On November 25, 2015, the Superior Court of Pennsylvania found an arbitration agreement to be enforceable despite the unavailability of the selected arbitration organization in MacPherson v. The Magee Memorial Hospital.
On or about January 27, 2012, the plaintiff, Patrick MacPherson (“MacPherson”) as executor of the estate of his brother Richard MacPherson (“Decedent”), filed a complaint against the defendant, Magee Memorial Hospital (“Magee”), alleging, inter alia, wrongful death and negligence. In response to MacPherson’s complaint, Magee filed preliminary objections on the basis of an arbitration agreement between the parties.
By way of background, on or about August 20, 2009, the Decedent was admitted to Magee’s nursing home facility, Manor Care. Thereafter, on or about October 6, 2009, the Decedent entered into an agreement with Magee wherein the Decedent agreed to a binding arbitration agreement. The Decedent stayed at Manor Care until his death on February 1, 2010. Magee’s preliminary objections to MacPherson’s complaint were premised on this October 6, 2009 arbitration agreement. Initially, the trial court overruled Magee’s preliminary objections and the case was placed in the trial pool. Accordingly, Magee timely appealed.
On appeal, the Superior Court of Pennsylvania addressed a number of issues, one of which was whether the trial erred in finding that the arbitration agreement was unenforceable due to the failure of a term in the agreement designating the National Arbitration Forum (“NAF”) to administrate the arbitration. Specifically, the term failed because the NAF was no longer allowed to accept arbitration cases pursuant to a consent decree it entered into with the Attorney General of Minnesota.
In support of this contention, the plaintiff relied on a 2010 case captioned Stewart v. GGNSC-Canonsburg, L.P. handed down by the Superior Court of Pennsylvania wherein the court held that an arbitration agreement was unenforceable because the provision designating the NAF and its procedures were integral to the agreement. Moreover, in reaching this decision, the Stewart court held that an agreement to submit to a specific forum and its set of rules is an express intention of the parties to arbitrate exclusively before that specific organization. The court in the instant case, however, declined to follow Stewart stating that the agreement in Stewart used the word “exclusively” with respect to the arbitration with the NAF and the agreement in MacPherson did not use the same exclusive designation. Because the parties did not use this “exclusivity” language, the court held that the designation of the NAF was not integral to the arbitration agreement.
The court’s decision to draw this fine-line distinction between Stewart and MacPherson demonstrates Pennsylvania’s long standing public policy favoring arbitration to resolve disputes between parties.
Thanks to Erin Connolly for her contribution.