The Court of Appeal, Fourth Appellate District, Division One, State of California (“California Appellate Court”) held in its published opinion filed on July 31, 2017 that a California nursing home arbitration agreement signed by a new resident who died during the statutory 30-day rescission period was valid and enforceable, stating, “Pursuant to the plain language of section 1295, subdivision (c), the terms of those agreements governed the parties’ relationship upon their execution; the fact that one signatory died before the expiration of the statutory 30-day rescission period does not render the terms of the parties’ agreements unenforceable in the absence of other grounds for not enforcing them.”
California Code, Code of Civil Procedure – CCP § 1295 provides, in part:
(a) Any contract for medical services which contains a provision for arbitration of any dispute as to professional negligence of a health care provider shall have such provision as the first article of the contract and shall be expressed in the following language: “It is understood that any dispute as to medical malpractice, that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings. Both parties to this contract, by entering into it, are giving up their constitutional right to have any such dispute decided in a court of law before a jury, and instead are accepting the use of arbitration.”
(b) Immediately before the signature line provided for the individual contracting for the medical services must appear the following in at least 10-point bold red type:
“NOTICE: BY SIGNING THIS CONTRACT YOU ARE AGREEING TO HAVE ANY ISSUE OF MEDICAL MALPRACTICE DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP YOUR RIGHT TO A JURY OR COURT TRIAL. SEE ARTICLE 1 OF THIS CONTRACT.”
(c) Once signed, such a contract governs all subsequent open-book account transactions for medical services for which the contract was signed until or unless rescinded by written notice within 30 days of signature. Written notice of such rescission may be given by a guardian or conservator of the patient if the patient is incapacitated or a minor …
The issue before the California Appellate Court involved section 1295, subdivision (c) in light of the two nursing home arbitration agreements bearing a date stamp of September 25, 2014, which was seven days after the resident was admitted to the nursing home (one nursing home arbitration agreement was for medical malpractice disputes and the other nursing home arbitration agreement was for disputes not involving medical malpractice), both of which contained the following language: “By signing this arbitration agreement below, the Resident agrees to be bound by the foregoing arbitration provision. The Resident acknowledges that he or she has the option of not signing this arbitration agreement and not being bound by the arbitration provisions contained herein. The execution of this arbitration agreement is not a precondition to receiving medical treatment or for admission to the Facility. This arbitration agreement may be rescinded by written notice from either party, including the Resident’s Legal Representative and/or Agent, if any, and as appropriate, to the other party within thirty (30) days of signature.”
The Underlying Facts
On October 5, 2014, the resident began sweating profusely and became very nauseated. The nursing home staff found her vomiting in the bathroom. The resident asked the nursing home staff for assistance, but the staff left her alone. At approximately 8:30 p.m., the nursing home staff found the resident on the floor of the bathroom, with her face turned blue. The resident had fallen and had sustained serious injuries to her head and body.
When the paramedics arrived, the nursing home staff informed them that they had seen the resident suffer a heart attack. The resident died after she was taken to the hospital. An autopsy revealed that the resident had died as a result of blunt force injuries to her head and torso.
The resident’s heirs filed their nursing home claims against the defendants, alleging four causes of action, including elder abuse, a violation of Health and Safety Code section 1430, negligence, and wrongful death. Defendants filed a petition to compel arbitration, pursuant to the nursing home arbitration agreements that the resident had signed.
The trial court ruled that because the resident died before the expiration of the 30-day rescission period under section 1295, subdivision (c), the defendants could not establish that an enforceable arbitration agreement exists (the trial court did not address the defendants’ contention that the FAA preempts the requirements imposed by section 1295, subdivision (c)). The defendants appealed.
The California Appellate Court Opinion
The California Appellate Court held that because the plaintiffs did not dispute that the resident signed the nursing home arbitration agreements, the burden shifted to the plaintiffs to raise any defenses that they might have to enforcement of the agreements. The California Appellate Court noted that the plaintiffs have not asserted, either in the trial court or on appeal, that the resident did not have the capacity to execute the agreements, nor have they raised a contention that the agreements were executed as a result of fraud, duress, or undue influence, such that the agreements may not be enforced. Instead, the plaintiffs argued that the arbitration agreements were not immediately enforceable upon their execution but rather the 30-day rescission period granted to parties to medical services arbitration agreements by section 1295, subdivision (c) must fully elapse before a medical services arbitration agreement may be enforced.
The California Appellate Court noted that section 1295, subdivision (c) provides in relevant part: “Once signed, such a contract governs all subsequent open-book account transactions for medical services for which the contract was signed until or unless rescinded by written notice within 30 days of signature,” and that the plain meaning of this provision is that a medical services agreement is effective upon execution by the parties and remains in effect until or unless a party rescinds within the 30-day period. Furthermore, both of the agreements in this case clearly indicate the parties’ intent that the agreements were to become valid and enforceable upon their execution, since, in addition to setting forth the language of section 1295, subdivision (c), both agreements state, “By signing this arbitration agreement below, the Resident agrees to be bound by the foregoing arbitration provision,” and “BY SIGNING THIS AGREEMENT THE RESIDENT AGREES TO” the arbitration of the identified claims and/or issues, which language indicates a clear intention to obligate the parties, pursuant to the agreements, immediately upon the execution of the documents.
The California Appellate Court further stated that if the California Legislature had intended to delay the enforceability of a medical services arbitration agreement for 30 days after the signing of such an agreement, even where the parties indicated an intention to make their obligations under the agreement enforceable upon signing, it could easily have done so by stating that such an agreement does not become enforceable until a 30-day “grace period” elapses after execution of the document. Instead, the California Legislature chose to provide parties to a medical services arbitration agreement a statutory right to rescind an otherwise enforceable agreement within 30 days of signing it. Where the terms of such an agreement indicate that the parties have agreed to arbitrate claims immediately upon the signing of the agreement, those terms govern the parties’ relationship “until and unless” a party rescinds within the 30-day statutory rescission period.
The California Appellate Court concluded that the medical services arbitration agreements in this case exhibit the parties’ intention that the agreements become enforceable immediately upon execution; that one of the parties died during the 30-day rescission period does not negate this express intention. Until the time of the resident’s death, neither party had rescinded the agreements; the agreements therefore remained in effect and enforceable at the time of her death.
Source Baker v. Italian Maple Holdings, LLC, D069797
If you or a loved one suffered injuries (or worse) while a resident of a nursing home in California or in another U.S. state due to nursing home neglect, nursing home negligence, nursing home abuse, or resident on resident abuse, you should promptly contact a local nursing home claim attorney in your U.S. state who may investigate your nursing home claim for you and file a nursing home claim on your behalf, if appropriate.
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