August 29

Normal Agency Principles Apply to Arbitration Agreement

When Evergreen Woods’ admissions coordinator visited May Robinson in her room to review and sign admission documents, May stated that she wanted her husband, also present, to sign the documents. The packet of documents contained an arbitration agreement, and the coordinator stated that entry into the agreement was not a condition of admission. The husband signed the documents. At issue in the appeal is the trial court’s order denying the nursing home’s motion to compel arbitration on the grounds that the husband was not authorized to sign the arbitration agreement.

The appeals court held that a party to an arbitration agreement is bound to the agreement when the signatory was authorized to act as the party’s agent. The lower court failed to distinguish prior case law setting aside arbitration agreements where the facility relied solely on the representations of the agent and no apparent agency relationship existed. In this case, May represented to the facility that her husband was authorized to sign documents on her behalf, and the nursing home accepted the representation. It is true that arbitration agreements result in a waiver of the fundamental right to a jury trial; nevertheless, general agency principles apply when considering whether the agreement is enforceable. The facility’s care coordinator identified the document in May’s presence and stated that its execution was not a condition of admission. When May’s husband executed the agreement, it was reasonable for the nursing home to rely on his authority and all information contained therein was imputed to May. The order was reversed with instructions to grant the motion to compel arbitration.

Evergreen Woods, LLC v. Estate of Robinson, 2015 WL 4486504 (Fla. App. July 24, 2015)

August 27

Centers for Medicare and Medicaid Services Proposes New Regulation to Govern Nursing Home Arbitration Agreements

On July 16, 2015, Centers for Medicare and Medicaid Services (CMS) published in the Federal Register an exhaustive proposed rule on requirements for long-term care facilities. One of the proposed provisions concerns dispute resolution — specifically, binding arbitration agreements — at Sec. 483.70(n). The posted background on this topic provides, “We considered not proposing any requirements concerning binding arbitration agreements. We share stakeholders’ concern that some nursing homes may be requiring residents to sign agreements for binding arbitration as a requirement for admission into the facility. In addition, if the nursing home is not requiring the agreement as a condition of admission, some facilities may be requesting the resident to sign the agreement without fully explaining the rights the resident is waiving and the consequences of that waiver. We have proposed specific requirements if a nursing home chooses to request that a resident sign an agreement for binding arbitration. These requirements include, among other things, that the nursing home must explain the agreement to the resident in a form and manner that he or she understands, and that the resident acknowledge that they understand the agreement. We have also proposed specific requirements for the agreement, including that admission to the facility cannot be contingent upon the resident signing the agreement, the agreement must be entered into voluntarily, and the arbitration must be conducted by a neutral arbitrator in a venue convenient to both parties.

For the full text of the proposed regulations from the Federal Register, click here.