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LEGAL ISSUES CONCERNING THE ENFORCEMENT OF CALIFORNIA NURSING HOME / ASSISTED LIVING ARBITRATION AGREEMENTS

  1. OVERVIEW

Long Term Care in the United States and the State of California, is a Multi-Billion dollar industry. Large national health and assisted living corporations dictate the process of how disputes are resolved. They persuade prospective residents, their Powers of Attorney and heirs, into signing facility arbitration agreements, then petition the Courts to enforce them in order to deny the unwary consumer their Constitutional Right to Trial by Jury.

The California Nursing Home / Assisted Living Arbitration Agreements contain many different legal issues, theories, procedures, remedies, and laws, making it extremely improbable, if not entirely impossible, for anyone, especially mentally impaired Elders, to really understand them.

The Peck Law Group, APC has successfully opposed the attempted enforcement of many different California Nursing Home / Long Term Care Arbitration Agreements against the likes of Dignity, Longwood, Plum, Sunrise, Brookdale, Mariner, Genesis, Kindred, Kaiser, and others.

Kaiser, is a direct insurer, and its Arbitration Agreements, are typically litigated under some different laws in the State of California that shall not be discussed in this article.

  1.  STANDARD OF REVIEW

The moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. (Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396-397, 399-400; Graphic Arts Int’l Union v. Oakland Nat’l Engraving Co. (1986) 185 Cal.App.3d 775, 781; see also County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 245; Marsch v. Williams (1994) 23 Cal.App.4th 250, 255.) Although California has a strong public policy in favor of arbitration, there is no preference for the arbitral forum when the parties have not agreed to arbitrate. (Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 481; Cione v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625, 634.).

  1. MICRA OR NOT MICRA

One of the key issues in any petition to compel arbitration is whether a resident is actually legally bound by the arbitration agreement. Many times the actual resident does not even sign the arbitration agreement or have the mental competency to understand it. The arbitration agreement is then signed by someone else, a third party, a family member, sibling and / or a spouse.

If the third party, family member, sibling and / or spouse obtained a validly signed legally effective Power of Attorney from the nursing home / assisted living resident, the Arbitration Agreement may be enforced against the Resident on an agency theory. (Valid Powers of Attorney and their scope and legal effectiveness will be the subject of another article by the Peck Law Group, APC.)

If the Plaintiff’s claim is against the Nursing Home / Assisted Living Facility for Elder Abuse, and the complaint also includes a Wrongful Death cause of action, defense will argue that the wrongful death claim, brought by the wrongful death claimant(s), solely in their personal capacity, are also subject to arbitration pursuant to California Code of Civil Procedure § 1295.

California Code of Civil Procedure §1295 is part of California’s Medical Injury Compensation Reform Act (MICRA). It created certain requirements for arbitration agreements of “any dispute as to professional negligence of a health care provider.” (§ 1295, subd. (a).) It defines “professional negligence” as “a negligent act or omission to act by a health care provider in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death, provided that such services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital.” (§ 1295, subd. (g)(2).)

Although the exception to the general rule that arbitration agreements must be the subject of consent rather than compulsion, in Ruiz v. Podolsky (2010) 50 Cal.4th 838, 849 [114 Cal. Rptr. 3d 263, 237 P.3d 584] (Ruiz), the California Supreme Court held that section 1295 permitted patients who consented to arbitration to bind their heirs in actions for  wrongful death. (Id. at p. 841.) It concluded that “all wrongful death claimants are bound by arbitration agreements entered into pursuant to section 1295, at least when, the language of the arbitration agreement manifests an intent to bind wrongful death claimants.

Defense shall always claim that Ruiz is controlling in order to compel the arbitration agreement against the non-signatory personal claims of the wrongful death heirs.

The court in Ruiz was “persuaded that California Code of Civil Procedure § 1295, was designed to permit patients / residents, who sign the facility arbitration agreements to bind their non-signatory heirs in wrongful death actions.” (Id. at p. 849.) Not only did California Code of Civil Procedure § 1295, subdivision (a) contemplate arbitration ‘of any dispute as to professional negligence of a health care provider,’” including wrongful death, but it “was part of MICRA’s efforts to control the runaway costs of medical malpractice … by promoting arbitration of malpractice disputes…”

  1. DANIELS v. SUNRISE SENIOR LIVING, INC.

In Daniels v. Sunrise Senior Living, Inc. (2013) 212 Cal. App 4th 674, the plaintiff sued a residential care facility (as distinguished from a health care facility,). Daniels alleged the facility had failed to properly care for her 92-year-old mother alleging causes of action for Elder Abuse and Wrongful Death.

The defendant, in Daniels, unsuccessfully petitioned to compel arbitration under a clause in the residency agreement, the plaintiff signed on her mother’s behalf pursuant to a durable general power of attorney. (Daniels, 212 Cal.App.4th at p. 678.) The arbitration clause at issue, like most that we see, purported to bind the patient’s non-signatory wrongful death heirs.

The Court of Appeal affirmed Daniels, rejecting the argument that Ruiz required arbitration of the independent wrongful death claim. “Ruiz is based squarely on California Code of Civil Procedure § 1295, which governs agreements to arbitrate professional negligence or medical malpractice claims in medical services contracts with health care providers.” (Daniels, at 212 Cal.App.4th at p. 682; see also Herbert v. Superior Court (1985) 169 Cal.App.3d 718 [215 Cal. Rptr. 477].)

Defendants argued that Daniels is irrelevant because the defendant in that case was not a licensed health care provider. The Court of Appeal disagreed. What matters is not the license status of the defendant, but the basis of the claims as pleaded in the complaint. If the primary basis for the wrongful death claim sounds in professional negligence as defined by MICRA, then California Code of Civil Procedure § 1295 applies. If the primary basis is under the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.) (the Act), then California Code of Civil Procedure § 1295 does not apply and neither does Ruiz’s exception to the general rule that one who has not consented nor signed the arbitration agreement shall be compelled to arbitrate.

The Court went on to say “Plaintiffs, within the limits of established law, are essentially free to plead their case as they choose. The fact that they could have also pleaded a claim for medical malpractice, had they wished to do so, is irrelevant. The Appellate court concluded that the plaintiffs’ claim is not one within the ambit of section 1295, and therefore, Ruiz’s holding does not apply.” Denying the compelling of arbitration agreements against people that have not signed them. see Daniels and Avila v. Southern California Speciality Care, Inc. 20 Cal. App. 5th 835 (2018) (Gravaman of the complaint is in Elder Abuse therefore is not subject to California Code of Civil Procedure § 1295 (MICRA) to bind non-signatory third party claimants.)

In California, a wrongful death claim is an independent claim. “Unlike some jurisdictions wherein wrongful death actions are derivative, California Code of Civil Procedure §  377.60 ‘creates a new cause of action in favor of the heirs as beneficiaries, based upon their own independent pecuniary injury suffered by loss of a relative, and totally distinct from any the deceased might have maintained had he survived.’” (Horwich v. Superior Court (1999) 21 Cal.4th 272, 283 [87 Cal. Rptr. 2d 222, 980 P.2d 927].)

In Daniels, the court rejected any claim that signing an arbitration agreement as agent gave the agent’s consent to arbitrate independent claims, including a claim for wrongful death. “Because Daniels signed the residency agreement solely as agent and not in her personal capacity, there is no basis to infer that Daniels agreed to arbitrate her personal wrongful death claim.

In context, the provision making the arbitration clause binding on heirs means only that the duty to arbitrate the survivor claims (such as Elder Abuse) may be binding on persons who would assert the survivor claims.

            Daniels relied on Fitzhugh v. Granada Healthcare & Rehabilitation Center, LLC (2007) 150 Cal.App.4th 469 [58 Cal. Rptr. 3d 585] (Fitzhugh). In that case, the court rejected the defense contention that signing an arbitration agreement as an agent also constituted an agreement to arbitrate in a personal capacity. In that case, Ruth Fitzhugh was admitted to a health care facility. Her husband George Fitzhugh signed two arbitration agreements as her “‘Legal Representative/Agent.’”  (at pp. 471–472.) Each of the agreements stated: “‘This arbitration agreement binds the parties hereto, including the heirs, representatives, executors, administrators, successors, and assigns of such parties.’” (at p. 472.) After Ruth died, George sued the facility for wrongful death (among other causes of action). (at pp. 471–472.)

The court held that George was not required to arbitrate his wrongful death cause of action. “It is irrelevant to the wrongful death cause of action whether George Fitzhugh may have signed the arbitration agreements as the decedent’s ‘legal representative/agent.’ Because there is no evidence that George Fitzhugh signed the arbitration agreements in his personal capacity … there is no basis to infer that [he] waived [his] personal right to jury trial on the wrongful death claim. ” (Fitzhugh, at150 Cal.App.4th at p. 474)

In most California Nursing Home Arbitration agreements there is simply no evidence that the wrongful death claimant, who may have signed the arbitration agreement as an agent, either for a living resident / deceased resident, had any specific intent to waive his / her personal right to a jury trial for any of their personal claims such as wrongful death. see Fitzhugh, Daniels and Avila.

The Peck Law Group is now finding more arbitration agreements, with specific clauses signed by the heirs, agreeing to arbitrate their wrongful death claims in order to circumvent the holdings in Fitzhugh, Daniels and Avila.

  • CALIFORNIA CODE OF CIVIL PROCEDURE § 1281.2(c)

“Even if decedent and his heirs are bound by the arbitration agreement for survivor claims, court’s may exercise their absolute discretion to ‘refuse to enforce the arbitration agreement.’

Compelling arbitration of the survivor claims (Elder Abuse) would unreasonably risk ‘conflicting rulings on a common issue of law or fact.’  (Acquire, 213 Cal.App.4th p. 971; Daniels, at  212 Cal.App.4th p. 680.)

According to California Law California Code of Civil Procedure § 1295 (the MICRA statute) makes section 1281.2, subdivision (c), inapplicable, but that is not always the case.

At the court’s discretion, section 1281.2, subdivision (c), permits a stay if: “‘A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party … arising out of the same transaction or series of related transactions’; and … ‘there is a possibility of conflicting rulings on a common issue of law or fact.’” (Acquire,  213 Cal.App.4th at pp. 967–968.) All three requirements must be satisfied before section 1281.2, subdivision (c), may be used to deny a motion to compel arbitration. (Acquire, at p. 968.)

If the survivorship claims were arbitrated while the wrongful death claim was litigated, there is a strong possibility of inconsistent rulings. The courts in Daniels, 212 Cal.App.4th at page 680, and Fitzhugh, 150 Cal.App.4th at page 476, each reached the same conclusion. Court’s thus may use their absolute discretion in denying arbitration petitions in situations that Section 1295 (MICRA) does not apply. .  

The Peck Law Group has utilized California Code of Civil Procedure Section 1281.2(c) to successfully oppose petitions to compel arbitration when there are third party defendants and / or wrongful death claimants that have not signed the arbitration agreement in their personal capacity.

            Nursing Home / Assisted Living arbitration agreements now may contain clauses which specifically state that each party waives their right to oppose the petition to compel arbitration based upon California Code of Civil Procedure Section 1281.2(c)

  • DELEGATION CLAUSES

 Some California Nursing Home Arbitration agreements have a clause that actually delegates the question of the existence, scope, or validity of the arbitration agreement to the arbitrator. Some courts are upholding these delegations clauses.

            A typical delegation clause reads as follows:

The arbitrator, and not any federal, state, or local court or agency, shall have the exclusive authority to resolve any Dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement, including, but not limited to, any claim that all or any part of this Agreement is void or voidable.    

            Although the scope of an arbitration clause is generally a question for judicial determination, the parties may, by clear and unmistakable agreement, elect to have the arbitrator, rather than the court, decide which grievances are arbitrable. (AT&T Technologies v. Communications Workers (1986) 475 U.S. 643, 649 [89 L. Ed. 2d 648, 106 S. Ct. 1415].)    

  • CONCLUSION

These are a taste of some, but not all, of the legal issues encountered when opposing California Nursing Home and Assisted Living (RCFE) arbitration agreements. There are certainly more legal issues which are not covered here.

The Laws are frequently changing, and the Long Term Care industry, is constantly developing new arbitration agreements, to make it that much more difficult and costly, in order to deny, the unwary consumer, their Constitutional Right to Trial By Jury.

The Peck Law Group

About the Author

Attorney Adam Peck has been practicing law since 1981. A former successful business owner, Mr. Peck initially focused his legal career on business law. Within the first three years, after some colleagues and friend’s parents endured nursing home neglect and elder abuse, he continued his education to begin practicing elder law and nursing home abuse law.


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