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Is an Arbitration Agreement Enforceable After I Die?

Legal agreements governing medical and nursing home care are an often overlooked estate planning issue. If you have a relative that requires 24-hour nursing care, you need to be aware of how certain actions may affect his or her legal rights. For example, many nursing homes insist their residents sign binding arbitration agreements. This means that in the event the resident is seriously injured or dies as a result of the facility’s negligence or malpractice, any claims must be submitted to binding arbitration.

The problem with arbitration is that it short circuits the normal discovery and trial process established by the California court system. Arbitration tends to emphasize speedy resolution of claims over justice. Depending on the type of arbitration clause and forum, victims and their families may not even be able to get honest answers about what happened.

30-Day Cancellation Period Does Not Protect Nursing Home Resident Who Died After 10 Days

Unfortunately, federal law strongly favors arbitration agreements. A recent published decision by an appeals court here in San Diego will only make things tougher for people who witnessed a family member die due to possible nursing home neglect and abuse.

The victim in this case was a 73-year-old woman admitted to a San Diego nursing home, which is owned by the defendant in this case. About a week after her admission, the defendant’s staff “presented” her with two binding arbitration agreements, which she signed. 10 days later, the woman died.

Her heirs and estate subsequently sued the defendant for elder abuse, negligence, and wrongful death. The defendant moved to dismiss these claims, arguing that they were subject to the binding arbitration agreements signed by the victim. The trial court rejected the defendant’s motion, finding no valid agreement existed under California law.

Specifically, the trial court cited a provision of California law governing arbitration agreements related to medical services. Section 1295(c) of the state’s Code of Civil Procedure states that, “Once signed,” an arbitration agreement “governs all subsequent open-book account transactions for which the contract was signed until or unless rescinded by written notice within 30 days of signature.” In other words, a nursing home resident has 30 days to cancel or rescind their signature on any arbitration agreement.

Of course, in this case the victim died before the 30-day period expired. In a 2009 decision, the California Second District Court of Appeal in Los Angeles held in a similar situation that an arbitration agreement was unenforceable because the victim died four days after signing it. In that case, the Second District reasoned that it was “impossible to make any evidentiary finding regarding whether [the decedent’s] alleged waiver of her rights,” including the family’s right to bring a wrongful death claim, “was knowing and voluntary.”

The trial court in the present case relied on the Second District’s decision in rejecting the defendant’s motion to compel arbitration. But on appeal, the Fourth District decided to diverge from its sister court and held the arbitration agreement here was enforceable. The Fourth District took the position that an arbitration agreement becomes enforceable “immediately upon execution,” unless and until it is rescinded under the 30-day rule. But the 30-day waiting period “does not create a condition precedent” to enforcing the agreement.

Get Advice From a California Estate Planning Lawyer

Many elderly Californians enter nursing homes under admission forms signed by a family member holding a power of attorney. It is a good idea to make your wishes known regarding arbitration beforehand, so your agent does not inadvertently sign away valuable legal and constitutional rights. If you need advice from a qualified San Diego estate planning attorney on this or any related matter, contact the Law Office of Scott C. Soady today.

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