In the recent case of Estate of Novosett v. Arc Villages, the Florida Fifth District Court of Appeals voided an arbitration agreement between a nursing home and one of its residents, who died while in the nursing home’s care.
The specific term at issue in the arbitration agreement was a limitation of liability provision, which limited the amount of non-economic damages that the plaintiff could seek and precluded the plaintiff from obtaining punitive damages. Non-economic damages reflect categories of damages like pain and suffering and reduced quality of life, as opposed to economic damages, which encompass quantifiable items like medical bills. Punitive damages are a category of recovery designed to punish a defendant that has engaged in willful, careless, reckless, or wanton conduct. Punitive damages are also designed to discourage other actors from engaging in similar conduct.
The decedent’s estate filed suit, challenging the arbitration agreement. The lower court struck the limitation of liability term from the contract, but it compelled the parties to proceed with arbitration because the contract included a severability clause. According to a severability clause, if one part of the contract is deemed unenforceable, it is struck from the agreement, and the remainder of the terms still stand. The decedent’s estate appealed this decision.
On appeal, the Fifth Circuit agreed that since the damages cap term went to the heart of the agreement, its unenforceability rendered the entire arbitration agreement unenforceable. In reaching this decision, the appellate court relied on a 2011 case that held that an arbitration agreement offered by a nursing home as part of the admission paperwork, which contained a limitation of liability clause, violated public policy. The earlier case also held that the limitation of liability term was not severable because it constituted the financial heart of the agreement. Like the earlier case, the arbitration agreement at issue purported to limit the non-economic and punitive damages available to the plaintiff.
Ultimately, therefore, the appellate court overturned the lower court’s order compelling the parties to arbitration. According to the court, the inclusion of a severability term in a contract does not singlehandedly determine whether a clause deemed void in the agreement renders the entire agreement unenforceable. Instead, the key issue is whether a void term goes to the essence of the agreement. Since the limitation of liability term “goes to the essence of the agreement,” the court invalidated the contract entirely. As a result, the plaintiff was permitted to seek compensation through the judicial court system instead of being forced to resolve the matter through arbitration.
If you or someone you love has been injured while in the care of a nursing home or care facility, you may be entitled to compensation. At Lusk, Drasites & Tolisano, our nursing home negligence lawyers have provided dedicated, compassionate, and knowledgeable legal guidance to plaintiffs throughout Southwest Florida, including in Naples, Cape Coral, and Fort Myers. We offer a free consultation to help you determine the legal options available to you and your family, and we do not collect any fees unless we recover a settlement or a judgment in your favor. Call us now at 1-800-283-7442 or contact us online to set up your appointment.