Another Judicial Assault on Nursing Home Arbitration

They seem to come on an almost weekly basis: judicial rejections of arbitration provisions in nursing home contracts.  The Sept. 22 attack by the Florida Supreme Court is the latest, and one of the harshest.

When Juan Sr. entered the home in 2009, a physician determined that he lacked the capacity to sign for himself, so Juan Jr. signed as his “representative.”  The contract had a mandatory arbitration provision and a paragraph reciting that “in the event the resident has appointed a representative to control his assets, the … representative shall be fully bound” by the contract.  Later Juan Sr. gave Juan Jr. his power of attorney.

When an eye infection led to the removal of Juan Sr.’s left eye, Juan Jr. sued on his behalf for negligence and statutory violations.  The court granted the home’s motion to compel arbitration, and the Court of Appeals affirmed.

The Supreme Court defined the issue in third-party contract terms: was Juan Sr., as third-party beneficiary, bound by the contract that the home and Juan Jr. signed?  The court answered the question with a resounding negative: Juan Sr. was not bound.  The court likened enforcement of the arbitration provision to enforcing a contract that a resident had signed only because the home threatened the “violent destruction of the resident’s property” or a prenuptial agreement extracted from a wife by the husband’s threat to “blow up the house and throw Clorox all over her clothes.”

A dissent in the three-to-two decision blasted the majority for “arbitrarily apply[ing] a manifest justice ‘standard,’ relying on law review articles from 1902 and 1928, and dicta from an 1859 New York plurality opinion.”

If the U.S. Supreme Court grants certiorari, as the Kindred nursing home chain has requested in Kindred v. Clark (No. 16-31, petition filed July 1, 2016), we may see some resolution of this continuing war over the enforceability of nursing home arbitration provisions.

The case is Mendez v. Hampton Court Nursing Center, No. SC-1349 (Fla., Sept. 22, 2016).

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