney and had a durable power of attorney. However, neither gave the power to waive the resident’s constitutional right to a jury trial. The Court held the language of the power of attorney did not authorize the agent to sign an arbitration agreement