Blankfeld v. Richmond Health Care, Inc.

• Decision Date: 25 May 2005
• Docket Number: No. 4D03-4929.,4D03-4929.
• Citation: 902 So.2d 296
• Parties: Melvin BLANKFELD, Personal Representative of the Estate of Riva Blankfeld, Appellant, v. RICHMOND HEALTH CARE, INC., d/b/a Sunrise Health and Rehabilitation Center, Appellee.
• Court: Florida District Court of Appeals

902 So.2d 296

Melvin BLANKFELD, Personal Representative of the Estate of Riva Blankfeld, Appellant, v. RICHMOND HEALTH CARE, INC., d/b/a Sunrise Health and Rehabilitation Center, Appellee.

No. 4D03-4929.

District Court of Appeal of Florida, Fourth District.

May 25, 2005.

Charles P. Schropp of Schropp, Buell & Elligett, P.A., Tampa, and Robert E. Sharbaugh of Law Office of Robert E. Sharbaugh, P.A., St. Petersburg, for appellant.

Leonard Blumenthal and Daniel J. Koleos of Koleos, Rosenberg, Metzger & Doyle, P.A., Fort Lauderdale, for appellee.

EN BANC

PER CURIAM.

Melvin Blankfeld, as Personal Representative of the Estate of Riva Blankfeld, appeals the trial court's decision granting Richmond Health Care's motion to compel arbitration. We reverse because the arbitration procedure substantially limits the remedies created by the Nursing Home Residents Act, and is void as contrary to public policy. We are considering this case en banc to clarify that holding a contractual provision void as contrary to public policy is distinct from holding that a contract is unenforceable because it is unconscionable. We have also concluded that the statutory health care proxy did not have the authority to bind the nursing home patient to arbitrate claims.

In 2001 Riva Blankfeld, who was senile, was readmitted to Sunrise Health and Rehabilitation Center, a nursing home facility, and the admission agreement, which was signed by her son, provided that all disputes "shall be resolved by binding arbitration administered by the National Health Lawyers Association." This suit against the nursing home was filed while Riva was still alive, and after her death, her son Melvin, as personal representative, maintained it, asserting that Sunrise had violated Riva's statutory rights under section 400.022, Florida Statutes (2001). In a separate count, it was alleged that Sunrise had negligently cared for Riva. Sunrise moved to compel arbitration, but Melvin contended that the arbitration provisions were unenforceable. After an evidentiary hearing in which testimony was given as to the circumstances surrounding the execution of the agreements, the court granted Sunrise's motion to compel arbitration.

We first address Melvin's argument that the method of arbitration, which is by the National Health Lawyers Association, limits the remedies created by the legislature in the Nursing Home Residents Act and is therefore void as contrary to public policy.

The arbitration provision provides that "any action, dispute, claim, or controversy of any kind ... now existing or hereafter arising between the parties ... shall be resolved by binding arbitration administered by the National Health Lawyers Association." Section 606 of the NHLA Rules [now known as the American Health Lawyers Association Arbitration Rules of Procedure] provides in part:

[T]he arbitrator may not award consequential, exemplary, incidental, punitive or special damages against a party unless the arbitrator determines, based on the record, that there is clear and convincing evidence that the party against whom such damages are awarded is guilty of conduct evincing an intentional or reckless disregard for the rights of another party or fraud, actual, or presumed.

Requiring clear and convincing evidence of intentional or reckless misconduct effectively eliminates recovery for negligence, and is contrary to the Nursing Home Residents Act, which provides in section 400.023(2):

In any claim brought pursuant to this part alleging a violation of resident's rights or negligence causing injury to or the death of a resident, the claimant shall have the burden of proving, by a preponderance of the evidence, that:

(a) The defendant owed a duty to the resident;

(b) The defendant breached the duty to the resident;

(c) The breach of the duty is a legal cause of loss, injury, death, or damage to the resident; and

(d) The resident sustained loss, injury, death, or damage as a result of the breach.

§ 400.023(2)(a)-(d), Fla. Stat. (2001). Melvin argues that the statute is remedial, is declarative of public policy, and that the limitation on the statutory remedies is therefore void.

A remedial statute is one which confers or changes a remedy. Campus Communs., Inc. v. Earnhardt, 821 So.2d 388 (Fla. 5th DCA 2002). The Nursing Home Resident's Act is remedial. Knowles v. Beverly Enterprises-Florida, Inc., 898 So.2d 1 (Fla.2004). The "Residents Rights" provisions in section 400.022 were enacted in 1980 to respond to a Dade County Grand Jury investigation of nursing homes which revealed detailed evidence of substantial elder abuse occurring in nursing homes. See Romano v. Manor Care, 861 So.2d 59, 62-63 (Fla. 4th DCA 2003)

; Crotts & Martinez, The Nursing Home Residents' Rights Act-A Good Idea Gone Bad!, 26 STETSON L.REV. 599 (1996). In 1993, the Legislature amended the statute by enacting section 400.023 ("Civil Enforcement"), providing civil remedies for nursing home residents for violation of the statute. § 400.023(1), Fla. Stat. (2001). A cause of action "may be brought in any court of competent jurisdiction to enforce such rights and to recover actual and punitive damages for any violation of the rights of a resident or for negligence." Id.

If nursing home residents had to arbitrate under the NHLA rules, some of the remedies provided in the legislation for negligence would be substantially affected and, for all intents and purposes, eliminated. The provision requiring arbitration under those rules is accordingly contrary to the public policy behind the statute and therefore void. Mullis v. State Farm Mut. Auto. Ins. Co., 252 So.2d 229, 235 (Fla.1971) (insurance policy provision limiting uninsured motorist protection provided in statute held void as contrary to public policy); Holt v. O'Brien Imps. of Fort Myers, Inc., 862 So.2d 87 (Fla. 2d DCA 2003) (automobile purchase contract providing for arbitration which limited remedies provided by Florida Deceptive and Unfair Trade Practices Act held void as contrary to public policy); see also Green v. Life & Health of America, 704 So.2d 1386, 1390 (Fla.1998)

(parties can contract around state or federal law except where such a contract provision would be void as contrary to public policy).¹

In Romano v. Manor Care, 861 So.2d 59 (Fla. 4th DCA 2003), we held that an arbitration agreement in a nursing home contract, which limited non-economic damages to $250,000, and excluded punitive damages, was unenforceable as a matter of law, because it defeated the remedial provisions of the statute protecting nursing home residents. We went on to state, based on Powertel, Inc. v. Bexley, 743 So.2d 570 (Fla. 1st DCA 1999), that the deprivation of the statutory remedy made the arbitration provision substantively unconscionable.

Unconscionability, which can be either procedural or substantive, was explained in Powertel:

The procedural component of unconscionability relates to the manner in which the contract was entered and it involves consideration of such issues as the relative bargaining power of the parties and their ability to know and understand the disputed contract terms. For example, the court might find that a contract is procedurally unconscionable if important terms were "hidden in a maze of fine print and minimized by deceptive sales practices." In contrast, the substantive component focuses on the agreement itself. [A] case is made out for substantive unconscionability by showing that "the terms of the contract are unreasonable and unfair."

743 So.2d at 574. In Romano, Richmond Healthcare, Inc. v. Digati, 878 So.2d 388 (Fla. 4th DCA 2004), Bellsouth Mobility, LLC v. Christopher, 819 So.2d 171 (Fla. 4th DCA 2002), and Chapman v. King Motor, 833 So.2d 820 (Fla. 4th DCA 2002), all cases involving remedial statutes, we engaged in an unconscionability analysis. We now clarify that holding a contractual provision unenforceable because it defeats the remedial provisions of a statute, and is thus contrary to public policy, is distinct from finding unconscionability.²

The nursing home argues that if the rules provided for arbitration are unenforceable, we should sever that portion of the arbitration provision providing for arbitration to be administered by the NHLA, but otherwise uphold arbitration. We need not address severability because of our conclusion in the next part of this opinion that the proxy could not bind the nursing home patient to arbitration.

The readmission agreement signed in 2001, which was required by the nursing home, was signed by Melvin. His authority to sign the contract was, at best, as a health care proxy under section 765.401, Florida Statutes (2001). Riva had been previously found, by physicians who had examined her, to be incompetent because of senile dementia.³

Section 765.401, Florida Statutes (2001), entitled "Absence of advanced directive," provides that if an incapacitated or developmentally disabled patient has not executed an advanced directive regarding health care, see section 765.101(1), or designated a surrogate, see section 765.101(16), health care decisions may be made by a designated list of individuals which run the gamut from judicially appointed guardians through relatives, friends, and licensed clinical social workers. Section 765.401 specifies that a proxy is authorized to make only "health care decisions." Section 765.101(5) defines them as follows:

`Health care decision' means:

(a) Informed consent, refusal of consent, or withdrawal of consent to any and all health care, including life-prolonging procedures.

(b) The decision to apply for private, public, government, or veterans' benefits to defray the cost of health care.

(c) The right of access to all records of the principal reasonably necessary for a health care surrogate to make decisions involving health care and to apply for benefits.

(d) The decision to make an anatomical gift pursuant to part X of chapter 732.

Section 765.106, provides:

"The

...