SUPREME COURT OF OHIO UPHOLDS ARBITRATION AGREEMENT

BETWEEN NURSING HOME AND RESIDENT

Executive Summary

In a decision issued May 7, 2009, the Supreme Court of Ohio (the .Court.) held that an arbitration agreement between a

nursing home and a resident is not unconscionable solely because of the resident.s age, provided that the arbitration is voluntary

and not a precondition to admission.

The Ohio Department of Health (.ODH.) has issued licensure citations on the basis that arbitration agreements violate Ohio.s

Patients. Bill of Rights. The Court, however, only addressed the conscionability of such arbitration agreements. Therefore, as of

this writing, it would appear that ODH.s position on arbitration agreements is not affected by the Court.s decision.

Supreme Court Decision

In Hayes v. Oakridge Home, Slip Opinion No. 2009-Ohio-2054, the Court considered a nursing home resident.s claim that the

arbitration agreement that she signed upon her admission to the nursing home was unconscionable and should be set aside.

Pursuant to the arbitration agreement, the resident agreed to submit any malpractice claims that she may have against the

nursing home to arbitration and to waive her right to recover punitive damages and attorneys. fees.

The arbitration agreement stated in boldface type at the top of the agreement that it was a voluntary agreement. Furthermore,

the arbitration agreement reiterated in various places that the agreement was voluntary and was not a condition of the resident.s

admission. Moreover, by signing the agreement, the resident acknowledged that she understood the terms of the agreement,

that an agent of the nursing home had explained those terms to her, and that she had the opportunity to ask questions and

consult with an attorney before signing the agreement. The Court also gave weight to the fact that the arbitration agreement

was a free-standing document and not buried within a lengthy admission agreement. The Court held that a party.s age, standing

alone, is an insufficient basis for finding an agreement procedurally unconscionable.

The Court also held that the arbitration agreement was not substantively unconscionable because the terms of the agreement

were commercially reasonable. Despite the fact that the waiver of punitive damages only applied to the resident, the nursing

home also waived statutory legal rights that applied only to the nursing home. For example, the nursing home waived its rights

to seek court costs and attorneys. fees and to pursue an action against the resident for filing a groundless complaint. Therefore,

the Court held that the arbitration agreement was not substantively unconscionable.

Conclusion

According to the Court.s holding in Hayes, an arbitration agreement between a nursing home and its resident is not

unconscionable, provided that the agreement is voluntary and not a precondition to admission. Although not required, the

Court also seemed to be impressed with the fact that the arbitration agreement considered in Hayes was a free-standing

document. As mentioned above, however, it remains to be seen whether the Hayes decision will affect ODH.s position that

such arbitration agreements violate the Patients. Bill of Rights.

To read a copy of the Court.s decision, visit http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-2054.pdf.

To read a copy of a letter issued by ODH regarding arbitration agreements, visit http://www.bfca.cc/images/3008481-1.pdf.

 

Author: Benesch Healthcare Group from Benesch Attorney

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