The Second DCA issued a nursing home arbitration decision inwhich it delivered the 36th Florida nursing home/arbitration decision and the eighth Florida opinion interpreting one company's form contract. Or so the opinion claims. Needless to say, it's been one we've been anxious to address.

The interpretation of "non-severable" in the case may surprise some. The practical result, after all of this, is that one party might still void the agreement anyhow. Will this be the appellate decision which triggers legislative action?

We've previously offered the chronology of Florida appellate courts interpreting the Manor Care / HCR arbitration agreement. Along these lines, we've discussed how the Second District leaves non-gateway issues to the arbitrator and "eschews" the Fourth District's sliding scale approach to unconscionability (the Fourth DCA, along the with Third, appear to eschew the Second DCA's "gateway" approach).

The case is ManorCare Health Services, Inc.; Manor Care of America, Inc.; Manor Care, Inc.; Russell Ward; Douglas Webb; and Michelle Wicks v. Catherine Stiehl as Personal Representative of the Estate of Florence C. Halloran (Per Curiam).

Unlike most nursing home arbitration disputes, there is no question about the appropriate signing party nor a dispute over unconscionability. Instead, the question is whether the remedial limitations warrant denial of the Defendants' Motion to Compel Arbitration. Despite the presence of a clause entitled, "Nonseverability," the court concluded that any provision which offended the arbitrator could be severed.

As is precedent in the Second District, the court would "not address the enforceability of the remedial limitations" because that was "beyond the initial gateway determination of an arbitration agreement's enforceability..." Instead, that issue is left to the arbitrator. Other districts, meanwhile, have done the exact opposite. For a lengthy discussion see here.

Historically, for example, the Fourth District has declined to enforce arbitration agreements with offending remedial measures in Lacey v. Healthcare and Blankfeld v. Richmond. In other instances, if there is a severability clause, arbitration would be granted after severing the unenforceable provisions. More recently, in the absence of a severability clause, the court has still severed.

In Stiehl, the court was faced with a nonseverability clause. Specifically, AFTER a court or arbitrator decides enforceability of any challenged provision, the parties may choose to "cancel the agreement." Hence, invalidating a provision does not void the arbitration agreement; it leaves the decision to the parties (thus it is voidable). In this instance, presumably the plaintiff would both seek to attack the remedial limitations and, if they won on any point, they would then cancel the arbitration agreement, leaving everyone back at square one in terms of filing a lawsuit at the courthouse.

We note, in passing, the court's reference to the agreement's choice-of-arbitrators provision and the inclusion of the AAA as an optional arbitrator -- meanwhile, the AAA has since reportedly declined to accept these kinds of cases. That kind of provision, as well, is something the Second District has overcome recently.

Interestingly, the Second District found that the remedial limitations were not so intertwined in the essence of the agreement that it could not be severed; the Fourth District, previously, has found otherwise (see Lacey and Blankfeld, above).

Thus, the appellate court directed the case to arbitration. Not surprisingly, a week later, the plaintiff sought Florida Supreme Court review.

In sum, Stiehl involves an arbitration agreement (with a nonseverability clause) where the agreement is intended to quickly resolve disputes without resorting to litigation delays. But the court found the nonseverability clause still allows... severing provisions. And the Second District admits it "eschews" how other districts handle some of these issues AND further admits its precedent is different. So how a contract is treated in Tampa is different than how it will be treated in West Palm Beach. One judge on the Second DCA even questioned whether the whole court's precedent may be off kilter. Meanwhile, at the end of hearings and appeals, the plaintiff still holds the trump card to cancel arbitration if the arbitrator finds any portion of the agreement invalid. Frustrations exist on both sides.

There has been proposed legislation at the state and federal level to alter arbitration statutes and codes to disallow or significantly revise arbitration clauses between consumers/nursing home residents and corporations. None have gotten far.

But the cry for legislative action has gotten louder (read the dissent). The accusation is that remedial limitations are one sided and are inserted simply to avoid the governing statutes. Whether or not that is true, many people may find Stiehl a frustrating case to understand and an indicator that the courts may have gotten these issues wrong. Will it be a catalyst during the next legislative term? We'll keep an eye on that... and the appeal to the Florida Supreme Court.