Trial News

A California appellate court voided a nursing home’s arbitration agreement for the facility’s failure to ensure that the agreement was properly executed by the resident’s representative and the agreement’s failure to identify the nursing home as a party. The ruling affirms a trial court’s decision denying the defendant’s motion to compel in a wrongful death case. (Perez v. P & M Health Care Holdings, Inc., 2019 WL 1578360 (Cal. Ct. App. Apr. 12, 2019).)

Rosa Perez, 78, suffered from glioblastoma and was admitted to the Rancho Mesa Care Center in Alto Loma, Calif., in August 2016. About two months later, Perez fell while under the care of a certified nurse assistant at Rancho Mesa. She was moved to a hospital where she died.

Perez’s daughter, Claudia Solorzano, was her designated health care agent and completed her admission paperwork for Rancho Mesa, which included a generic resident-facility arbitration agreement with separate signature blocks for medical negligence claims and for all other claims. The agreement did not identify Rancho Mesa or its holding company, P&M Health Care Holdings, as a party to the agreement. The facility representative portion of each signature block was not signed, and Solorzano signed only the block regarding nonmedical claims.

In October 2017, Solorzano and Perez’s son sued Rancho Mesa in California state court, alleging elder abuse and neglect, professional negligence, and wrongful death. Rancho Mesa moved to compel arbitration. The plaintiffs argued that the agreement was invalid because it was not properly executed, and the trial court agreed.

On appeal, California’s Fourth Appellate District affirmed the trial court’s order denying Rancho Mesa’s motion but disagreed with the trial court’s analysis. The appellate court found that “the absence of Rancho Mesa’s signature did not invalidate the agreement” because Rancho Mesa had adequately demonstrated its intent to be bound through its actions. The court instead focused on the use of a generic arbitration agreement that is ambiguous as to which party was to be bound and held that the agreement’s “failure to identify Rancho Mesa as a party is fatal.”

The appellate court considered whether, if the agreement was not doomed by its failure to identify Rancho Mesa as a party, it could be enforced. According to the plaintiffs, at least the second portion of the agreement regarding nonmedical claims should be found invalid, because Solorzano had not signed it either.

Rancho Mesa argued that Solorzano’s initials at the bottom of the first page of the agreement constituted a signature. The court, however, took issue with the execution of the agreement, and not the form of the signature. Disagreeing with Rancho Mesa’s argument that Solorzano’s initials were sufficient to evidence her agreement to arbitrate all claims, the appellate court looked to California statutory law regarding long-term health care facility admission contracts. Under Cal. Health & Safety Code §1599.81, admission contracts may not require agreement to arbitration as a precondition to admission and must clearly indicate this in their language. In addition, arbitration clauses in admission contracts must include specific signature lines for applicants to agree to the arbitration of disputes, including a signature line for medical malpractice claims and nonmedical claims. The court found that initialing a location other than the signature block for the nonmedical claims arbitration clause was insufficient to show intent to agree to the arbitration of these claims.

The plaintiffs’ attorney, Joyce Fujimaki, of Whittier, Calif., called the decision “a small victory in an arena where skilled nursing facilities typically hold the power.” However, she explained that better consumer protection still is needed, such as “a requirement that potential residents be verbally informed that they are not required to sign an arbitration agreement as a condition of admission to a facility.”