Kohlman, D. v. Grane Healthcare Company

J-A23033-19

2020 PA Super 29

DEBRA KOHLMAN, ADMINISTRATRIX : IN THE SUPERIOR COURT OF

OF THE ESTATE OF FAY A. VINCENT, : PENNSYLVANIA

DECEASED :

:

:

v. :

:

:

GRANE HEALTHCARE COMPANY; :

HIGHLAND PARK CARE CENTER, LLC, :

D/B/A HIGHLAND PARK CARE :

CENTER; GRANE ASSOCIATES, LP; :

GRANE ASSOCIATES, INC.; GRANE :

PROPERTIES, INC.; TREBRO, INC.; :

HIGHLAND PARK PROPERTIES, LLC; :

UNIVERSITY OF PITTSBURGH :

MEDICAL CENTER A/K/A UPMC; :

UPMC PRESBYTERIAN SHADYSIDE; :

UPMC SHADYSIDE HOSPITAL :

:

:

APPEAL OF: GRANE HEALTHCARE :

COMPANY; HIGHLAND PARK CARE :

CENTER, LLC, D/B/A HIGHLAND :

PARK CARE CENTER; GRANE :

ASSOCIATES, LP; GRANE :

ASSOCIATES, INC.; GRANE :

PROPERTIES, INC.; TREBRO, INC.; :

HIGHLAND PARK PROPERTIES, LLC : No. 144 WDA 2019

Appeal from the Order Entered January 2, 2019

in the Court of Common Pleas of Allegheny County

Civil Division at No(s): GD 18-010949

BEFORE: BENDER, P.J.E., KUNSELMAN, J., and MUSMANNO, J.

OPINION BY MUSMANNO, J.: FILED FEBRUARY 10, 2020

Grane Healthcare Company, Highland Park Care Center, LLC d/b/a

Highland Park Care Center, Grane Associates, LP, Grane Associates, Inc.,

Grane Properties, Inc., Trebro Inc., and Highland Park Properties, LLC

J-A23033-19

(collectively, “Defendants”), appeal from the Order denying their Preliminary

Objections seeking to compel arbitration of the claims asserted against

Defendants by Debra Kohlman (“Plaintiff”), Administratrix of the Estate of Fay

A. Vincent (“decedent”). We affirm in part, reverse in part, and remand for

further proceedings.

On January 31, 2017, decedent, who was 67 years old and Plaintiff’s

mother, was discharged from a Pittsburgh hospital (the “Hospital”)1 and

admitted for care and rehabilitation at Highland Park Care Center (“Highland

Park”),2 a skilled nursing home facility located in Pittsburgh. While she was

being admitted, decedent executed a two-page document entitled

“AGREEMENT TO ARBITRATE DISPUTES” (hereinafter, the “Arbitration

Agreement”).3

The Arbitration Agreement provides, in relevant part, as follows:

PLEASE READ CAREFULLY, YOU ARE GIVING UP YOUR

RIGHT TO SUE [HIGHLAND PARK] IN COURT

[Decedent] and [Highland Park] agree that all matters in

dispute between [decedent] and [Highland Park], its agents,

____________________________________________

1 Decedent was treated for various conditions at the Hospital, including

congestive heart failure, diabetes, and pressure ulcers. Decedent remained

in the Hospital for three months, two of which were in the intensive care unit.

2 Defendants collectively owned and operated Highland Park.

3 The record does not contain the admission agreement concerning decedent’s

admission into Highland Park. Notably, nor does it explain the circumstances

surrounding decedent’s execution of the Arbitration Agreement and admission

agreement. However, it does indicate that the Arbitration Agreement is a

separate contract from the admission agreement.

-2-

J-A23033-19

servants, employees, officers, contractors and affiliates

(hereinafter “the parties”), including but not limited to claims for

personal injuries or any controversy or claim between the parties

arising out of or relating to the agreement for admission and for

the provision of nursing facility services, whether by virtue of

contract, tort or otherwise, including the scope of this [A]rbitration

[A]greement and the arbitrability of any claim or dispute[,] 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.[4]

In the event that a court having jurisdiction finds any

portion of this agreement unenforceable, then that portion shall

not be effective and the remainder of the agreement shall remain

effective.

***

[Decedent] retains all rights under federal and state

law to file grievances with or to complain to authorities or

advocacy groups concerning care and treatment.

***

[Decedent] understands that he/she has the right to consult

legal counsel concerning this [A]rbitration [A]greement; that

execution of this [A]rbitration [A]greement is not a condition of

admission or to the furnishing of services to [decedent] by

[Highland Park]; and that this [A]rbitration [A]greement may be

rescinded by written notice delivered to [Highland Park] within ten

(10) days of signature. …

The undersigned certifies that he/she has read this

[A]rbitration [A]greement 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.

____________________________________________

4 We will hereinafter refer to this provision as the “fee-splitting provision.”

-3-

J-A23033-19

Arbitration Agreement, 1/31/17 (footnote added; bold, underline and heading

capitalization in original). A representative of Highland Park also signed and

dated the Arbitration Agreement. Decedent died approximately three months

after her admission into Highland Park.

On August 27, 2018, Plaintiff filed a Complaint against, inter alia,

Defendants,5 alleging negligence, survival and wrongful death causes of

action. Plaintiff alleged that Defendants were negligent in their care and

treatment of decedent while she was a resident at Highland Park, which

caused her injuries and eventually led to her death. Plaintiff sought

compensatory and punitive damages.

On October 22, 2018, and November 13, 2018, Defendants filed

Preliminary Objections to the Complaint.6 Therein, Defendants asserted, in

relevant part, that Plaintiff’s claims must be resolved via arbitration, pursuant

to the Arbitration Agreement. Plaintiff thereafter filed a Response to the

Preliminary Objections, asserting, inter alia, that the Arbitration Agreement

was unenforceable, void, unconscionable, against public policy, and the

____________________________________________

5The Complaint also named as defendants University of Pittsburgh Medical

Center, a/k/a UPMC, UPMC Presbyterian Shadyside, and UPMC Shadyside

Hospital (collectively, “the UPMC defendants”). The UPMC defendants are not

parties to the instant appeal, and did not file a brief.

6 Defendants did not attach a Notice to Plead to their Preliminary Objections,

as required by Allegheny County Local Rule 1028(c)(2) (providing that if an

issue of fact is raised in preliminary objections, they “must be endorsed with

notice to plead[.]”).

-4-

J-A23033-19

product of duress. The trial court heard oral argument on the matter on

January 2, 2019, wherein the parties’ respective counsel disputed the

enforceability of the Arbitration Agreement. Importantly to this appeal, the

parties did not engage in any discovery prior to the trial court’s ruling on the

Preliminary Objections.

By an Order dated January 2, 2019, and entered on January 8, 2019,

the trial court denied Defendants’ Preliminary Objection to compel arbitration.

Defendants timely filed a Notice of Appeal. The trial court ordered Defendants

to file a Pa.R.A.P. 1925(b) concise statement of errors complained of on

appeal, and Defendants timely complied. The trial court then issued a Rule

1925(a) Opinion.

In its Opinion, the trial court ruled, in relevant part, as follows:

 Plaintiff is entitled to a trial on the wrongful death cause of

action, notwithstanding the Arbitration Agreement.7 See Trial

Court Opinion, 3/13/19, at 4.

 “[T]he standards for a valid and enforceable agreement to

arbitrate cannot be met where an ill or damaged patient signs

such an agreement as either an implicit or explicit condition of

admission to a health care facility, such as [Highland Park]

here.” Id.

 The “[fee-splitting] provision in the [Arbitration] Agreement[,

which states] that an injured patient has also agreed to pay for

the Arbitrator’s services and to have given up his or her right

to a trial in a court before a judge and jury, where there is no

____________________________________________

7 As we discuss below, Defendants do not dispute that Plaintiff’s wrongful

death action must proceed to court; thus, their claim under the Arbitration

Agreement concerns only the survival action.

-5-

J-A23033-19

charge to litigants for those services, defines overreach and

chutzpah.” Id.

 Defendants failed to meet “their burden to show that

[d]ecedent knew what she was giving up and what expense

she was accepting when she signed” the Arbitration

Agreement. Id. at 4-5.

 Defendants’ attempt to enforce the Arbitration Agreement

“with an allegedly elderly woman in frail health and in need of

advanced wound care, is facially unconscionable and procured

under duress[,]” and the Arbitration Agreement is thus void,

and Plaintiff’s survival action must proceed to court. Id. at 4.

On appeal, Defendants present the following issue for our review:

“Whether the court below erred by overruling Preliminary Objections seeking

to compel the matter to arbitration pursuant to a binding agreement to

arbitrate disputes?” Brief for Defendants at 3.

This Court previously set forth our standard of review and the relevant

law as follows:

Our review of a claim that the trial court improperly denied

the appellant’s preliminary objections in the nature of a petition

to compel arbitration is limited to determining whether the trial

court’s findings are supported by substantial evidence and

whether the trial court abused its discretion in denying the

petition.

***

[C]ourts must bear in mind:

(1) arbitration agreements are to be strictly construed

and not extended by implication; and (2) when parties

have agreed to arbitrate in a clear and unmistakable

manner, every reasonable effort should be made to

favor the agreement unless it may be said with

positive assurance that the arbitration clause involved

-6-

J-A23033-19

is not susceptible to an interpretation that covers the

asserted dispute.

***

Pennsylvania law endorses the nationally accepted liberal

policy favoring arbitration embodied in the Federal Arbitration

Act at 9 U.S.C. §§ 1-16 (“FAA”):

The enactment of the FAA expresses a liberal federal policy

favoring arbitration agreements. Congress[’s] purpose was to

overcome state legislative and judicial efforts to undermine the

enforceability of arbitration agreements, inter alia, by establishing

a substantive rule of federal law placing such agreements upon

the same footing as other contracts. The federal statute thus

requires that a written provision to settle by arbitration a

controversy thereafter arising out of such contract or transaction

shall be valid, irrevocable, and enforceable, save upon any

grounds at law or in equity for the revocation of any contract.

Griest v. Griest, 183 A.3d 1015, 1022 (Pa. Super. 2018) (citations, brackets,

ellipses, footnote and indents omitted).

We are further guided by the reasoning of our Pennsylvania Supreme

Court in Taylor v. Extendicare Health Facilities, Inc., 147 A.3d 490 (Pa.

2016):

[W]hile state courts have attempted to reconcile their state law

contract defenses and public policy protections with the

preemptive effect of the FAA, see, e.g., [AT&T Mobility, LLC v.]

Concepcion[,] 563 U.S. [333,] 342 [(2011)] (recognizing that

“the judicial hostility toward[] arbitration that prompted the FAA

had manifested itself in “a great variety” of “devices and formulas”

declaring arbitration against public policy”), the United States

Supreme Court has endeavored to compel judicial acceptance of

private agreements to arbitrate. The FAA is now perceived as

applying to almost every arbitration agreement, although the

savings clause envisions a limited role for state law. In this

respect, arbitration has come a long way from its origin as a

mutually agreed-upon method of dispute resolution by two

business entities of equal bargaining power, and now is employed

-7-

J-A23033-19

in a variety of contracts, many of which are contracts of adhesion.

As arbitration clauses proliferate, individuals will ever more

broadly exchange their right to a jury trial for basic consumer

products or nursing home care.

One of the striking consequences of the shift away from the

civil justice system and toward private adjudication is that

corporations are routinely stripping individuals of their

constitutional right to a jury trial. See U.S. Const. amend.

VII (preserving the right to a trial by jury); Pa. Const. art. 1, § 6

(same). While one’s right to a jury trial may be waived, it is not

at all apparent that signatories to arbitration agreements are

aware that they waive their right to a jury trial upon the execution

of an arbitration agreement.

The West Virginia Supreme Court of Appeals highlighted this

constitutional concern in Brown et al[.] v. Marmet Health Care

Ctr. et al[.], 228 W. Va. 646, 724 S.E.2d 250 (W.Va. 2011).

Relying in part upon the state constitution’s provision of the right

to a jury trial, W. Va. Const. art. III, § 13, the West Virginia court

criticized the [United States] Supreme Court’s decisions granting

the FAA sweeping preemptive effect. Brown, 724 S.E.2d at

278 (“With tendentious reasoning, the United States Supreme

Court has stretched the application of the FAA from being a

procedural statutory scheme effective only in the federal courts,

to being a substantive law that preempts state law in both the

federal and state courts.”). Based upon its belief that Congress

did not intend for all arbitration agreements to be governed by the

FAA, the state court held that the FAA did not apply to pre-dispute

agreements to arbitrate negligence claims in nursing home

contracts. Id. at 291-92 ([stating that] “[a]s a matter of public

policy under West Virginia law, an arbitration clause in a nursing

home admission agreement adopted prior to an occurrence of

negligence that results in personal injury or death, shall not be

enforced to compel arbitration of a dispute concerning the

negligence.”).

On appeal, the [United States] Supreme Court was

unsympathetic to the [West Virginia] court’s concern for the right

to a jury trial. In a cursory per curiam opinion, the Supreme Court

reversed, and chastised the West Virginia court for “misreading

and disregarding the precedents of this Court interpreting the

FAA.” Marmet [Health Care Ctr., Inc. v. Brown, 565 U.S. 530,

531 (2012) (per curiam)]. The Court held that the state’s public

-8-

J-A23033-19

policy rationale constituted “a categorical rule prohibiting

arbitration of a particular type of claim,” which the Court held was

“contrary to the terms and coverage of the FAA” and, therefore,

preempted. Id. at [533]; see [also] Nitro-Lift Techs., L.L.C.

v. Howard, 568 U.S. 17 … (2012) (per curiam) (invalidating a

state law that required the validity of non-compete provisions in

employment contracts to be resolved judicially).[FN]

[FN] Interestingly, upon remand from the Supreme Court,

the West Virginia Supreme Court of Appeals again

declared that the arbitration agreements at issue could

be invalid, this time based upon common-law grounds of

unconscionability, and remanded for the development of

a record to assess these common-law arguments.

Brown et al v. Marmet Health Care Ctr. et al, 229 W.

Va. 382, 729 S.E.2d 217, 223 (W.Va. 2012)

[(hereinafter, Brown II)].

With this Supreme Court jurisprudence in mind, and

solicitous of our obligation to consider questions of arbitrability

with a “healthy regard for the federal policy favoring arbitration,”

Moses H. Cone [Mem’l Hosp. v. Mercury Constr. Corp.], 460

U.S. [1,] 2[4] [(1983)], we observe that Section 2 of the FAA

binds state courts to compel arbitration of claims subject to an

arbitration agreement. 9 U.S.C. § 2 (providing that arbitration

agreements “shall be valid, irrevocable, and enforceable”). This

directive is mandatory, requiring parties to proceed to arbitration

on issues subject to a valid arbitration agreement, even if a state

law would otherwise exclude it from arbitration. Mastrobuono

v. Shearson Lehman Hutton, Inc., 514 U.S. 52 … (1995).

The only exception to a state’s obligation to enforce an

arbitration agreement is provided by the savings clause, which

permits the application of generally applicable state contract law

defenses such as fraud, duress, or unconscionability,[8] to

____________________________________________

8 Concerning the defense of unconscionability, we have explained that

“[u]nconscionability has generally been recognized to include an absence of

meaningful choice on the part of one of the parties[,] together with contract

terms which are unreasonably favorable to the other party.” Cardinal v.

Kindred Healthcare, Inc., 155 A.3d 46, 53 (Pa. Super. 2017) (citation

omitted).

-9-

J-A23033-19

determine whether a valid contract exists. [Doctor’s Assocs. v.]

Casarotto, 517 U.S. [681,] 687 [(1996)]; Volt [Info. Scis. v.

Bd. Of Trs.], 489 U.S. [468,] 476 [(1989)]; Perry [v. Thomas],

482 U.S. [483,] 492 n.9 [(1987)].

Taylor, 147 A.3d at 507-09 (Pa. 2016) (footnote added, some footnotes and

brackets omitted).9 Additionally, this Court has explained that “the existence

of an arbitration provision and a liberal policy favoring arbitration does not

require the rubber stamping of all disputes as subject to arbitration.” Pisano

v. Extendicare Homes, Inc., 77 A.3d 651, 661 (Pa. Super. 2013) (citation

omitted).

Initially, Defendants do not dispute that Plaintiff is entitled to a trial on

the wrongful death cause of action, notwithstanding the Arbitration

Agreement. See Brief for Defendants at 32 (citing Pisano, 77 A.3d at 663

(stating that “Pennsylvania’s wrongful death statute creates an independent

action distinct from a survival claim that, although derived from the same

tortious conduct, is not derivative of the rights of the decedent. We conclude,

therefore, that the trial court did not abuse its discretion in determining that

____________________________________________

9 Though the Taylor Court held that the FAA binds state courts to compel

arbitration of claims subject to an arbitration agreement, even if a state law

would exclude it from arbitration, Taylor, 147 A.3d at 509, the court went on

to remand the case to the trial court to afford the parties “the opportunity to

litigate whether there is a valid and enforceable arbitration contract in accord

with generally applicable contract defenses and the FAA’s savings

clause.” Id. at 513.

- 10 -

J-A23033-19

Decedent’s contractual agreement with [the nursing home] to arbitrate all

claims was not binding on the non-signatory wrongful death claimants.”)).

We next turn to Defendants’ claim that the trial court erred in denying

their Preliminary Objection to compel arbitration of the survival action, and

ruling that the Arbitration Agreement was unconscionable and, thus, void.

See Brief for Defendants at 15-27.

Because the record has not been sufficiently developed to address

Plaintiff’s contract law unconscionability defense, it would be premature at this

point to reach the merits of Defendants’ claim. In this regard, we are

persuaded by the following argument advanced by Plaintiff:

Plaintiff was not afforded an opportunity to conduct discovery on

the issue of whether a valid and enforceable contract to arbitrate

exists. Instead, Plaintiff set forth grounds upon which the

proffered [A]rbitration [A]greement could be set aside as a matter

of law. But[,] “where material facts are disputed … concerning

the general commercial background underlying a challenged

transaction …[,] fact finding may be necessary.” Salley v. Option

One Mortg. Corp., 925 A.2d 115, 120 (Pa. 2007).[10] In light of

allegations that a contract is unconscionable, “the parties are to

be afforded an opportunity to present evidence as to commercial

setting, purpose and effect to aid the court in its determination.”

Id.

Further, a preliminary objection in the nature of a motion to

compel arbitration “cannot be determined from facts of record.”

Pa.R.Civ.P. 1028(a)(6)[, (c)(2), note]. And “[i]f an issue of fact

is raised, the court shall consider evidence by depositions or

otherwise.” Pa.R.Civ.P. 1028(c)(2).

____________________________________________

10 The Salley Court further stated that although the question of

unconscionability is “ultimately a question of law for the court to decide[,]”

the matter is also “often fact-sensitive[.]” Salley, 925 A.2d at 124.

- 11 -

J-A23033-19

Brief for Plaintiff at 20-21 (footnote added; footnote in original omitted).

Indeed, in Taylor, supra, this Court declined to address the plaintiff’s

generally applicable contract defenses, including unconscionability, where

plaintiffs did not have the opportunity to present these issues in the lower

courts, and directed that “[u]pon remand to the trial court, the parties will

have the opportunity to litigate whether there is a valid and enforceable

arbitration contract in accord with generally applicable contract defenses and

the FAA’s savings clause.” Taylor, 147 A.3d at 512-13; see also id., supra

(pointing out that the West Virginia state court, in Brown II, remanded for

the development of a record to assess the plaintiff’s claim of unconscionability

of the nursing home arbitration agreement, where the parties did not have

the opportunity to conduct discovery and develop the record on this matter).

Here, the record was not developed to establish facts surrounding, inter

alia, the following:

 decedent’s physical and mental state at the time that she

executed the Arbitration Agreement;11

 whether decedent was accompanied by anyone at this time;

 the nature of the admission agreement that decedent executed

(and whether the Arbitration Agreement was part of, or buried

within, a potentially lengthy admissions packet that decedent

was required to complete, while in ill health);

____________________________________________

11 We are naturally cognizant that decedent’s death will limit the amount of

facts that can be uncovered surrounding some of the circumstances of

decedent’s execution of the Arbitration Agreement; nevertheless, the parties

are entitled to develop the record on the unconscionability claim. See Taylor,

147 A.3d at 512-13.

- 12 -

J-A23033-19

 whether the Hospital sent the ill decedent directly to Highland

Park upon her discharge from the Hospital;

 whether decedent was aware that she could receive treatment

from other skilled nursing care facilities, and whether she had

the ability to research other options;

 whether decedent was economically constrained to enter into

an agreement with Highland Park to provide her care (and

relatedly, whether she had the means to pay for arbitration).

Accordingly, we remand for the parties to conduct discovery, and

develop the record on the defense of unconscionability related to the survival

action, and for a proper consideration by the trial court as to whether the

Arbitration Agreement is unconscionable, based on a complete record. See

Taylor, 147 A.3d at 512-13. Thus, we affirm the trial court’s Order refusing

to compel arbitration of the wrongful death action, and vacate that part of the

Order denying Defendants’ Preliminary Objection seeking to compel

arbitration of the survival action, and remand consistent with the foregoing.

Order affirmed in part and reversed in part. Case remanded for further

proceedings consistent with this Opinion. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 2/10/2020

- 13 -