In MacPherson v. Magee Memorial Hospital for Convalescence et al., the Pennsylvania Superior court addressed the applicability of arbitration agreements in a wrongful death action.  In September 2009, Richard MacPherson was admitted to Manor Care nursing home facility.  A short time later, Richard and Manor Care executed a written arbitration agreement, which provided that any disputes between the parties would be submitted to binding arbitration, and both parties waived the right to trial by judge or jury.

After his death, Richard’s brother Patrick, as executor of Richard’s estate, brought a lawsuit against various nursing home facilities where Richard had stayed.  Manor Care filed preliminary objections seeking to have the case transferred to arbitration, which were denied by the trial court. Manor Care appealed to the superior court to determine whether the arbitration agreement was binding on the executor of the estate.

Under Pennsylvania law, courts apply a two-part test to decide if a trial court should compel arbitration. First, the court must determine whether there is a valid agreement to arbitrate.  Second, the court must determine if the underlying dispute falls within the scope of the agreement.

In reviewing the first prong of the test, the Superior Court noted that both Pennsylvania law and the Federal Arbitration Act embrace a liberal policy favoring arbitration. Applying state-law contract interpretation principles, and recognizing the policies favoring arbitration, the court determined that both Richard MacPherson and Manor Care freely entered into the agreement to submit to binding arbitration.

Under the second prong of the test, the court ultimately determined that the underlying dispute fell within the scope of the arbitration agreement, distinguishing the case from Pisano v. Extedicare Homes.  In Pisano, the same court previously found that an arbitration agreement entered into by the decedent in a wrongful death action was not binding on the decedent’s relative, the plaintiff in the case, because the relative was not a party to the agreement.

The Superior Court stated that MacPherson’s case was different because it was brought under a different subsection of Pennsylvania’s Death Act. The first type of action, allows for specifically delineated beneficiaries–parents, children, and spouses–to recover against those liable for the wrong death of their relative. Pisano fell into this category.

The second type of action allows for the personal representative of the decedent, or executor, to recover on behalf of estate of the decedent. Because the executor was the decedent’s sibling, which is not one of the recognized beneficiaries under the Death Act, his claim was brought solely as the representative of his brother’s estate. Because the estate is the entity capable of recovering, and not another beneficiary, the Court found that the arbitration agreement is binding on the dispute. As such, the applicability of the arbitration agreement in wrongful death actions is going to be determined by what relatives the decedent is survived by.

Thanks to Jim Stinsman for his contribution to this post and please write to Mike Bono for more information.