Are Mandatory Pre-Dispute Binding Arbitration Agreements

in Nursing Home and Assisted Living Facility Contracts Really Mandatory?

Presentation By

Katherine C. Pearson

Professor of Law

Dickinson Law, Penn State

Carlisle, Pennsylvania

Research Outline Prepared By

Megan Armstrong, Candidate for J.D. 2018

Dickinson School of Law, Pennsylvania State University

Carlisle, Pennsylvania

  1. Overview
  2. Recommendations for Clients Considering Admission to Facilities
  3. Refuse to sign Arbitration Provision (thus rejecting “voluntary” arbitration provisions) at time of admission
  4. Retain the resident’s right to consent or refuse pre-dispute arbitration by not granting that power to the surrogate
  5. Seek admission to the facility prior to signing admissions paperwork[1]
  1. Recommendations for Clients WITH a Signed Arbitration Agreement
  2. Revoke consent to arbitration, especially if there is an available“revocation period” (e.g., 30 days, depending on terms of the agreement and governing state law)
  3. Challenge the validity of the agreement using traditional contract law theories, such as duress, unconscionability, lack of agent’s authority, etc. [2]
  4. *Pennsylvania Option - Bring a wrongful death action arising from the same facts as the survival action so that the claims cannot be bifurcated and will proceed to trial pursuant to Pa. R.C.P. 213(e) (governing “consolidation, severance and transfers” of actions, including wrongful death and survival actions).[3]
  1. Questions to Consider When Evaluating an Arbitration Agreement
  2. Is the agreement a condition of admission to the facility? Look for language indicating that the agreement is “voluntary” or “not a condition of admission.”
  3. What causes of action may or must be arbitrated pursuant to the agreement?
  4. Does the agreement opt for the application of state law or the FAA?
  5. Who are the named parties in the agreement? Does the agreement only name the facility and not the company in its entirety?
  6. Does the agreement outline how arbitration fees will be divided?
  7. What forum will be used for any potential arbitration? Will the forum be out-of- state? Will the forum be inconvenient?
  8. Does the agreement attempt to bind or affect the rights of third-parties (beneficiaries, children, spouses, guardians, etc.)?
  1. Federal Law
  2. Federal Arbitration Act, 9 USCS § 1

•Controls arbitration agreements involving maritime transactions or interstate commerce.[4] NH and AL admissions contracts may affect interstate commerce by accepting Medicare or Medicaid payments on the patient’s behalf, making out-of-state purchases of medical supplies or equipment or caring for residents from out-of-state.[5] Jurisdictions differ on what actions affect interstate commerce.[6]

•Stated purpose was to make agreements to arbitrate as enforceable as other contractual provisions.[7]

•Does not automatically invoke federal court jurisdiction, allowing the FAA to be applied to state court actions.[8]

  1. Federal Pre-emption

•Pre-emption of state law will occur when the statute attempts to limit or restrict the scope of the Federal Arbitration Act. State statutory law may only broaden the scope of the FAA.[9]

•Regulation of arbitration procedures is permissible.[10]

•Parties may elect to apply state law by agreement.

  1. Federal Pre-Emption Case Law

•Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201 (2012) (holding that the Supreme Court of West Virginia’s interpretation of the FAA was both incorrect and inconsistent with clear instruction in the precedents of the United States Supreme Court. West Virginia’s purported statutory prohibition against pre-dispute binding arbitration was a categorical rule prohibiting a type of claim and was thus contrary to the FAA).

•AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (denying provider’s motion to compel arbitration and reversing United States Court of Appeals for the Ninth Circuitbecause the contract established dispute proceedings, provided for arbitration of unresolved disputes and precluded class arbitration. The FAA preempted California’s Discover Bank Rule. The court found that requiring the availability of class arbitration was inconsistent with the FAA).

  1. Pennsylvania Statutory Law
  2. The Pennsylvania Uniform Arbitration Act, 42 Pa.C.S. § 7301

•Pennsylvania’s companion statute to the Federal Arbitration Act, making arbitration agreements valid, enforceable and irrevocable except under law or in equity.

•Courts will grant motions to compel arbitration so long as the agreement is valid.

  1. Pennsylvania’s Wrongful Death Statute, 42 Pa. C.S.A. § 8301

•Wrongful death actions are statutorily created claims which allow recovery by close relatives of the decedent in the case of negligence leading to death.[11]

•42 Pa. C.S.A. § 8301 makes pre-dispute binding arbitration clauses unenforceable.[12] Under § 8301(a), wrongful death actions are established as being legitimate causes of action when a death results from a wrongful act, neglect, negligence or unlawful violence and there has not been a recovery of damages for the same damages by the injured individual while they were alive.[13]

•Pursuant to § 8301(b), benefits may only be conferred upon a spouse, children or parents of the deceased regardless of their citizenship or residency.[14]

•Section 8301(c) provides for special damages, allowing the plaintiff to seek damages for reasonable hospital, nursing, medical, funeral expenses and expenses of administration necessitated by reason of injuries causing death. If no beneficiaries exist under the provisions of § 8301(b) than a personal representative of the decedent may bring an action under § 8301(d).[15]

  1. Pennsylvania’s Survival Action Statute, 42 Pa. C.S.A. § 8302

•Survival actions are “predicated on the rights of recovery for personal injuries the deceased would have possessed had he or she lived”.[16] Recovery in survival actions may be for “conscious pain and suffering prior to death, loss of earnings, medical and hospital expenses, and punitive damages” and may be brought by the plaintiff’s personal representative.[17]

•“All causes of action or proceedings, real or personal, shall survive the death of the plaintiff or of the defendant, or the death of one or more joint plaintiffs or defendants”.[18]

  1. Pennsylvania Case Law
  2. Federal Court

•Grkman v. 890 Weatherwood Lane Operating Co., LLC., 2016 U.S. Dist. LEXIS 70880 (W.D. Pa. 2016) (denying Defendant’s Motion to Dismiss Plaintiff’s survival and wrongful death action because the Decedent could only waive his own right to a jury trial with respect to the survival claim and under Pennsylvania law survival claims cannot be severed from wrongful death actions arising from the same tortious conduct).

•Clouser v. Golden Gate Nat’l Senior Care, LLC., 2016 U.S. Dist. LEXIS 37880 (W.D. Pa. 2016) (granting in partDefendant’s Motion to Compel arbitration and Motion to Dismiss the claim for punitive damages with respect to Plaintiff’s survival action and denying in part with respect to Plaintiff’s wrongful death action).

•Golden Gate Nat’l Senior Care, LLC v. Beavens, 123 F. Supp. 3d 619 (E.D. Pa. 2015) (denying Beavens’ Motion to Dismiss and disregarding Defendant’s arguments regarding failure to join an indispensable party which would destroy subject matter jurisdiction, abstention under the Colorado River Doctrine and restrictions imposed by the Anti-Injunction Act, and and granting GGNSC’s Motion to Compel in part with respect to the survival claims).

•Hartman v. Sabor Healthcare Grp., 2015 WL 5569148 (M.D. Pa. 2015) (disagreeing with the state court’s interpretation of the FAA as not preempting Pa. R.C.P. 213(e) and deciding to bifurcate the wrongful death action from the survival action).

•Northern Health Facilities v. Batz, 993 F. Supp. 2d 485 (M.D. Pa. 2014) (granting Motion to Compel arbitration as to the survival action but denying as to the wrongful death claim and finding that the agreement was valid because an agency relationship arose between Decedent and his wife due to the circumstances under which Decedent’s wife executed the agreement.)

•GGNSC Lancaster v. Roberts, 2014 U.S. Dist. LEXIS 43102, 2014 WL 1281130 (E.D. Pa. 2014) (denying Respondent’s Motions to Abstain under the Colorado River Doctrine or in the alternative Dismiss).

•Golden Gate Nat’l Senior Care, LLC v. Brooks, 2014 U.S. Dist. LEXIS 134280 (M.D. Pa. 2014) (granting Motion to Compel arbitration since the arbitration agreement was executed by Respondents with express authority to do so as durable power of attorney and all arguments regarding lack of subject matter jurisdiction were dismissed).

•Glover v. Darway Elder Care Rehab. Ctr., 2014 U.S. Dist. LEXIS 31380 (M.D. Pa. 2014) (granting Motion to Compel arbitration and staying federal and parallel state court action since the arbitration agreement defeated claims of unconscionability due to the agreement being voluntary and was provided to the Decedent in advance of admission).

•Estate of Hodges v. Green Meadows, 2013 U.S. Dist. LEXIS 46878 (E.D. Pa. 2013) (granting Motion to Compel arbitration because the agreement was valid and voluntary as evidenced by the Opt Out Provision and language indicating that the agreement was not a requirement of admission to the facility).

  1. State Court

•Taylor v. Extendicare, 113 A.3d 317 (Pa. Super 2015) (relying on Marmet Health Care Ctr., Inc. v. Brown and the Supreme Court’s application of AT&T Mobility LLC v. Concepcion in finding that Pa. R.C.P. 213(e) is not preempted by the FAA because the rule does function as a categorical prohibition and therefore holding that Pa. R.C.P. 213(e) prevented Plaintiff’s wrongful death action and survival action from being bifurcated).

•Guddat v. Northern Health Facilities, Inc., 2015 Pa. Dist. & Cnty. Dec. LEXIS 147 (Pa. Ct. Com. Pl. 2015) (affirming the Court’s Order, in which Preliminary Objections filed by Defendant were denied and dismissed because although a valid agreement to arbitrate existed, the agreement unsuccessfully sought to bind the rights of third-parties).

•Pisano v. Extendicare Homes, Inc., 77 A.3d 641, 654 (Pa. Super 2013) (applying a two-tier test determining validity of the agreement to arbitrate and the scope of the agreement, the Court held that although a wrongful death action and survival action flow from the same underlying tortious conduct, the rights of the decedent cannot limit the rights of a third-party beneficiary who has never been a party to the arbitration agreement).

•Joe v. Mercy Fitzgerald Hosp., 2012 Phila. Ct. Com. Pl. LEXIS 300; 26 Pa. D. & C.5th 164 (Pa. Ct. Com. Pl. 2012) (affirming the decision to overrule Defendant’s Preliminary Objections without prejudice in an action in which Plaintiff asserted that the husband of Decedent, who signed the arbitration agreement, did not have the appropriate authority to consent).

•Mannion v. Manor Care, Inc., 2006 Pa. Dist. & Cnty. Dec. LEXIS 564; 4 Pa. D & C.5th 321 (Pa. Ct. Com. Pl. 2006) (sustaining Defendant’s Preliminary Objections pursuant to Pa. R.C.P. 1028(a)(6) and severing objectionable limitations regarding damages and discovery due to unconscionability without invalidating the entire arbitration agreement).

Other Resources

Miles B. Farmer, Mandatory and Fair? A Better System of Mandatory Arbitration, 121 Yale L.J. 2346 (2011-2012) (proposingreforms addressing systemic bias in mandatory arbitration).

Lauren Gaffney, The Circle of Assent: How “Agreement” Can Save Mandatory Arbitration in Long-Term Care Contracts, 62 Vand. L. Rev. 1017 (2009) (outliningthe rise of arbitration agreements and applicable legislation, how to combat arbitration and the current state of arbitration agreements in the United States).

Ann E. Krasuski, Mandatory Arbitration Agreements Do Not Belong in Nursing Home Contracts with Residents, 8 DePaul J. Health Care L. 263 (2004-2005) (highlightingthe advantages afforded to nursing homes using mandatory arbitration agreements).

Katherine Palm, Arbitration Clauses in Nursing Home Admission Agreements: Framing the Debate, 14 Elder L.J. 453 (2006)(student note, concludingthat mandatory arbitration agreements are a positive tool and that instead of seeking to eliminate them, time is better spent improving the state of such clauses and forums).

John R. Schleppenbach, Something Old, Something New: Recent Developments in the Enforceability of Agreements to Arbitrate Disputes Between Nursing Homes and Their Residents, 22 Elder L.J. 141 (2014) (concluding that elder law practitioners, nursing homes, arbitral institutions and legislatures procedural protections all have roles in potential reform).

Jean R. Sternlight, The Rise and Spread of Mandatory Arbitration as a Substitute for the Jury Trial, 38 U.S.F. L. Rev. 17 (2003-2004) (arguing that the civil jury trial is becoming less prevalent in America and that constitutional rights should have more bearing upon the validity of arbitration clauses).

Lisa Tripp, Arbitration Agreements Used by Nursing Homes: An Empirical Study and Critique of AT&T Mobility v. Concepcion, 35 Am. J. Trial Advoc. 87 (2011-2012) (analyzingNorth Carolina nursing homes and their admissions contracts and examining the Supreme Court’s decision in AT&T Mobility v. Concepcion).

1

[1]Arbitration Agreements in Nursing Homes: Don’t Sign Them, California Advocates For Nursing Home Reform (July 1, 2013),

[2]Id.

[3]See Taylor v. Extendicare, 113 A.3d 317 (Pa. Super 2015) (This case was recently appealed and heard by the Supreme Court of Pennsylvania. Decision pending).

[4]9 USC § 1 (1925).

[5] Brad W. Smith, W. Davis Frye and Brad C. Moody, Enforcing Arbitration Agreements in Long-Term Care Litigation (July 2010),

[6]Id.

[7] 9 USC § 2 (1925).

[8]Id.

[9] William G. Phelps, Annotation,Pre-emption by Federal Arbitration Act (9 U.S.C.A. §§ 1 et seq.) of state laws prohibiting or restricting formation or enforcement of arbitration agreements, 108 A.L.R. Fed. 179, 1a.

[10]Id. at 3.

[11]1-8 Damages in Tort Actions § 8.04 (2015).

[12] 42 Pa.C.S.A. § 8301 (1995).

[13] 42 Pa.C.S.A. § 8301(a) (1995).

[14] 42 Pa.C.S.A. § 8301(b) (1995).

[15] 42 Pa.C.S.A. § 8301(d) (1995).

[16]1-8 Damages in Tort Actions § 8.04 (2015).

[17]3-21 Damages in Tort Actions § 21.01 (2015).

[18]42 Pa.C.S.A. § 8302 (1972).