PLDF Annual Conference 2013:“EMERGING ARBITRATION TRENDS IN MEDICAL MALPRACTICE AND LONG TERM CARE LITIGATION”

By: Heather A. Neal, Esq.and Peter Akmajian, Esq.

Long Term Care Facilities• Types/Levels:• Skilled Nursing Facility• Assisted Living Facility• Independent Living Facility• Group Homes

• Common Types of Claims• Wrongful Death• Violation of Elder Abuse Statute: See A.R.S. 46-451 et

seq. • Pressure Ulcer• Falls• Medication Errors• Elopements• Failure to Transfer

Video Clip

“Not So Skilled Nursing Facility”

And Now Comes the Arbitration Agreement….• Arbitration Agreement is either a clause or a stand alone

document that, if entered into, requires disputes between a resident and long term care facility to be resolved through binding arbitration.• See Example Arbitration Agreement included in

materials.• Does not deprive the parties of due process, but merely

designates an alternative forum to resolve issue to finality.• In most cases, arbitration is less expensive, speedier and

consumes less resources. • Especially in long term care litigation, the process is less

protracted and less burdensome for the parties.

Enforceability of Arbitration Agreements: The Basics• Enforceability of an arbitration agreement is governed by general

principles of contract law. See Broemmer v. Abortion Services of Phoenix, Ltd., 173 Ariz. 148, 150, 840 P.2d 1013, 1015 (1992).• Offer• Acceptance• Consideration• Proper authority• Competency

• The Federal Arbitration Act, 9 U.S.C. §2• Authorizes written agreements to arbitrate and provides that

they are “valid, enforceable, and irrevocable save upon such grounds as exist at law or in equity for the revocation of any contract.”

• See A.R.S. §12-1501 which mimics the language in the Federal Arbitration Act.

Federal Arbitration Act• FAA is substantive law enacted pursuant to the Congress’

commerce clause authority. Therefore, it preempts state laws so long as the contract at issue evidences a transaction involving interstate commerce. See Southland Corp. v. Keating, 465 U.S. 1 (1984). • Long term care facilities are subject to pervasive federal

regulation:• Federal law sets forth minimum requirements for

participation in Medicare and Medicaid programs. • Substantial economic impact on interstate commerce. • Supplies, inventory, construction, medical

equipment, out of state residents, etc.• FLASHBACK – International Shoe Co. v. Washington,

326 U.S. 310 (1945) and its progeny - “Minimum Contacts” test.

Plaintiff’s Main Arguments Against Enforcing Arbitration

• Lack of Authority• Power of Attorney vs. Medical (Healthcare) Power of Attorney

• Contract of Adhesion • Not Within Reasonable Expectations of Signatory• Waive right to jury trial

• Contract is Unconscionable• Substantively• Cost• Overall imbalance of in obligations and rights

• Procedurally• Contract terms were not explained to signatory

• State laws preempt application of Federal Arbitration Act

Lack of Authority• Does the person who signed the agreement have the authority

and competency to do so?• Resident Signing• Is he/she physically and mentally capable of reading and

comprehending the terms of the agreement?• Family Member/Representative Signing• Establish the relationship of the signatory AND DOCUMENT

the relationship in the business file.• Distinguish between Durable Power of Attorney and Medical

(Healthcare) Power of Attorney – Review each state’s statutory definitions.

• If no POA or MPOA, consider whether there is a surrogate decision maker statute and establish priority.

Lack of Authority• An agency relationship can derive from either actual or apparent

authority.• Actual Authority• Express Authority – Direct evidence of an express contract of

agency.• Implied Authority – Proof of facts implying such a contract.

• Apparent Authority• Ruesga v. Kindred Nursing Centers, L.L.C., 215 Ariz. 589, 161 P.3d

1253 (2007). • Court found that based on long history of wife’s decision making

on husband’s behalf, an agency relationship was established such that the wife could bind her husband to the arbitration agreement.

• Leading case requiring evidentiary hearing on factual issues, such as authority/circumstances of transaction.

Contract of Adhesion• A standardized form offered to consumer of goods and

services on a “take it or leave it” basis without affording the consumer an opportunity to bargain.• Entering into arbitration agreement cannot be a pre-

requisite to admission to the facility or condition of treatment.• Although the contract may be one of adhesion, this in

and of itself is not determinative of enforceability.• Courts will look at:• Whether the contract was within the reasonable

expectations of the signatory; and• Whether the arbitration contract is unconscionable.

Reasonable Expectations• Terms are beyond the range of reasonable expectations if

one party to the contract has reason to believe that the other party would not have accepted the agreement if he had known that the agreement contain the particular term.• Is there a conspicuous or explicit waiver of the

fundamental right to a jury trial set forth in the agreement?

• Was the signatory under duress or extreme conditions?• Were the terms explained to the signatory? Are they

required to be?• See Harrington v. Pulte Home Corporation, 211 Ariz. 241,

119 P.3d 1044 (2005).

Unconscionable

• Procedural Unconscionability• Occurs when there is something wrong in the bargaining

process. Courts will consider the circumstances surrounding the transaction. • How sophisticated was the signatory? Educated?• How was the agreement presented?• Was the agreement buried or a separate document?• Fine print? Bold print?• How much time was the signatory given to review?• Were they given the opportunity to ask questions? • Were they given the opportunity to have the

agreement reviewed by counsel?

Unconscionable

• Substantive Unconscionability• Concerns the actual terms of the contract and

examines the relative fairness of the obligations assumed. • Are there bizarre or oppressive terms?• Are the terms so one sided to oppress or

unfairly surprise an innocent party?• Is there an overall imbalance in the

obligations and rights?• Is there a significant cost-price disparity?

Public Policy Favors Arbitration • If all else fails, fall back on the public policy

argument….• Doubts about whether an agreement to arbitrate

applies to a particular dispute are to be resolved in favor of sending the parties to arbitration. See Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983).• The FAA is a congressional declaration of a liberal

federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. See Liberty Mut. Fire Ins. Co. v. Mandile, 192 Ariz. 216, 963 P.2d 295 (App. 1997).

Practical ConsiderationsDo you want to enforce the arbitration agreement?Is this case better suited for a jury trial rather than a

binding arbitration?Do you have a three panel arbitration or just one

arbitrator?Can you agree on the arbitrators? Are they biased?Are the arbitrators specialized in the area of long term

care/medical malpractice litigation?Are the terms of the arbitration agreement still possible?Are you or your client trying to set a precedent?

Video Clip

“So You Want to be a Mediator?”

Contact Information

Heather A. NealOne North Central, Suite 900

Phoenix, Arizona 85004(602)256-3040 – Direct Line

hneal@rcdmlaw.com