Dangerous Arbitration Agreements

The attorneys at Cannon Law, P.C. continuously warn consumers of the dangers posed by “routine” paperwork when dealing with sophisticated corporations and other large business entities.  In Westmoreland v. Highpoint Healthcare, Inc. (COA 10-1103), decided January 17, 2012, the North Carolina Court of Appeals reaffirmed North Carolina’s reluctance to invalidate arbitration agreements.  In this case, a nursing home patient’s daughter was presented with several documents for her signature, one of which was an arbitration agreement.  The arbitration agreement provided that any claims between the patient and the nursing home would be resolved by binding arbitration and that the parties waived their right to trial before a jury or a judge.  It also provided that attorney’s fees could be assessed against the losing party.

When the patient died, the daughter, as executrix of the estate, attempted to sue the nursing home for its alleged negligence in causing the death.  The nursing home asked the court to require the estate to proceed with its claim solely in arbitration, but the trial court found the arbitration agreement to be so unfair that it was unenforceable.

However, on appeal, the Court of Appeals enforced the arbitration agreement and would not permit the wrongful death claim to be brought before a judge or jury.  The Court did not accept the argument that because the American Arbitration Association (AAA) finds arbitration of such disputes between healthcare providers and patients to be inappropriate subjects for arbitration, such contracts should not be enforced.  The Court of Appeals reiterated that “the courts of this state will only set aside contractual agreements based upon unconscionability in a very rare case.”

We strongly recommend that you have one of our attorneys review any contract or document before signing.  As this case illustrates, you can sign away valuable rights without even knowing it.