Federal Arbitration Act Pre-emption of Pennsylvania's Wrongful Death Act and Survival Act Upheld, Lipshutz v. St. Monica Manor
A recent ruling by the Court of Common Pleas in Philadelphia, upheld the federal and state public policy that favors promoting arbitration agreements. There are definite plus and minus to arbitration. Especially true with nursing home arbitration agreements, where the publics' knowledge of a nursing homes' safety record is greatly limited. Before placing a loved one into a facility checking their safety record of known allegation of serious abuse and neglect is of great importance. However, when a party is bound by contractual principles, which upholds arbitration agreements, instead of being able to file a lawsuit that is public record, these legal disputes are processed in a more private manner. It has long been touted as an efficient, and less costly alternative to trial litigation, enabling the courts to free up limited resources and time. Often, nursing home companies' favor, and accordingly place an arbitration agreement clause into their contracts, a contract which is required to be signed prior to admission into their facility. As was the case in Lipshutz v. St. Monica Manor, the Philadelphia Court of Common Pleas found that the survivorship action related to a wrongful-death case was bound by the arbitration agreement and further upheld by federal law.
In Lipshutz v. St. Monica Manor, the plaintiffs brought a wrongful death and survival claims on behalf of their deceased mother and her estate under Pennsylvania's Wrongful Death Act and Survival Act. Decedent suffered a stroke on November 4, 2011 at which time she was taken to Jefferson University Hospital. The decedent was discharged with an "impaired mental status" unable to care for herself. On November 11, 2011, decedent's daughter, plaintiff Elizabeth Lipshutz, acting as her mother's power of attorney, signed an admission agreement which contained within a mandatory arbitration clause. On May 16, 2013, plaintiffs alleged that the substandard care at St. Monica Manor was the direct cause of the decedent's untimely death.
Because the decedent's daughter acted with the authority and in a representative capacity, the court held that the survival claims had to be remanded to arbitration. At the time of the signing there was a valid contract supported by fundamental contract principles, such as a valid offer, acceptance, and consideration and that no traditional defenses to formation were available. The court held that the Federal Arbitration Act ("FAA") pre-empts Pennsylvania civil procedure rules, Pa.R.Civ.P. 213(e), which requires wrongful-death claims and survival claims to be litigated together.
In determining who was bound by the arbitration clause, the court looked to Pisanco v. Extendicare Homes, Inc., which determined that "one who is not a party to a contract cannot be bound by it, and that arbitration agreements are not binding on non-signatory beneficiaries." Here, her four children, three of whom did not sign an arbitration agreement with St. Monica Manor, survived the late Mrs. Lipshutz. Therefore, Elizabeth Lipshutz signing of the agreement in her capacity of power of attorney bound her late mother's decedent's survival claims to arbitration, but did not affect her own right or the rights of other surviving beneficiaries to bring wrongful death claims. While the Court of Common Pleas is not the highest court in Pennsylvania, if higher courts uphold the ruling, it can soon become precedent in the state.