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Arizona Court of Appeals Upholds Arbitration Agreement In Health Care Litigation

by James Kaucher and Danielle Constant

February 27, 2017 - The Arizona Court of Appeals recently ruled that an arbitration agreement signed by a patient while living in a nursing home is enforceable. Arbitration agreements between health care providers and their patients remain controversial. The Court's ruling in this case shows the importance of ensuring that these agreements are executed under circumstances that ensure that patients understand what they are signing and that they have signed the agreement voluntarily.

In Gullett v. Kindred Nursing Centers West, LLC, Division II of the Arizona Court of Appeals considered substantive and procedural challenges to an arbitration agreement between a nursing home and its patient. The plaintiff filed a suit against a nursing home, asserting a claim for abuse and neglect under Arizona's vulnerable adult abuse statute.

The nursing home produced a copy of an arbitration agreement that the patient signed during his residency, moved to dismiss the complaint, and moved to refer the dispute to arbitration. The plaintiff argued that the agreement was unenforceable because it was substantively and procedurally unconscionable.

The Court of Appeals rejected the claim that the agreement was substantively unenforceable. It rebuffed the plaintiff's claim that the limits on discovery were unreasonable, noting that "[t]he amount of discovery is not so low and the burden to obtain more so high that the Agreement denies litigants the opportunity to conduct discovery sufficient to adequately arbitrate an APSA claim." The Court noted that the agreement was mutual and that its provisions for selecting an arbitrator reasonably provided for the selection of an impartial arbitrator. Accordingly, the agreement was substantively enforceable.

The Court of Appeals remanded to the trial court, however, for a determination of whether the parties entered into the agreement "under procedurally unconscionable conditions . . . ." The Court noted that while Arizona public policy favors arbitration, the process of entering arbitration agreements must still be "fair." The court held that the plaintiff should be allowed to conduct limited discovery to determine "whether there was a meeting of the minds on the agreement to arbitrate."

As Gullett shows, a balanced, mutual, and fair arbitration agreement can be enforced when the agreement is executed under circumstances that ensure that patients understand what they are signing and have signed the agreement voluntarily.

For more information or questions, please contact any our Health Care Law attorneys:.
Peter Collins - 520.628.7073 - pcollins@gustlaw.com
Danielle Constant - 520.388.4784 - dconstant@gustlaw.com
James Kaucher - 520.388.4792 - jkaucher@gustlaw.com
Thomas Murphy - 520.205.4759 - tmurphy@gustlaw.com
Heather Neal - 602.257.7672 - hneal@gustlaw.com
Victoria Otto - 520.388.4786 - votto@gustlaw.com
Carol Romano - 602.257.7660 - cromano@gustlaw.com
J.T. Shoaf - 602.257.7419 - jtshoaf@gustlaw.com
William Sowders - 602.257.7478 - wsowders@gustlaw.com

The information contained herein is intended for general information purposes only, and should not be construed as legal advice or opinion on any particular facts or circumstances. Readers are urged to consult with an attorney with legal questions concerning specific factual circumstances.

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