Source: http://www.margolandmargol.com/blog/7250/
Timestamp: 2020-07-06 22:37:33
Document Index: 21951908

Matched Legal Cases: ['§400', '§400', '§682', '§682', '§682', 'in fine', '§ 21', '§ 400', '§400', '§ 400', '§682', '§ 682', '§ 400', '§ 682']

By David H. Margol
For many Floridians, particularly the elderly, the right to trial by jury seemed to be disappearing in recent years. This was especially true in the context of nursing home liability claims until the Florida Supreme Court recently chose to take action.[1] This basic right, which can be traced back to early modes of trial in use among the Anglo-Saxon and Anglo-Norman civilizations, has been recognized and respected for centuries.[2]
When the United States Constitution was drafted, the failure to include a right to trial by jury in civil cases was a major point of contention between the Federalists and the Anti-Federalists. As a result, the 7th Amendment to the United States Constitution specifically set forth this right. The right to trial by jury is also established under the Florida Constitution through Article I, Section 22. Article I, Sections 1 through 25 comprise Florida's Declaration of Rights. Among other things, the Declaration of Rights guarantees that in the State of Florida, “[t]he courts shall be open to every person for redress of any injury...”, and “[t]he right of trial by jury shall be secure to all and remain inviolate.”[3] It is well settled that these fundamental rights cannot be denied to a litigant absent a knowing, voluntary, and intelligent waiver.[4] Although this is a well settled point of law, nursing home providers for years have been attempting to circumvent the traditional tort system, including the right to trial by jury, by requiring their residents to sign mandatory arbitration agreements as a condition of residency.
The arbitration requirement effectively deprives this already vulnerable group of citizens of a fundamental constitutional right. Furthermore, many of these arbitration provisions attempt to take away specific statutory rights which were created by the legislature in an effort to protect this specific group of citizens.[5]
II. Arbitration Clauses in the Nursing Home Context
What is an arbitration clause, and in turn, what does it seek to accomplish? The American Arbitration Association defines arbitration as “the submission of a dispute to one or more impartial persons for a final and binding decision, known as an award.” This process takes place outside the confines of a courtroom and therefore, different rules may, and often do. apply. Because these clauses are inserted into contracts that have been signed by nursing home residents, it is important to recognize that this area of the law combines both contract and tort principles.
The substance of many of these clauses involves a limitation on forum, a limitation on damages, a higher burden of persuasion for the claimant, and a limitation on the imposition of liability on the part of the nursing home. By their very nature, these clauses remove claims from the traditional judicial system and eliminate the right of a nursing home resident to a trial by jury.
III. The Impact of Arbitration Clauses Within Florida’s Borders
Although the primary goal of arbitration is to keep claims out of court, a multitude of cases have surfaced in the court system despite this goal. Initially, these disputes have been litigated as contract cases—the claim being that the contract is unenforceable in part or in whole. If the arbitration clause is found to be unenforceable, then and only then, will a resident have the ability to pursue underlying tort principles in a courtroom setting.
Nowhere is this issue more significant than Florida.[6] For many years, Florida has been a popular destination among the elderly population in this country. A variety of favorable tax laws, coupled with the climate, draws people to the state to live out their “golden years.” Not surprisingly, there are many cases of alleged nursing home liability currently being litigated, many of which focus on whether these arbitration agreements are enforceable.
At the outset, it is important to review the legislative enactments and the Florida case law in this area. The threshold issue to be considered is the enforceability of an arbitration clause when considered alongside the rights of nursing home residents. Therefore, the appropriate Florida statutes to examine are contained within the Nursing Home Residents Act[7]and the Florida Arbitration Code.[8]
The Florida Nursing Home Residents Act was created by the legislature in order to protect the rights of a group of citizens the legislature determined required protection under the law. This Act, sometimes referred to as the “Nursing Home Resident’s Bill of Rights,” is a remedial statute.[9] A remedial statute is one which confers or changes a remedy.[10] The Act provides for an extensive list of basic rights that must be afforded to these residents. Such rights are set forth in §400.022(1), Florida Statutes, and include, but are not limited to:
“The right to civil and religious liberties, including knowledge of available choices and the right to independent personal decision; the right to private and uncensored communication; and the right to present grievances on behalf of himself or herself or others to the staff or administrator of the facility, to governmental officials, or to any other person.”[11]
In an effort to address criticism regarding insufficient civil enforcement of these rights, the legislature amended the Nursing Home Residents Act in 1993 by enacting §400.023, Florida Statutes. This section provides civil remedies for nursing home residents resulting from a violation of the statute. Furthermore, the parameters of civil enforcement are defined under the same section. Specifically, one may bring an action seeking injunctive relief and/or to recover actual damages, and if appropriate, punitive damages for "any violation of the rights of a resident or for negligence."[12] In addition, a plaintiff who prevails may be able to recover "the costs of the action and a reasonable attorney’s fee.”[13] Given the level of detail set forth by the legislature, not only in enumerating very specific resident rights, but also in the detailed enforcement scheme, it is clear that the intention was to provide a heightened level of protection for a vulnerable segment of our population. This heightened level of protection is precisely what many of these arbitration clauses seek to circumvent.
The Florida Arbitration Code[14] must also be considered as a part of this analysis. Under the Code, the legislature has recognized that freedom of contract is also an important principle worth protecting. Specifically, §682.03(1) of the Arbitration Code provides, in pertinent part:
“A party to an agreement or provision for arbitration subject to this law claiming the neglect or refusal of another party thereto to comply therewith may make application to the court for an order directing the parties to proceed with arbitration in accordance with the terms thereof.”[15]
The next clause, within the same section, provides a clear indication that the legislature was concerned about the elderly in nursing home cases:
“If the court is satisfied that no substantial issue exists as to the making of the agreement or provision, it shall grant the application. If the court shall find that a substantial issue is raised as to the making of the agreement or provision, it shall summarily hear and determine the issue and, according to its determination, shall grant or deny the application.”[16]
This second clause of §682.03(1) directly addresses the circumstances under which many of these nursing home agreements are signed.
It is important to note that the Florida Arbitration Code was adopted to be applicable to a variety of contractual arrangements. For example, construction contracts, purchase and sale agreements, and supply contracts are all subject to the Code. It is equally important to note that most contracts are entered into between informed parties. While in contrast, the very nature of the nursing home environment involves one sophisticated party (the nursing home provider) and typically one unsophisticated party (the elderly resident). §682.03(1) seems to acknowledge this inequality when it recognizes that there will be situations in which a “substantial issue exists as to the making of the agreement or provision.” In these situations the legislature has indicated that the judicial system should step in and make a determination regarding the legitimacy of the contractual component of the case.
B. An Analysis of Florida Case Law
Nursing home claims are common in Florida, and many of these claims involve admission contracts with arbitration agreements. In fact, as early as 2005 the Fourth District Court of Appeals noted in Blankfeld v. Richmond Healthcare, Inc.[17] that “a nursing home arbitration provision has recently shown up in all of the District Courts of Appeal.” First, this suggests that these arbitration provisions are not keeping these cases out of the court system, as was intended. Second, this means that Florida, until very recently, was dealing with a problem that was not likely to go away until the Florida Supreme Court stepped in to clarify the law.
The Florida Supreme Court brought clarity to the issue on November 23rd, 2011 when it decided Gessa v. Manor Care of Florida, Inc.[18] and Shotts v. OP Winter Haven, Inc.[19] Both Gessa and Shotts primarily address mandatory arbitration clauses in nursing home admission agreements. In June of 2010, the Court heard oral arguments in both cases and the decisions it handed down now control the contractual environment in nursing home cases, as well as in other areas of the law when arbitration is at issue. In order to fully understand the current state of the law, it is important to understand the line of cases which gave rise to the Florida Supreme Court’s decision to act in this area.
In Blankfeld v. Richmond Healthcare, Inc.,[20] the Fourth District held that an arbitration clause inserted into a nursing home residency contract, was void as contrary to public policy.[21] The relevant portion of the clause stated that all disputes “shall be resolved by binding arbitration administered by the National Health Lawyers Association.”[22] One of the rules set forth by this arbitration organization required a showing by the plaintiff of “clear and convincing evidence of intentional or reckless misconduct” in order for consequential, exemplary, incidental, punitive or special damages to be awarded.[23]
The plaintiff argued that the method of arbitration was void as contrary to public policy because it limited the remedies created by the legislature in the Nursing Home Residents Act and the Fourth District agreed.[24] A central focus of the court’s ruling was that a contractual provision being void as contrary to public policy is distinct from a holding of unenforceability due to contractual unconscionability.[25] Here the court appears to set forth a test of sorts by stating that if the arbitration provision in the contract was enforced “some of the remedies provided in the legislation for negligence would be substantially affected and, for all intents and purposes, eliminated.”[26] Therefore, the test appears to be that a provision will be void as contrary to public policy if the remedies set forth by the legislature are “substantially affected and, for all intents and purposes, eliminated.” It is also important to recognize that this court concluded that a plaintiff must assert a theory regarding a violation of public policy in order for the court to consider it, instead of simply asserting an unconscionability argument and expecting the court to make a decision, sua sponte, based on public policy grounds.[27]
In a concurring opinion, Judge Farmer noted that he would hold the arbitration provision unenforceable under a different rationale, stating: “It is absurd to think a regulatory scheme can be evaded by private contracts of the very person being controlled.”[28] He advances a “slippery slope” argument by asking what other regulation can be “side-stepped” using contracts of this nature:
“Can restaurants avoid health codes by contractual provisions in the [customer’s] bill? Can cigarette dealers cancel health warnings by provisions in the sales papers? Can home builders modify building codes in contracts for construction?”[29]
To allow such contractual “side-stepping” of important legislation amounts to a violation of public policy—the result reached in Blankfeld.
Another significant, and more recent, decision issued by the Fourth District Court of Appeals is Place at Vero Beach v. Hanson.[30] The nursing home resident in this case also signed an admissions agreement as part of the admissions process.Within the agreement was an arbitration clause which specified an arbitration administrator.[31] The trial court focused on the burden of proof imposed on the claimant. If arbitration was permitted, the plaintiff would have been required to meet a “clear and convincing” standard, while the Nursing Home Residents Act requires only a “preponderance of the evidence” standard.[32] Reviewing the trial court’s decision de novo, the Fourth District held that an arbitration provision requiring a higher burden of proof was in conflict with the Nursing Home Residents Act and therefore, unenforceable.[33]
As mentioned previously, all of the Florida District Courts of Appeal have confronted the issue of mandated arbitration in the nursing home setting. In a case out of the Fifth District, SA-PG-Ocala, LLC v. Stokes,[34] the nursing home resident signed an arbitration agreement as a condition of residency. The agreement set forth the requirement that any controversy or dispute between the parties must be resolved by arbitration, as provided under the specific rules of the American Health Lawyers Association.[35] Adopting the reasoning of its sister courts, the Fifth District found that the arbitration clause would “dismantle the protections afforded patients by the legislature” and therefore was void as contrary to public policy.[36]
The court also relied upon a case out of the Fourth District, Lacey v. Healthcare and Retirement Corp. of America[37] for the proposition that in the event “that a contractual limitation defeats the purpose of a remedial statute, the limitation may be found void as a matter of law.” In Lacey, the arbitration agreement contained a $250,000 cap on non-economic damages and a waiver of punitive damages.[38] The Nursing Home Residents Act, in contrast, provides for both compensatory and punitive damages, without the imposition of a cap.[39] This court determined that the cap on non-economic damages, and a complete waiver of punitive damages, substantially affected the remedies set forth by the legislature and therefore the arbitration provision was void as contrary to public policy.[40]
As discussed by the court in Blankfeld, there is a distinct difference between a public policy argument and an unconscionability argument.[41] Thus far, the cases discussed have focused on the public policy rationale for holding an arbitration agreement to be unenforceable. The alternative argument relies on a showing that the agreement is both procedurally and substantively unconscionable.
In another Fourth District case, Romano v. Manor Care,[42] the plaintiff makes both an unconscionability argument, as well as a public policy argument. This case involves an agreement signed by the nursing home resident’s husband upon his wife’s admission to the home. Neither the resident, nor her husband, were given the relevant documents on the actual day of admission.[43] Instead, it was the following day when a nursing home representative approached and asked the husband to sign eight separate documents, one of which was the arbitration agreement. This particular agreement was six pages in length and it imposed a variety of limitations.[44] For example, it limited the discovery process by prohibiting depositions of anyone other than expert witnesses. It dictated that a former judge be appointed as the arbitrator. Neither party could recover attorney’s fees. And furthermore, it capped non-economic damages at $250,000 and excluded punitive damages. While the agreement did specify that statutory rights were being waived, the court notes that neither the agreement nor the representative informed the resident that she had a statutory right to sue for punitive damages.[45]
Although the agreement specified that the resident could cancel the agreement within three days of its execution, the husband testified that he was simply handed the documents by the nursing home representative and told that he must sign them.[46] Furthermore, the nursing home representative did not attempt to explain any of the documents, and in fact, when she testified, she admitted that “she really didn’t know what the arbitration agreement meant.”[47]
Romano provides guidance by identifying what a plaintiff must establish in order to succeed on a claim of unconscionability:
“To decline to enforce a contract as unconscionable, the contract must be both procedurally unconscionable and substantively unconscionable. Procedural unconscionability refers to the individualized circumstances under which the contract was entered, while substantive unconscionability deals with the unreasonableness and unfairness of the contractual terms themselves.”[48]
The court refers to a “balancing test” which is often applied to determine whether there is sufficient evidence of unconscionability. The court sums up this test by explaining that “the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.”[49] The court determined that the agreement was significantly, substantively unconscionable and that there was irregularity in the contract formation, amounting to a lesser degree of procedural unconscionability.[50]
The court noted that “as to procedural unconscionability, it is true that the arbitration agreement was not hidden in fine print.”[51] However, the court also pointed out that there was no showing that the husband had any legal training to understand the rights he was waiving. In addition, he was never told that his failure to sign the documents would not have affected his wife’s ability to stay in the home.[52] The advanced age of the resident and her husband, coupled with the lack of any explanation regarding the rights he was signing away, was sufficient procedural unconscionability for this court, when considered alongside the “egregious substantive unconscionability,” to declare it unenforceable.[53]
In Prieto v. Healthcare and Retirement Corp. of America,[54] the Third District Court of Appeals relied on similar reasoning. The arbitration clause at issue was buried among several papers signed by the daughter of the nursing home resident. The daughter testified that she was given a packet of forms to sign, while her father was being transported to the nursing home facility from the hospital.[55] She also testified that she was told to sign the forms in order to have her father admitted. The nursing home provider argued that the arbitration agreement was “clearly labeled in bold print and capital letters” and that the agreement “provided a three-day period during which Ms. Prieto had the opportunity to review the documents at home and rescind them if they did not meet her approval.”[56] The trial court found that both procedural and substantive unconscionability existed, but that they did not rise to a level that was sufficient to invalidate the arbitration provision.[57]
The Third District disagreed with the trial court, relying on the same reasoning set forth in Romano. The court agreed with the trial court in its finding of both procedural and substantive unconscionability, but it disagreed that the level of the two combined did not rise to a level sufficient to hold the provision unenforceable.[58]
Specific contractual terms singled out by the appellate court included a limit on non-economic damages, a complete bar on punitive damages, an exclusion of attorney’s fees and costs, and limitations on discovery.[59] Referring to the substantive unconscionability aspect of the analysis, the court stated that it must examine whether the contractual terms were “so outrageously unfair as to shock the judicial conscience.”[60] It concluded that the terms did in fact rise to such a level. The court stated that “the agreement herein deprives the nursing home resident of significant remedies provided for by the statutes.”[61] The court was troubled by the fact that the limitations in the agreement unfairly restricted a resident’s ability to prove statutory violations. Therefore, after considering the totality of the circumstances, the arbitration provision, although clearly identified within the packet of documents, was found to be unenforceable under an unconscionability theory.[62] The decision by this court indicates that it takes more than clearly labeling the agreement as an “arbitration provision” to ensure that it will be upheld as enforceable. Steps must be taken on the part of the nursing home to ensure the resident or the resident’s representative understands what he or she is signing.[63]
The significant takeaways from the previously discussed series of cases include: (1) arbitration provisions are not keeping nursing home liability cases out of the court system; (2) all five District Courts of Appeal have had to address this issue; (3) a plaintiff must survive the threshold contract issues in order to reach the underlying tort issues in a courtroom setting; and (4) a nursing home resident who has signed an arbitration agreement has the ability to challenge the provision in hopes of retaining his or her right to a trial by jury. This challenge can be accomplished by putting forth either a public policy argument or by asserting an unconscionability based argument. A prudent attorney would assert both theories if the surrounding circumstances appear to be similar to the cases previously discussed.[64]
IV. Reduced Incentive to Represent Victims in an Arbitration Setting
If the breed of arbitration clause at issue in this analysis is held to be enforceable, the resulting environment would undeniably leave the majority of nursing home residents without adequate representation. Under the traditional tort system, legitimate cases will most often be accepted on a contingency basis, where attorneys anticipate they will be adequately compensated. Under the Nursing Home Residents Act, attorneys may also receive fees as dictated by the statute when seeking an injunctive or administrative remedy. Furthermore, the Act does not cap non-economic damages, nor does it bar punitive damages, as many of these arbitration clauses do. Therefore, recovery under the Act would allow the resident’s attorney to be fairly compensated.
In sharp contrast, if the arbitration clauses at issue in nursing home liability cases are held to be enforceable, not only will elderly residents be deprived of a jury’s consideration of their cases, but they will also likely be deprived of adequate representation. In this environment, the claimant may be responsible for his or her own attorney’s fees, which could prove problematic for many nursing home residents who are indigent or living on a fixed income. If the arbitration provision limits non-economic damages, completely excludes punitive damages, and increases the burden of proof, it follows that in many otherwise meritorious cases it would not make financial sense for an attorney to undertake representation.
In Romano, the court observed that due to the nursing home resident’s advanced age, her compensatory damages may be insubstantial.[65] The court’s concern was clear: “Because the arbitration agreement fails to allow the arbiter to award either attorney’s fees or punitive damages, it does not permit the nursing home resident to vindicate her statutory rights.”[66]
V. The Counter-Argument and the Associated Flaws
There are valid reasons for utilizing arbitration as a means of dispute resolution. Some of the significant benefits often associated with arbitration include: expedience, reduced costs, privacy, and a reduction in overly-burdened trial dockets.
While some may assert that in certain instances arbitration can be less costly and less time consuming, there is adequate evidence to question such assumptions. As the authors of a recent Florida Bar Journal article argue, the public policy in favor of arbitration agreements in certain situations may be misplaced.[67] Although the article focuses on complex commercial cases, the reasoning applies in the nursing home liability context as well. The thrust of the argument is really three-fold. First, inserting an arbitration clause into a contract may actually prove to be more costly than if the case was simply litigated on the merits. Second, the existence of an arbitration clause may increase, substantially, the time it takes to obtain a resolution regarding the underlying issues in the case. And finally, generally speaking, a decision in arbitration is not subject to the traditional quality controls afforded to parties in the traditional court system, specifically judicial review and basic evidentiary standards.[68] For these reasons, those who argue in favor of arbitration may be standing on shaky ground.[69]
In the end, arbitration may be more expensive for two reasons. First, if the arbitration is contested, a court will need to determine, as a threshold issue, whether the provision is enforceable. If the provision is found to be unenforceable, the case will typically continue through the traditional court system. If the provision is determined to be enforceable, the parties will have already dedicated time and resources in this initial stage of litigation and then the party seeking to have the provision declared unenforceable will likely take an appeal, thus further increasing the cost to the parties.
If the provision is eventually upheld as enforceable, the typical arbitration process will continue. This will require an arbitrator, or panel of arbitrators, and their services are neither free, nor inexpensive.[70] As noted in the Florida Bar Journal article, the fees associated with arbitration are a unique expense:
“Judges are paid a salary by the government to resolve our disputes. In arbitration, however, the ‘judges’ are paid an hourly fee by the litigants. A typical arbitration agreement calls for the appointment of not one, but three arbitrators, all of whom are compensated on an hourly basis. Accordingly, a party in a three-arbitrator proceeding can expect to receive a substantial invoice for his or her share of the three arbitrators’ hourly fees, depending on the amount of hearing and preparation time.”[71]
Therefore, the final result can be a significantly higher price tag, when compared to the price of simply allowing the case to proceed on the merits through the traditional court system.
Because arbitration agreements are being employed to resolve significant and life altering claims in many of these cases, their enforceability is of great importance. In other less significant settings, arbitration may very well never be challenged and may prove to be a time-saver. However, in certain settings such as the nursing home setting or medical malpractice setting, submitting to arbitration will typically drastically limit an elderly or severely injured individual’s rights and should not be taken lightly. Therefore, the provision will often be a point of contention between the parties. The likely outcome will be a prolonged dispute resolution process as opposed to an abbreviated one.
A final flaw in the arbitration process can be viewed through the lens of “quality control.” Of particular concern is the fact that the appeals process afforded to litigants in the court system is essentially nonexistent in the arbitration process. Indeed, under Florida law, mere errors of fact or law made within the arbitration proceeding, no matter how blatant, are not sufficient grounds to vacate a decision.[72] If, as a society, we seek to provide justice to our citizens, and provide for a heightened level of protection for particular groups of citizens it is counterintuitive to think that we would allow a blatant mistake of law or fact by the arbitrators to go uncorrected.
One might argue that although the legislature has afforded certain segments of the population an increased level of protection, the legislature has also decided it is necessary to protect the right to freely enter into contracts. An underlying assumption however, is that the parties entering into such agreements are competent to do so and are doing so of their own free will.
The ability to freely enter into lawful contractual agreements is of great importance in a free market society and should be protected by the law. However, what should not be protected are situations in which a repeat player hides behind the “freedom to contract” principle, in order to take advantage of an unsuspecting and/or unknowing party. This is precisely what is at issue in many of these nursing home liability cases, as well in other areas of the law (e.g. medical malpractice).[73] While arbitration provisions may provide benefits in certain settings, the way in which they have been utilized recently, essentially allows the nursing home provider and healthcare provider to circumvent the traditional court system and deprive the resident of not only a trial by jury, but also of many specific rights set forth by the legislature.
VI. The Current State of the Law
In the past, the challenge facing most trial courts was found in the difficulty of reading the Nursing Home Residents Act in conjunction with the Florida Arbitration Code. The Supreme Court’s decisions in Gessa and Shotts have helped resolve that issue.
In Gessa v. Manor Care of Florida, Inc., the resident’s daughter, acting as her attorney-in-fact, signed nursing home admissions documents that included an arbitration agreement. During her stay at Manor Care, Angela Gessa filed suit alleging negligence, violation of resident's rights, and breach of fiduciary duty. Manor Care moved to compel arbitration. At the hearing on the motion, Gessa argued that the arbitration agreement was unconscionable and contrary to public policy due to the limitation of liability provisions in the agreement that capped noneconomic damages at $250,000 and waived punitive damages. The trial court, however, granted the motion to compel, ruling that, because any offensive clauses can be severed, the agreement was not unconscionable. The court declined to rule on the public policy issue, leaving it for the arbitrator. Gessa appealed, arguing that the limitation of liability provisions violated public policy and were not severable. The district court affirmed, agreeing with the trial court that the provisions were severable. The district court did not rule on the public policy issue, leaving it for the arbitrator. Gessa sought discretionary review, which the Florida Supreme Court granted.[74]
Gessa raised several issues, including: (i) whether the limitation of liability provisions were severable, (ii) whether the court or the arbitrator must decide if the arbitration agreement violates public policy, and (iii) whether the limitation of liability provisions violate public policy.[75] The Florida Supreme Court addressed all of these issues holding that the limitation of liability provisions, which placed a $250,000 cap on noneconomic damages and waived punitive damages, were not severable; the court and not the arbitrator must decide whether the arbitration agreement violates public policy; and the limitation of liability provisions violated public policy and were unenforceable because they directly frustrated the remedies created by the Nursing Home Residents Act.[76]
Shotts v. OP Winter Haven, Inc.[77] addressed many of the same issues raised in Gessa. In fact, the significant issues addressed by the Court were virtually identical, with the exception of the way in which the arbitration agreement limited liability and extinguished remedies available to the nursing home resident. In Gessa, the limitation of liability provisions placed a $250,000 cap on noneconomic damages and waived punitive damages. Similar to the language in Gessa, the clause in Shotts stated that “the arbitrators will have no authority to award punitive damages.”[78] The “limitations of remedies” provision in Shotts also provided that the arbitration would be conducted in accordance with the American Health Lawyers Association (AHLA) rules.[79] The terms of this arbitration agreement went even further than the terms in Gessa by expressly stating that the “limitation of remedies” provisions were severable.[80]
In Shotts, the Florida Supreme Court held that (i) the “limitations of remedies” provisions, were not severable, despite the expressly stated language to the contrary, (ii) the court and not the arbitrator must decide whether the arbitration agreement violates public policy, and (iii) the “limitation of remedies” provisions violated public policy and were unenforceable because they “directly undermine specific statutory remedies created by the legislature.”[81] The Florida Supreme Court appears to take its decision one step further in Shotts by making it applicable to arbitration agreements outside the realm of nursing home liability cases. That step is evident by the Court’s conclusion that any arbitration agreement that “substantially diminishes or circumvents” remedies provided for by the legislature stands in violation of the public policy of the State of Florida and is therefore unenforceable.[82]
Many nursing home providers have been using contract law as a “gatekeeper” in an effort to prevent nursing home residents from exercising their constitutional right to trial by jury, while at the same time eliminating specific remedies provided by the legislature. What the Florida Supreme Court appears to have said in its decisions in Gessa and Shotts, is that if courts were to allow an elderly individual’s right to a trial by jury to be extinguished, along with specific statutory rights afforded by the legislature, we would be allowing private parties to eliminate the role of the legislature in protecting vulnerable members of society. The bedrock of our legal system is the right to trial by jury, and if that right were to disappear for a group of our most at risk citizens without an adequate remedial substitute, it is troubling to think which group would be next to see this critical constitutional right contractually eviscerated. While the facts in Gessa and Shotts focus on nursing home liability, the tone the Court takes indicates that these decisions apply to any arbitration agreement that substantially diminishes or circumvents remedies provided by the legislature. The Florida Supreme Court took notice of the fact that the right to trial by jury was disappearing and appropriately has chosen to act in order to protect it.
[1] Gessa v. Manor Care of Florida, Inc., No. SC09-768. 2011 WL 5864823 (Fla.); Shotts v. OP Winter Haven, Inc., No. SC08-1774, 2011 WL 5864830 (Fla.)
[2] In William Forsyth’s History of Trial By Jury, the origins of what we refer to today as the “jury system” is explored in depth. One of the conclusions reached by Mr. Forsyth is that the system used today in American court rooms can be traced back to ancient Anglo-Saxon and Anglo-Norman civilizations.
[3] Art. I, §§ 21-22, Fla. Const.
[4] See, e.g. State v. Upton, 658 So.2d 86, 87 (Fla. 1995); Tucker v. State, 559 So.2d 218, 219 (Fla. 1990); Vetrick v. Hollander, 743 So.2d 1128, 1131 (Fla. 4th DCA 1999).
[5] The Nursing Home Residents Act, and specifically Section 400.022, was originally enacted after a Dade County, FL Grand Jury investigation of nursing homes revealed substantial elder abuse and a lack of an effective remedy.
[6] According to the Census Bureau, in 2008 Florida had the greatest proportion of elderly people, when compared to all other states, and it ranked second in total number of elderly people (defined as age 65+) behind only California. U.S. Census Bureau, Number of Persons 65+ by Race and Hispanic Origin - by State – 2008, (available at http://www.census.gov/popest/datasets.html)
[7] Fla.Stat. 400.022 et seq.
[8] Fla.Stat. 682.03 et seq.
[9] Knowles v. Beverly Enterprises-Florida, Inc., 898 So.2d 1 (Fla. 2004).
[10] Campus Communs., Inc. v. Earnhardt, 821 So.2d 388 (Fla. 5th DCA 2002).
[11] § 400.022(1), Fla. Stat. (2007).
[12] §400.023(1), Fla. Stat. (2001).
[13] The broad attorney’s fee provision of Chapter 400 was repealed in 2001, leaving a more restrictive provision in its place. Currently the relevant portion of § 400.023(1) provides: “Any resident who prevails in seeking injunctive relief or a claim for an administrative remedy is entitled to recover the costs of the action, and a reasonable attorney's fee assessed against the defendant not to exceed $25,000.” Therefore, a plaintiff can now recover attorney’s fees only when injunctive or administrative relief is the sole remedy sought.
[14] §682.01 et. seq. Fla. Stat.
[15] § 682.03(1), Fla. Stat. (2004).
[17] Blankfeld v. Richmond Healthcare, Inc., 902 So.2d 296, 307 (Fla. 4th DCA 2005), review denied 917 So.2d 195 (Fla. Nov. 16, 2005).
[18] Gessa v. Manor Care of Florida, Inc., No. SC09-768, 2011 WL 5864823 (Fla.)
[19] Shotts v. OP Winter Haven, Inc., No. SC08-1774, 2011 WL 5864830 (Fla.)
[20] Blankfeld v. Richmond Healthcare, Inc., 902 So.2d 296, 307 (Fla. 4th DCA 2005), review denied 917 So.2d 195 (Fla. Nov. 16, 2005).
[21] Id. at 297.
[24] Id. at 297.
[26] Id. at 298.
[27] Id. at 299.
[30] Place at Vero Beach v. Hanson, 953 So.2d 773, 774 (Fla. 4th DCA 2007).
[31] The arbitration organization specified in this clause was the very same organization at issue in Blankfeld v. Richmond Healthcare, Inc.
[32] Place at Vero Beach, 953 So.2d at 774.
[34] SA-PG-Ocala, LLC v. Stokes, 935 So.2d 1242, 1242 (Fla. 5th DCA 2006).
[35] This organization was previously the National Health Lawyers Association but is now known as the American Health Lawyers Association.
[36] Stokes, 935 So.2d at 1243.
[37] Lacey v. Healthcare and Retirement Corp. of America, 918 So.2d 333, 334 (Fla. 4th DCA 2005).
[38] Id. at 334.
[39] § 400.023(1), Fla. Stat. (2001).
[40] Lacey, 918 So.2d at 334.
[41] It was noted in that decision that the court will only entertain both arguments if they are both asserted. Asserting just one could be viewed as malpractice under certain circumstances.
[42] Romano v. Manor Care, Inc., 861 So.2d 59, 62 (Fla. 4th DCA 2003), review denied 874 So.2d 1192 (Fla. May 05, 2004).
[48] Id. at 62.
[50] The court used this reasoning to hold the arbitration agreement unenforceable.
[51] Romano, 861 So.2d at 63.
[54] Prieto v. Healthcare and Retirement Corp. of America, 919 So.2d 531, 532 (Fla. 3d DCA 2005).
[58] Reviewing the decision de novo, the court determined that the circumstances surrounding the signing of the agreement were irregular enough to find some level of procedural unconscionability, and that when combined with the incredibly unfair terms (i.e. substantively unconscionable), the agreement was unenforceable.
[59] Prieto, 919 So.2d at 532.
[60] Id. at 533.
[63] It appears to be important to this court that the arbitration agreement be explained in a setting that does not involve a “hurry up and sign it so the resident can be admitted” type of environment. This type of environment leads to the classic adhesion contract scenario, which should be avoided by nursing homes. This particular agreement was clearly labeled in bold print and capital letters and, in addition, it provided for a three-day rescission period. The court, however, found that regardless of how the provision is labeled, a failure to explain the terms, coupled with terms that deprive the resident of significant remedies set forth by the legislature will result in its unenforceability.
[64] It would be prudent to put forth both arguments because, as noted by the court in Blankfeld, the two theories are distinct from one another and a plaintiff could succeed on one without necessarily succeeding on the other.
[65] Romano, 861 So.2d at 63.
[67] A recent article entitled “Re-examining the Presumption in Favor of Arbitration in Complex Commercial Cases” appeared in the March 2010 edition of the Florida Bar Journal. This article, authored by Robert J. Hauser, Raymond E. Kramer III, and Patricia A. Leonard, casts serious doubt on the general benefits commonly associated arbitration as a means of dispute resolution.
[68] The rules of evidence at trial (either state or federal) would often keep certain issues from being heard. In the arbitration setting however, these issues may very well surface and be heard by the decision maker, which could prejudicially impact the final and binding decision.
[69] In a recent American Bar Association Journal article, arbitration, which was once looked at by international companies as a less expensive and expedient dispute resolution tool, is now being viewed as more of a problem than a solution. Many of these companies are turning away from arbitration and turning back to the traditional court system in order to find time and cost savings. Steven Seidenberg, International Arbitration Loses Its Grip Are U.S. Lawyers to Blame?, 96 APR A.B.A. J. 50, 51 (2010).
[70] A recent American Bar Association online news article reported that a single arbitrator charged $900 per hour for his work on an arbitration panel. The resulting bill for work done by the panel totaled approximately $400,000. Martha Neil, Lawyer’s $900/Hour Arbitration Fee Angers Transit Board Members, American Bar Association Online (Oct. 28, 2009).
[71] Robert J. Hauser et al., Re-examining the Presumption in Favor of Arbitration in Complex Commercial Cases, 84 MAR Fla. B.J. 8, 14 (2010).
[72] Under § 682.13, Fla. Stat. (2004), an arbitration award must be confirmed unless there is bias or corruption in the making of the award, or some other manifest procedural impropriety such that the hearing was not a fair hearing. “The District Court of Appeal is not empowered to set aside arbitration awards for mere errors of judgment as to law or facts, or because of equitable principles.” Dasso v. Fernandez, 831 So.2d 714 (Fla. 3d DCA 2002). See also Felger v. Mock, 65 So.23d 625 (Fla. 1st DCA 2011)
[73] The Florida Supreme Court granted certiorari on November 8th, 2011 in Franks v. Bowers, 62 So.3d 16
(Fla. 1ST DCA 2011), a case involving wrongful death and medical negligence claims. The circuit court stayed the action and compelled arbitration pursuant to an arbitration provision in a financial agreement between the patient and the medical practice. The personal representative then appealed the enforceability of the arbitration agreement to the Florida Supreme Court. The petitioner’s initial brief on the merits is due December 5th, 2011.
[74] Gessa v. Manor Care of Florida, Inc., No. SC09-768, 2011 WL 5864823, at *2 (Fla.)
[75] Id at 2.
[76] Id. at 8.
[77] Shotts v. OP Winter Haven, Inc., No. SC08-1774 20911 WL 5864830 (Fla.)
[82] Shotts v. OP Winter Haven, Inc., No. SC08-1774, 2011 WL 5864830, at *16 (Fla.)