Court to decide validity of arbitration agreement
The Supreme Judicial Court will hear arguments this week in a negligence case that defense lawyers say could significantly affect the ability of health care providers to utilize and enforce arbitration agreements. In Miller v. Cotter, et al., SJC No. 09817, the SJC will be asked to decide whether a Superior Court judge abused his discretion by declining to enforce an arbitration provision between a nursing home and a patient's family on grounds that it was procedurally and substantively unconscionable.
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Court to decide validity of arbitration agreement
By David E. Frank
The Supreme Judicial Court will hear arguments this week in a negligence case that defense lawyers say could significantly affect the ability of health care providers to utilize and enforce arbitration agreements.
In Miller v. Cotter, et al., SJC No. 09817, the SJC will be asked to decide whether a Superior Court judge abused his discretion by declining to enforce an arbitration provision between a nursing home and a patient's family on grounds that it was procedurally and substantively unconscionable.
Where the suit named some parties who were not involved in the arbitration agreement, including a treating physician, the plaintiff's lawyers argued their client would unfairly have to litigate some of the case in court and handle the rest through arbitration.
"If the trial judge's decision is affirmed, it will be a major victory for patients' rights and the right to a jury trial because it would prevent a party from benefiting from its dramatically superior bargaining position," said Adam R. Satin of Boston, who along with Andrew C. Meyer Jr. represents the plaintiff. "The provision in place here was so unfair that I can't conceive of any lawyer who would recommend to a patient or his family that they enter into this voluntarily."
But Boston lawyer Joseph M. Desmond, who represents the defendant nursing home with Allison M. Foley, countered that a court can only deem an arbitration provision invalid upon a finding of fraud, duress or unconscionability â none of which existed here, he said.
"This would create a completely unfair way to void valid arbitration agreements in almost every situation imaginable," he said. "Any time a plaintiff or defendant wanted to do an end run and avoid arbitration, all they would have to do is add another nominal party that wasn't a party to the agreement."
Briefs filed by the parties in the Miller case can be found in the Brief Bank section of our website.
Resident
The plaintiff, Charles Miller Jr., filed suit in January 2005 in Worcester Superior Court alleging that his 91-year-old father, Charles Miller Sr., received negligent care while a resident of a nursing home in Fitchburg.
Specifically, he claimed that his father died as a direct result of the unacceptable and grossly inadequate care he received from his physician, co-defendant Eric Cotter, and the defendant staff at the Birchwood Care Center.
On the date of his admission to the nursing home in October 2003, the plaintiff and his wife met with a representative from the facility and signed a number of documents, including an arbitration agreement.
The agreement stated: "It is understood that any and all claims ⦠arising out of ⦠the admission agreement or any service or healthcare provided by the facility to the resident shall be resolved exclusively by binding arbitration ⦠and not by a lawsuit or resort to Court process."
Although the parties agreed that some conversation about the arbitration provision took place, they were in dispute as to how the provision was presented and what instructions were given in connection with it.
The patient's attending physician was not employed by the nursing home and was not a party to the arbitration provision.
The lawsuit stated that the plaintiff's father was not evaluated by a physician until three weeks after his admission. It was alleged that he had lost 19 pounds by that time and was suffering from dehydration and worsening pneumonia, all of which led to his death.
The plaintiff brought the suit as personal representative of his father's estate.
The nursing home filed an answer to the complaint asserting an affirmative defense that a validly executed arbitration agreement compelled dismissal.
After permitting discovery on the issue and hearing oral arguments, Judge Francis R. Fecteau ruled that the agreement was not enforceable and denied the nursing home's summary judgment motion.
Arbitration principles
Kenneth A. Behar of Boston, who submitted an amicus brief on behalf of the Massachusetts Extended Care Federation Inc., said the lower court decision ran counter to the long-accepted principle that arbitration agreements are enforceable.
"The ruling of the superior court ⦠calls into question a nursing facility's ability to rely on contractual undertakings voluntarily entered into by the holder of a health care proxy and durable power of attorney on behalf of a resident," he wrote. "[It] essentially permits any resident who enters into an arbitration agreement to disavow its terms by naming a non-party to a judicial action."
Desmond â the nursing home's lawyer â added that the provision should be enforced based on well-stated law under both the Federal Arbitration Act and the Massachusetts Arbitration Act, which require a finding of fraud, duress or unconscionability.
"This was an agreement that a competent and experienced person made stating that he would prefer to arbitrate," he said. "It's a simple matter of a contract between the plaintiff and the nursing home â not a choice made by lawyers after the fact about whether they would rather arbitrate or have the case heard in court."
Desmond noted that the patient's son was an experienced claims representative who was aware of what arbitration entailed.
During a closed-door meeting held prior to the signing of the agreement, a representative from the nursing home explained its terms and conditions, Desmond said.
"The weight of authority around the country does not then permit a plaintiff to simply name a separate defendant who is not a party to the arbitration agreement in order to invalidate an otherwise enforceable provision," he said.
Contrary to the plaintiff's argument, Desmond said the arbitration provision was not made a condition of the residency agreement.
"The fact that this is a consumer-related issue doesn't invalidate the arbitration agreement, nor is it any different because it's a health care case," he said. "Arbitration agreements have been upheld in every state that has considered the issue in the context of nursing home and resident contracts."
Distinctions
But Satin countered that arbitration provisions in health care cases are much different than those entered into during business transactions.
In cases like his client's, he said, patients and their families get nothing in return for agreeing to binding arbitration.
"It's not a business deal where everyone at the time they sign an arbitration agreement is thinking about their financial interest in terms of what may happen if they sue," he said. "In the health care context, when a family member signs a bunch of documents admitting a loved one into a facility, all they're concerned with is getting that person treated and taken care of."
Satin noted that in his client's situation, the nursing home representative provided incomplete and inaccurate information about who was covered by the agreement.
Specifically, he said no mention was made that the patient's attending physician was an independent contractor who was not covered by the arbitration provision.
"Under the [nursing home's] argument, that puts the family in the position of having to bring their case in court with respect to the doctor and arbitrate the rest, even though the facts and circumstances are largely the same," he said.
In that scenario, he explained, the doctor could defend the Superior Court case by blaming what happened on the facility. Similarly, in the arbitration case, the facility could point the finger at the doctor.
"Having to litigate in two fora would create an empty chair in both cases, which would run the risk that no one will be accountable," he said. "The bottom line is that people shouldn't be bound by agreements that are inherently unfair."
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