J-S55004-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
DEBORAH A. LOMAX, : IN THE SUPERIOR COURT OF ADMINISTRATRIX FOR THE ESTATE : PENNSYLVANIA OF RUFUS LOMAX, DECEASED, : : : v. : : : CARE ONE, LLC; 4114 SCHAPER : AVENUE OPERATING COMPANY, LLC. : D/B/A PRESQUE ISLE : REHABILITATION AND NURSING : CENTER; CARE ONE MANAGEMENT, : LLC; HEALTHBRIDGE MANAGEMENT, : LLC; DES HOLDING CO., INC.; THCI : HOLDING COMPANY, LLC; THCI : COMPANY, LLC; CARE VENTURES, : INC.; CARE REALITY, LLC; SHOLIN J. : MONTGOMERY, NHA : : Appellants : No. 344 WDA 2020
Appeal from the Order Entered February 10, 2020 In the Court of Common Pleas of Erie County Civil Division at No(s): No. 10167-2017
BEFORE: BOWES, J., McCAFFERY, J., and COLINS, J.*
MEMORANDUM BY BOWES, J.: FILED: MARCH 5, 2021
Care One, LLC, 4114 Schaper Avenue Operating Company, LLC. d/b/a
Presque Isle Rehabilitation and Nursing Center, Care One Management, LLC,
Healthbridge Management, LLC, Des Holding Co., Inc., THCI Holding
Company, LLC, THCI Company, LLC, Care Ventures, Inc., Care Reality, LLC,
____________________________________________
* Retired Senior Judge assigned to the Superior Court. J-S55004-20
and Sholin J. Montgomery, NHA (collectively “the Facility”) appeal from the
order that overruled their preliminary objections to compel arbitration. We
affirm.
The following facts are pertinent to our review. Rufus Lomax
(“Decedent”) had both of his legs amputated below the knee. Decedent’s
vision was also impaired by cataracts, but he did not desire to undergo yet
another surgery. For approximately ten years, he resided in an apartment at
an assisted living facility designed for wheelchair-bound tenants. His niece,
Deborah A. Lomax (“Ms. Lomax”), provided additional care through preparing
meals, running errands, and attending medical appointments with him,
eventually becoming employed as his caregiver through a senior program
offered by the local community action agency.
Decedent was hospitalized in March 2015 due to complications from an
infection. Having also experienced a recent decline in his strength that caused
him to fall and develop sores, he decided to cease living on his own and enter
a rehabilitation facility upon discharge from the hospital. He opted for Presque
Isle Rehabilitation and Nursing Center since it “was one of the only open
facilities for him, due to his insurance.” N.T. Evidentiary Hearing, 7/30/19, at
95.
Nurse Darlene Stokes performed an assessment of Decedent upon his
admission and noted that Decedent suffered from dementia, depression, and
poor vision in both eyes with or without glasses. After Ms. Stokes performed
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her assessment, Admissions Coordinator Kara Calandrelli secured Decedent’s
signature on the paperwork attendant to his admission to the Facility. Ms.
Calandrelli followed her usual routine of meeting with the new resident in his
room and spending forty-five minutes to an hour going through the twenty-
page admission agreement. Her customary procedure was to involve a family
member or the Erie Office on Aging in the process if the new resident was
incompetent or visually impaired. However, she obtained Decedent’s
signature on the agreement despite his having been assessed by Ms. Stokes
as visually impaired and suffering from dementia without any family present.
Page sixteen of the twenty-page admission agreement “between Presque Isle
Rehabilitation and Nursing Center (‘the Facility’) and Rufus Lomax,”1
contained the following provision:
ARTICLE XIV DISPUTE RESOLUTION AND ARBITRATION
ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT AND BROUGHT BY THE RESIDENT, HIS/HER PERSONAL REPRESENTATIVES, HEIRS, ATTORNEYS, OR THE RESPONSIBLE PARTY SHALL BE SUBMITTED TO BINDING ARBITRATION BY A SINGLE ARBITRATOR SELECTED AND ADMINISTERED PURSUANT TO THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. A CLAIM SHALL BE WAIVED AND FOREVER BARRED IF, ON THE DATE THE DEMAND FOR ARBITRATION IS RECEIVED, THE CLAIM (IF ASSERTED IN A CIVIL ACTION) WOULD BE BARRED BY THE APPLICABLE STATE OF FEDERAL STATUTE OF LIMITATIONS. ANY CLAIMANT CONTEMPLATED BY THIS PARAGRAPH HEREBY WAIVES ANY AND ALL RIGHTS TO BRING SUCH CLAIM OR CONTROVERSY IN ANY MANNER NOT EXPRESSLY ____________________________________________
1 See Admission Agreement, 3/27/15, at 1.
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SET FORTH IN THIS PARAGRAPH INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO A JURY TRIAL.
Admission Agreement, 3/27/15, at 16.2 Nowhere in the written agreement
does it indicate that the arbitration provision was optional or voluntary, and
Ms. Calandrelli did not advise Decedent that he did not have to sign this
agreement to receive care at the Facility. Notably, the arbitration provision
of the agreement lacked spaces for checking “yes” or “no” that were used
elsewhere in the document to accept or reject other “voluntary” provisions.
See, e.g., id. at 3 (regarding consent to allow the Facility to manage financial
affairs); id. at 10 (concerning use of name in the Facility directory and photo
for promotional purposes). Rather, there was merely a line where Decedent
affixed his initials.
After completing the admission process, Decedent resided at the facility
for six months until he was admitted to the hospital with a fever, tachycardia,
altered mental status, oxygen saturation of 84%, sepsis, and previously-
2 Additionally, Article XVII of the admission agreement stated: “The Resident parties understand that the Facility may change any or all terms and conditions of the Agreement at any time, by serving appropriate notice to the Resident Parties together with the offer of a revised Agreement or an addendum revising the existing Agreement.” Admission Agreement, 3/27/15, at 18. A resident thereafter was required to execute the new agreement or give written notice to the Facility “of an intention to terminate the Agreement.” Id. Termination would trigger provisions regarding transfer or discharge of the patient. Id. Thus, because the arbitration agreement was a term of the admission agreement, the Facility in effect reserved the right to change any or all of the substance of the arbitration agreement unilaterally.
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uncharted pressure ulcers. Decedent did not recover, dying in the hospital on
September 26, 2015.
Ms. Lomax was appointed as administratrix of Decedent’s estate and
initiated this wrongful death and survival action against the Facility. In her
complaint, Ms. Lomax stated claims of negligence, negligence per se, breach
of fiduciary duty, and wrongful death, seeking compensatory and punitive
damages. Each of the defendants filed preliminary objections to compel
arbitration.3 Ms. Lomax responded opposing arbitration, the trial court
conducted an evidentiary hearing, and the parties submitted proposed
3 As noted earlier, the admission agreement is between Decedent and “Presque Isle Rehabilitation and Nursing Center (‘the Facility’).” Admission Agreement, 3/27/15, at 1. The arbitration clause does not purport to govern claims against the Facility’s employees, agents, contractors, or other affiliates. Cf. Kohlman v. Grane Healthcare Co., 228 A.3d 920, 921 (Pa.Super. 2020) (reviewing arbitration clause that governed disputes between the patient and the facility, “its agents, servants, employees, officers, contractors and affiliates”); MacPherson v. Magee Mem’l Hosp. for Convalescence, 128 A.3d 1209, 1217 (Pa.Super. 2015) (“The Parties intend that this Agreement shall inure to the direct benefit of and bind the Center, its parent, affiliates, and subsidiary companies, management companies, executive directors, owners, officers, partners, shareholders, directors, medical directors, employees, successors, assigns, agents, insurers and any entity or person (including health care providers) that provided any services, supplies or equipment related to the Patient’s stay at the Center . . . .”). Defendants other than the entity doing business as Presque Isle Rehabilitation and Nursing Center each asserted that Ms. Lomax’s claims are governed by the agreement without specifying how it is a party to the agreement or otherwise is entitled to benefit from it. However, given our determination that Decedent did not have a valid agreement to arbitrate with any entity, we need not examine whether each defendant established that it was a party to the contract and thus entitled to enforce it.
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findings of fact and conclusions of law. Thereafter, the trial court made
findings of fact and conclusions of law, determining both that (1) there was
no meeting of the minds between the parties as to the arbitration provision,
and (2) the provision was unconscionable. Accordingly, the trial court
overruled the Facility’s preliminary objections.
The Facility filed a timely notice of appeal,4 and both the Facility and the
trial court complied with Pa.R.A.P. 1925. The Facility states the following
questions, which we have reordered for ease of disposition:
1. The trial court found that an arbitration clause was unconscionable, because [D]ecedent needed nursing home care when he signed it, and because the clause only required [D]ecedent to arbitrate. But this Court has found that, because public policy favors arbitration, issues like these do not make an arbitration clause unconscionable. Was the trial court’s decision a reversible error?
2. When [D]ecedent was admitted to a nursing home, he signed an admissions agreement and initialed its arbitration clause. The trial court found that [he] was not bound by that contract, because he had poor eyesight. But under Pennsylvania law, a signed contract is presumed to be binding, and evidence of poor eyesight will not overturn this presumption. Was the trial court’s decision a reversible error?
The Facility’s brief at 5.
We begin with a review of the pertinent legal principles. In an appeal
from an order overruling preliminary objections in the nature of a petition to
compel arbitration, this Court’s review “is limited to determining whether the
4 We have jurisdiction over this appeal from an interlocutory order pursuant to 42 Pa.C.S.§ 7320(a)(1).
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trial court’s findings are supported by substantial evidence and whether the
trial court abused its discretion in denying the petition.” Pisano v.
Extendicare Homes, Inc., 77 A.3d 651, 654 (Pa.Super. 2013) (internal
quotation marks omitted). “In doing so, we employ a two-part test to
determine whether the trial court should have compelled arbitration. First,
we examine whether a valid agreement to arbitrate exists. Second, we must
determine whether the dispute is within the scope of the agreement.”
MacPherson v. Magee Mem’l Hosp. for Convalescence, 128 A.3d 1209,
1219 (Pa.Super. 2015) (en banc) (cleaned up). On the issues of contractual
interpretation, our review is de novo and our scope of review is plenary. See
Cardinal v. Kindred Healthcare, Inc., 155 A.3d 46, 50 (Pa.Super. 2017).
Pursuant to the mandates of the Federal Arbitration Act (“FAA”), “courts
are obligated to enforce arbitration agreements as they would enforce any
other contract,” and, in considering whether a claim is subject to arbitration,
must exhibit “a healthy regard for the federal policy favoring arbitration[.]”
Taylor v. Extendicare Health Facilities, Inc., 147 A.3d 490, 504, 509 (Pa.
2016) (cleaned up). Nonetheless, “a party cannot be compelled to arbitrate
in the absence of a valid agreement to do so[.]” McIlwain v. Saber
Healthcare Grp., Inc., 208 A.3d 478, 486 (Pa.Super. 2019) (cleaned up).
The following principles pertain to determining the existence of a valid
agreement to arbitrate. “It is black letter law that in order to form an
enforceable contract, there must be an offer, acceptance, consideration, or
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mutual meeting of the minds.” Id. at 485 (internal quotation marks omitted).
“Under Pennsylvania law, it is presumed that an adult is competent to enter
into an agreement, and a signed document gives rise to the presumption that
it accurately expresses the state of mind of the signing party.” Cardinal,
supra at 50. As such, “[c]ontracting parties are normally bound by their
agreements, without regard to whether the terms thereof were read and fully
understood and irrespective of whether the agreements embodied reasonable
or good bargains.” Nicholas v. Hofmann, 158 A.3d 675, 693 (Pa.Super.
2017) (internal quotation marks omitted).
Nonetheless, as is the case in any action upon a contract, “defenses
such as fraud, duress, or unconscionability” are available to challenge the
validity of an arbitration agreement. Taylor, supra at 509. We have
explained that “a determination of unconscionability requires a two-fold
determination: 1) that the contractual terms are unreasonably favorable to
the drafter, and 2) that there is no meaningful choice on the part of the other
party regarding the acceptance of the provisions.” MacPherson, supra at
1221 (cleaned up). “The aspects entailing lack of meaningful choice and
unreasonableness have been termed procedural and substantive
unconscionability, respectively.” Salley v. Option One Mortgage Corp.,
925 A.2d 115, 119 (Pa. 2007). “[P]rocedural and substantive
unconscionability are generally assessed according to a sliding-scale approach
(for example, where the procedural unconscionability is very high, a lesser
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degree of substantive unconscionability may be required).” Id. at 125 n.12
(citing Delta Funding Corp. v. Harris, 912 A.2d 104, 111 (N.J. 2006)).
While “the determination of whether an agreement is unconscionable is
ultimately a question of law, . . . the necessary inquiry is often fact sensitive.”
Id. at 124. Factual issues pertinent to the Court’s inquiry in cases involving
arbitration agreements between nursing homes and patients include: (1) the
physical and mental state of the patient; (2) whether the patient was alone at
the time of its execution; (3) the nature of the admission agreement and
whether the arbitration agreement “was part of, or buried within, a potentially
lengthy admissions packet that decedent was required to complete, while in
ill health;” (4) whether the patient was sent to the facility directly from the
hospital; (5) whether the patient had awareness of and the opportunity to
research options to instead enter other facilities; (6) whether the patient “was
economically constrained” to enter into an agreement with the facility at issue
to provide care; and (7) whether the patient had the means to pay for
arbitration. See Kohlman v. Grane Healthcare Co., 228 A.3d 920, 927
(Pa.Super. 2020) (listing non-exhaustive factors).
Concerning the procedural prong of the unconscionability examination,
our Supreme Court has observed that “[a]n adhesion contract is a standard-
form contract prepared by one party, to be signed by the party in a weaker
position, usually a consumer, who adheres to the contract with little choice
about the terms.” Chepkevich v. Hidden Valley Resort, L.P., 2 A.3d 1174,
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1190 (Pa. 2010) (cleaned up). However, “merely because a contract is one
of adhesion does not render it unconscionable and unenforceable as a matter
of law.” Salley, supra at 127.
For example, this Court reversed trial court findings of unconscionability
of arbitration agreements in both MacPherson and Cardinal, cases
significant to the trial court’s ruling and the Facility’s arguments in this appeal.
MacPherson and Cardinal each concerned challenges to four-page
arbitration agreements between nursing homes and patients that were
executed at the time of admission separately from the respective admission
agreements. The arbitration agreement at issue in McPherson provided as
follows:
VOLUNTARY AGREEMENT: If you do not accept this Agreement, the Patient will still be allowed to live in, and receive services in, this Center.
ARBITRATION AGREEMENT (“AGREEMENT”)
BY ACCEPTING THIS AGREEMENT, THE PARTIES ARE WAIVING THEIR RIGHT TO A TRIAL BEFORE A JUDGE AND/OR A JURY OF ANY DISPUTE BETWEEN THEM. PLEASE READ THIS AGREEMENT CAREFULLY AND IN ITS ENTIRETY BEFORE ACCEPTING ITS TERMS.
This Agreement made on ____ (date) by and between the Parties, Patient Richard MacPherson [handwritten] and/or Patient’s Legal Representative ____ (collectively referred to as “Patient”), and the Center Manor Care Yeadon [handwritten], is an Agreement intended to require that Disputes be resolved by arbitration. The Patient’s Legal Representative agrees that he is signing this Agreement as a Party, both in his representative and individual capacity.
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A. What is Arbitration?: Arbitration is a cost effective and time saving method of resolving disputes without involving the courts. In using arbitration, the disputes are heard and decided by a private individual called an arbitrator. The dispute will not be heard or decided by a judge or jury.
B. AGREEMENT TO ARBITRATE “DISPUTES”: Any and all claims or controversies arising out of or in any way relating to this Agreement, the Admission Agreement or any of the Patient’s stays at this Center, or any Center operated by any subsidiary of HCR– Manor Care, Inc., whether or not related to medical malpractice, including but not limited to disputes regarding the making, execution, validity, enforceability, voidability, unconscionability, severability, scope, interpretation, preemption, waiver, or any other defense to enforceability of this Agreement or the Admission Agreement, whether arising out of State or Federal law, whether existing now or arising in the future, whether for statutory, compensatory or punitive damages and whether sounding in breach of contract, tort or breach of statutory duties (including, without limitation except as indicated, any claim based on Patients’ Rights or a claim for unpaid Center charges), regardless of the basis for the duty or of the legal theories upon which the claim is asserted, shall be submitted to binding arbitration. Notwithstanding the above, nothing in this Agreement prevents the Patient from filing a grievance or complaint with the Center or appropriate governmental agency; from requesting an inspection of the Center from such agency; or from seeking review under any applicable federal, state or local law of any decision to involuntarily discharge or transfer the Patient from the Center.
....
E. RIGHT TO CHANGE YOUR MIND: This Agreement may be cancelled by written notice sent by certified mail to the Center’s Administrator within thirty (30) calendar days of the Patient’s date of admission. If alleged acts underlying the dispute occur before the cancellation date, this Agreement shall be binding with respect to those alleged acts. If not cancelled, this Agreement shall be binding on the Patient for this and all of the Patient’s other admissions to the Center without any need for further renewal.
F. OTHER PROVISIONS:
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1. No Caps/Limits on Damages: There are no caps/limits on the amount of damages the Panel can award other than those already imposed by law in the state in which this Center is located. All state laws, statutes and regulations that limit awardable damages and define the scope of admissible and inadmissible evidence (i.e. regulatory surveys, incident reports, etc.) expressly apply to any arbitration hearing held pursuant to this Agreement.
2. Opportunity to Review & Right to Consult with Attorney: The patient (if competent) and the Patient’s Legal Representative acknowledge that the Patient and Legal Representative have each received a copy of this Agreement, and have had an opportunity to read it (or have it read to him/her) and ask questions about it before accepting it. Please read this Agreement very carefully and ask any questions that you have before signing it. Feel free to consult with an attorney of your choice before signing this Agreement.
6. Fees and Costs: The Panels’ fees and costs will be paid by the Center except in disputes over non-payment of Center charges wherein such fees and costs will be divided equally between the Parties. NAF’s administrative fees shall be divided equally among the Parties. To the extent permitted by law, any Party who unsuccessfully challenges the enforcement of this Agreement shall be required to pay the successful Parties’ reasonable attorney fees and costs incurred to enforce such contract (i.e., Motion to Compel Arbitration). The Parties shall bear their own attorney fees and costs in relation to all preparation and attendance at the arbitration hearing, unless the Panel concludes that the law provides otherwise. Except as stated above, the Parties waive any right to recover attorneys’ fees and costs.
BY SIGNING BELOW, THE PARTIES CONFIRM THAT EACH OF THEM HAS READ ALL FOUR (4) PAGES OF THIS AGREEMENT AND UNDERSTANDS THAT EACH HAS WAIVED THE RIGHT TO A TRIAL BEFORE A JUDGE OR JURY AND THAT EACH OF THEM CONSENTS TO ALL OF THE TERMS OF THIS VOLUNTARY AGREEMENT.
MacPherson, supra at 1213–18 (emphases in original).
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Although the trial court found the agreement to arbitrate in
MacPherson invalid, this Court reversed, concluding that it was neither
procedurally nor substantively unconscionable. We observed the following.
At the outset, in prominent styling, the agreement indicated that it was
voluntary and made it clear that “the Patient will still be allowed to live in, and
receive services at Manor Care.” Id. at 1222 (internal quotation marks
omitted). Further, the patient was conspicuously notified that he had thirty
days to change his mind. Hence, we concluded that there was no lack of
meaningful choice on the part of the patient.
Regarding substantive unconscionability, we noted that the requirement
that each side pay its own fees and costs in preparation of arbitration, which
was a significant basis for the trial court’s conclusion that the agreement
unreasonably favored Manor Care, was the same as would be the case in
common pleas court. Id. at 1221. Manor Care agreed to pay the arbitration
panel’s costs and fees, and placed no limits on the type or amount of available
damages. Additionally, the agreement contained a large, bold indication that
both Manor Care and the patient were waiving their rights to a jury trial. Id.
Thus, we concluded that the terms of the agreement did not unreasonably
favor Manor Care. Accordingly, we reversed the trial court’s order overruling
the preliminary objections.
In Cardinal, this Court likened the agreement at issue to that in
MacPherson. We indicated that it contained “a capitalized, bold-faced
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notification at the very top of the agreement stating: ‘THIS AGREEMENT IS
NOT A CONDITION OF ADMISSION TO OR CONTINUED RESIDENCE IN
THE FACILITY.’” Cardinal, supra at 53 (emphasis in original). The first
page of the agreement additionally provided:
THE PARTIES UNDERSTAND, ACKNOWLEDGE, AND AGREE THAT BY ENTERING INTO THIS AGREEMENT THEY ARE GIVING UP THEIR CONSTITUTIONAL RIGHT TO HAVE THEIR DISPUTES DECIDED BY A COURT OF LAW OR TO APPEAL ANY DECISION OR AWARD OF DAMAGES RESULTING FROM THE ADR PROCESS EXCEPT AS PROVIDED HEREIN.
Id. at 53-54 (emphasis in original). Moreover, as in MacPherson, “[t]he
agreement state[d] that the parties will each bear their own fees and costs,
that [the facility] shall pay the arbitrators fees and costs, and that the
monetary relief available via arbitration is the same as that which would be
available in a court of law”. Id. at 54. Finally, the agreement also specified
that the patient had thirty days to revoke the agreement. Id. Thus, we
concluded that the agreement was not unconscionable and the trial court erred
in overruling the facility’s preliminary objections.
Turning to the case sub judice, the Facility maintains that the trial court
erroneously found the arbitration agreement procedurally unconscionable
“simply because it considered the Admission Agreement to be a contract of
adhesion that [Decedent] had to sign if he wanted to remain at the facility.”
The Facility’s brief at 46. It argues that the facts of this case are “very similar”
to those in Cardinal since Ms. Calandrelli testified that Decedent would not
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be discharged if he had failed to sign the arbitration agreement. Id. at 47-
48. The Facility asserts that there was no evidence that Decedent felt time-
pressured to sign the arbitration agreement or that he was unable to
understand what he was doing. Id. at 51-52.
The Facility further contends that the arbitration agreement was not
substantively unconscionable, as our Supreme Court has expressly held that
non-reciprocal arbitration agreements are not ipso facto unconscionable. Id.
at 56 (citing Salley, supra at 117-18, 129). It maintains that “[a] non-
reciprocal arbitration agreement makes sense in this situation” because a
collection action, the type of claim most likely to have been brought by the
Facility against Decedent, “is more efficient to pursue” in a court. Id. at 57.
Finally, the Facility asserts that the trial court misread the Cardinal
decision, improperly concluding that the specific contract terms noted
favorably in Cardinal and MacPherson evidencing a lack of unconscionability
were now required elements for any arbitration agreement to be valid under
Pennsylvania law. Id. at 60. It argues that by holding that the arbitration
agreement had “to be identical to the contract discussed in Cardinal to be
enforceable,” the trial court “turned the burden of proving unconscionability
on its head” and runs afoul of the FAA’s prohibition against discrimination
against arbitration provisions. Id. at 61. Nonetheless, the Facility posits, its
arbitration agreement passes the trial court’s Cardinal-based litmus test. Id.
at 62-67.
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We disagree with the Facility’s characterization of the trial court’s
determination. The trial court offered the following explanation of its finding
that the Facility’s arbitration provision5 was both procedurally and
substantively unconscionable:
Taken as a whole, this Arbitration Clause in the instant case was meant to be a part of the Admissions Agreement, without the ability for Decedent to rescind this clause. Decedent was not provided any notice that his acquiescence to this Arbitration Clause was not required to obtain treatment in the facility. This Arbitration Clause was only explained to a resident if the resident specifically asked questions about the Arbitration Clause and even then Ms. Calandrelli did not sufficiently explain the significant impact of this Arbitration Clause on a resident’s life. . . . Ms. Calandrelli introduced the Arbitration Clause to residents as follows: “So I would say arbitration is where parties meet and an arbitrator would be there to hear both sides. And then the ____________________________________________
5 To reiterate, the arbitration agreement at issue herein provides, in toto, as follows:
ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT AND BROUGHT BY THE RESIDENT, HIS/HER PERSONAL REPRESENTATIVES, HEIRS, ATTORNEYS, OR THE RESPONSIBLE PARTY SHALL BE SUBMITTED TO BINDING ARBITRATION BY A SINGLE ARBITRATOR SELECTED AND ADMINISTERED PURSUANT TO THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. A CLAIM SHALL BE WAIVED AND FOREVER BARRED IF, ON THE DATE THE DEMAND FOR ARBITRATION IS RECEIVED, THE CLAIM (IF ASSERTED IN A CIVIL ACTION) WOULD BE BARRED BY THE APPLICABLE STATE OF FEDERAL STATUTE OF LIMITATIONS. ANY CLAIMANT CONTEMPLATED BY THIS PARAGRAPH HEREBY WAIVES ANY AND ALL RIGHTS TO BRING SUCH CLAIM OR CONTROVERSY IN ANY MANNER NOT EXPRESSLY SET FORTH IN THIS PARAGRAPH INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO A JURY TRIAL.
Admission Agreement, 3/27/15, at 16.
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arbitrator would make the decision, just like a judge. And it's binding and it's a legal – like whatever the outcome is, it's a legal finding, so.” . . .
After review of the entire Admission Agreement, this agreement did not require Decedent to initial after every clause, but rather, just a few select clauses chosen by the drafters of the Admissions Agreement such as the Arbitration Clause. Residents were not made aware they were not required to sign said Admission Agreement and still could receive medical care and treatment; residents were not aware they were not required to consent to the Arbitration Clause; and residents were not permitted to rescind their consent to the Arbitration Clause within thirty (30) days. By initialing this Arbitration Clause, residents were forever relinquishing their fundamental rights to a trial by jury and to pursue an action in a court of law. This Arbitration Clause is also not reciprocal in that Presque Isle Rehabilitation and Nursing Center still retained its right to a trial by jury and its right to pursue a legal action in a court of law. A review of this Arbitration Clause in the Admissions Agreement demonstrates all terms described in Cardinal are not present.
Trial Court Opinion, 2/10/20, at 21-23.
The trial court further addressed the procedural prong of the
unconscionability inquiry as follows:
Decedent was unable to negotiate or counter the terms of the Arbitration Clause. Decedent also knew he needed a significant amount of assistance daily such as help with transferring from his bed, using the toilet, dressing himself, daily hygienic needs, and bathing. Decedent was never informed he would be allowed to remain in the facility if he chose not to agree to the Arbitration Clause. Decedent had no realistic choice as to the terms of the Arbitration Clause. Decedent knew he needed medical care and treatment, and if he did not sign the Admissions Agreement he would not receive said medical care and treatment he needed.
Trial Court Opinion, 2/10/20, at 24.
The Facility seeks to have us overturn the trial court’s finding by
attacking particular facts piecemeal and contrasting in isolation statements
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from other cases. Properly viewing the attendant circumstances of this case
as a whole and applying the sliding-scale analysis approved by our Supreme
Court in Salley, supra at 125 n.12, 128, we find no basis to conclude that
the trial court erred or abused its discretion by finding that there was no valid
agreement to arbitrate based upon the unconscionability of the arbitration
provision proffered by Defendants.
We begin by noting that almost all of the factors this Court identified in
Kohlman as relevant to procedural unconscionability support the trial court’s
finding. See Kohlman, supra at 927. The testimony credited by the trial
court at the evidentiary hearing establishes that Decedent was elderly,
depressed, and had documented dementia; he arrived at the Facility directly
from the hospital, alone, and burdened by recently accepting that he was not
able to care for himself any longer; the arbitration provision was buried deep
within a lengthy admission agreement that took forty-five minutes to an hour
to complete; the Facility was one of few that had an opening and accepted his
insurance, thus rendering him economically constrained to agree to the
Facility’s terms, which were non-negotiable and not presented with an option
to decline or to revoke agreement upon further reflection.6 See N.T.
6 The Facility contends that the trial court’s finding that Decedent knew that he needed medical care and would not receive it if he did not sign the Admission Agreement, thereby agreeing to the arbitration provision, was “contradicted by Ms. Calandrelli’s testimony that [Decedent] would not have been discharged if he failed to sign the Admission Agreement.” The Facility’s
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Evidentiary Hearing, 7/30/19, at 45-47 (describing Decedent’s condition on
admission); id. at 79-80, 95 (concerning Decedent’s need for professional
assistance and lack of options); id. at 121 (Ms. Calandrelli testifying that she
did not tell residents that the arbitration agreement was mandatory or
voluntary). See also Admission Agreement, 3/27/15, at 16 (containing no
statement that the agreement to arbitrate is voluntary).
As to its substance, the provision purported to require binding
arbitration only of claims brought by Decedent without reciprocally requiring
the Facility to waive its jury trial rights in any claims it might have under the
agreement. Moreover, Article XVII of the admission agreement, under
miscellaneous provisions, specified that the Facility retained the right to
“change any or all terms and conditions of the Agreement at any time,” that
a resident’s failure to execute a modified agreement would constitute a
material breach of the Agreement, and that such would terminate the
Agreement and subject the resident to transfer or discharge.7 See Admission
Agreement, 3/27/15, at 18.
brief at 48. The Facility neglects to acknowledge that Ms. Calandrelli conceded that she never shared the information that the agreement was voluntary with Decedent or any other new patient. See N.T. Evidentiary Hearing, 7/30/19, at 121-22.
7 Although the trial court did not rely upon Article XVII of the admission agreement, which by its terms is applicable to the arbitration provision, in its finding of substantive unconscionability, we reiterate that the ultimate question is one of law, to which we apply a de novo, plenary review. See
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In our view, the trial court’s contrast of the sparse, one-sided arbitration
provision included in Decedent’s agreement that was never disclosed to
Decedent as voluntary with the detailed, stand-alone, voluntary arbitration
agreements at issue in Cardinal and MacPherson did not amount to an
improper litmus test. Rather, it served to highlight why the trial court’s
unconscionability finding in this case should not be overturned as were the
findings in those cases.
In sum, the Facility offered a classic contract of adhesion to a vulnerable
man in need of medical assistance, not as a voluntary agreement but as a
requirement for his admission. The arbitration agreement unreasonably
favored the Facility, not requiring it to waive any litigation rights and allowing
it to unilaterally change the terms and evict Decedent if he did not accept the
modification. The trial court did not err, abuse its discretion, or violate the
FAA in concluding that the arbitration agreement herein was invalid based
upon the generally applicable contract defense of unconscionability. As there
was no valid agreement to arbitrate, the trial court properly overruled
Defendants’ preliminary objections.8
Cardinal v. Kindred Healthcare, Inc., 155 A.3d 46, 50 (Pa.Super. 2017). As such, we are not bound by the trial court’s rationale.
8 Given our conclusion that the trial court did not err or abuse its discretion of finding that there was no valid agreement to arbitrate based upon the unconscionability of the arbitration provision proffered by the Facility, we need not consider the propriety of the trial court’s determination that there was no meeting of the minds due to Decedent’s poor vision.
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Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 3/5/2021
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