In the case of Harrington v. Kramer, No. 2024-CV-774 (C.P. Luz. Co. Jan. 14, 2025 Gelb, J.), Judge Lesa Gelb of the Luzerne County Court of Common Pleas found that the terms of a nursing home Arbitration Agreement was unconscionable and, therefore, unenforceable.
The court also denied Preliminary Objections filed by the Defendants against the punitive damages claims. The court noted that these punitive damages issues could be revisited during the Motion for Summary Judgment stage.
According to the Opinion, the Plaintiff filed claims for vicarious and direct corporate liability against nursing home Defendants in which the Plaintiff’s decedent resided. The Plaintiffs alleged that the decedent sustained injuries while staying at the Defendant’s premises from which the decedent eventually passed away.
A central issue in the case relative to the arguments addressed in this decision were whether the Plaintiff decedent had sufficient cognitive function and understanding to properly agree to the admission paperwork, which included an Arbitration Agreement.
It was additionally alleged that the nursing home did not have any written policies about what the Director of Admissions should do in order to prepare for initial meetings with incoming residents, in part, in terms of determining if a person is competent to sign an arbitration agreement.
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| Judge Lesa Gelb Luzerne County |
Judge Gelb provided a thorough review of Pennsylvania law regarding the validity and enforceability of arbitration agreements in this context. The court noted that, although Pennsylvania and federal law impose a strong public policy in favor of enforcing arbitration agreements, the enforcement of such an agreement to arbitrate can be denied by a court where the party opposing arbitration proves a contract defense that invalidates the agreement to arbitrate. One such defense to an allegation that a valid arbitration agreement has been entered into is the defense of unconscionability.
The court noted that, to invalidate enforcement of a contract based upon unconscionability, the party challenging the contract must show both an absence of a meaningful choice, referred to as procedural unconscionability and contract terms that are unreasonably favorable to the other party, which is known as substantiative unconscionability. The court noted that these tests are assessed under a sliding-scale approach, with a lesser degree of substantiative unconscionability required where the procedural unconscionability is very high.
Applying the law to the facts of this case, the court found that the Arbitration Agreement at issue was unconscionable and, therefore, unenforceable. The court found that the Arbitration Agreement at issue was equally and procedurally substantively unconscionable.
The court noted that it found that the Plaintiff decedent did not have the legal capacity to sign the Arbitration Agreement based upon the medications that she was prescribed, the notes from the nursing staff as to the decedent’s cognition, and the other circumstances surrounding the agreement. The court also found the agreement itself to be substantively unconscionable because it imposed additional costs on the decedent and her representatives that they would not have in a court of law. The court also found that the Arbitration Agreement favored the nursing home in that it permitted the nursing home to pursue the decedent and/or her representatives for non-payment outside of arbitration.
Due to the above issues, the court held that the Arbitration Agreement was not binding.
Anyone wishing to review a copy of this decision may click this LINK.
I send thanks to Attorney Thomas F. Foley, III of the Foley Law Firm in Scranton for bringing this case to my attention.