In its decision filed on February 26, 2018, the Court of Appeal of the State of California Fourth Appellate District Division Three (“California Appellate Court”) affirmed the order of the trial court that denied the defendant nursing home’s petition to compel arbitration as to the nursing home negligence and elder abuse claims of the now-deceased nursing home resident, and the wrongful death claim brought by his son. The California Appellate Court also affirmed the trial court exercising its discretion under Code of Civil Procedure section 1281.2, subdivision (c), to refuse to enforce the arbitration agreement as to the remaining claims due to the risk of inconsistent judgments.
The Underlying Facts
In 2007, the nursing home resident executed California’s statutory power of attorney form, naming his son as his agent.
In March 2015, the 87-year-old nursing home resident was transferred from one nursing home to the defendant nursing home. The resident was suffering at that time from various conditions, including sepsis and chronic renal failure.
The next day, after the resident had begun receiving care, his son was presented with a stack of documents, including a document entitled “Voluntary Alternative Dispute Resolution (ADR) Agreement” (“Agreement”), which he signed on behalf of his father. The Agreement provided for arbitration after mediation, with submission to arbitration as provided by California law. The Agreement stated “any dispute as to medical malpractice,” in addition to “any legal claim or civil action arising out of or relating to your hospitalization,” was subject to arbitration.
The Agreement further stated, “This ADR agreement also covers any claim or action brought by a party other than you (e.g., an action by your spouse, legal representative, agent, heir) arising out of or relating to your hospitalization . . . .,” and included a 30-day period in which to rescind.
On the signature page of the Agreement, immediately prior to the signature area, there is a statement pursuant to section 1295, subdivision (b) stating that by signing, the signator is “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.” The signature line under “name of patient” was stamped “unable to sign,” and the signature was the son’s, followed by the word “son.” The Agreement was also signed by the son under a statement regarding his certification that he was authorized to act as his father’s agent.
Five days after admission to the defendant nursing home, the resident’s feeding tube became dislodged and began infusing into his throat and/or esophagus instead of his stomach. Due to the resident’s impaired gag reflex, he was unable to clear his lungs and he aspirated, resulting in cardiopulmonary arrest and rapid decline until his death.
The son filed a complaint in March 2016 on behalf of his father and himself, alleging negligence/willful misconduct, elder abuse, and neglect on behalf of both plaintiffs. A third and final cause of action for wrongful death was filed on the son’s behalf only.
In May 2016, the defendant nursing home filed an answer, demand for jury trial, and notice of posting of juror fees. The defendant nursing home also sent a letter to the plaintiff’s nursing home claim lawyer, demanding dismissal of the lawsuit and proceeding to arbitration, which the plaintiff refused.
In July, 2016, the defendant nursing home filed a petition to compel arbitration and motion to stay. Following a hearing on the petition and motion, the trial court denied the motion, concluding that the defendant had failed to show a valid arbitration agreement with respect to the son. The trial court exercised its discretion under section 1281.2, subdivision (c) to refuse to order arbitration of the remaining claims, citing the risk of inconsistent rulings. The defendant appealed.
The California Appellate Court Decision
The California Appellate Court stated that a key issue in this case is whether the son is bound by the Agreement. The defendant conceded that the son did not sign the Agreement in his individual capacity, but rather as his father’s agent, but nonetheless argued that the wrongful death claim brought in his personal capacity is subject to arbitration pursuant to section 1295.
Section 1295 is part of California’s Medical Injury Compensation Reform Act (MICRA) that created certain requirements for arbitration agreements of “any dispute as to professional negligence of a health care provider.” The California Supreme Court has previously held that section 1295 permitted patients who consented to arbitration to bind their heirs in actions for wrongful death, concluding that “all wrongful death claimants are bound by arbitration agreements entered into pursuant to section 1295, at least when, as here, the language of the agreement manifests an intent to bind these claimants.”
The California Appellate Court stated that if the primary basis for the wrongful death claim sounds in professional negligence as defined by MICRA, then section 1295 applies. If the primary basis is under the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, §15600 et seq.) (the “Act”), then section 1295 does not apply.
Turning to the complaint filed in the present case, the California Appellate Court stated that the complaint includes allegations that could be categorized as professional negligence as well as elder abuse, and there is at least some overlap between the two. But the complaint was pleaded as one for “negligence/willful misconduct,” elder abuse and neglect under the Act, and wrongful death. The complaint alleges a “conscious and continued pattern of withholding the most basic care and services,” which included a lack of monitoring, supervision, assistance, and other adequate care and services. The complaint alleges the lack of availability of a physician, failure to provide properly trained staff and nursing, among other things.
The California Appellate Court stated that under the Act, neglect refers not to the substandard performance of medical services but, rather, to the failure of those responsible for attending to the basic needs and comforts of elderly or dependent adults, regardless of their professional standing, to carry out their custodial obligations. Thus, the statutory definition of “neglect” speaks not of the undertaking of medical services, but of the failure to provide medical care.
The California Appellate Court held that the plaintiff chose to plead a cause of action under the Act, and did so successfully. The fact that the plaintiff could have also pleaded a claim for medical malpractice, had he wished to do so, is irrelevant. Accordingly, “we conclude the plaintiffs’ claim is not one within the ambit of section 1295, and therefore, Ruiz’s holding does not apply.”
Having determined that section 1295 does not apply in the present case, the California Appellate Court then looked to the general rules governing arbitration agreements to determine if a valid agreement exists between the son and the defendant. While California has a strong public policy in favor of arbitration as an expeditious and cost-effective way of resolving disputes, parties can only be compelled to arbitrate when they have agreed to do so.
In California, a wrongful death claim is an independent claim. The California Appellate Court held that there is simply no evidence that when the son signed the Agreement as his father’s agent, he had any intent to waive his right to a jury trial for any personal claims.
With regard to the trial court’s ruling that compelling arbitration of the survivor claims would unreasonably risk conflicting rulings on a common issue of law or fact, the California Appellate Court stated that as to the exercise of the trial court’s discretion, section 1281.2, subdivision (c) permits a stay if: “A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party . . . aris[ing] out of the same transaction or series of related transactions; and . . . there is a possibility of conflicting rulings on a common issue of law or fact.” All three requirements must be satisfied before section 1281, subdivision (c), may be used to deny a motion to compel arbitration.
The California Appellate Court held that all three factors were met in the present case: both parties are litigants in both the survivorship and wrongful death claims; those claims involve the same set of operative facts; and, if the survivorship claims were arbitrated while the wrongful death claim was litigated, there is a strong possibility of inconsistent rulings. Therefore, the California Appellate Court found no abuse of discretion by the trial court.
Source Avila v. Southern California Specialty Care, Inc., G054269.
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