With the continued risk of the spread of COVID-19 in assisted care facilities, more and more facilities are implementing a virtual admissions process. This process includes providing all of the admissions documents, including an arbitration agreement, to potential residents and/or their legal representatives electronically. While it is preferable from a legal standpoint that the arbitration agreement be presented and executed in person, in today's world that is not always possible. Below is a discussion of the risks associated with the use of electronic arbitration agreements, and ways that your facility can ensure the enforceability of an electronic arbitration agreements.
In-person admissions processes are not infallible insofar as courts have found that arbitration agreements included in admissions packets are unenforceable if they were not properly presented at the time of admission. Recently, in Gay v. Saber Healthcare Group, L.L.C., the Court of Appeals of North Carolina refused to enforce an advanced care facility's arbitration agreement because it was not properly presented to the resident's legal representative. In Gay, Ms. Gay's mother was transferred to Saber's advanced care facility. Upon her mother's admission, Ms. Gay executed the admissions paperwork, which included an arbitration agreement. However, when the arbitration agreement was presented to Ms. Gay, only the signature page was presented and not the entire agreement. Subsequently, Ms. Gay's mother died while a resident at the facility, and a lawsuit was filed. It was at that time that Saber moved the court to enforce the arbitration agreement. However, the court refused to enforce the arbitration agreement because it was not properly presented to Ms. Gray insofar as she was only provided with the signature page for the arbitration agreement and not with the entire arbitration agreement. Additionally, the court held that the arbitration agreement was unenforceable because it conflicted with other provisions contained in the admissions paperwork. Proper presentation of the arbitration agreement, whether in person or virtually, is key to enforceability.
The risk that a court will find that an arbitration agreement is unenforceable due to improper presentation is only exacerbated when the arbitration agreement is presented virtually. In Shockley v. PrimeLending, the Eighth Circuit held that an arbitration agreement contained in an electronic employee handbook was improperly presented and therefore unenforceable. In Schockley, the employer maintained its employee handbook, which contained a dispute resolution/arbitration provision, on a network accessible by its employees. When employees clicked on the handbook, the system automatically generated an acknowledgment of review, advising the employees that by entering the system, they acknowledged their review of the material. It also generated a pop-up window with a link to open the full text of the handbook. It did not record whether the employee clicked on the hyperlink, nor did it require the employee to affirmatively agree to the arbitration agreement. The employer required its employees to review the handbook annually and presented evidence to the court that the plaintiff twice entered the system, thus generating the automatic acknowledgment. However, the court held that the employer’s process stopped short of what was required to demonstrate a valid contract. The employer's software also did not require employees to actually click the link to open the handbook, much less the specific arbitration agreement, and it did not record when the employee reviewed the electronic handbook. The company's policy also did not advise employees that their continued employment would constitute acceptance of the arbitration agreement. Additionally, the employer did not require the employee to affirmatively “accept” or “agree” to the arbitration agreement. Therefore, the Eighth Circuit made it clear that for an electronic arbitration agreement to be enforceable, there has to be an affirmative action taken by the person agreeing to be bound by the electronic arbitration agreement.
These cases do not foreclose the use of an electronic arbitration agreement, but instead provide guidance on how to ensure the enforceability of an electronic arbitration agreement. Below are the steps that need to be taken to ensure the enforceability of an electronic arbitration agreement:
- Make sure that the provisions of the electronic arbitration agreement agree with the provisions contained in the rest of the virtual admissions packet;
- Make sure that the arbitration agreement is provided in its entirety to potential residents and/or their legal representatives as one document. Do not separate the signature page or electronic acceptance from the body of the electronic arbitration agreement. Additionally, a single signature page for the entire virtual admissions packet that includes an arbitration agreement is not sufficient. Having a single signature page runs the risk of having a court find that the electronic arbitration agreement was not presented in its entirety to potential residents and/or their legal representatives, and is therefore unenforceable;
- Do not bury the arbitration agreement in the virtual admissions packet. When the admissions packet is presented in person, the proper procedure is to have admissions personnel individually present the arbitration agreement, in its entirety, to potential residents and/or their legal representatives. The same must remain true when the arbitration agreement is part of a virtual admissions packet. Ideally, the electronic arbitration agreement will be its own separate document from the rest of the electronic admissions packet that will require potential residents and/or their legal representatives to click on a separate conspicuous hyperlink (i.e., an open and obvious hyperlink that is not buried within a document) in order to review and execute the electronic arbitration agreement;
- As stated by the court in Schockley, having potential residents and/or their legal representatives merely click on a hyperlink to the arbitration agreement is insufficient to show acceptance of the terms of the electronic arbitration agreement. To show that potential residents and/or their legal representatives expressly accept the terms of the electronic arbitration agreement, there must be a process by which they acknowledge that they have reviewed the terms of the electronic arbitration agreement and expressly agree to its terms. This would include a check box where potential residents and/or their legal representatives click to acknowledge their review of the electronic arbitration agreement, and then an inclusion of an electronic signature agreeing to the terms of the electronic arbitration agreement. The electronic system should also capture the date and time that the electronic arbitration agreement was reviewed and executed;
- Express acceptance or denial of the electronic arbitration agreement must be required before the electronic admission process can be completed. This will ensure that the electronic arbitration agreement was properly presented, reviewed, and accepted; and
- If there are any questions regarding whether the electronic arbitration agreement has been successfully acknowledged and signed, then an in-person review and execution of the arbitration agreement with potential residents and/or their legal representatives may be required once they arrive for admission to the facility.
With safety being paramount, the use of virtual admissions packets that include an electronic arbitration agreement by assisted living facilities is an inevitability. The implementation of the tips included in this article will ensure the enforceability of electronic arbitration agreements included in virtual admissions packets.