News: A state court affirmed an arbitration award of $6 million for a child who suffered a brain injury caused by a nurse’s failure to reinsert a tracheotomy tube to ensure proper oxygenation to the child’s brain. On appeal, the defendant care providers argued the patient waived her right to arbitrate, the arbitration agreement was not enforceable, and the neutral arbitrator acted with misconduct. The appellate court found in favor of the patient on all counts, and affirmed the award.

Background: A child was born with a congenital respiratory condition requiring intubation and constant medical care. In October 2015, while the child was under the care and medical supervision of a nurse, the nurse failed to provide appropriate care and to properly reinsert the patient’s tracheotomy tube in a timely manner. The delay in reinserting the tube caused the patient to suffer oxygen deprivation to her brain, which led to significant and permanent damage.

In January 2016, the mother filed a medical malpractice action in state court against the nurse and the nurse’s employer. That complaint alleged the nurse’s delay constituted negligence and directly resulted in the child’s permanent brain injury. The patient sought to recover damages for physical pain and impairment, mental suffering, loss of enjoyment of life, emotional distress, past and future medical expenses, and loss of earning capacity.

Four months after filing the lawsuit, the patient sought to enforce an arbitration agreement instead, moving the matter to a private arbitration rather than a public court. The defendant nurse and employer opposed the motion. The arbitration clause was included in a contract between the patient and the medical service provider that stated any dispute regarding allegations of medical malpractice was to be resolved through arbitration, and that the state’s law applicable to healthcare providers governed the arbitration. The state court granted the motion, and halted all further proceedings with the court to enable the private arbitration to move forward. The case proceeded to arbitration in front of a panel of three arbitrators: one selected by the patient, one selected by the care providers, and a third selected by both of the first two arbitrators.

During the arbitration, the issue of liability was largely undisputed, as the panel unanimously agreed the nurse breached the standard of care and caused the patient’s injuries. However, on the issue of damages, the panel was divided. The patient-selected arbitrator advocated for an award of $14 million, based on a life expectancy of 20 years. The care provider-selected arbitrator advocated for an award of $2 million, based on a life expectancy of two years. Because of the disagreement among the panel, the decision was up to the neutral arbitrator, who awarded $6 million, based on a life expectancy of between five to seven years.

After the issuance of the arbitration award, the defendant care providers appealed, arguing that the matter should not have been in arbitration and arguing that the neutral arbitrator was biased. The appellate court denied the appeal, and affirmed the $6 million award for the patient.

What this means to you: The issue of liability in this case was unanimously decided by all three arbitrators in favor of the patient. The facts of the case leave little space to argue the nurse acted in conformity with the necessary standard of care, particularly because of the significance of the delayed medical intervention. The patient’s medical condition and her reliance on the tube to deliver steady oxygen to her brain was known to the nurse, and was the entire basis for the provision of medical care. The nurse knew or should have known that leaving the patient without the tube for several minutes would cause oxygen deprivation with the likely consequence of significant brain injury. Even during the arbitration proceedings, the defendant-appointed arbitrator found in favor of the patient.

Rather than substantively challenging the basis for the negligence, the defendant care providers singled out aspects of the arbitration proceeding. First, the care providers argued the proceeding should have never been allowed because the patient delayed seeking the arbitration. Nevertheless, the court explained the burden of proving the arbitration proceeding could not be enforced rests on the party challenging the proceeding and, when doubt exists as to whether an arbitration clause is enforceable, the law will resolve in favor of arbitration. The defendants failed to raise a timely challenge to the motion to compel arbitration, and had also failed to provide any evidence as to why the arbitration agreement was unenforceable. Thus, the care providers waived their right to challenge the arbitration. As a general legal principle, regardless of venue, the law favors resolution of disputes on the merits, and disfavors dismissal of actions on technical or procedural grounds. Even if the challenge to the arbitration forum was successful, the matter would have proceeded in the state court.

Second, the care providers challenged the validity of the arbitration, alleging the neutral arbitrator exhibited prejudice. Two specific instances were cited: the arbitrator’s denial of the care providers’ motion to declare a mistrial when it appeared clear that their expert witness would be unable to testify due to illness, and a conversation where the arbitrator referred to the case as “tragic.” The appellate court found that the mere comment by the arbitrator did not indicate he had decided the case based on preconceived ideas. Furthermore, there was no evidence the arbitrator acted with misconduct and, even in the decision of the award amount, the arbitrator applied a clear and logical standard drawing his conclusions from information presented by experts. The court noted that all but one of the arbitrator’s decisions questioned by the care providers were unanimous decisions of the panel, and in no occasion did the other panel members question the neutral arbitrator’s fairness or good faith.

Finally, the nurse defendant argued that since the arbitration agreement was between the medical service provider — her employer — and the patient, and because she was not a signatory of the agreement, the arbitration clause could not be enforced against her individually. The appellate court did not address the substance of the nurse’s argument because it determined that she waived such arguments by failing to oppose the patient’s motion to compel arbitration brought at the state court.

Because the evidence on liability was clear in this case, the defendants challenged nearly every procedural aspect of the proceeding. Unfortunately, their challenges were too late, as they failed to oppose the motion to compel arbitration brought by the patient at the initial trial court hearing. If the care providers opposed the motion, the procedural aspects of this case may have changed significantly. Those procedural aspects, including the change of venue, could have altered the substantive outcome. Whether such changes would have been favorable to the care providers is difficult to say, but one item is largely indisputable: Courts generally proceed slower than private arbitrations. Those delays inure to the benefit of defendants rather than plaintiffs.

REFERENCE

Decided on Jan. 14, 2020, in the Court of Appeal of the State of California, Fourth Appellate District, Case Number G056386.