Over the past decade, professional malpractice claims against long term care facilities in Georgia have increased exponentially. Traditionally, professional medical malpractice claims were asserted against hospitals, physicians, nurses, and other acute care medical providers.
Over the past decade, professional malpractice claims against long term care facilities in Georgia have increased exponentially. Traditionally, professional medical malpractice claims were asserted against hospitals, physicians, nurses, and other acute care medical providers. However, the landscape of litigation against long term care providers began to change in the 1980’s and early 1990’s when the federal and state governments began increasing the number of regulations with which long term care providers were expected to comply. The number and complexity of the various federal and state laws and regulations with which nursing homes must now comply make the nursing home industry the most highly regulated health care enterprise in the United States, and one of the most highly regulated industries in America. Although these increasingly complex regulations were initially intended to address nursing home quality of care deficiencies then believed to be common throughout much of the United States, an unintended consequence has been the development of a cottage industry within the Plaintiffs’ Bar in which lawyers, and sometimes entire law firms, make their living suing nursing homes alleging a violation of one or many of these regulations. These types of lawsuits have become so prevalent in some parts of the country that many nursing home operators can no longer procure liability insurance at affordable rates, and many insurers have stopped insuring nursing homes altogether.
Nursing home operators recognize the right of an individual to resort to the courts for redress if the individual believes he has been wronged. However, all too often these lawsuits now focus on pursuing a corporation believed to have deep pockets, rather than on compensating individual Plaintiffs alleged to have been harmed.
In an effort to swiftly address the injuries alleged to have been caused by individual nursing home residents, many nursing home operators have begun including arbitration agreements in their admissions paperwork. These agreements typically provide that, should a disagreement arise between the resident and the facility, the parties mutually agree to submit their grievance to binding arbitration These agreements generally also provide that the arbitrator, or panel of arbitrators, are to be chosen jointly by the resident (or appropriately designated persons in the event the resident is incapacitated or deceased); the arbitration fees will be paid by the facility; and, in some instances, the agreements provide that a designated sum will be paid to the resident to assist with payment of the resident’s attorney’s fees to ensure the resident will be represented by counsel.
Notwithstanding these agreements, they are often ignored, and suit filed even before the operator is even notified of a claim. In order to enforce the arbitration agreement, operators often must file a motion to dismiss the lawsuit and compel arbitration. When an agreement to arbitrate is disputed, the party seeking arbitration bears the burden of proving the existence of a valid and enforceable agreement to arbitrate. Ashburn Health Care Center, Inc. et al v. Poole, 286 Ga. App. 24 (Georgia Court of Appeals, 2007). Under Ashburn, to establish the existence of a valid agreement, it must be shown that the person signing the arbitration agreement held actual or apparent authority on behalf of the resident at the time the agreement was signed. This is usually shown through the existence of a valid power of attorney authorizing the agent to act on behalf of the resident. It is not enough that the person signing the agreement is a family member, or even a spouse of the resident. Although the husband of the resident in Ashburn signed the agreement, the resident’s children, not the spouse, held power of attorney and the arbitration agreement was ruled unenforceable.
In those rare instances where the resident signs the arbitration agreement, it must usually be shown that the resident had the requisite mental capacity to enter into the agreement at the time of signing. This is usually a factual issue for the court to decide. See Washburn v. Beverly Enterprises-Georgia, Inc. et al., 2006 U.S. Dist. LEXIS 73267 (S.D. Ga.).
The hurdles to enforcing an arbitration agreement does not end by showing the existence of a valid agreement. Arbitration agreements involving cases of alleged personal injury are unenforceable under Georgia law in most instances. Georgia’s Arbitration Act, O.C.G.A. § 9-9-1 et seq., governs arbitration proceedings in Georgia. O.C.G.A. § 9-9-2 (c)(10) specifically provides that actions involving any agreement to arbitrate future claims arising out of personal bodily injury or wrongful death based on tort are not enforceable under the Georgia Arbitration Act. Georgia law also contains very specific provisions for the arbitration of medical malpractice claims. Nursing home malpractice claims are included within this section of the code. O.C.G.A. §9-9-60 provides, in pertinent part, that the term “medical malpractice claim” means any claim for damages resulting from the death of or injury to any person arising out of….. (2) Care or service rendered by any public or private hospital or nursing home……” While O.C.G.A. § 9-9-60 appears to govern arbitration of nursing home claims alleging medical malpractice, O.C.G.A. § 9-9-62 effectively guts the Georgia Arbitration Act provisions for arbitration of nursing home claims by providing, in pertinent part, that “no agreement to arbitrate shall be enforceable unless the agreement was made subsequent to the alleged malpractice and after a dispute or controversy has occurred and unless the claimant is represented by an attorney at law at the time the agreement is entered into.” In other words, pre-dispute arbitration agreements are unenforceable under the Georgia Arbitration Act. Since almost all nursing home arbitration agreements are signed on admission and before a dispute arises, Georgia law is rarely helpful in attempting to enforce a nursing home arbitration agreement.
Consequently, most agreements now provide that the terms of the Federal Arbitration Act, 9 U.S.C.S. 1 et seq., will govern the agreement. Unlike the Georgia Arbitration Act, the terms of the Federal Arbitration Act are much less restrictive with regard to the arbitration of medical malpractice claims. As the United States Supreme Court has recognized, the Federal Arbitration Act was designed to allow the parties to avoid the costliness and delays of litigation and place arbitration agreements upon the same footing as other contracts. Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-11, (1974). The Supreme Court has stated that the policy favoring arbitration agreements under federal law guarantees the enforcement of private contractual arrangements and creates a of federal law establishing and regulating the duty to honor an agreement to arbitrate. Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983). Notwithstanding the Supreme Court’s interpretation of the Act, defense counsel usually must convince the court in which the action is pending of the applicability of the Federal Arbitration Act, and further that the Federal Arbitration Act supersedes and preempts Georgia law to the contrary. While the arguments of preemption are more complex than the scope of this article, such an argument usually includes establishing that the agreement at issue is a contract evidencing transactions in interstate commerce, that nursing homes are subject to extensive federal regulation and control, and that federal law trumps state law with regard to the agreement to arbitrate at issue.
While determining the enforceability of agreements to arbitrate in nursing home lawsuits is the initial province of the trial court, several state supreme courts have held nursing home agreements to arbitrate enforceable, either under their state arbitration code, or under the Federal Arbitration Act. See Briarcliff Nursing Home et al. v. Turcotte and Briarcliff Nursing Home et al. v. Woodman, 894 So.2d 661 (2004)(Alabama);Vicksburg Partners, L.P. et al. v. Stephens, 911 So.2d 507 (2005)(Mississippi); Owens v. National Healthcare Corporation et al., 2007 Tenn. LEXIS 1003 (2007)(Tennessee). It is important to note that no Georgia appellate court has yet ruled on the enforceability of a valid agreement to arbitrate nursing home claims under the Federal Arbitration Act. This area of law thus remains unsettled in Georgia.
However, if the Fairness in Nursing Home Arbitration Act becomes law, a ruling by the Georgia Supreme Court holding an agreement to arbitrate enforceable under the Federal Arbitration Act may be short lived. Last year, both houses of the 110th Congress proposed bills, with bi-partisan sponsors, to amend the Federal Arbitration Act to severely restrict the applicability of agreements to arbitrate nursing home claims. Senate Bill 2838 and H.R. 6126 provide that a pre-dispute arbitration agreement between a long term care facility and a resident of such facility (or person acting on behalf of the resident) is invalid and unenforceable. Although both bills were reported out of committee, neither bill made it to a floor vote and the bills died with the end of the 110th Congress. However, both bills have now been re-introduced in the 111th Congress, with expanded language which could in some cases sweep assisting living facilities and personal care homes, in addition to nursing homes, within its scope. If passed, this law would effectively eliminate any argument that pre-dispute arbitration agreements are enforceable under the Federal Arbitration Act.
Arbitration agreements were intended to serve as a means for the speedy and efficient resolution of disputes between nursing homes and residents or their families. While arbitration can always be used when jointly agreed to after a dispute has arisen, pre-dispute nursing home arbitration agreements in medical malpractice actions are generally unenforceable under the Georgia Arbitration Act. Although the enforceability of arbitration agreements in this context under the Federal Arbitration Act has not yet been determined by the Georgia appellate courts, the Fairness in Nursing Home Arbitration Act, if passed, may well determine a future ruling on this issue by the Georgia Supreme Court.