ARBITRATION - AURORA HEALTHCARE, INC. V. RAMSEY

Oct 21, 2011

In Aurora Healthcare, Inc. v. Ramsey, [Ms. 1091561, Oct. 21, 2011] __ So. 3d __(Ala. 2011), the Supreme Court of Alabama held that a trial court erred by denying Defendant Aurora Healthcare, Inc.'s motion to compel arbitration. This case arose out of the death of Plaintiff's decedent, Mary Pettway, following her medical treatment at a nursing home owned and operated by the defendants. At the nursing home, an arbitration agreement was executed, along with other admission documents on behalf Pettway. In November of 2005, Ramsey, in her capacity as Administratrix of Pettway's estate, filed a complaint in the circuit court against the defendants. The parties then engaged in litigation until November 3, 2006, when the defendant filed a motion to compel arbitration. Subsequently, the trial court entered an order denying the defendant's motion to compel arbitration finding that the defendant had substantially invoked the litigation process and that Ramsey had been prejudiced by incurring significant attorney fees in participating in litigation. On appeal, the Supreme Court of Alabama held that, because there is a strong federal policy favoring arbitration, waiver of the right to compel arbitration is not lightly inferred and the party seeking to prove waiver has a heavy burden and must show both the defendant's substantial invocation of the litigation process and resulting substantial prejudice. The Court then held that, under the facts of this case, the plaintiff failed to meet her burden since she did not produce any evidence supporting her assertion that she suffered substantial prejudice by the defendant's belated assertion of its arbitration rights. Therefore, the trial court erred by denying the defendant's motion to compel arbitration. However, the Supreme Court also held that it was unable to determine whether the case was, in fact, due to be arbitrated because of issues associated with the validity and scope of the arbitration agreement. The Court therefore remanded the case to the trial court for further proceedings.