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Reinshagen v. WRYP – Damage Caps in Nursing Home Arbitration Agreements Void Contract

Nursing home arbitration agreements have become the new normal anytime a patient is admitted to a facility. These agreements are intended to limit the patient’s or family’s access to courts for resolution of disputes, such as those that arise as a result of nursing home abuse or nursing home neglect or nursing home negligence. Ultimately, the goal is to reduce or eliminate the complainant’s ability to collect damages from the nursing home. Arbitration agreements and arbitrators tend to be far more friendly to the business than the individual.

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Although courts will uphold these agreements as they would any other contract, there is an emerging legal trend that involves finding these agreements either invalid or against public policy. There are a number of arguments that could be effective. One is to cite that the person who signed the document on the patient’s behalf had no legal authority to do so. Another, which emerged recently with the case of Estate of Novosett v. Arc Villages II, before Florida’s 5th District Court of Appeal in March 2016, was to argue the damage caps and elimination of punitive damages were against public policy and could not be severed from the rest of the agreement. The 5th DCA sided with the plaintiff in that case.

And that brings us to the most recent Florida nursing home arbitration agreement decision, which was also handed down by the 5th DCA in Estate of Reinshagen v. WRYP ALF LLC.

The appeals court doesn’t detail the exact allegations in the complaint, except to say it was asserted that decedent, a former resident at the nursing home, sustained injuries that resulted in his death that were caused by nursing home negligence.

At issue here, as in Novosett, was the damage cap in the arbitration agreement.

Opinions in both cases referred back to the 2011 decision by the Florida Supreme Court in Gessa v. Manor Care of Florida. In that case, the daughter of a nursing home resident, acting as her attorney-in-fact, signed an arbitration agreement on her mother’s behalf. Later, when allegations of nursing home negligence arose, plaintiff filed a lawsuit and the nursing home moved to compel arbitration. Plaintiff argued the agreement was unconscionable and contrary to public policy because it imposed a damage cap of $250,000 on non-economic damages and also waived punitive damages. The trial court disagreed and argued that the offensive clauses could be severed from the agreement, which wasn’t unconscionable. The court declined on the issue of whether the agreement violated public policy, choosing instead to leave that decision to the arbitrator.

The appeals court affirmed, but the Florida Supreme Court reversed. First, the court determined that such clauses in an agreement are against public policy and cannot be severed. Plus, the court ruled that a determination of whether an agreement violates public policy isn’t in for an arbitrator to decide – it’s for the courts.

So now back to Reinshagen, which involved the death of a 92-year-old WWII Army Air Corps veteran. The underlying agreement contained a provision that would limit recovery of non-economic damages and barred any recovery of punitive damages. Citing the earlier opinions, the court ruled this was clearly against public policy and therefore, the order compelling arbitration was reversed. The case will now go to trial.

However, the court did certify a question to the Florida Supreme Court, which was when a nursing home arbitration agreement contract contains a severability clause (as this one did), does Gessa still control?

Call Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights. Now serving Orlando, West Palm Beach, Port St. Lucie and Fort Lauderdale.

Additional Resources:

Estate of Reinshagen v. WRYP ALF LLCApril 29, 2016, Florida’s 5th DCA

More Blog Entries:

New Bill Would Ban Anonymous Nursing Home Complaints, May 13, 2016, Margate Nursing Home Abuse Lawyer Blog

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