Bruner v. Timberlane Manor Ltd. Partnership

• Decision Date: 12 December 2006
• Docket Number: No. 103,028.,103,028.
• Citation: 155 P.3d 16,2006 OK 90
• Parties: Detra L. BRUNER, as next of kin of Leola Bruner (Depp), deceased, Appellee, v. TIMBERLANE MANOR LIMITED PARTNERSHIP, and its successor in interest, Timberlane Manor Limited Liability Company, d/b/a Grace Living Center, Appellants.
• Court: Oklahoma Supreme Court

155 P.3d 16

2006 OK 90

Detra L. BRUNER, as next of kin of Leola Bruner (Depp), deceased, Appellee, v. TIMBERLANE MANOR LIMITED PARTNERSHIP, and its successor in interest, Timberlane Manor Limited Liability Company, d/b/a Grace Living Center, Appellants.

No. 103,028.

Supreme Court of Oklahoma.

December 12, 2006.

Rehearing Denied January 29, 2007.

Appeal from the District Court of Oklahoma County, Oklahoma; The Honorable Barbara G. Swinton, Presiding.

¶ 0 Detra L. Bruner filed suit against Grace Living Center, alleging that her mother's death was caused by the nursing home's negligent care. Grace Living Center filed a motion to dismiss or in the alternative to compel arbitration and stay the proceedings. The district court found that the nursing home care did not involve interstate commerce; the federal arbitration statutes are not applicable to the nursing home admission agreement; and, the binding arbitration provision in the nursing home admission form is unenforceable under § 1-1939(D) and (E) of the Oklahoma Nursing Home Care Act, 63 O.S.2001, §§ 1-1901, et seq. The district court denied the motion to dismiss or in the alternative to compel arbitration. Grace Living Center appealed. This Court retained the appeal.

DISTRICT COURT AFFIRMED.

David K. McPhail, Steven J. Johnson, Foliart, Huff, Ottaway & Bottom, Oklahoma City, OK, for appellants.

Don S. Strong, G. Stephen Martin, Strong, Martin & Associates, and John E. Barbush, Oklahoma City, OK, for appellee.

Kenneth G. Cole, Mansell Engle & Cole, Oklahoma City, OK, for amicus curiae, Oklahoma Trial Lawyers Association.

TAYLOR, J.

¶ 1 On July 5, 2005, Detra L. Bruner, as next of kin of Leola Bruner, deceased, filed suit against Timberlane Manor Limited Partnership, and its successor in interest, Timberlane Manor Limited Liability Company d/b/a Grace Living Center (nursing home). The petition alleged that the nursing home's negligent care and breach of duties caused Leola Bruner's death. The nursing home moved to dismiss the suit or in the alternative to compel arbitration and stay the proceedings as required by the federal arbitration law. The district court denied the motion. The dispositive question on appeal is whether the Federal Arbitration Act applies to the nursing home's admission contract. To answer this question we must consider the body of federal and state law enforcing arbitration provisions and the body of federal and state law regulating nursing homes. We conclude that the Federal Arbitration Act does not apply to the nursing home admission contract at issue. We affirm the district court's order refusing to compel arbitration. We remand this case to the district court for further proceedings.

I. Proceedings Below

¶ 2 The petition initiating this tort action alleged the following facts. Detra L. Bruner, plaintiff/appellee (plaintiff), is the daughter of Leola Bruner, deceased. On June 22, 2004, plaintiff, as her mother's attorney in fact, signed the contract for her mother to be admitted as a resident patient at Grace Living Center, defendant/appellant, a state licensed nursing care facility in Edmond, Oklahoma. When she was admitted to the nursing home, Leola Bruner was sixty-six years old and physically frail, and her decision-making abilities and mental facilities were impaired. Leola Bruner resided at the nursing home from June 22, 2004 until July 17, 2004, when she was hospitalized. Leola Bruner died on August 31, 2004.

¶ 3 The petition further alleged that during her residency at the nursing home, Leola Bruner was dependent upon the nursing home and its agents and employees for proper hydration and nutrition, personal care and attention, and prevention and treatment of any illness and injuries; but the nursing home failed to provide Leola Bruner with adequate and proper daily care and supervision, adequate and appropriate nourishment, and necessary and reasonable medical treatment and services. It also alleged that Leola Bruner suffered injuries and illnesses, including a fractured hip and malnutrition, caused by the nursing home's negligence and breach of duties. The petition asked for actual and punitive damages for the wrongful death of Leola Bruner, allegedly caused by the nursing home's negligence and its violation of the Patients' Bill of Rights in the Oklahoma Nursing Home Act.

¶ 4 In response to the petition, the nursing home appeared specially and asked the district court to dismiss the petition and enforce the binding arbitration agreement in the admission contract. The nursing home relied on the dispute resolution provisions in its admission contract which provided that all disputes "arising out of or in connection with the care rendered to the Resident by GLC [Grace Living Center] and/or arising out of or in connection with the Admission Agreement pursuant to which said care is rendered" are to be resolved by binding arbitration.¹

¶ 5 The nursing home took the position that its admission contract involved or affected interstate commerce because in its operation, the nursing home 1) receives Medicare payments that originate outside the state of Oklahoma, 2) complies with federal Medicare and Medicaid licensing rules and regulations, including routine inspections/surveys by out-of-state federal investigators/surveyors, 3) purchases medical and non-medical supplies from out-of-state vendors, and 4) uses instruments of interstate commerce such as telephone lines, internet, airlines and the federal postal service. The nursing home argued that the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1, et seq., and the Oklahoma Uniform Arbitration Act (OUAA), 15 O.S.2001, §§ 801, et seq., govern the nursing home admission application and that the FAA preempts and displaces the state's anti-arbitration statute in the Oklahoma Nursing Home Care Act at 63 O.S.2001, § 1-1939(D) and (E).

¶ 6 The district court found that "the nursing home care at issue does not involve interstate commerce, the Federal Arbitration Act does not apply, and Sections 1-1939(D) and (E) of the Oklahoma Nursing Home Care Act, 63 O.S. §§ 1-1901 et seq., are not preempted." Thereupon, the district court found "the arbitration agreement between the parties unenforceable, and Sections 1-1939(D) and (E) of the Oklahoma Nursing Home Care Act remain applicable." The district court denied the nursing home's motion to dismiss or in the alternative to compel arbitration and stay proceedings. The nursing home appealed the interlocutory order which is appealable by right under the OUAA. 12 O.S.Supp.2005, § 1879² and Okla. Sup.Ct.R. 1.60(i), 12 O.S.2001, ch.15, app. Upon plaintiff/appellee's motion, we retained the appeal.

II. Standard of Review

¶ 7 The issues raised on appeal by the nursing home are: 1) whether the district court erred in finding that the nursing home care of Leola Bruner did not involve interstate commerce and that the FAA does not govern the nursing home's admission application; 2) whether a strong federal interest should be presumed in matters in which federal funds, such as Medicare funds, are utilized; 3) whether Oklahoma law recognizes a strong public policy favoring arbitration agreements; and 4) whether the district court erred in finding the arbitration provisions in the nursing home's admission application unenforceable under the Oklahoma Nursing Home Care Act. As to the interstate commerce issue, plaintiff urges that it is a question of fact to be reviewed for abuse of discretion, while the nursing home urges that it requires interpretation of the FAA to be reviewed by a de novo standard. Both parties urge that all other issues should be reviewed by a de novo standard.

¶ 8 Generally, the existence of an agreement to arbitrate is a question of law to be reviewed by a de novo standard. Rogers v. Dell Computer Corp., 2005 OK 51, ¶ 11, 138 P.3d 826, 831. However, an application to compel arbitration may present questions of fact and law as to the existence or the enforceability of an arbitration agreement. See, id. at ¶¶ 15-17, 830-831 (delineating procedures on applications to compel arbitration that present questions of fact or law relating to the existence or enforcement of an arbitration agreement). Where the facts are controverted, mixed questions of fact and law may require deferential review standards. Feightner v. Bank of Okla., 2003 OK 20, ¶ 3, 65 P.3d 624, 627.

¶ 9 Whether a transaction involves interstate commerce under the FAA is often a mixed question of fact and law. See Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003). Here, plaintiff did not controvert the evidence the nursing home submitted in support of its contention that nursing home care is a transaction involving commerce under the FAA. Where the facts are undisputed, the controversy presents questions of law. Feightner, 2003 OK 20, at ¶ 3, 65 P.3d at 627. We review questions of law by a de novo standard and without deference to the lower court. Gladstone v. Bartlesville Indep. Sch. Dist. No. 30, 2003 OK 30, ¶ 5, 66 P.3d 442, 445.

¶ 10 We begin with an overview of the United States Supreme Court decisions construing the FAA, the state arbitration law and the pertinent federal and state nursing home regulations. Against this backdrop, we consider de novo whether the FAA applies to the nursing home's admission contract.

III. The Federal Arbitration Act

¶ 11 Pursuant to its power over admiralty and interstate commerce, Congress, in 1925, enacted the FAA to make arbitration agreements as enforceable as other contracts but not more so. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404-405, n. 12-13, 87 S.Ct. 1801, 1806-1807, 18 L.Ed.2d 1270 (1967).³ The FAA's principal objective was to enforce arbitration agreements made by the parties to interstate commerce and maritime transactions, Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 219-220, 105 S.Ct. 1238, 1241-1242, 84 L.Ed.2d 158 (1985),⁴ and place arbitration...