The Nebraska Supreme Court held in its opinion filed on June 15, 2018 that: (1) in the absence of a contractual provision evidencing clear and unmistakable intent to the contrary, the issue of whether an arbitration agreement is enforceable is for a court to decide and not an arbitrator, and (2) the district court did not err in determining that the nursing home arbitration agreement at issue in the case was not binding upon the resident or her estate.
The Nebraska nursing home resident was 88 years old at the time of her admission to the defendant nursing home in 2010, at which time she suffered from dementia. After the resident died on February 2, 2015, the special administrator of her estate (the resident’s son) filed a wrongful death action against the defendant nursing home on behalf of the estate. The defendant nursing home filed a motion to dismiss or, in the alternative, stay proceedings and compel arbitration pursuant to § 4 of the Federal Arbitration Act (“FAA”), in accordance with the terms of a written arbitration agreement between the resident and the defendant nursing home. The defendant nursing home argued that the resident’s 84-year-old husband, while acting as his wife’s attorney in fact, agreed to resolve disputes through arbitration when he signed the nursing home arbitartion agreement on September 28, 2010, the date the resident and her husband were admitted to the facility.
At the hearing on the defendant nursing home’s motion to compel arbitration, the nursing home offered the affidavit of its business manager, who was not present when the nursing home arbitration agreement was executed, which stated the facility’s routine procedure with respect to its resident admissions. The affidavit stated that when the business manager assisted in the admission process, she would do the following: present the ADR Agreement to the resident and allow the resident and the resident’s family members to read the paperwork; explain that by signing the ADR Agreement, the resident would waive his or her right to a trial and agree to submit any dispute to arbitration, but state that signing the ADR Agreement was not required to become a resident at the facility; obtain the resident’s signature; and sign the document on behalf of the nursing home. The business manager further alleged in her affidavit that it was her belief that the normal procedure was followed with regard to the resident’s admission in this case. The defendant nursing home did not present an affidavit from its employee who executed the ADR Agreement on its behalf.
In response, the resident’s husband presented his affidavit in which he stated: “[W]e sat down and the female staff member presented me with a stack of papers which she said was ‘the paperwork I needed to sign to admit my wife’ and another stack to admit myself. The staff member handled the papers, turned the pages and told me she needed my signature ‘here’ and directed me where to sign.” The husband conceded that he signed the ADR Agreement, but stated that he did so because it was his understanding that if he did not sign the paperwork, his wife would not have been admitted to receive health care. He stated he was not informed that any document in the stack of papers was optional, that the paperwork included an arbitration agreement, or that he was waiving his or his wife’s right to a jury trial. He further stated that he would have not signed the ADR Agreement had he known what it meant and that it was not required.
The resident’s son submitted an affidavit in which he stated that when he and his father met with the staff member in the office, she specifically stated that “‘these are standard forms we need you to sign.'”. The son stated the staff member turned the stack of papers to face his father, flipped up the bottom half of the pages, and pointed to the place where she wanted him to sign. At at no time did the staff member state any of the documents were optional or would have the effect of waiving legal rights.
Based on the evidence before it, the district court entered an order which found that the husband’s execution of the arbitration agreement cannot be binding upon his wife nor her estate.
Nebraska Supreme Court Opinion
The Nebraska Supreme Court stated, “A party has a constitutional right to adjudication of a justiciable dispute, and the law will not find a waiver of that right absent direct and explicit evidence of actual intent of a party’s agreement to do so. Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator … Disputes over ‘formation of the parties’ arbitration agreement’ and ‘its enforceability or applicability to the dispute’ at issue are ‘matters . . . ‘the court’ must resolve.'”
The Nebraska Supreme Court stated that “if the claim is fraud in the inducement or fraud in the execution of the arbitration clause itself—an issue which goes to the making of the agreement to arbitrate—the court may proceed to adjudicate it … [t]hus, [the] enforceability challenge to the ADR Agreement is a matter for judicial determination.”
The Nebraska Supreme Court stated: “Arbitration in Nebraska is governed by the UAA [Uniform Arbitration Act] as enacted in Nebraska, but if arbitration arises from a contract involving interstate commerce, it is governed by the FAA. Where a transaction falls within the scope of the FAA, the substantive issue of whether the motion to compel arbitration should be granted is a question of federal law. However, the U.S. Supreme Court has never held that § 4 of the FAA, which is a procedural section, applies to state courts. There is no federal policy favoring arbitration under a certain set of procedural rules, and the federal policy is simply to ensure the enforceability of private agreements to arbitrate.”
The Nebraska Supreme Court continued: “The FAA makes arbitration agreements ‘valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ Under § 2 of the FAA, arbitration agreements can be declared unenforceable ‘upon such grounds as exist at law or in equity for the revocation of any contract,’ including contract defenses like fraud or unconscionability. State law governs the formation of contracts, as well as the validity, revocability, and enforceability of contracts generally. The U.S. Supreme Court has declared that state contract law applies to contracts with arbitration agreements governed by the FAA.”
The Nebraska Supreme Court stated, “Generally, in the absence of fraud, one who signs an instrument without reading it, when one can read and has had the opportunity to do so, cannot avoid the effect of one’s signature merely because one was not informed of the contents of the instrument … However, the rule that one who fails to read a contract cannot avoid the effect of signing it applies only in the absence of fraud or an inability to read. The doctrine that the carelessness or negligence of a party in signing a writing estops him or her from afterward disputing the contents of such writing is not applicable in a suit thereon between the original parties thereto when the defense is that such writing, by reason of fraud, does not embrace the contract actually made.”
The Nebraska Supreme Court held: “Recognizing that direct evidence is not required in fraud cases, and viewing the evidence in the light most favorable to [the plaintiff], we find [the plaintiff] satisfied each element required for a claim of fraudulent representation and the determination that the ADR Agreement is not binding upon [the resident]. We conclude from our review that the evidence supports the outcome reached by the district court.”
Cullinane v. Beverly Enterprises – Nebraska, Inc., 300 Neb. 210.
If you or a loved one suffered injuries (or worse) while a resident of a nursing home in Nebraska or in another U.S. state due to nursing home neglect, nursing home negligence, nursing home abuse, nursing home under-staffing, or the nursing home failing to properly care for a vulnerable adult, you should promptly find a nursing home claim lawyer in Nebraska or in your state who may investigate your nursing home claim for you and file a nursing home claim on your behalf or behalf of your loved one, if appropriate.
Click here to visit our website to be connected with medical malpractice attorneys (nursing home claim attorneys) in your U.S. state who may assist you with your nursing home claim, or call us toll-free in the United States at 800-295-3959.
Turn to us when you don’t know where to turn.