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Alabama High Court Remands Arbitration Dispute In Case of Delayed Motion to Arbitrate – Aurora Healthcare Inc. v. Ramsey

One very common issue for me as a Pennsylvania nursing home lawyer is arbitration agreements. Many homes, especially private for-profit homes, will require or pressure patients into signing arbitration agreements when they enter the home. These agreements take away the patient’s right to pursue justice through the court system; instead, they are compelled to use a form of private judging that has no jury and is not public record. Some studies have even shown that some arbitrators decide in favor of the large company paying them more often than they decide in favor of the individual bringing the lawsuit. For these reasons, we always prefer to go to open court. This was also the preference in Aurora Healthcare Inc. v. Ramsey, a nursing home negligence case in Alabama. The trial court there found that Aurora waited so long to invoke its arbitration agreement that it prejudiced Sharon Ramsey, but the Alabama Supreme Court sent the case back for more investigation.

Ramsey is the administrator of the estate of Mary Pettway, who died at 75 after two stays in Aurora nursing homes. Pettway signed an arbitration agreement on her second admission to a home. However, she ended up returning to the hospital, where she died. Ramsey filed a complaint on Nov. 3, 2005, alleging wrongful death and other common-law torts. Aurora responded by moving for a change of venue, which it eventually got, and filing other pretrial and discovery motions. It didn’t raise the issue of an arbitration agreement until Nov. 3, 2006; another filing from that day said it hadn’t realized an arbitration agreement existed until then. Litigation continued at least two years, followed by a two-year gap in the record. When the trial court finally addressed the issue in June 2010, it denied arbitration, saying Aurora’s pursuit of the litigation prejudiced Ramsey by incurring considerable expense. Aurora appealed.

On appeal, the nursing home company got a second chance, although the issue wasn’t fully settled. Under Alabama law, the Alabama Supreme Court said, denying arbitration is correct when the party seeking arbitration has substantially invoked the arbitration process and when the opposing party has been substantially prejudiced as a result. Ramsey failed to meet that second burden, the court found. The litigation expenses she incurred in the change of venue dispute cannot count under state law, it said, because defendants have the right to establish venue before compelling arbitration. The subsequent litigation expenses were primarily about discovery issues, the court said — and these could not prejudice Ramsey because discovery would also have taken place in arbitration. Nor are expenses for opposing arbitration prejudicial. The court noted that Aurora had filed motions that would have been unavailable in arbitration, but that Ramsey didn’t incur expenses responding to those. Thus, there was little evidence that Ramsey met the high burden of showing prejudice, it said. To determine whether she could meet that burden, the Supreme Court remanded the case to trial court.

As a Philadelphia injury lawyer, I wish Ramsey well in the remanded case. Arbitrators are not necessarily prejudiced against the plaintiff, but studies show that they can be. Arbitration can also remove one of the benefits of litigation — shining a light on unsafe or illegal practices that lead to Pennsylvania nursing home abuse. Indeed, this may be enough to explain why nursing homes so vigorously pursue arbitration agreements in the first place — so their dirty laundry stays unaired. Of course, nursing homes also wish to avoid the expense of litigation, which is part of the stated reason for arbitration. However, this argument is somewhat undercut by the pursuit of years of pretrial litigation, as the Alabama high court noted. As a Philadelphia medical malpractice lawyer, I do not believe businesses with more attorneys and more money at their disposal should be able to have their cake and eat it too.

Rosenbaum & Associates represents families that have suffered a serious injury or loss because of mistreatment at a nursing home. If you’d like to tell us your story and learn more about our services, call us today at 1-800-7-LEGAL-7 or send us a message online.

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