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In affirming a lower court order denying a nursing home's motion to compel arbitration, the California Court of Appeal held that the arbitration agreements failed to satisfy the disclosure requirements set forth in California regulations governing the use of arbitration agreements by nursing homes.
In Swayne v. Torrance Care Center West, Inc., 2007 WL 4157576 (Cal. Ct. App.2d Nov. 26, 2007), Rogers died during her residency at a nursing home run by Torrance Care Center (TCC). Her estate sued TCC for wrongful death.
In response, TCC moved to compel arbitration pursuant to an arbitration agreement that Rogers' granddaughter signed when she admitted Rogers to the home. The trial court denied the motion based on its finding that the granddaughter's power of attorney was invalid.
On appeal, the Court affirmed the order denying arbitration on separate grounds – namely, that the arbitration agreement did not satisfy the disclosure requirements set forth in regulations promulgated by the California Department of Health Services.
Under those disclosure requirements, a nursing home arbitration agreement must "be separate from the [s]tandard [a]dmission [a]greement and shall contain . . . [an] advisory in a prominent place at the top of the proposed arbitration agreement, in bold-face font of not less than 12 point type: 'Residents shall not be required to sign this arbitration agreement as a condition of admission to this facility.'"
The arbitration agreement in this case contained the essential information, but the disclosures failed to "clearly indicate" that assent to arbitration was not a condition of admission because this advisory was not in boldface type or in a prominent location.
Finally, the Court rejected TCC's argument for applying the doctrine of substantial compliance. In rejecting this argument, the Court explained that "the failure to highlight the disclosure precludes a finding of substantial compliance."
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