Sean Cowdrey and Taryn Reid[i]
On August 28, 2019, the California Court of Appeal published Lopez v. Bartlett Care Center, affirming a lower court decision to deny long-term care facility, Bartlett Care Center, from compelling arbitration against a deceased patient’s daughter. Lopez v. Bartlett Care Center, LLC (2019) 39 Cal. App. 5th 311.
Bartlett Care Center is a skilled nursing facility located in Orange County, California. The decedent, Irene Lopez, was admitted to Bartlett in 2016 as a dependent adult.
After admission, a Bartlett employee provided Irene’s daughter, Jasmine Lopez, with a two-page document entitled “RESIDENT-FACILITY ARBITRATION AGREEMENT.” Jasmine signed the document, despite lacking power of attorney to make healthcare decisions for her mother.
After Irene died, Jasmine sued Barlett, alleging wrongful death and several successor-in-interest claims on behalf of Irene. Bartlett then attempted to compel Jasmine to arbitrate all claims. Ultimately, the Court of Appeal affirmed that the arbitration agreement was invalid as to Irene’s claims and void as to Jasmine’s claims under unconscionability grounds.
In upholding the lower court’s decision, the court examined whether Jasmine had authority to sign the arbitration agreement. Each party provided a declaration, which was directly in conflict with the other. The court, weighing the credibility of the declarations, found insufficient evidence that Irene authorized Jasmine to sign on her behalf. Thus, there was no valid arbitration agreement to compel Jasmine to arbitrate Irene’s claims.
Not only did the court find an invalid arbitration agreement for Irene’s claims, the court also held the arbitration agreement for Jasmine’s claims was void as unconscionable. Bartlett argued that the document was only two pages and that bolded red ink emphasized important information; therefore, by reading and signing the document, Jasmine clearly understood.
Despite these arguments, the court still concluded the arbitration agreement was unconscionable because the arbitration language for Jasmine was hidden amidst the language for Irene, and the title of the document only referenced “Resident,” not “Resident and/or Representative.”
Lessons Learned: How to Strengthen your Arbitration Agreement & Signing Practices
- The Title of Your Arbitration Agreement Matters
The Court of Appeal emphasized that the title of the document solely referred to the “resident” of the facility, not the “resident or representative.”
Therefore, having a detailed title is a simple step to ensure the patient and their representative know what they signed. If the arbitration agreement is intended for both individual claims and successor claims, ensure the title includes both the patient/resident and representative in the title.
- Employees Need to Know Who is Allowed to Sign the Arbitration Agreement
In a setting where many elderly and dependent adults have authorized others to act on their behalf, you must train employees to identify a valid principle-agent relationship before having a family member sign on behalf of a patient. The best evidence is a power of attorney for health care. Anything in writing is better than nothing.
- You’ve Got to Keep Them Separated
The court found Bartlett’s arbitration agreement unconscionable partially because the arbitration clauses for Jasmine’s individual claims were hidden in the middle of the agreement. To avoid this problem, the claims and individuals subject to arbitration should be expressly mentioned with individual headings, highlighting or bolding important language.
- Clarity is Key
Even though Bartlett’s arbitration agreement was only two pages, the court held the necessary language was “buried” in the document. Therefore, no matter how short, it is imperative to provide clear and organized language in your arbitration agreement.
- Document Everything
While it may seem obvious to keep a paper trail, documenting the process of signing the arbitration agreement could have completely changed the outcome of Lopez.
Having company policies in place, or providing employees with an arbitration agreement checklist, can ensure arbitration agreements are validly signed and bolster your facility’s credibility should a court be left to weigh the credibility of conflicting declarations. Arbitration enforcement law is ever-changing. Have your arbitration agreements reviewed by counsel. A “solid” arbitration agreement drafted last year may not be so good this year.
[i] Sean Cowdrey is a partner at Beach, Cowdrey, Jenkins, LLP, a civil litigation firm with a focus on representing long-term health care providers. Mr. Cowdrey has over 25 years of experience representing nursing homes, rehabilitation centers, and counseling healthcare facilities on general business matters and employment disputes.
Taryn Reid is a law clerk (California Bar admission pending) at Beach, Cowdrey, Jenkins, LLP. Ms. Reid graduated from UCLA School of Law in 2019.