Johnson v. Heritage Healthcare of Estill, LLC

• Decision Date: 25 May 2016
• Docket Number: Appellate Case No. 2014–002502,Opinion No. 27639
• Citation: 788 S.E.2d 216,416 S.C. 508
• Court: South Carolina Supreme Court
• Parties: Linda Johnson, as Personal Representative of the Estate of Inez Roberts, Petitioner, v. Heritage Healthcare of Estill, LLC, d/b/a Heritage of the Lowcountry and/or Uni–Health Post Acute Network of the Lowcountry, United Clinical Services, Inc., United Rehab, Inc., And UHS–Pruitt Corporation, Respondents.

416 S.C. 508

788 S.E.2d 216

Linda Johnson, as Personal Representative of the Estate of Inez Roberts, Petitioner,

v.Heritage Healthcare of Estill, LLC, d/b/a Heritage of the Lowcountry and/or Uni–Health Post Acute Network of the Lowcountry, United Clinical Services, Inc., United Rehab, Inc., And UHS–Pruitt Corporation, Respondents.

Appellate Case No. 2014–002502

Opinion No. 27639

Supreme Court of South Carolina.

Heard November 18, 2015

Filed May 25, 2016

Rehearing Denied August 8, 2016

Margie Bright Matthews, of Bright Matthews Law Firm, LLC, of Walterboro, Lee D. Cope, of Hampton, and Matthew Vernon Creech, of Ridgeland, both of Peters Murdaugh Parker Eltzroth & Detrick, PA, and Charles J. McCutchen, of Lanier & Burroughs, LLC, of Orangeburg, for Petitioner.

Monteith P. Todd, Robert E. Horner, and J. Michael Montgomery, all of Sowell Gray Stepp & Laffitte, LLC, of Columbia, and Joshua S. Whitley, of Smyth Whitley, LLC, of Charleston, W. Jerad Rissler and Jason E. Bring, both of Arnall Golden Gregory, LLP, of Atlanta, Georgia, for Respondents.

ACTING JUSTICE TOAL:

Linda Johnson asks this Court to review the court of appeals' decision in Johnson v. Heritage Healthcare of Estill , Op. No. 2014–UP–318, 2014 WL 3845115 (S.C. Ct. App. filed Aug. 6, 2014)

, reversing the circuit court's finding that Heritage Healthcare of Estill (HHE)¹ waived its right to arbitrate the claims between it and Johnson. We granted certiorari and now reverse.

Facts/Procedural Background

In 2007, Johnson enrolled her mother, Inez Roberts (Mrs. Roberts), in HHE to receive nursing home care. Johnson held a general power of attorney for Mrs. Roberts, and as such, signed an arbitration agreement with HHE on her mother's behalf upon Mrs. Roberts's admission to HHE.²

At the time, Mrs. Roberts was eighty-five years old and enjoyed good health. However, within six months of entering HHE, she developed severe pressure ulcers

, resulting in the amputation of her leg and ultimately, her death in 2009.

Prior to Mrs. Roberts's death, in August 2008, Johnson requested HHE allow her access to Mrs. Roberts's medical records, but HHE refused, citing privacy provisions in the Health Insurance Portability and Accountability Act (HIPAA). Johnson then filed an ex parte motion for a temporary restraining order (TRO), seeking to obtain a copy of Mrs. Roberts's medical records from HHE and to restrain HHE from changing, altering, or destroying the records. The circuit court granted the TRO, and HHE filed a motion to dissolve the order, again citing HIPAA's privacy provisions.

Subsequently, at Johnson's request, the circuit court appointed her Mrs. Roberts's guardian ad litem (GAL) in order to pacify HHE's HIPAA concerns. However, HHE still refused to produce the records. The court again ordered HHE to produce the records, and HHE appealed. During the pendency of the appeal, Mrs. Roberts died, and Johnson became her personal representative. HHE then produced the records, and the parties dismissed the appeal by consent.

Several months after obtaining the records, in August 2010, Johnson filed a notice of intent (NOI) for a wrongful death and survival action against HHE. In October 2010, following an impasse at pre-suit mediation, Johnson filed her complaint. In November 2010, HHE filed its answer and asserted arbitration as one of several defenses, but did not move to compel arbitration at that time. Instead, HHE filed arbitration-related discovery requests on Johnson.

In December 2010, Johnson moved to strike HHE's arbitration defenses, arguing that HHE waived its right to enforce the arbitration agreement. Specifically, Johnson argued that although the TRO proceedings fell within the scope of the arbitration agreement, HHE did not move to compel arbitration during those proceedings, the GAL proceedings, or the subsequent appeal. Moreover, Johnson contended that HHE participated in pre-suit mediation, responded to Johnson's discovery requests, and served discovery requests on Johnson in return, thus availing itself of the court's authority.

In response, HHE speculated that if it moved to compel arbitration at that time, Johnson would raise defenses to arbitration. HHE therefore requested “a small amount of time to conduct discovery” to determine in advance the defenses Johnson intended to raise, and to obtain information through discovery that would allow HHE to better defend itself.

In March 2011, the circuit court denied Johnson's motion to strike, but found that Johnson could re-raise the waiver issue if, and once, HHE filed a motion to compel arbitration.

The parties then engaged in discovery. Johnson filed multiple motions to compel, and HHE appeared before the court to defend the motions. Further, in May 2011, the parties deposed Johnson and the HHE employee who signed the arbitration agreement on HHE's behalf. In August 2011, after a delay to obtain the deposition transcripts, HHE moved to compel arbitration.

The circuit court denied the motion, finding, inter alia , that HHE waived its right to enforce the arbitration agreement by waiting to file its motion to compel until after it participated in discovery and appeared multiple times in court. The court found that Johnson was prejudiced by HHE's tactics because they forced Johnson to waste a significant amount of time and money that was wholly within HHE's power to avoid.

HHE appealed, and the court of appeals reversed in an unpublished opinion. Johnson , Op. No. 2014–UP–318

(stating only “[w]e reverse as to whether the trial court erred in ruling [HHE] waived arbitration” (citing Dean v. Heritage Healthcare of Ridgeway, L.L.C. , 408 S.C. 371, 759 S.E.2d 727 (2014) )). By implication, the court of appeals found that HHE moved to compel arbitration at its first opportunity. See id.

The Court granted Johnson's petition for a writ of certiorari to review the decision of the court of appeals with respect to the waiver issue.

Issue

Whether HHE waived its right to enforce the arbitration agreement?

Standard of Review

“Arbitrability determinations are subject to de novo review.” Dean , 408 S.C. at 379, 759 S.E.2d at 731

; Rhodes v. Benson Chrysler–Plymouth, Inc. , 374 S.C. 122, 125, 647 S.E.2d 249, 250 (Ct. App. 2007). “Nevertheless, a circuit court's factual findings will not be reversed on appeal if any evidence reasonably supports the findings.” Simpson v. MSA of Myrtle Beach, Inc. , 373 S.C. 14, 22, 644 S.E.2d 663, 667 (2007) ; Rhodes , 374 S.C. at 125–26, 647 S.E.2d at 250–51. The litigant opposing arbitration bears the burden of demonstrating that he has a valid defense to arbitration. See

Dean , 408 S.C. at 379, 759 S.E.2d at 731 (citations omitted); Gen. Equip. & Supply Co. v. Keller Rigging & Constr., S.C., Inc. , 344 S.C. 553, 556, 544 S.E.2d 643, 645 (Ct. App. 2001).

Analysis

South Carolina courts favor arbitration. Toler's Cove Homeowners Ass'n, Inc. v. Trident Constr. Co. , 355 S.C. 605, 612, 586 S.E.2d 581, 585 (2003)

. Nonetheless, a party may waive its right to enforce an arbitration agreement. Liberty Builders, Inc. v. Horton , 336 S.C. 658, 665, 521 S.E.2d 749, 753 (Ct. App. 1999) (citing Hyload, Inc. v. Pre–Eng'd Prods., Inc. , 308 S.C. 277, 280, 417 S.E.2d 622, 624 (Ct. App. 1992) (per curiam)).

“The party seeking to establish waiver has the burden of showing prejudice through an undue burden caused by a delay in the demand for arbitration.” Gen. Equip. & Supply Co. , 344 S.C. at 556, 544 S.E.2d at 645

; see also Evans v. Accent Mfd. Homes, Inc. , 352 S.C. 544, 550, 575 S.E.2d 74, 76 (Ct. App. 2003)

. Mere inconvenience or delay is insufficient to establish prejudice on its own. Toler's Cove , 355 S.C. at 612, 586 S.E.2d at 585 ; Rich v. Walsh , 357 S.C. 64, 72, 590 S.E.2d 506, 510 (Ct. App. 2003) (“[M]ere delay, regardless of its duration, should not be considered as a factor independent of the actual prejudice it occasions.”).

As in all waiver cases, any appropriate analysis is heavily fact-driven. Liberty Builders , 336 S.C. at 665, 521 S.E.2d at 753

(“ ‘There is no set rule as to what constitutes a waiver of the right to arbitrate; the question depends on the facts of each case.’ ” (quoting Hyload, Inc. , 308 S.C. at 280, 417 S.E.2d at 624 )); see also

Rhodes , 374 S.C. at 127, 647 S.E.2d at 252. Here, in its order finding that HHE waived its right to enforce the arbitration agreement, the circuit court set forth the relevant facts in detail, and made various factual and legal findings. However, in contrast, the court of appeals summarily reversed the circuit court, with no mention of any factual or legal errors. See Johnson , Op. No. 2014–UP–318 (stating only “[w]e reverse as to whether the trial court erred in ruling [HHE] waived arbitration”). In this fact-driven issue, we find the court of appeals' summary reversal inappropriate, particularly when compared with the circuit court's order, which clearly considered the facts of the case.

The initial dispute between HHE and Johnson began prior to the TRO proceedings, when HHE refused to release Mrs. Roberts's medical records to Johnson. At various times, Johnson functioned as Mrs. Roberts's power of attorney, GAL, and personal representative. Thus, both Mrs. Roberts and the court appointed Johnson to speak and act on Mrs. Roberts's behalf. Nonetheless, on multiple occasions, HHE unreasonably refused to release the records to Mrs. Roberts's duly-appointed representative, resulting in Johnson incurring unnecessary litigation expenses. Moreover, even after Johnson filed her complaint, HHE continued to delay by seeking limited discovery of issues that HHE wished to pursue, but ignoring Johnson's requests for discovery of issues that, in HHE's opinion, were irrelevant at that point in the litigation. Unsurprisingly, HHE's tactics caused Johnson to incur further expenses, both in responding to HHE's requested discovery, and in preparing for litigation in the event that HHE never moved to compel arbitration at all.

HHE contends that the delay and expenses are...