In a pair of rulings that could have far-reaching implications, the Florida Supreme Court on Wednesday rejected key parts of arbitration agreements that would have limited legal damages against nursing homes.
The rulings dealt with a common practice of nursing homes asking incoming residents or their families to sign agreements that call for using arbitration — instead of going before judges and juries — to resolve legal disputes about such things as injuries.
But in cases from Hillsborough and Polk counties, a five-member majority of the Supreme Court rejected parts of the agreements that sought to limit the ability of residents to seek punitive damages or to limit pain-and-suffering damages.
“(These) limitation of liability provisions, which place a $250,000 cap on non-economic damages and waive punitive damages, violate the public policy of the State of Florida and are unenforceable,” the majority wrote in the Hillsborough case, which was filed on behalf of resident Angela Gessa against Manor Care of Florida, Inc.
But Justice Ricky Polston, joined by Chief Justice Charles Canady, wrote a stinging dissent in the Gessa case. Polston wrote that Florida law allows people to waive their legal rights, such as by signing arbitration agreements.
“The Florida Legislature, not this court, should decide Florida’s public policy,” Polston wrote.
Arbitration agreements have been a controversial issue in the nursing-home industry in recent years. Nursing homes argue the agreements can hold down legal costs at a time they are struggling with cuts in Medicaid and Medicare payments; attorneys for injured residents argue the agreements take away legal rights.
That has led to a spate of lawsuits throughout the state about whether arbitration agreements are valid.
Kristen Knapp, a spokeswoman for the Florida Health Care Association, which represents the nursing home industry, said her group supports the use of arbitration agreements and has worked to make sure they are understandable for residents and their families.
But Tampa attorney Jim Wilkes, who argued the Supreme Court cases on behalf of the residents, said people are asked to sign the agreements with little knowledge of what they include. He likened it to “giving somebody divorce papers and saying, ‘Here, fill these out.’ ”
Wilkes, who has gained national prominence for representing nursing-home residents, praised the court rulings.
“If I sound happy, it’s because the court did such a beautiful job of writing reasoned opinions,” he said.
Justice James E.C. Perry wrote the majority opinions in Wednesday’s rulings, which overturned decisions by the 2nd District Court of Appeal. Other members of the majority were Justices R. Fred Lewis, Peggy Quince, Jorge Labarga and Barbara Pariente.
Pariente did not sign onto Perry’s opinion in the Polk County case, which was filed on behalf of the estate of Edward Henry Clark against several defendants, including Tandem Health Care. She concurred without explanation in that case.
The rulings do not eliminate the possibility of arbitration agreements. But they restrict the way they such agreements can be used.
For example, the majority said judges — and not arbitrators — should decide whether arbitration agreements are valid and do not violate “public policy” spelled out in state laws. Also, the majority ruled that arbitration agreements couldn’t remain in effect simply by eliminating, or “severing,” parts that are found to violate public policy.
In both cases, the nursing homes argued that the residents or their family members freely entered into the arbitration agreements, which they said offer advantages such as resolving cases more quickly.
“Gessa voluntarily entered into the arbitration agreement, and its execution was not a condition of her receiving the home’s services,” Manor Care argued in one brief. “The fundamental right to contract, including the right to waive personal rights to damages, permits an individual such as Gessa to contract for speedy arbitration, with the arbitrator’s fees and costs paid by Manor Care and certain limitations on monetary damages.”
But Paul Jess, general counsel for the trial-lawyers group Florida Justice Association, said Wednesday that nursing homes have “pretty much tested the limit in what kind of onerous and unconscionable limits” they can place in arbitration agreements.
“These kinds of provisions are really over the top,” Jess said.
By Jim Saunders
