In a recent decision from the Superior Court of Pennsylvania, the intermediate appellate court provided additional guidance in regards to whether an arbitration agreement may be considered unconscionable and therefore unenforceable. In Lomax v Care One, LLC et. al. No. 344 WDA 2020 (March 5, 2021), Plaintiff filed a wrongful death and survival action against the nursing home and other defendants after the death of her father at the facility. The Defendants filed Preliminary Objection to the Complaint asking the trial court to compel the action to arbitration on the basis of a pre-dispute arbitration agreement. However, the trial court denied the Preliminary Objections and the ruling was upheld on appeal on the basis that the subject arbitration agreement was unconscionable.
The Plaintiff’s decedent executed an Admission Agreement (“the Agreement”) upon entering the nursing home facility a few months before his death. The Agreement contained a Dispute Resolution and Arbitration provision (“the Arbitration Clause). The court first took issue with the Arbitration Clause itself. The court found that the decedent had no ability to rescind the clause and he was not advised that was not required to acquiesce to the clause in order to receive care at the facility. In addition, residents were not give an explanation about the Arbitration Clause unless they asked for one and if they did the explanation normally given was insufficient. They were simply told that an arbitrator would hear both sides and she/he would make a decision which would be a legal finding. The decedent was not required to initial the Arbitration Clause and the facility was not bound by the arbitration clause and could sue in court if it chose to.
In reaching its decision, the court also heard evidence about the mental and physical circumstances of the decedent when he executed the Agreement. At the time he was elderly, depressed, he had documented dementia, he arrived at the facility directly from the hospital and he was recently told that he could no longer care for himself. The Arbitration Clause was contained in the lengthy Agreement, the facility was one of a few that accepted his insurance which rendered him constrained to agree to the facility’s terms and the terms were presented as non-negotiable or without an option to decline with further consideration.
The court noted that a finding of unconscionability requires a determination that the contractual terms are unreasonably favorable to the drafter, and there is no meaningful choice on the part of the other party regarding the acceptance provisions. In applying this standard to the facts presented during the trial court evidentiary hearing the Superior Court held that the Arbitration Clause was invalid based upon the generally applicable contract defense of unconscionability.