Manley v. Personacare of Ohio, 2007 Ohio 343 (Ohio Ct. App. 2007)

After admission to the nursing home, resident met with the admissions director and signed a “resident admission agreement” and an “alternative dispute resolution agreement between resident and facility.” Later, resident suffered from recurring falls, was permitted to get sick and died as a result of treatment. Daughter filed a wrongful death action against nursing home. Nursing home moved to stay and to have matter referred to arbitration. In addition to filing the agreements, nursing home filed (1) competency evaluation; and (2) and copy of a pamphlet regarding alternative dispute resolution. The trial court granted Defendants’ motion and Plaintiff appealed alleging the agreement was unconscionable. “Under Ohio law, a contract clause is unconscionable where one party has been misled as to its meaning, where a severe imbalance of bargaining power exists, or where the specific contractual clause is outrageous. n9 Unconscionability is generally recognized to include an absence of meaningful choice on the part of one of the parties to a contract, combined with contract terms that are unreasonably favorable to the other party.” To prevail, Plaintiff must show contract is substantively unconscionable (not commercially reasonable) and procedurally unconscionable (factors bearing on the relative bargaining position of the contracting parties, including their age, education, intelligence, business acumen and experience, relative bargaining power, who drafted the contract, whether the terms were explained to the weaker party, and whether alterations in the printed terms were possible). The court examined the resident’s age, education, the fact that she had been an assault victim the week prior to admission, her stress on admission and the relative bargaining power of the parties and found the agreement procedurally unconscionable. However, the agreement, while troubling, contained a warning that rights were being waived, a statement that admission was not contingent on it being executed and a 30 day right to rescind; therefore the court found it was not substantively unconscionable despite a troubling provision providing for attorney’s fees to the prevailing party. The court rejected plaintiff’s argument that there was on consideration for the agreement. The consideration resident received was the right to have disputes with the nursing home resolved through arbitration. The court rejected plaintiff’s argument that the arbitration agreement was an illegal additional consideration in addition to the Medicaid rate.

Note: Other cited cases rejecting the additional consideration argument were Broughsville v. OHECC, LLC, 2005 Ohio 6733 (Ohio Ct. App. 2005); Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278 (Fla. 1st DCA 2003); Owens v. Coosa Valley Health Care, Inc., 890 So. 2d 983 (Ala. 2004)