Big Changes in Nursing Home Abuse Litigation in Florida

Arbitration of Florida nursing home neglect claims has been a thorn in the side of elder abuse victims for decades. Recently, there has been two significant changes in Florida law regarding nursing home arbitration. First, the Federal government issued a strong ruling that nursing home arbitration agreements should not be allowed in facilities that accept Medicare and Medicaid payments. Secondly, in the Florida Supreme Court case of Mendez v. Hampton Court Nursing Center, our Supreme Court held that third parties without legal authority cannot execute arbitration agreements on behalf of residents.

CMS Strikes Down Nursing Home Arbitration Agreements

Recognizing the inherent unfairness of arbitration agreements in the nursing home context, the Centers for Medicare and Medicaid Services (CMS)[1] “has restored a fundamental right of millions of elderly Americans across the country: their day in court” by barring any nursing home facility that receives federal funding (i.e. Medicare or Medicaid) from requiring that its residents resolve any disputes in arbitration, instead of court.

Florida Nursing Home Abuse Case of Mendez v. Hampton Court

            In the recent Supreme Court of Florida decision Mendez v. Hampton Court, Mr. Mendez was admitted to Hampton Court nursing home. Included in the admission contract was an arbitration clause. Mr. Mendez did not sign the arbitration clause but his son did. Mr. Mendez’s son did not have power of attorney over his father at the time of signing the contract. Mr. Mendez lost his eye due to an infection and his son filed suit against Hampton Court. The nursing home moved to compel arbitration and the circuit court granted Defendant’s motion. The Third District Court of Appels affirmed the circuit court’s ruling, and the Supreme Court of Florida accepted jurisdiction over the matter because the ruling conflicted with other Florida cases.

“Third persons who are not parties to an arbitration agreement generally are not bound by the agreement.” 21 Williston on Contracts § 57:19, at 181 (4th ed. 2001). “Hampton Court urges us to adopt the rule of Mendez and Alterra Healthcare: that under the third-party beneficiary doctrine, a nursing home resident may be bound by a contract to which the resident never agrees. We disagree.” Mendez, pg. 4 of 23 (Fla. 2016).

Our Supreme Court goes on to explain:

Critically, the third-party beneficiary doctrine enables a non-contracting party to enforce a contract against a contracting party—not the other way around. See, e.g., Espinosa v. Sparber, Shevin, Shapo, Rosen & Heilbronner, 612 So. 2d 1378, 1380 (Fla. 1993); Shingleton v. Bussey, 223 So. 2d 713, 715 (Fla. 1969). The third-party beneficiary doctrine does not permit two parties to bind a third— without the third party’s agreement—merely by conferring a benefit on the third party. Mendez and Alterra Healthcare are not in accord with this principle.

. . .

We have previously held that “[w]e see no reason to allow [the noncontracting third-party beneficiary] to enjoy the benefits of the [contract] without bearing its burdens as well.” Nat’l Gypsum Co. v. Travelers Indem. Co., 417 So. 2d 254, 256 (Fla. 1982) (holding that the non-contracting third-party beneficiary - 6 - had to comply with the contract’s pre-litigation notice requirements if the third party wanted to sue to enforce the contract). We distinguish National Gypsum, however, because the third-party beneficiary in that case sued to enforce a contract between other parties; here, the father’s estate sued for negligence and statutory violations—not to enforce the son’s contract with Hampton Court. This distinction is consistent with many of the authorities cited in Justice Polston’s dissenting opinion.

. . .

Neither Mendez nor Alterra Healthcare squares with the principles of justice and equity underlying the third-party beneficiary doctrine: both decisions permit contracting parties to bind the non-contracting party without the non-contracting party’s consent. See Mendez, 140 So. 3d at 674-76; Alterra Healthcare, 953 So. 2d at 579. We would never enforce an admission agreement if a nursing home obtained a resident’s signature by threatening the violent destruction of the resident’s property unless the resident signed the agreement. Cf. Casto v. Casto, 508 So. 2d 330, 335 (Fla. 1987) (invalidating a prenuptial agreement in part because of the husband’s ultimatum that the wife “sign the agreement or he would blow up the house and throw Clorox all over her clothes”). If we will not enforce a - 9 - contract when a party agrees under threat or duress, then we should not enforce a contract in the absence of the party’s agreement altogether.

Mendez v. Hampton Court Nursing Center, LLC, September 22, 2016, Fla. 2016).

[1] CMS is an agency of the Health and Human Services Department that controls the $1 trillion+ Medicare and Medicaid dollars in the U.S.

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