Nursing-home owner loses battle in court

Agreements void, class-action plaintiffs remain in lawsuit, state justices affirm

Hundreds of plaintiffs in a class-action lawsuit against Arkansas nursing-home magnate Michael Morton and his businesses are not bound by arbitration agreements his attorneys had sought to enforce, the Arkansas Supreme Court ruled Thursday.

The 6-1 ruling by the high court, for the most part, upheld a similar ruling by a Pulaski County circuit judge in 2017, and voided at least 396 of 544 arbitration agreements in dispute, though an attorney for the plaintiffs said the number could be higher.

The ruling also dealt a second blow to attempts by Morton and his attorneys to peel away members of the class of patients and their families from the lawsuit, which alleges understaffing and inadequate care at several nursing homes. The state Supreme Court in 2017

upheld class-action status in all but one of the areas — negligence — sought by the plaintiff ’s attorneys.

Andrew Phillips filed a wrongful-death lawsuit in late 2014 over the death of his mother, Dorothy Phillips, at Morton’s Robinson Nursing and Rehabilitation Center in North Little Rock. In September 2015, Phillips filed a first amended class-action complaint alleging that the Robinson facility had breached its admissions and provider agreements, violated the Arkansas Deceptive Trade Practices Act, committed negligence and civil conspiracy, and been unjustly enriched. He then sought a certification of the class of all residents and estates of residents at the facility from June 11, 2010, on.

The class-action suit has since grown to include about 2,000 plaintiffs, according to Greg Campbell, an attorney for the class.

The suit also names more of Morton’s businesses — Central Arkansas Nursing Centers and Nursing Consultants Inc. — in addition to the Robinson facility.

“We’re pleased with the ruling,” said Campbell, noting that the larger issue of the plaintiffs’ claims is still awaiting trial. “We don’t comment on [cases] until we win them on the merits.”

Reached on Thursday, Morton deferred to his attorneys for comment, calling the decision “a lot of legal jargon.” His attorneys did not respond to requests for comment.

Writing for the majority, Justice Courtney Hudson found three main reasons for invalidating most of the arbitration agreements.

The reason affecting the largest number of agreements, 271, was that they were signed by a “responsible party” who was not appropriately representing the patient in question. Other agreements were nullified because the agreements failed to hold Morton’s nursing homes similarly accountable to arbitration, or because representatives failed to sign their end of the agreements at all.

The effect of Hudson’s ruling is limited to allowing plaintiffs without a binding arbitration agreement to remain a part of the class in the suit against Morton and his businesses.

“Legally, it’s really a big nothing,” said attorney David Couch, who has filed suits based on similar claims against nursing homes.

Hudson’s opinion whittled away at the number of valid agreements, but did not give a specific number for how many could still be enforced. As many as 148 agreements were potentially left standing, though Campbell said his reading of the opinion left as little as 105 valid agreements.

With respect to those agreements not struck, the majority ruling reversed an earlier decision by Pulaski County Circuti Judge Tim Fox invalidating the agreements.

“In sum, after reviewing the record before us, Robinson has failed to meet its burden of proving a valid and enforceable agreement with respect to each of the agreements that contain the deficiencies previously discussed,” Hudson wrote. “Accordingly, the circuit court’s order denying the motions to compel arbitration are affirmed as to those agreements.”

Joining Hudson in the majority were Chief Justice Dan Kemp, and Justices Josephine “Jo” Hart, Karen Baker and Robin Wynne. Special Justice Greg Vardaman, who filled in for Justice Rhonda Wood after her recusal, also joined the majority. Wood recused because Morton and his businesses had donated to her campaign.

In a separate opinion, Justice Shawn Womack concurred with the majority in voiding the small number of agreements — 28 — that had not been signed by officials for the nursing homes. However, he dissented and wrote that he would have upheld all the other agreements at issue in the case.