TALLAHASSEE – A Florida appellate court recently ruled that the arbitration agreement in a dispute between a nursing home and a deceased resident was unenforceable because the agreement included a cap on damages.

In Novosett v. Arc Villages, the 5th District Court of Appeal ruled on March 11 that since the agreement had a limitation on damages, which the Florida Supreme Court ruled was unconstitutional in a previous case (Gessa v. Manor Care of Florida), the arbitration agreement in the contract could not be enforced.

“Arbitration is a way to take a case out of a courtroom and send it to a neutral arbitration panel,” William Large, president of Florida Justice Reform Institute, told the Florida Record. “The core issue of the appeal was previously the Florida Supreme Court had ruled that a cap on non-economic damages on a nursing home liability contract was unenforceable. This contract had that provision but it also had a provision in it that the damages would go to arbitration. The 5th District Court of Appeals said both provisions are unconstitutional, including the arbitration provision, because if you try to limit non-economic damages it makes the entire contract unenforceable.”

Over the last decade, Florida courts have seen an increasing number of nursing home lawsuits, making long-term care one of the most lucrative areas of practice in the state. As a result, many long-term care facilities have taken measures to try to curb expenses that may arise in litigation. One of the more common practices is to include arbitration agreements in paperwork new residents sign upon admission. That way any claims made against the facility will be argued in an arbitration hearing, instead of a lengthy and costly trial.

In many long-term care cases, the courts have upheld arbitration agreements. However, each ruling hinges on the contents of the agreement and whether the court finds the contract to be conscionable.

In the Gessa case, a nursing home resident filed a lawsuit against Manor Care of Florida for negligence and a violation of her resident's rights under Chapter 400, Florida Statutes. Since an arbitration agreement had been signed by all parties, the facility moved the case to arbitration, which a trial court granted. The decision was affirmed by the 2nd District Court of Appeal. However, on appeal to the Florida Supreme Court, the claimant argued that the arbitration agreement had a limitation on non-economic damages and waived her right to claim punitive damages.

In 2011, the Florida Supreme Court struck down the arbitration agreement, ruling that the agreement was unenforceable because provisions in the contract limited the nursing home's liability to Angela Gessa and diminished the statutory remedies afforded to Gessa as a nursing home resident.

Such rulings provide a clear message that arbitration agreements limiting relief that would otherwise be afforded under Chapter 400, Florida Statutes will not be upheld in the state’s courts.

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