2 recent nursing home arbitration cases

The Second and Fifth District Courts of Appeal simultaneously issued two opinions regarding arbitration enforcement in the nursing home context and, in one case, the Fifth DCA certified an issue to the Florida Supreme Court as one of “great public importance.” The nursing home setting continues to be a battle ground for refining the standards of whether an arbitration clause is enforceable and some of the arguments — such as the failure of one side to verbally explain the agreement to the other party who does not read the document — risk watering down how two parties make an enforceable agreement.

In the Estate of Yetta Novosett v. Arc Villages and Arc Lady Lake et al., the 5th DCA issued a brief 2-page opinion which determined that an arbitration agreement which contained a severability clause but also contained an “unenforceable cap on damages that goes to the ‘financial heart’ of the agreement” is unenforceable and void per Gessa v. Manor Care of Florida (Fla. 2011). Gessa confirmed that statutory nursing home claims cannot be subject to caps on non-economic damages nor the preclusion of punitive damages however, in Gessa, the contract at issue did not contain a severability clause. Here, the contract did. But, the Fifth DCA concluded that the existence of a severability clause in an agreement is not dispositive of whether a void clause invalidates the entire contract (Shotts v. OP Winter Haven, Inc. (Fla. 2011)) and that, since the limitations went to the “financial heart” of the agreement (language from the Gessa case), the court held that the severability clause would not preserve the agreement to arbitrate. The court certified as an issue of great public importance the question whether Gessa controls in this type of situation when the arbitration clause includes a severability clause.

A longer read is Florida Holdings III (Bay Tree Care & Rehabilitation) v. Sheila Duerst by and through Debra Duerst where the Second District upheld an arbitration agreement. There, the challenge was primarily that it was procedurally unconscionable because of the circumstances surrounding the execution of the agreement. The daughter, signing for the mother/resident, did not read the agreement, did not know what arbitration was, and claims that she was given a short period to review the documents. The court, however, noted that the agreement was short (6 pages), boldly referenced “legal rights” and “what is arbitration?” on the first page, repeated similar language right above the signature block, and gave 30 days for the family to change their mind. And it was optional. This case would be a good resource for (a) lawyers who draft arbitration agreements and (b) lawyers arguing motions to compel arbitration since, in 16 pages, the court fairly well traced out the law and relevant arguments.

Two quick notes

For further reading, consider the 2014 Florida Bar Journal articles, When Must a Dispute Be Submitted to Arbitration? Who Makes the Call, part 1 and part 2.

Also, NB, I was counsel on Romano v. Manor Care, which was authority for a number of these cases above and I am infrequently a panel arbitrator for the National Arbitration Forum (for non-nursing home cases). The NAF was mentioned in the Bay Tree case, above, and was the subject of Sheptak v. Transitional Hosps. Corp. of Tampa (Fla 2d DCA 2015).