Published on:

Court Rejects Bid to Apply Third Party Arbitration Agreement to Nursing Home Lawsuit – GGNSC Omaha Oak Grove v. Payich

As a Pennsylvania nursing home lawyer, I’m very interested in the recent series of appeals court cases about whether a binding arbitration contract is valid. Very often, these cases go to trial because someone other than the patient, or his or her health care agent, signed the agreement. It’s not usually clear that the third party who signed the agreement had any authority to represent the patient’s legal interests, and when the patient, or his or her estate, later sues the nursing home, a court has to decide the issue. That was the case in GGNSC Omaha Oak Grove LLC v. Payich, in which the son of Nada Payich sued Golden Living Center of Sorensen. Ivan Payich signed the arbitration agreement when his mother was admitted, but Nada Payich had not been declared incompetent to manage her own affairs. A district court declined to compel arbitration, and the Eighth Circuit agreed.

Nada Payich executed a power of attorney on behalf of her son, Ivan Payich, on Sept. 3, 2009. The next day, Nada Payich was admitted to the Golden Living Center of Sorenson. No doctor had declared her incompetent. Nonetheless, Ivan signed the admission agreement on the line for Nada’s legal representative, and also signed an arbitration agreement, adding “son” after his signature. Unfortunately, Nada Payich died after her admission to Sorenson. The appeals court’s opinion doesn’t go into the details of how Sorenson allegedly neglected or abused her, but Ivan Payich’s later lawsuit alleges negligent care by the home that led to physical and mental injuries. After removing the case to federal court, Sorenson moved to compel arbitration, arguing that Ivan signed on Nada’s behalf and was therefore bound by the arbitration agreement, or that Nada was a third-party beneficiary to the agreement between Ivan and Sorenson. The district court disagreed.

The Eighth U.S. Circuit Court of Appeal upheld that decision, finding no valid agreement applied to Ivan’s lawsuit. On appeal, Sorenson argued only that Nada was a third-party beneficiary to an arbitration agreement between Ivan and Sorenson. Because Nada accepted the benefits of the agreement–care by Sorenson–her estate should be bound by them, the nursing home argued. The Eighth disagreed, saying there was no contract between Sorenson and Ivan, as required to find that someone is a third-party beneficiary. The arbitration agreement expressly names Nada as the contracting party, the court noted. It only provides signature lines for the patient herself or for her legal representative if she is incompetent. Though Ivan’s choice to put “(son)” after his signature suggests that he intended to sign as Nada’s representative, Sorenson abandoned the argument that he was acting as her representative. Thus, the Eighth upheld the ruling declining to compel arbitration.

As a Philadelphia injury lawyer, I approve. Arbitration agreements are not necessarily fatal to a Pennsylvania nursing home abuse case, but they’re not usually helpful. Arbitration shields the proceedings from public view, which keeps the public from learning about the details of abuse or neglect allegations. To make matters worse, some arbitrators have been accused of essentially deciding cases the way the nursing home–the party that brings in their paying business–prefers. This stacks the deck against the plaintiff–the injured patient and his or her family–and prevents them from warning the public. As a Philadelphia medical malpractice lawyer, I believe everyone has a right to their day in a public and publicly accountable court.

If you believe someone in your family was hurt by neglect, abuse or other bad decisions in an eastern Pennsylvania nursing home, you should call Rosenbaum & Associates for a free consultation. You can reach us through our website or call 1-800-7-LEGAL-7 today.

Similar blog posts:

Alabama Supreme Court Rules Third Party’s Signature on Arbitration Contract Nonbinding – SSC Montgomery CCOC v. Bolding

West Virginia High Court Finds Arbitration Clause Signed by Health Care Surrogate Unenforceable – State ex rel, AMFM, LLC v. Circuit Court

Pennsylvania Nursing Home Abuse Law, Designed to Limit Punitive Damages, Stalls in the PA Legislature

Contact Information