BlogLine

Court’s ruling rocks nursing home arbitration 

8/13/24

By: Lili Mikaelian

On June 28, 2024, in Hearden v. Windsor Redding Care Ctr., LLC, the Court of Appeal in California affirmed a trial court decision finding that families of deceased nursing home residents were not bound by the facilities’ arbitration agreement in their representative or individual capacities, even though the families signed the deal on their deceased family members’ behalf.  

In 2020, several residents at Windsor Redding Care Center (“Windsor”), a skilled nursing facility, died due to COVID-19. The family members of the decedents sued Windsor and its affiliated entities, asserting various causes of action, including elder abuse, negligence, and wrongful death. Windsor moved to compel arbitration based on agreements signed by respective family members. The trial court denied the motion.  

For three of the arbitration agreements signed by the families, the trial court found no evidence of authority by the families to sign on behalf of the deceased residents. The court determined that merely signing as an agent or legal representative, without more, does not establish authority or agency. The court reasoned that Windsor failed to prove any conduct by the decedents to lead the facility to reasonably believe the families had the authority to bind the decedents to arbitration. Even though one of the families signed the agreement under a power of attorney executed by the decedent, the court still denied the motion to compel arbitration as to all parties to avoid conflicting rulings. Furthermore, the court found that the family members themselves were not bound by the arbitration agreements because they did not sign them in their individual capacities.  

On appeal, Windsor argued that equitable estoppel should bind the families to arbitration. Equitable estoppel requires “(a) a representation or concealment of material facts; (b) made with knowledge, actual or virtual, of the facts; (c) to a party ignorant, actually and permissibly, of the truth; (d) with the intention, actual or virtual, that the ignorant party act on it; and (e) that party was induced to act on it.” Young v. Horizon West, Inc. (2013) 220 Cal.App.4th 1122, 1131. However, the court found that the family signatories did not make relevant misrepresentations or conceal facts. Therefore, equitable estoppel did not apply.  

Windsor also relied on the doctrine of unclean hands, which “bars relief to a party who has engaged in misconduct directly related to the transaction or matter.” DeRosa v. Transamerica Title Ins. Co. (1989) 213 Cal.App.3d 1390, 1395. However, the court found that Windsor failed to show that any alleged misconduct by the family members was directly related to the arbitration agreements or that impacted the arbitration process. 

The Court of Appeal affirmed the trial court’s decision and all of its holdings.

This decision underscores the importance of clear and unambiguous arbitration clauses that specifically address who is bound by the agreement, particularly in the health care setting. The decision further demonstrates the necessity for clear evidence of authority in cases where family members are signing on behalf of residents, including obtaining and retaining proof of power of attorney or any other relevant authorization documents. 

For more information please contact Lili Mikaelian at lili.mikaelian@fmglaw.com or your FMG relationship partner to learn more.