MacPherson v. Magee Memorial Hospital for Convalescence
128 A.3d 1209
| Pa. Super. Ct. | 2015Background
- Decedent Richard MacPherson resided at Manor Care in Sept–Oct 2009; on October 6, 2009 he (and/or a legal representative) signed a four‑page arbitration agreement requiring binding arbitration of disputes arising from the stay.
- Decedent died February 1, 2010. Patrick J. MacPherson, as executor, sued Manor Care and hospital defendants in 2012 for negligence, wrongful death, survivorship, and related claims.
- Manor Care filed preliminary objections seeking to compel arbitration under the Agreement; the trial court overruled and denied referral to arbitration.
- On appeal a majority of the Superior Court reversed, holding (1) the trial court failed to apply the FAA’s liberal policy favoring arbitration, (2) no evidence showed Decedent lacked capacity to sign, (3) the Agreement was not procedurally or substantively unconscionable, and (4) the Agreement did not fail simply because the National Arbitration Forum (NAF) cannot administer cases.
- The court distinguished Stewart and Wert (NAF‑related precedents) because this Agreement: (a) did not make NAF exclusive, (b) provided alternatives if NAF was unavailable, and (c) contained a severability clause; the Superior Court remanded for referral to arbitration.
Issues
| Issue | Plaintiff's Argument (MacPherson) | Defendant's Argument (Manor Care) | Held |
|---|---|---|---|
| 1. Whether court applied FAA and pro‑arbitration policy | Trial court correctly denied arbitration (relied on trial court record) | FAA and PA law favor arbitration; trial court failed to apply liberal FAA policy | Reversed: trial court failed to give due regard to FAA/PA policy favoring arbitration |
| 2. Capacity to execute agreement | Decedent lacked capacity at signing (trial court inferred from medical condition) | Medical records show Decedent alert and oriented at/near signing; plaintiff did not contest capacity on appeal | Reversed: record lacks evidence Decedent lacked capacity; plaintiff waived/abandoned capacity challenge on appeal |
| 3. Unconscionability (procedural/substantive) | Agreement terms (e.g., fee shifting, limits on appeal, no jury) unreasonably favor Manor Care given patient vulnerability | Agreement is voluntary, conspicuously presented, contains rescission period, no damage caps, and pays arbitration costs — not unconscionable | Reversed: terms not shown to be procedurally or substantively unconscionable |
| 4. Invalidity due to NAF unavailability / incorporation of NAF rules | Agreement unenforceable because it incorporates NAF and NAF cannot administer under consent decree (Stewart/Wert) | Agreement is non‑exclusive re: NAF, provides alternatives if NAF unavailable, and has severability clause — NAF unavailability is not fatal | Reversed: NAF reference not integral; provisions severable; arbitration enforceable and case sent to arbitration |
Key Cases Cited
- Pisano v. Extendicare Homes, Inc., 77 A.3d 651 (Pa. Super. 2013) (two‑part test: valid arbitration agreement and scope; wrongful‑death beneficiaries may not be bound)
- Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201 (U.S. 2012) (FAA preempts state law that categorically excludes arbitration)
- Stewart v. GGNSC‑Canonsburg, L.P., 9 A.3d 215 (Pa. Super. 2010) (NAF‑incorporating clause held integral where parties agreed to NAF exclusivity)
- Wert v. Manorcare of Carlisle PA, LLC, 124 A.3d 1248 (Pa. 2015) (plurality/controlling portions addressing NAF incorporation and unenforceability)
- Gaffer Ins. Co. v. Discover Reins. Co., 936 A.2d 1109 (Pa. Super. 2007) (apply ordinary contract law to arbitration clauses but give due regard to federal policy favoring arbitration)
- Witmer v. Exxon Corp., 434 A.2d 1222 (Pa. 1981) (definition of unconscionability: lack of meaningful choice plus unreasonably favorable terms)