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The United States Court of Appeals for the First Circuit has upheld a challenge to the enforceability of an arbitration agreement in the senior living facility and long-term care (LTC) arena. In Biller v. S-H OpCo Greenwich Bay Manor, LLC, No. 19-1865, 2020 U.S. App. LEXIS 17735, at *1 (1st Cir. June 5, 2020) (“Biller”), the First Circuit determined an arbitration clause in a residency agreement was enforceable after the LTC resident had ceased receiving care at the facility. With this decision, facilities will have clarity about the agreements and can rely on the contractual terms with its residents to arbitrate applicable claims, even after a resident may leave the facility. The decision should further dissuade residents from challenging arbitration clauses and reduce unnecessary litigation costs.
In Biller, the plaintiff moved into the assisted-living facility in 2016 where the plaintiff’s daughter and attorney-in-fact signed the residency agreement on her mother’s behalf. The residency agreement, among other things, stated that “it would continue indefinitely, but that either party could terminate it ‘immediately upon written notice in the event of [Plaintiff’s] death or if [she] must be relocated due to [her] health.’” Biller, supra at * 2. The residency agreement included an arbitration provision stating, in part:
Any and all claims or controversies arising out of, or in any way relating to, this Agreement or any of your stays at the Community…. shall be submitted to binding arbitration, as provided below, and shall not be filed in a court of law…. The parties to this Agreement further understand that a judge and/or jury will not decide their case.
Id., at * 3 (emphasis in original). More than one year after moving into the defendant facility, the plaintiff alleges she suffered serious health complications due to the failure of the facility’s staff to properly administer prescribed medication. The plaintiff eventually was admitted to the hospital, and she vacated the facility permanently.
The plaintiff brought claims under Rhode Island state law arising out of the facility’s alleged negligent administration of prescription drugs. The facility removed the action to federal court and simultaneously moved to compel arbitration. The facility resident opposed the motion to compel arbitration asserting the arbitration agreement “wasn’t in effect” between the plaintiff and the facility, in part, and claiming the agreement terminated when the plaintiff left the original unit. The ALF facility in turn argued “the termination clause in the residency agreement had not been triggered, because [plaintiff] merely ‘receiv[ed] different services over time at the same facility’ throughout her stay; and there was no superseding agreement, because the March 2016 residency agreement contemplated additional services and fees.” Biller, supra at * 6.
The United States District Court, District of Rhode Island, denied the facility’s motion to compel arbitration because, in its view, the residency agreement terminated when the plaintiff moved to a different unit within the facility. The First Circuit Court of Appeals in Biller, however, reversed the District Court’s decision. Biller held plaintiff failed to “mount an ‘independent’ challenge to the arbitration agreement itself” and the plaintiff did not “identif[y] evidence that the parties intended not only the residency agreement but also their arbitration obligations to lapse when [plaintiff] relocated (or at some other time before [the facility] sought to invoke arbitration).” Biller, supra at * 21 (internal citations omitted).
The First Circuit Court of Appeals’ decision in Biller bolsters assisted-living facilities and other long-term care centers’ right to enforce arbitration, even after moving out. Unless a resident or the respective representative is able to establish the parties’ intent at contract formation that arbitration obligations terminate upon expiration of a residency agreement, claims arising out of the agreement should remain arbitrable.