The Arkansas Supreme Court gave a victory to plaintiffs in a nursing home case today by saying hundreds of residents couldn’t be compelled to go to arbitration over claims against the Robinson Nursing and Rehabilitation Center because the arbitration agreements weren’t signed by legally authorized representatives.
The ruling was an intermediate decision — an appeal of Circuit Judge Tim Fox’s ruling that certified a class action in behalf of nursing home residents. Robinson, owned by Michael Morton of Fort Smith, argued that arbitration agreements compelled arbitration in 544 cases and the plaintiffs couldn’t sue. In most of these cases, the court ruled, the arbitration agreements were invalid.
Arkansas and federal law generally favors arbitration agreements in various areas of commerce, the court noted. Representatives of injured parties say these agreements favor corporations and legislative efforts have been made to help consumers.
The nursing home contended agreements were valid because they were signed by “responsible parties,” such as relatives. But the court held that these were not legal representatives in many cases.
The court also agreed that the arbitration agreement was unfair because it allowed the nursing home to go to court for the only claim it was likely to make against a resident — unpaid bills — while forcing residents into arbitration for virtually all claims against the nursing home.
Justice Shawn Womack dissented from the majority opinion, written by Justice Courtney Hudson. He’d have enforced arbitration. Greg Vardaman sat as special justice in place of Justice Rhonda Wood, who recused. Michael Morton was her single biggest campaign contributor and money he channeled through PACs to help her became a part of a scandal over nursing home contributions in judicial races.
The court, while invalidating most of the arbitration agreements, said some questions remain to be answered about specific terms of some arbitration agreements and sent those remaining questions back to circuit court.
The case was brought by the estate of a former nursing home resident, Dorothy Phillips. It seeks damages for alleged breaches of admissions and provider agreements and negligence that unjustly enriched the nursing center.