Kohlman v. Grane Healthcare Co.

Kohlman v. Grane Healthcare Co.

Fay Vincent (Vincent) was 67 years old when she was discharged from a hospital and admitted to Highland Park Care Center (Highland Park) in 2017. She was noted to be alert and oriented and had no memory problems or dementia, but suffered from anxiety and poor concentration.  Fay also had also been diagnosed with bilateral blindness; thus Highland Park understood the importance of having her family or a close friend involved in discussions about her care.

Upon admission to Highland Park, Vincent signed an Agreement to Arbitrate Disputes (Arbitration Agreement), which in part provided:

PLEASE READ CAREFULLY, YOU ARE GIVING UP YOUR RIGHT TO SUE [HIGHLAND PARK] IN COURT

Resident and [Highland Park] (“parties”) agree that all matters in dispute between the parties, including but not limited to claims for personal injuries…shall be resolved exclusively by binding arbitration… The parties agree that any administrative fees and costs, including the fees of the arbitrator, shall be split equally between the parties, and that each party shall be responsible for their own attorneys’ fees…Resident retains all rights under federal and state law to file grievances with or to complain to authorities or advocacy groups concerning care and treatment…The undersigned certifies that he/she has read this arbitration agreement and that it has been fully explained to him/her, that he/she understands its contents, and that he/she is the Resident or a person duly authorized by the Resident or otherwise to execute this agreement and accept its terms.

Vincent died three months into her admission to Highland Park. Vincent’s daughter, Debra Kohlman, filed a wrongful death and negligence actions against the Highland Park and others flowing from Vincent’s death. Highland Park filed preliminary objections to compel arbitration. The trial court overruled Highland Park’s objection, concluding that the Arbitration Agreement could not bind wrongful death claimants, and the Arbitration Agreement was unconscionable, and not binding on Vincent’s Estate, because it required Vincent to pay half of the costs of arbitration. Highland appealed the trial court’s ruling to the Pennsylvania Superior Court, who remanded the case back to the trial court to gather additional information. Kohlman v. Grane Healthcare Co. (Kohlman I), 228 A.3d 920 (Pa. Super. 2020).

After additional discovery, the trial court concluded that the Arbitration Agreement was unconscionable and overruled the Highland Park’s objection to compel arbitration. Specifically, the trial court determined:

• While Vincent was competent, she was not well and was in severe pain and medicated at the time that she signed the Arbitration Agreement;
• Vincent was alone when she was asked to sign the Arbitration Agreement, and was not given a chance to read the Arbitration Agreement before signing;
• The admissions director did not read or explain all of Arbitration Agreement’s provisions to Vincent;
• Vincent was not given a copy of the Arbitration Agreement after she signed, even though it permitted her to rescind within ten days;
• Vincent did not have awareness of ability to research other nursing care options; and
• Vincent’s financial condition was irrelevant to whether the Arbitration Agreement was unconscionable.

Highland appealed the trial court’s ruling. Kohlman v. Grane Healthcare Company, et al., 2022 PA Super 118, No. 103 WDA 2021.

To invalidate or bar enforcement of a contract based on unconscionability, the party challenging the contract must show both an absence of meaningful choice, also referred to as procedural unconscionability, and contract terms that are unreasonably favorable to the other party, known as substantive unconscionability. Salley v. Option One Mortgage Corp., 925 A.2d 115 (Pa. 2007); Cardinal v. Kindred Healthcare, Inc., 155 A.3d 46 (Pa. Super. 2017); MacPherson v. Magee Memorial Hospital for Convalescence, 128 A.3d 1209 (Pa. Super. 2015).

The Superior Court found record support for the trial court’s determination that the Arbitration Agreement was procedurally unconscionable because:

• Vincent was in pain and was medicated at the time that she signed the Arbitration Agreement;
• Vincent was alone when she was asked to sign the Arbitration Agreement;
• Vincent had no opportunity to read the Arbitration Agreement;
• The Arbitration Agreement was not fully read or explained to Vincent; and
• Vincent was not given a copy to review the Arbitration Agreement.

The Court placed significant weight on the fact that Vincent was blind and relied on others to assist her in these matters.

The Superior Court found record support for the trial court’s determination that the Arbitration Agreement was also substantively unconscionable because Vincent had to pay one-half of the costs of any arbitration, including one-half of the arbitrator’s fees, expenses that Vincent would not have to bear in a court action, particularly since Vincent was not given full information concerning her choices or any opportunity to inform herself of what she was signing or to exercise those choices.