Nursing Home Cannot Compel Arbitration When Capacity of Resident Who Signed Admissions Agreement is Questionable

James Patterson entered Care One at Moorestown on September 3, 2014. He had various serious health conditions. Approximately 2 months after he entered Care One, during which period he was hospitalized four times, he died. Plaintiff, the administrator ad prosequendum of Mr. Patterson’s estate, sued Care One, alleging that its negligence and/or recklessness had caused Mr. Patterson’s serious injuries and, eventually, his death. Plaintiff asserted negligence, wrongful death, and survival claims against the facility.

In response, in lieu of an answer to the plaintiff’s complaint, Care One filed a motion to compel the parties to submit to arbitration. It relied on the 17-page Admission Agreement that Mr. Patterson had signed the day that he entered Care One. The Admission Agreement included an arbitration clause.

Following oral argument, the trial judge denied Care One’s motion, finding that Care One had not met its burden of showing that there had been a “meeting of the minds” between the parties to the Admission Agreement. The judge noted that, although absent fraud or duress it is presumed that a party to a contract understands and agrees to its terms, there was an issue as to whether Mr. Patterson had the requisite capacity to enter into the agreement, given his “multiple serious health issues” at the time of admission. He was 83 years old and arrived at the facility on a stretcher from a hospital following a stroke. Care One had conducted a nursing evaluation and found that Mr. Patterson’s speech was slurred; that he had a “neurological deficit;” and that his cognition was “alert.” The judge concluded that Mr. Patterson’s competency, at the time he signed the agreement, was “at a minimum, unclear.”

Moreover, the trial judge concluded that the Admission Agreement was a contract of adhesion. It was on a pre-printed form that was a requisite to admission. There was no indication that Mr. Patterson had been given the AAA arbitration rules, the chance to consult with an attorney, or the right to rescind the agreement. Recognizing the State’s “strong public policy of protecting the elderly and infirm,” particularly those who are residents of nursing homes, and recognizing Mr. Patterson’s “age, neurological deficit, lack of commercial sophistication and the disparity of bargaining power,” the court concluded that there were “indicia of procedural unconscionability.”

The judge recognized that a party’s waiver of the right to trial must be knowing, and he could not definitively rule that Mr. Patterson’s waiver had been knowing. Moreover, because the arbitration agreement prevented Mr. Patterson, but not Care One, from pursuing litigation, the judge declared,

[n]othing in equity requires the court to compel one party to arbitrate when the other party is not bound, particularly when the other party had superior bargaining power and drafted the contract which [Mr. Patterson] may or may not have even had the capacity to understand.

The trial court’s decision was affirmed on appeal. The Appellate Division recognized that the Federal Arbitration Act provides a liberal policy in favor of arbitration. Nevertheless, it concluded that “this does not mean that all arbitration agreements should be enforced” and that they are subject to invalidation by “generally applicable contract defenses.” A necessary element to a contract is a meeting of the minds, and the record supported the trial judge’s conclusion that no such meeting of the minds occurred.

Care One argued that the decision regarding the validity of the arbitration agreement should have been made by an arbitrator, rather than by the court. The Appellate Division rejected this argument: because there was no meeting between the minds, there was no enforceable agreement between the parties.

A copy of Patterson v. Care One can be found here – Patterson v. Care One

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