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In three previous blogs (here, here, and here) I have shown the disdain of the Pennsylvania Superior Court – twice (Pisano, Burkett) and the Philadelphia Court of Common Pleas (Curtis) for arbitration clauses in nursing home agreements. Add the Pennsylvania Supreme Court to the list of tribunals who do not care for arbitration clauses in nursing home agreements.
In Wert vs. Manorcare of Carlisle, 124 A.3d 1248 (Pa. 2015), a nursing home and one of its residents entered into an agreement containing a dispute-resolution clause that mandated arbitration under the National Arbitration Forum’s (NAF) code of procedure. The NAF code provided, in turn, that the arbitration would be administered by the NAF. The NAF had stopped accepting such arbitration cases by the time of the parties’ dispute.
Notwithstanding the presence of a standard severability clause relative to unenforceable provisions, the court held that the involvement of the NAF itself was “integral” to the parties’ agreement. As a result, it declined to compel arbitration in any form and, instead, allowed the dispute to proceed in court.
The essence of the opinion is that if you put a clause in an arbitration agreement you are stuck with it. If it involves who shall arbitrate the arbitration and that entity is no longer in business you cannot argue that the identity of the arbitration administrator is not integral to the agreement.
The Pennsylvania Supreme Court understands there is a lopsided balance of power between the parties to these types of contracts. If the contract is poorly written or contains a provision that is no longer enforceable then the party who drafted the contract should suffer the consequences.
This opinion is another instance where the courts are trying to level the playing field. Nursing homes have to understand that their blatant attempts to usurp the fundamental constitutional right of trial by jury by implementing arbitration agreements are being subject to extremely close scrutiny. Any missteps should and will be flagged by plaintiff’s counsel.