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Hochbaum v. Palm Garden of Winter Haven – Florida Nursing Home Arbitration Agreement Violates Public Policy

Florida courts have been increasingly allowing nursing home negligence lawsuits to go to trial, despite the existence of nursing home arbitration agreements. Defendant nursing homes are looking to compel plaintiffs to resolve their dispute via arbitration, where outcomes are private and tend to favor the facility.gavel

The grounds on which a court may find an agreement unenforceable usually involve whether the agreement is “unconscionable.” That means the contract is so one-sided, it’s unfair to one party and violates public policy. It’s the kind of contract that leaves one party with no real, meaningful choice and typically arises due to the power imbalance between the two parties. So many of these nursing home arbitration agreements are signed by vulnerable patients or their loved ones upon admission – sometimes as a condition to admission. A contract can be unconscionable if there is:

  • Undue influence;
  • Duress;
  • Unequal bargaining power;
  • Unfair surprise.

Such an agreement may also be unenforceable if the person who signed it did not have the capacity or authority to do so. Elderly adults with dementia may not have the mental capacity to enter into legal agreements, but if their relatives are not expressly designated as their legal representative, they may not be able to legally sign on their loved one’s behalf. 

Still, even when a portions of a contract are deemed unconscionable, this does not mean it is necessarily unenforceable. In the recent case of Hochbaum v. Palm Garden of Winter Haven, Florida’s Second District Court of Appeal ruled that while part of the contract did violate public policy, it was still enforceable because the clause in question could be severed from the agreement.

In this case, there were actually three separate arbitration agreements signed by plaintiff at various junctures on behalf of her husband, who had been a patient at defendant nursing home.

Although we don’t know exactly the type of mistreatment decedent is alleged to have received by defendant, we do know plaintiff filed a three-count complaint in 2015 that alleged violations of:

Nursing home defendants responded with a motion to compel arbitration. Plaintiff argued each of the three agreements in question all violated public policy because each required the respective parties to pay their own attorneys’ fees. This, she said, violated the fee-shifting portion of F.S. 415.1111.

Trial court, however, found plaintiff had not proven the agreements were unconscionable and granted defense motion to compel arbitration.

The 2nd DCA reversed, but only in part.

Plaintiff argued before the appeals court that state law allows vulnerable adults who have been abused, neglected or exploited to recover both actual and punitive damages, as well as reasonable attorney’s fees, costs of the action and damages. By writing a contract that expressly violates this right, plaintiff asserted, the nursing home was violating public policy and therefore the contract was not enforceable.

The 2nd DCA did agree that this particular portion of the contract, as it relates to attorney fees, does violate public policy, and this had already been established in the previous case of Flying Printing Co. v. Hills (Fla. 2d DCA 2001). However, the court ruled that it could be severed from the original agreement, which could still be kept in tact.

So while the case will still have to be heard by an arbitrator, plaintiff will be entitled to attorneys’ fees if she prevails.

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:

Hochbaum v. Palm Garden of Winter Haven, Oct. 5, 2016, Fla. 2nd District Court of Appeal

More Blog Entries:

Nursing Home Operator Jailed in Florida for Alleged $1 Billion Health Fraud, Oct. 15, 2016, Nursing Home Negligence Lawyer Blog

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