Florida Supreme Court Nixes Nursing Home Arbitration Agreement

The Florida Supreme Court has settled a dispute among appellate courts in the state over whether nursing home defendants may compel arbitration in cases where the agreement was signed by a friend or family member. Essentially, unless there has been a court order investing that individual with those legal powers, the agreement won’t be enforceable. 

The decision in the case, Mendez v. Hampton Court Nursing Center, resolves a dispute between the Third District Court of Appeals and other state appellate courts. The 3rd DCA had ruled an arbitration agreement signed by a nursing home resident’s son was valid and enforceable because the father was mentally incapacitated and the son was serving as his representative. However, the state high court ruled the father’s mental capacity should not factor in to whether the son had legal standing to sign the arbitration provision in his nursing home admission papers.

According to court records, the father was admitted to the nursing home back in 2009. His son signed his admission paperwork, including the arbitration contract. 

In general, third persons who aren’t parties to an arbitration agreement usually aren’t bound by that agreement. However, courts have disagreed on the issue of whether a nursing home resident is bound by an arbitration clause in a nursing home contract when the resident neither signed or otherwise agreed to the contract. The First and Third Districts held that the resident IS bound by the contract, reasoning the resident is the intended third-party beneficiary of the contract. These courts both stressed the resident is bound even when he or she didn’t sign the contract and it matters only whether the signing person had the authority to act on behalf of the resident.

The courts reasoned this could be justified under the third-party beneficiary doctrine. It holds that a nursing home resident can be bound by a contract to which he or she never actually agrees. The third-party beneficiary doctrine holds that in certain situations, a person can sue to enforce a contract even if that person is not a party to that contract.

Florida Supreme Court justices noted that while the third-party beneficiary doctrine does allow non-contracting parties to enforce a contract against a contracting party, it does not allow contracting parties to enforce agreements against those who are non-contracting. The court stated the doctrine doesn’t allow two contracting parties to bind a third without that third party’s consent, just by conferring some benefit on the third party.

In this case, the father’s estate is suing for statutory violations and negligence that caused him to suffer an eye infection that ultimately resulted in doctors having to remove that eye. What the father was not doing was trying to enforce his son’s contract with the nursing home. The court noted that it would ordinarily enforce an arbitration clause if a plaintiff sues under a contract to which plaintiff is not a party (absent some other valid defense). However in this case, the plaintiff/ father is not filing a suit as a third-party beneficiary.

The father in this case died in 2013, but the legal dispute continued.

Now, with the state supreme court’s blessing, the father’s estate may continue with this nursing home negligence lawsuit before the courts instead of being compelled to take the case before an arbitrator.

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Additional Resources:

Florida Supreme Court rejects arbitration in nursing-home injury case, Sept. 22, 2016, By Jim Saunders, Miami Herald