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Smart Summary

Factual and Procedural Background

Patricia Grazia underwent preoperative testing at Crittenton Hospital on February 9, 1988, at which time she signed a surgical consent form and an "Arbitration Agreement" that complied with the Malpractice Arbitration Act (MCL 600.5040 et seq.; MSA 27A.5040 et seq.). She subsequently had an elective laparotomy on February 12, 1988, and developed postoperative complications that she alleges were caused by defendants' negligence. Plaintiff filed suit in January 1990. Defendants moved for summary disposition under MCR 2.116(C)(7), asserting the February 9 arbitration agreement required arbitration of the dispute. The trial court granted summary disposition, and plaintiff appealed. The Court of Appeals affirmed.

Legal Issues Presented

  1. Whether the arbitration agreement executed on February 9, 1988, applies only to the preoperative testing and procedures of that day or whether it also covers the elective surgery and hospitalization that began February 12, 1988.
  2. Whether defendants established a prima facie valid arbitration agreement under the Malpractice Arbitration Act such that the statutory presumption of validity attaches and the burden shifts to plaintiff to rebut that presumption.

Arguments of the Parties

Plaintiff's Arguments

  • Plaintiff contends the February 9 arbitration agreement applies only to the preoperative testing and other procedures performed on February 9 and does not include the surgery and hospitalization beginning February 12.

Defendants' Arguments

  • Defendants asserted the February 9 arbitration agreement complied with the Malpractice Arbitration Act and applied to the upcoming hospital admission and elective surgery.
  • Defendants presented an unrebutted affidavit from the hospital's preadmission unit manager stating that, during preadmission procedures, patients are clearly told the arbitration agreement is for their upcoming admission.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Beauregard-Bezou v Pierce, 194 Mich. App. 388, 390-391; 487 N.W.2d 792 (1992) Standard of review under MCR 2.116(C)(7): accept all plaintiff's well-pleaded allegations as true and construe them most favorably to plaintiff. The court applied this standard in evaluating the summary disposition motion.
Bonner v Chicago Title Ins Co, 194 Mich. App. 462, 469; 487 N.W.2d 807 (1992) Support for the MCR 2.116(C)(7) standard of review citation. Used with other authorities to state the applicable standard of review.
Harrison v Director, Dep't of Corrections, 194 Mich. App. 446, 449; 487 N.W.2d 799 (1992) Principle that a (C)(7) motion should not be granted unless no factual development could provide a basis for recovery. The court invoked this rule in assessing whether summary disposition was appropriate.
Marciniak v Amid, 162 Mich. App. 71, 76; 412 N.W.2d 248 (1987) That the Malpractice Arbitration Act evidences a strong public policy favoring arbitration and arbitration clauses should be liberally construed. The court cited this to justify liberal construction of the arbitration agreement in favor of arbitration.
McKinstry v Valley Obstetrics-Gynecology Clinic, PC, 428 Mich. 167, 173; 405 N.W.2d 88 (1987) Burden of establishing a statutory arbitration agreement rests with the party seeking enforcement; once prima facie evidence is presented, a statutory presumption of validity accrues and the burden shifts to the opponent. The court found defendants presented prima facie evidence of a valid agreement, invoked the statutory presumption, and placed the burden on plaintiff to rebut. The opinion also cites McKinstry for admissibility of habit/routine evidence.
McKain v Moore, 172 Mich. App. 243, 249; 431 N.W.2d 470 (1988) Example authority supporting the burden shift once prima facie evidence is shown. Cited as an example of cases applying the burden-shift principle; the court distinguished McKain on its facts regarding "hospital stay."
Green v Gallucci, 169 Mich. App. 533, 537-538; 426 N.W.2d 693 (1988) Another case illustrating the burden shift and that habit or routine evidence is admissible in hospital arbitration agreement contexts. Used to support admission of the hospital manager's affidavit as habit/routine evidence and the application of the presumption of validity.
Campbell v St John Hosp, 170 Mich. App. 551, 557; 428 N.W.2d 711 (1988), aff'd 434 Mich. 608; 455 N.W.2d 695 (1987) That a trial court's evaluation and decision to place the burden on the plaintiff will not be overturned absent clear error. The court applied this standard, noting appellate review requires a definite and firm conviction that a mistake was made to overturn.
Tuttle v Dep't of State Hwys, 397 Mich. 44, 46; 243 N.W.2d 244 (1976) Definition of "clearly erroneous" for appellate review. Quoted to define the standard for overturning the trial court's evaluation.
Harte v Sinai Hosp of Detroit, 144 Mich. App. 659; 375 N.W.2d 782 (1985) Persuasive authority where arbitration agreements signed after care were held to relate back to the hospital stay; agreements construed liberally and held to cover related claims. The court relied on Harte as persuasive authority to justify that an agreement signed before an elective surgery may relate to that future surgery (by analogy to Harte's relation-back holding).
Hawker v Northern Michigan Hosp, Inc, 164 Mich. App. 314, 323; 416 N.W.2d 428 (1987) Contract formation principles: when parties become bound depends on their intention as manifested by statements and conduct in light of all circumstances. The court applied the Hawker principle to conclude that the parties' conduct and statements showed the February 9 agreement related to the upcoming admission and surgery.
Haywood v Fowler, 190 Mich. App. 253; 475 N.W.2d 458 (1991) Case involving an arbitration agreement referencing "THIS hospital stay" where the plaintiff was discharged and readmitted; used in comparison of factual scenarios. The court distinguished Haywood on its facts, explaining that Haywood involved an indisputable discharge and readmission, unlike the present case.

Court's Reasoning and Analysis

The court began by stating the applicable summary disposition standard under MCR 2.116(C)(7): accept plaintiff's well-pleaded allegations as true and construe them in plaintiff's favor, and grant the motion only if no factual development could provide a basis for recovery. The court then examined the Malpractice Arbitration Act (MAA), including statutory provisions that permit hospital patients to execute arbitration agreements, treat each admission as separate for arbitration purposes, and create a presumption of validity for agreements that include the statutory provisions.

The court emphasized Michigan's strong public policy favoring arbitration and the rule that arbitration clauses be liberally construed. It explained that the party seeking enforcement must first present prima facie evidence that the agreement satisfies the statute; when that is done, the statutory presumption of validity arises and the burden shifts to the party opposing enforcement to rebut the presumption.

Applying contract formation principles (intent as manifested by verbal statements and conduct), the court considered persuasive precedent (Harte) that allowed agreements to "relate back" when signed after care. The court analogized that reasoning to hold that an agreement signed before elective surgery may "relate forward" to the surgery itself. The court rejected plaintiff's contention that the agreement applied only to the February 9 visit because the agreement's reference to "THIS hospital stay" did not control where there was no evidence that February 9 constituted an actual admission or a discharge prior to February 12.

The court relied on an unrebutted affidavit from the hospital's preadmission-testing manager stating that patients are told the Arbitration Agreement is for their upcoming admission. The court treated this as admissible habit/routine evidence (citing McKinstry and Green). Plaintiff provided no evidence to rebut the hospital's testimony or to show she believed the agreement applied only to February 9. Because defendants presented prima facie statutory-compliant evidence of an arbitration agreement and plaintiff failed to rebut the presumption of validity, the court concluded the agreement applied to the February 12 surgery and affirmed the trial court's grant of summary disposition.

Holding and Implications

AFFIRMED.

Holding: The Court of Appeals affirmed the trial court's grant of summary disposition under MCR 2.116(C)(7) on the basis that the February 9, 1988 arbitration agreement was valid under the Malpractice Arbitration Act and applied to the subsequent elective surgery and hospitalization beginning February 12, 1988. Defendants presented prima facie evidence of a valid arbitration agreement and the statutory presumption of validity attached; plaintiff failed to rebut that presumption.

Implications: The direct effect is that plaintiff's claims were subject to the arbitration agreement and the trial court's summary disposition was upheld. The opinion applies established statutory and contract principles favoring arbitration and does not announce a novel rule beyond applying those principles to the facts; the court relied on existing precedent and statutory presumption in resolving the dispute.

GRAZIA v SANCHEZ

PER CURIAM.

In this medical malpractice action, plaintiffs appeal the grant of summary disposition on the basis of the existence of an agreement to arbitrate. MCR 2.116(C)(7). We affirm.

Plaintiff Patricia Grazia (hereafter plaintiff) had an elective laparotomy on February 12, 1988. On February 9, 1988, plaintiff visited the hospital for preoperative tests. At the same time, she executed a surgical consent form ("Crittenton Hospital Consent to Operation and Treatment") and an "Arbitration Agreement." The agreement complied with the requirements of MCL 600.5040 et seq.; MSA 27A.5040 et seq., the Malpractice Arbitration Act (MAA).

Plaintiff developed complications after surgery, allegedly because of the negligence of the various defendants. She brought suit in January 1990. Defendants moved for summary disposition, citing the February 9, 1988, arbitration agreement. The trial court granted the motion, and plaintiff appeals.

Plaintiff argues that the February 9 arbitration agreement applies only to the preoperative testing and other procedures performed on that day and does not include the surgery and hospitalization that began on February 12. We disagree.

The applicable standard of review under MCR 2.116(C)(7) requires us to accept all of plaintiff's well-pleaded allegations as true and to construe them most favorably to the plaintiff. Beauregard-Bezou v Pierce, 194 Mich. App. 388, 390-391; 487 N.W.2d 792 (1992); Bonner v Chicago Title Ins Co, 194 Mich. App. 462, 469; 487 N.W.2d 807 (1992). The motion should not be granted unless no factual development could provide a basis for recovery. Harrison v Director, Dep't of Corrections, 194 Mich. App. 446, 449; 487 N.W.2d 799 (1992); MCR 2.116(C)(7); MCR 2.116(G)(5).

MCL 600.5042; MSA 27A.5042 provides:

(1) A person who receives health care in a hospital may execute an agreement to arbitrate a dispute, controversy, or issue arising out of health care or treatment rendered by the hospital. . . .

* * *

(6) Each admission to a hospital shall be treated as separate and distinct for the purposes of an agreement to arbitrate but a person receiving outpatient care may execute an agreement with the hospital which provides for continuation of the agreement for a specific or continuing program of health care or treatment under the provisions of [MCL 600.5041; MSA 27A.5041].

* * *

(8) An agreement to arbitrate which includes the provisions of this section shall be presumed valid.

The MAA evidences Michigan's strong public policy favoring arbitration. Marciniak v Amid, 162 Mich. App. 71, 76; 412 N.W.2d 248 (1987). Arbitration clauses should be liberally construed to resolve all doubts in favor of arbitration. Id.

The burden of establishing the existence of an arbitration agreement that conforms to the strict requirements of the statute rests with the party seeking to enforce the agreement. McKinstry v Valley Obstetrics-Gynecology Clinic, PC, 428 Mich. 167, 173; 405 N.W.2d 88 (1987). Once prima facie evidence of such an agreement has been presented, the statutory presumption of validity accrues, and the burden of going forward with evidence to rebut the presumption then shifts to the party seeking to avoid the agreement. Id. See also, e.g., McKain v Moore, 172 Mich. App. 243, 249; 431 N.W.2d 470 (1988); Green v Gallucci, 169 Mich. App. 533, 537-538; 426 N.W.2d 693 (1988).

A trial court's evaluation of the evidence before it and its decision to place the burden of rebutting the presumption of the validity of an arbitration agreement on the plaintiff will not be overturned absent clear error. Campbell v St John Hosp, 170 Mich. App. 551, 557; 428 N.W.2d 711 (1988), aff'd 434 Mich. 608; 455 N.W.2d 695 (1987). A decision is "clearly erroneous" when the reviewing court is left with a definite and firm conviction that a mistake has been made. Id., quoting Tuttle v Dep't of State Hwys, 397 Mich. 44, 46; 243 N.W.2d 244 (1976).

Harte v Sinai Hosp of Detroit, 144 Mich. App. 659; 375 N.W.2d 782 (1985), is persuasive. There, the plaintiff gave birth to a child at defendant hospital. After she was discharged, the hospital mailed her "two arbitration agreements and a patient information booklet describing the arbitration agreements and arbitration procedure," one relating to the care of plaintiff herself and the other for her son. Id. at 662. Both agreements "obliged [plaintiffs] to arbitrate any claims or disputes, `[w]hich may arise in the future out of or in connection with the health care rendered . . . by [the] hospital [and] its employees.'" Id. Plaintiff signed both agreements, but later attempted to revoke them. This Court upheld the circuit court's grant of summary disposition to defendants:

Plaintiffs . . . argue that alleged malpractice occurring before the agreements were signed is not covered by the arbitration agreements. We disagree. .. . Since Karen Harte only went to the hospital once, and testified that she understood that the agreements related back to the hospital stay, and since liberal construction is appropriate, the arbitration agreements apply to malpractice in connection with plaintiff's son's birth. Similarly, plaintiffs' claims which arise out of prenatal care should also be included in the arbitration proceeding. They are inextricable from the arbitrable claims because they involve the same damages. [ Id. at 665; emphasis supplied.]

Contract principles apply to arbitration agreements. McKain, supra at 253. The question of when parties become contractually bound depends upon their intention as manifested by their verbal statements and conduct in light of all the circumstances. Hawker v Northern Michigan Hosp, Inc, 164 Mich. App. 314, 323; 416 N.W.2d 428 (1987). The Harte Court found that an arbitration agreement signed after the care was rendered related back to the date of service. We have no hesitation in holding that a similar agreement signed before elective surgery relates forward to the surgery itself.

Plaintiff relies on the fact that the arbitration agreement makes reference to "THIS hospital stay," as did the agreements in McKain, supra, and Haywood v Fowler, 190 Mich. App. 253; 475 N.W.2d 458 (1991), contending that the February 9 visit was the only "hospital stay" to which the agreement applied. This line of reasoning is without merit. There is no evidence that plaintiff was actually "admitted" to the hospital on February 9, or that she was "discharged" before her admission on February 12. In other words, there is nothing to show that plaintiff's February 9 visit constituted a "hospital stay" at all. McKain and Haywood are distinguishable. In McKain, the alleged negligence clearly occurred after the plaintiff's discharge from the emergency room in the course of follow-up outpatient care. In Haywood, the plaintiff was indisputably discharged from the hospital against medical advice and was readmitted a day later, although for treatment of the same condition. Neither of these factual situations is analogous.

It is manifest from the parties' "conduct in light of all the circumstances," Hawker, supra, that the consent form and arbitration agreement signed on February 9 related to the upcoming laparotomy. In an unrebutted affidavit, the manager of the hospital's preadmission testing and endoscopy unit testified that, during the preadmission procedure, "[t]he patient is clearly told that the Arbitration Agreement is for their [sic] upcoming admission." Such habit or routine evidence is admissible in cases involving hospital arbitration agreements; see, e.g., McKinstry, supra at 181; Green, supra at 538. Plaintiff, by contrast, did not plead and has submitted no evidence that she believed that the arbitration agreement related only to the February 9 procedures. Defendants have presented prima facie evidence of a valid arbitration agreement, and plaintiff has failed to rebut it. The statutory presumption of validity applies; McKinstry, supra at 181.

Affirmed.

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GRAZIA v. SANCHEZ
(May 4, 1993)