Massachusetts Supreme Judicial Court Holds Decedent's Arbitration Agreement Applies to Executor's Wrongful Death Action Against Nursing Home

The Massachusetts Supreme Judicial Court has held that a decedent's arbitration agreement with a nursing home binds the executor or administrator of the decedent's estate to arbitrate a wrongful death action brought on behalf of the decedent's beneficiaries against the nursing home and affiliates. GGNSC Administrative Services, LLC v. Schrader, SJC-12714, slip opinion (Feb. 27, 2020). Responding to questions certified to it by the First Circuit Court of Appeals, the decision clears up what had arguably been a somewhat muddled issue under Massachusetts law: whether wrongful death actions are derivative of the decedent's cause of action or independent. That issue has also been litigated in other states over the last decade or so. The SJC "adopt[ed] the majority rule that precludes wrongful death actions unless decedents could have brought an action for the injuries that caused their death," that is, the court determined that wrongful death actions are derivative under Massachusetts law. Slip opinion at 18.

The court noted that the contrary determination--that wrongful death actions are independent of the decedent's causes of action--"could have an inefficient application":

[I]f a nursing home resident signed an arbitration agreement and her nursing home injured her, she could bring only her negligence claim through arbitration. If she later died from those injuries, a statute giving rise to independent wrongful death claims would permit her executor to commence a wrongful death action in court based on the same conduct even if she had resolved her negligence claims against the nursing home through arbitration. Slip opinion at 9.

Since the court determined a decedent's valid arbitration agreement would bind an executor bringing a derivative wrongful death action on behalf of the decedent's beneficiaries, it found "[t]he beneficiaries' lack of consent [to the arbitration agreement] is thus inconsequential." Slip opinion at 19.

 The court deferred to the federal District Court's determination that the facts in the case "demonstrate[d] no fraud, duress, undue influence, or unconscionability" in the arbitration agreement or the circumstances of its signing. Slip opinion at 20-21. (As it clearly should have, since the decedent's executor has not appealed the District Court's findings that there was a valid contractual agreement to arbitrate and that the agreement was neither procedurally nor substantively unconscionable under Massachusetts law. GGNSC Administrative Services, LLC v. Schrader, 917 F.3d 20, 22 (2019). The arbitration agreement, along with other nursing home registration documents, were signed by the decedent's daughter and executor, acting as the decedent's attorney-in-fact. The SJC noted the following pertinent facts as found by the federal court:

[The nursing home] allowed [the daughter] to study the documents for some time before signing, and there was no evidence that she did not assent to the terms of the arbitration agreement. The agreement also was not procedurally unconscionable, given that it clearly indicated, in bold-faced capital letters, that the agreement was not mandatory for continuing care or admission. The agreement further advised [the daughter] to read it carefully before signing, and [the nursing home] provided a thirty-day revocation period. Slip opinion at 21.

The court acknowledged "the strong public policy in favor of arbitration in commercial disputes" and the fact that it has "declined to adopt a 'per se rule that predispute arbitration agreements in the nursing home context should be void as a matter of public policy.'" Slip opinion at 20, quoting Miller v. Cotter, 448 Mass. 671, 682 (2007). (The latter determination seems ordained by the U.S. Supreme Court decisions in Kindred Nursing Center, Ltd. v. Clark, 137 S. Ct. 1421, 1429 (2017), and Marmet Health Care Center, Inc. v. Brown, 565 U.S. 530, 533 (2012) (per curiam).) Nevertheless, the SJC closed its opinion with the following cautionary footnote, reflecting its longstanding antipathy toward predispute arbitration agreements in general and seeming to invite legislative action: 

Placing a loved one in a nursing home is for many, if not most, people  a heart-wrenching decision. Once the decision has been made and the day arrives to register one's parent, spouse, significant other, dear friend or other family member, residents and their legal proxies may feel too overwhelmed by circumstances to comprehend complex legal language. Prudence and good practice requires that those registering the resident explain any arbitration agreement in clear and straightforward language and provide ample time for residents, or their representatives, to decide whether to sign such an agreement. We will scrutinize arbitration agreements with particular care if admission to a nursing home is conditioned on agreeing to arbitrate any legal claims. There are many reasons why arbitration agreements might make sense and many reasons that such agreements may raise grave concerns. Ultimately, the appropriateness of predispute arbitration agreements between nursing homes and residents, as a general rule, is a legislative prerogative. Slip opinion at 21 n.16.

With respect to need to explain an arbitration agreement, compare what the District Court said in this case: "there is no duty to explain the terms of a written contract to the other party in an arms-length transaction." GGNSC Administrative Services, LLC v. Schrader, No. 16-10525-DPW, 2018 WL 1582555, *5 (March 31, 2018), citing Sec. Industry Ass'n v. Connolly, 703 F. Supp 146, 152 & n.10 (D. Mass. 1988), aff'd, 883 F.2d 1114 (1st Cir. 1989) (wherein the court stated, "There is no general contractual duty in Massachusetts requiring one party to describe fully-or for that matter, at all-the legal effect of a contractual provision to another party with whom the first party proposes to contract.").