The Arkansas Supreme Court ruled Thursday that a woman who sued her parents' Arkadelphia nursing home claiming negligence and maltreatment must instead settle any grievance through arbitration.
In a 4-3 decision, the majority of justices ruled that Malinda Arnold -- who filed suit on behalf of her parents in Clark County against Courtyard Gardens Health and Rehabilitation LLC in 2013 -- would have to abide by an arbitration agreement signed when her parents entered the nursing home, even if the arbiter named in the agreement stopped doing that work.
In the majority opinion, Justice Karen Baker wrote that Arnold failed to demonstrate that arbitration between the parties was impossible. The case will return to Clark County, where the judge will be instructed to issue an order for arbitration.
Baker wrote that the defunct arbiter, Minnesota-based National Arbitration Forum, was merely an "ancillary" and not an "integral" component of the agreement.
The agreement "does not mandate that claims be arbitrated with the NAF; rather it requires arbitration as the sole means of resolving the claims. ... It was the parties' intent to resolve their disputes through binding arbitration regardless of the availability of the NAF," Baker wrote. She also noted there was a clause in the agreement that if a court found any part of the agreement "unenforceable," then the remainder of the contract will stay in effect.
Justice Paul Danielson, joined by two others, disagreed. In his dissent, Danielson found that the parties agreed to arbitrate only with the National Arbitration Forum and that the agreement entitled Arnold's parents the right to seek other legal means if arbitration with NAF became "impossible."
Because the designation of the forum was an integral part of the agreement, a federal law stating that an alternative arbiter will be named does not apply, Danielson wrote. "The unavailability of the NAF renders the parties' arbitration agreement impossible to perform; consequently, it is unenforceable," he wrote.
The National Arbitration Forum was sued in 2009 by the Minnesota attorney general for unfair practices and having ties too close with the companies it was supposed to arbitrate with.
That same year, the company signed a consent decree with Minnesota Attorney General Lori Swanson to stop handling arbitration cases dealing directly with consumers.
Proponents of such agreements argue that they keep courts clear of tedious lawsuits and ensure quick resolution of disputes. Swanson and 15 other attorneys general are trying to get Congress to ban such agreements for long-term care and nursing facilities. They say that the Federal Arbitration Act of 1925, which controls cases in which arbitration agreements are made, was crafted for the benefit of big businesses doing work together, and that the law has been used to put consumers at a disadvantage.
In 2009, Arnold's mother, Annie Bullock, checked into the Courtyard Gardens facility in Arkadelphia. She was joined by her husband, Jessie James Bullock, in early 2010.
Arnold's sister signed pre-dispute arbitration agreements for her parents. The agreements stipulated that any claims against the facility would go to arbitration in accordance with the National Arbitration Forum's Code of Procedure. That code states that a member of the forum would handle the arbitration.
In 2013, Arnold sued the facility alleging malpractice and negligence over malnutrition, dehydration, bedsores and multiple falls. The company asked Clark County Circuit Judge Robert McCallum to dismiss the suit, saying the claim had to be handled in arbitration. Arnold responded that the contract was unenforceable.
"Rule 1 of the NAF Code of Procedure requires the NAF to serve as arbitrator of any disputes between the Plaintiff and Defendants," McCallum ruled. "As such, the NAF Code of Procedure is an integral term of the Arbitration agreement. Because the NAF is no longer in business and is unavailable to serve as arbitrator over this dispute, the Agreement is impossible to perform."
In Thursday's ruling, Baker found that the Federal Arbitration Act compelled the parties to arbitrate, even if the forum was no longer viable. McCallum's decision was reversed and the case was sent back to his court.
Metro on 02/19/2016