Elder Care Alert: California Appeals Court Affirms 3rd Party Wrongful Death Claims Against RCFEs Can’t be Compelled to Arbitration

In Daniels v. Sunrise Senior Living, Inc. et al., 2013 WL 50943, plaintiff, Norma Daniels sued Sunrise Senior Living, Inc. and other defendants, the owners and operators of a residential care facility for the elderly (“RCFE”) known as Sunrise of Hemet (“Sunrise”), for elder abuse and related survivor claims as the successor in interest of her late mother, Margaret Barcenas. Daniels alleged that Barcenas died as a result of receiving inadequate care at Sunrise. In her personal capacity, Daniels also alleged an additional cause of action against defendants for the wrongful death of Barcenas.

Defendants petitioned the trial court to compel arbitration of all of the claims pursuant to the arbitration clause in a residency agreement Daniels entered into with Sunrise Senior Living, Inc. as Barcenas’s attorney in fact, but not in her personal capacity. Under the arbitration clause, all claims related to the care Barcenas received at Sunrise are subject to binding arbitration, and the clause is binding on Barcenas’s heirs and representatives.

The court denied the petition and refused to order any of the claims to arbitration on the following grounds: (1) Daniels was a third party to the agreement and could not be compelled to arbitrate her wrongful death claim, and (2) there was a possibility of conflicting rulings on common issues of fact and law if the survivor claims were arbitrated but the wrongful death claim was not. Defendants appealed and the Court of Appeal affirmed the ruling.

The Court of Appeal determined that Daniels’ wrongful death claim is personal to her and lies independent of the survivor claims. As a general rule, a party cannot be compelled to arbitrate a dispute that he or she has not agreed to resolve by arbitration. Defendants argued that Daniels’ wrongful death claim should be deemed subject to the arbitration clause based on the practical considerations and principles articulated in Herbert v. Superior Court (1985) 169 Cal.App.3d 718 and Ruiz v. Podolsky (2010) 50 Cal.4th 838, which held that nonsignatories to an arbitration agreement must arbitrate their wrongful death claims against a health care provider when a decedent agreed to arbitrate medical malpractice claims pursuant to California Code of Civil Procedure section 1295, the wrongful death claims are based on medical malpractice, and the agreement was intended to bind wrongful death claimants.

The Court refused to apply Ruiz and Herbert in this situation as those cases were based squarely on section 1295, which governs agreements to arbitrate professional negligence or medical malpractice claims in medical services contracts with health care providers. Section 1295 was enacted as part of the Medical Injury Compensation Reform Act of 1975 (“MICRA”). The purpose of section 1295 is to encourage and facilitate arbitration of medical malpractice disputes, because the arbitration of these disputes furthers MICRA’s goal of reducing costs in the resolution of malpractice claims and therefore malpractice insurance premiums.

The Court determined that Ruiz and Herbert should not be extended to arbitration agreements not governed by section 1295, or that are entered into with a person other than a health care provider for claims other than medical malpractice. The Court was not persuaded with the argument that an RCFE is an extension of a health care facility to provide a variety of health-related services to residents and employ or permit health care practitioners to provide care to residents. Instead, the Court confirmed the ruling in Fitzhugh v. Granada Healthcare & Rehabilitation Center, LLC (2007) 150 Cal.App.4th 469 that spouses and adult children who do not sign an arbitration agreement in their personal capacity cannot be compelled to arbitrate their personal claims as applied to arbitration agreements not governed by or entered into pursuant to section 1295.

The Court also found that the trial court did not abuse its discretion in refusing to compel arbitration on the ground there was a danger of inconsistent rulings on common questions of law or fact if the survivor claims but not the wrongful death claim were ordered to arbitration. Indeed, if the survivor claims are ordered to arbitration but Daniels’s wrongful death claim was not, there is a possibility of inconsistent rulings on the claims given that the claims are based on the allegation that Barcenas received inadequate care at Sunrise.

This ruling confirms that in California it is extremely difficult to compel a case into arbitration involving both Elder Abuse and Wrongful Death claims against an RCFE. This difficulty results in plaintiff’s attorneys racking up large attorney fee bills in the litigation process and focusing on “jury appeal facts” in an attempt to meet the heightened burden of proof required in Elder Abuse claims and recoup their attorneys’ fees.

This document is intended to provide you with information about elder care related developments. The contents of this document are not intended to provide specific legal advice. This communication may be considered advertising in some jurisdictions.

January 8, 2013