Recently, on November 28th, the Arkansas Court of Appeals held that the arbitration agreement that Hickory Heights attempted to enforce against a resident that was represented by Reddick Moss, PLLC was unenforceable due to the lack of mutuality of obligations. “Even though the arbitration agreement did not explicitly exclude a type of claim from its scope or require only one party to forgo its right to the court system, the arbitration provision was obviously drafted to shield Hickory Heights from defending itself in the court system against the majority of residents' potential claims while maintaining its right to utilize the court system for its likely claims against residents.”
The Arkansas Supreme Court has held numerous times that an arbitration agreement must have mutuality of obligation, meaning the agreement must impose real liability on both parties. One party cannot use an arbitration agreement to shield itself from court while at the same time reserving, only for itself, the ability to pursue relief through the courts. Additionally, the Arkansas Supreme Court held in 2014 that an arbitration agreement requiring disputes about the residency at a nursing home be arbitrated while excluding disputes of billing from that requirement, lacked mutuality of obligation and was not valid. Reddick Moss, PLLC also represented the Plaintiff in that case before the Arkansas Supreme Court.
The arbitration agreement at Hickory Heights required all disputes of more than $30,000 be arbitrated, whereas claims below $30,000 were not limited to arbitration and could be brought in court. Reddick Moss, PLLC made the argument, and the Court of Appeals agreed, that the only feasible claims that would be below $30,000 are those claims brought by Hickory Heights, i.e. claims for unpaid bills. The admission agreement allowed Hickory Heights to discharge a resident after 30 days for failure to pay his/her bill, and Reddick Moss, PLLC argued it is highly unlikely that debt for unpaid bills would ever be more than $9,400. Any claim Hickory Heights may have against a resident would be below the threshold of $30,000 allowing the facility to sue the resident in court, whereas a resident’s claims would almost always be above the threshold preventing them from ever being able to bring their claims to court.
The Arkansas Court of Appeals held that the arbitration agreement lacked mutuality of obligation.
Robert Francis, attorney at Reddick Moss, PLLC, said that he was not surprised by the Arkansas Court of Appeals decision, it was “an accurate adoption of existing arbitration law.”
This is a paid post by Reddick Moss. If you or someone you love is or has been a resident at a nursing home in Arkansas, then you may have a case and should contact Reddick Moss for a free consultation.