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Heineman v. Evangelical Luth. Good Sam. Soc.
Citation: 300 Neb. 187Docket: S-17-983
Court: Nebraska Supreme Court; June 8, 2018; Nebraska; State Supreme Court
Original Court Document: View Document
Mark Heineman, a nursing home resident, initiated a personal injury lawsuit against The Evangelical Lutheran Good Samaritan Society and its employees following injuries sustained during his residency. The defendants sought to dismiss the case and compel arbitration based on an arbitration agreement signed by Heineman upon admission. The district court ruled the arbitration agreement void and unenforceable, citing state law and public policy concerns. The Nebraska Supreme Court found the district court's ruling erroneous, stating that arbitrability is a legal question subject to independent review, and emphasized that a bill of exceptions is necessary for appellate courts to consider evidence not presented at trial. The court noted that contracts involving interstate commerce fall under the Federal Arbitration Act, which preempts contradictory state laws regarding arbitration provisions. The Supreme Court reversed the district court's decision and remanded the case with directions to enforce the arbitration agreement. The arbitration agreement signed by Heineman on February 11, 2015, included a section titled “Resolution of Legal Disputes,” wherein Heineman indicated a desire to arbitrate any disputes by affirmatively checking a box. The agreement clarified that arbitration was not a condition for admission or continued stay at the facility and stated that all parties related to the resident, including spouses or heirs, would be bound by the arbitration provision, which was governed by the Federal Arbitration Act (FAA). The district court conducted two hearings based on affidavits from Evangelical Lutheran, finding the arbitration clause unenforceable due to a lack of "mutuality of obligation" and non-compliance with Nebraska’s Uniform Arbitration Act (UAA). The court also referenced federal regulations aimed at eliminating mandatory arbitration clauses in nursing facility contracts that receive Medicaid funding, ruling the clause void and contrary to public policy. Evangelical Lutheran appealed, asserting that the district court made several errors: it contended the arbitration clause was governed by the FAA, was not void under the UAA, had mutual obligations, and was not contrary to public policy. The standard of review for these legal questions is independent of the lower court’s conclusions. The district court's finding of a lack of mutuality of obligation was contested by Evangelical Lutheran, which argued that both parties were mutually bound by the agreement, as it covered all legal disputes involving either party. Heineman countered that Evangelical Lutheran was not bound by the arbitration agreement. Heineman cited cases from county and district courts to argue that Evangelical Lutheran filed lawsuits against residents without first attempting arbitration and requested judicial notice of these complaints to demonstrate a lack of mutual obligation. However, the appellate court stated that it cannot expand the record in this manner, as it typically reviews only evidence presented to the trial court. The court overruled Heineman's motion for judicial notice, noting that without this additional evidence, his argument failed. The court clarified that consideration for a contract can exist if there is any detriment to the promisee or benefit to the promisor, finding that the arbitration agreement's language applied equally to both parties and thus had sufficient consideration. The court determined that the Federal Arbitration Act (FAA) governed the arbitration clause, as it involved interstate commerce, which Heineman acknowledged during oral arguments. The court pointed out that the FAA preempts conflicting state laws regarding arbitration provisions in commerce-related contracts, meaning the arbitration agreement did not need to comply strictly with the Uniform Arbitration Act (UAA). The district court's ruling that the arbitration agreement was void and unenforceable on public policy grounds was also found erroneous. The court noted that the federal regulation cited by the district court, which barred pre-dispute binding arbitration agreements, did not take effect until after the agreement in question was signed and that no legislation had been enacted to support the public policy Heineman argued. The regulation's retroactive application was rejected, especially since its implementation had been blocked by a federal court. Ultimately, the appellate court concluded that the arbitration agreement was valid and enforceable under the FAA and directed the district court to compel arbitration, with the option to stay or dismiss the case. The court reversed the district court's order and remanded the case with specific instructions.