Public policy is no bar to arbitration

Many nursing homes attempt to evade liability by inserting arbitration clauses in nursing home admission paperwork without telling the resident or their loved ones.  Unfortunately, many courts enforce these unconscionable agreements.

A son should be precluded from filing a wrongful-death suit against a nursing home where he had signed a binding arbitration agreement prior to admitting his father to the facility, the Supreme Judicial Court has ruled.

The son, a college-educated claims manager, argued that since his Superior Court complaint named a treating physician and other medical personnel who were not parties to the arbitration agreement, enforcing it would unfairly require him to address part of the case in court and part of it in arbitration.

But the SJC disagreed and reversed a Superior Court judge’s ruling after finding that nothing in the arbitration provision was procedurally or substantively unconscionable.

“[The son’s] failure to read the agreement ‘word-for-word’ makes no difference, as we have long held that, absent fraud, a party’s failure to read or understand a contract provision does not free him from its obligations,” said Justice Robert J. Cordy, writing for the court.

He added: “There is nothing in the specific facts of this case, or in the nursing home context in general, that would lead us not to enforce the predispute arbitration agreement between [the son] and the [nursing home].”

The 22-page decision is Miller v. Cotter, et al., Lawyers Weekly No. 10-056-07.

Presumptively preferred
Joseph M. Desmond of Boston, who represented the defendant nursing home, said the decision started with the presumption that arbitration remains the preferred means of dispute resolution.

“The court clearly ruled that in the absence of fraud, duress or unconscionability, arbitration agreements are enforceable in the context of nursing-home admission agreements,” he said. “They are used broadly in a lot of contexts, and there’s no reason to separate health care as a place not to enforce them.”

Where the agreement did not require the son to give up any of his substantive rights, Desmond said the court agreed with the facility’s argument that the arbitration provision was enforceable.

“To argue a per se rule of unconscionability is completely inconsistent with the favored nature of arbitration,” Desmond said.

Adam R. Satin of Boston, who along with Andrew C. Meyer Jr. represented the plaintiff son, said he had urged the court to take a different approach when assessing arbitration clauses in the health care setting.

“Our argument was that the court should not enforce the provision due to the nature of the pressures and the different bargaining positions that the two sides have during the [nursing-home] admission process,” he said.

“It’s a situation that is inherently stressful,” Satin added, “and the last thing that people are thinking about in those situations is the rights that they may be signing away.”

Admission and death
The plaintiff, Charles Miller Jr., admitted his 91-year-old father into the defendant Birchwood Care Center in Fitchburg in October 2003. His father had suffered a series of medical problems over the years, and the son had authority to make binding agreements on his behalf.

On the day of his admission, the son met with a social worker employed by the facility to help manage patient cases. After meeting with her for more than an hour, the son signed a series of forms on his father’s behalf, including a 16-page admission contract and an agreement calling for binding arbitration of disputes.

The arbitration agreement was presented as a separate document and stated: “It is understood that any claims … arising out of … the admission agreement or any service or health care provided by the facility to the resident shall be resolved exclusively by binding arbitration … and not by a lawsuit or resort to court process.”

In a deposition, the son said the social worker explained that the arbitration agreement was not a precondition of admission and further testified he could not recall any specifics about the provisions of the agreement.

He said he did not read through all of the terms “word by word” because he was under great stress at the time and “just wanted to make sure that there was no problem getting dad admitted.”

In November 2003, the father died while a patient at the facility. His son subsequently filed suit in Worcester Superior Court against members of the nursing home and medical staff who had treated him.

The patient’s attending physician, who was named in the suit, did not work for the nursing home and was not a party to the arbitration provision.

When the nursing home raised an affirmative defense that a validly executed arbitration agreement compelled dismissal, Judge Francis R. Fecteau ruled the agreement was unenforceable and denied the facility’s summary judgment motion.

In reversing Fecteau’s ruling, the SJC found nothing in the agreement suggested that it was procedurally unconscionable.

Cordy noted that the son held an English degree from Tufts University and had spent 27 years in the insurance industry, where he had developed a high level of sophistication in dealing with contracts and arbitration provisions.

Cordy stated that the son had also shown an extensive understanding of his rights and responsibilities under both his father’s power of attorney and health care proxy.

“The process of admitting his father to a nursing home was not new to him,” the judge pointed out. “[He] was not required to sign the agreement as condition of admission, and [the social worker] did not exert any undue pressure on him to sign it.”

Cordy further rejected the son’s argument that it would be unfair to require him to litigate the case in two different forums.

“Whether this is inconvenient, duplicative, or inefficient is not determinative,” the judge wrote. “It is the necessary result of the choice that [the son] made when he signed the arbitration agreement.”

The son also argued that “the context of nursing home admissions is inherently unfair to patients because of the pressures created by the patient’s (often acute) need for nursing care.” Cordy said, however, that the court would not adopt “a per se rule that predispute arbitration agreements in the nursing home context should be void as a matter of public policy.”

This ruling was based on the fact that “this type of agreement does not meet the requirements for the public policy exception to the enforcement of contracts,” Cordy said, emphasizing that the Legislature and the court have expressed a clear policy to the contrary favoring arbitration.