THE STATE OF SOUTH CAROLINA
In The Supreme Court
Linda Johnson, as Personal Representative of the Estate
of Inez Roberts, Petitioner,
v.
Heritage Healthcare of Estill, LLC, d/b/a Heritage of the
Lowcountry and/or Uni-Health Post Acute Network of
the Lowcountry, United Clinical Services, Inc., United
Rehab, Inc., And UHS-Pruitt Corporation, Respondents.
Appellate Case No. 2014-002502
ON WRIT OF CERTIORARI TO THE COURT OF APPEALS
Appeal From Hampton County
Carmen T. Mullen, Circuit Court Judge
Opinion No. 27639
Heard November 18, 2015 – Filed May 25, 2016
REVERSED
Margie Bright Matthews, of Bright Matthews Law Firm,
LLC, of Walterboro, Lee D. Cope, of Hampton, and
Matthew Vernon Creech, of Ridgeland, both of Peters
Murdaugh Parker Eltzroth & Detrick, PA, and Charles J.
McCutchen, of Lanier & Burroughs, LLC, of
Orangeburg, for Petitioner.
Monteith P. Todd, Robert E. Horner, and J. Michael
Montgomery, all of Sowell Gray Stepp & Laffitte, LLC,
of Columbia, and Joshua S.Whitley, of Smyth Whitley,
LLC, of Charleston, W. Jerad Rissler and Jason E. Bring,
both of Arnall Golden Gregory, LLP, of Atlanta,
Georgia, for Respondents.
ACTING JUSTICE TOAL: Linda Johnson asks this Court to review the court
of appeals' decision in Johnson v. Heritage Healthcare of Estill, Op. No. 2014-UP-
318 (S.C. Ct. App. filed Aug. 6, 2014), reversing the circuit court's finding that
Heritage Healthcare of Estill (HHE)1 waived its right to arbitrate the claims
between it and Johnson. We granted certiorari and now reverse.
FACTS/PROCEDURAL BACKGROUND
In 2007, Johnson enrolled her mother, Inez Roberts (Mrs. Roberts), in HHE
to receive nursing home care. Johnson held a general power of attorney for Mrs.
Roberts, and as such, signed an arbitration agreement with HHE on her mother's
behalf upon Mrs. Roberts's admission to HHE.2
At the time, Mrs. Roberts was eighty-five years old and enjoyed good health.
However, within six months of entering HHE, she developed severe pressure
ulcers, resulting in the amputation of her leg and ultimately, her death in 2009.
1
In addition to HHE, there are three other Respondents: United Clinical Services,
Inc.; United Rehab, Inc.; and UHS-Pruitt Corporation, each of which are parent
companies of HHE. For ease of reference, we refer to all of them as HHE.
2
The arbitration agreement stated, in relevant part, that Mrs. Roberts and HHE
agreed to arbitrate "any and all controversies, claims, disputes, disagreements or
demands of any kind . . . arising out of or relating to the Resident's Admission
Agreement with the Facility . . . or any service or care provided to the Resident by
the Facility." The covered claims explicitly included, inter alia, "negligence, gross
negligence, malpractice, or any other claim based on any departure from accepted
standards of medical or health care or safety whether sounding in tort or in
contract."
Prior to Mrs. Roberts's death, in August 2008, Johnson requested HHE allow
her access to Mrs. Roberts's medical records, but HHE refused, citing privacy
provisions in the Health Insurance Portability and Accountability Act (HIPAA).
Johnson then filed an ex parte motion for a temporary restraining order (TRO),
seeking to obtain a copy of Mrs. Roberts's medical records from HHE and to
restrain HHE from changing, altering, or destroying the records. The circuit court
granted the TRO, and HHE filed a motion to dissolve the order, again citing
HIPAA's privacy provisions.
Subsequently, at Johnson's request, the circuit court appointed her Mrs.
Roberts's guardian ad litem (GAL) in order to pacify HHE's HIPAA concerns.
However, HHE still refused to produce the records. The court again ordered HHE
to produce the records, and HHE appealed. During the pendency of the appeal,
Mrs. Roberts died, and Johnson became her personal representative. HHE then
produced the records, and the parties dismissed the appeal by consent.
Several months after obtaining the records, in August 2010, Johnson filed a
notice of intent (NOI) for a wrongful death and survival action against HHE. In
October 2010, following an impasse at pre-suit mediation, Johnson filed her
complaint. In November 2010, HHE filed its answer and asserted arbitration as
one of several defenses, but did not move to compel arbitration at that time.
Instead, HHE filed arbitration-related discovery requests on Johnson.
In December 2010, Johnson moved to strike HHE's arbitration defenses,
arguing that HHE waived its right to enforce the arbitration agreement.
Specifically, Johnson argued that although the TRO proceedings fell within the
scope of the arbitration agreement, HHE did not move to compel arbitration during
those proceedings, the GAL proceedings, or the subsequent appeal. Moreover,
Johnson contended that HHE participated in pre-suit mediation, responded to
Johnson's discovery requests, and served discovery requests on Johnson in return,
thus availing itself of the court's authority.
In response, HHE speculated that if it moved to compel arbitration at that
time, Johnson would raise defenses to arbitration. HHE therefore requested "a
small amount of time to conduct discovery" to determine in advance the defenses
Johnson intended to raise, and to obtain information through discovery that would
allow HHE to better defend itself.
In March 2011, the circuit court denied Johnson's motion to strike, but found
that Johnson could re-raise the waiver issue if, and once, HHE filed a motion to
compel arbitration.
The parties then engaged in discovery. Johnson filed multiple motions to
compel, and HHE appeared before the court to defend the motions. Further, in
May 2011, the parties deposed Johnson and the HHE employee who signed the
arbitration agreement on HHE's behalf. In August 2011, after a delay to obtain the
deposition transcripts, HHE moved to compel arbitration.
The circuit court denied the motion, finding, inter alia, that HHE waived its
right to enforce the arbitration agreement by waiting to file its motion to compel
until after it participated in discovery and appeared multiple times in court. The
court found that Johnson was prejudiced by HHE's tactics because they forced
Johnson to waste a significant amount of time and money that was wholly within
HHE's power to avoid.
HHE appealed, and the court of appeals reversed in an unpublished opinion.
Johnson, Op. No. 2014-UP-318 (stating only "[w]e reverse as to whether the trial
court erred in ruling [HHE] waived arbitration" (citing Dean v. Heritage
Healthcare of Ridgeway, L.L.C., 408 S.C. 371, 759 S.E.2d 727 (2014))). By
implication, the court of appeals found that HHE moved to compel arbitration at its
first opportunity. See id.
The Court granted Johnson's petition for a writ of certiorari to review the
decision of the court of appeals with respect to the waiver issue.
ISSUE
Whether HHE waived its right to enforce the arbitration agreement?
STANDARD OF REVIEW
"Arbitrability determinations are subject to de novo review." Dean, 408
S.C. at 379, 759 S.E.2d at 731; Rhodes v. Benson Chrysler-Plymouth, Inc., 374
S.C. 122, 125, 647 S.E.2d 249, 250 (Ct. App. 2007). "Nevertheless, a circuit
court's factual findings will not be reversed on appeal if any evidence reasonably
supports the findings." Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14, 22,
644 S.E.2d 663, 667 (2007); Rhodes, 374 S.C. at 125–26, 647 S.E.2d at 250–51.
The litigant opposing arbitration bears the burden of demonstrating that he has a
valid defense to arbitration. See Dean, 408 S.C. at 379, 759 S.E.2d at 731
(citations omitted); Gen. Equip. & Supply Co. v. Keller Rigging & Constr., S.C.,
Inc., 344 S.C. 553, 556, 544 S.E.2d 643, 645 (Ct. App. 2001).
ANALYSIS
South Carolina courts favor arbitration. Toler's Cove Homeowners Ass'n,
Inc. v. Trident Constr. Co., 355 S.C. 605, 612, 586 S.E.2d 581, 585 (2003).
Nonetheless, a party may waive its right to enforce an arbitration agreement.
Liberty Builders, Inc. v. Horton, 336 S.C. 658, 665, 521 S.E.2d 749, 753 (Ct. App.
1999) (citing Hyload, Inc. v. Pre-Eng'd Prods., Inc., 308 S.C. 277, 280, 417 S.E.2d
622, 624 (Ct. App. 1992) (per curiam)).
"The party seeking to establish waiver has the burden of showing prejudice
through an undue burden caused by a delay in the demand for arbitration." Gen.
Equip. & Supply Co., 344 S.C. at 556, 544 S.E.2d at 645; see also Evans v. Accent
Mfd. Homes, Inc., 352 S.C. 544, 550, 575 S.E.2d 74, 76 (Ct. App. 2003). Mere
inconvenience or delay is insufficient to establish prejudice on its own. Toler's
Cove, 355 S.C. at 612, 586 S.E.2d at 585; Rich v. Walsh, 357 S.C. 64, 72, 590
S.E.2d 506, 510 (Ct. App. 2003) ("[M]ere delay, regardless of its duration, should
not be considered as a factor independent of the actual prejudice it occasions.").
As in all waiver cases, any appropriate analysis is heavily fact-driven.
Liberty Builders, 336 S.C. at 665, 521 S.E.2d at 753 ("'There is no set rule as to
what constitutes a waiver of the right to arbitrate; the question depends on the facts
of each case.'" (quoting Hyload, Inc., 308 S.C. at 280, 417 S.E.2d at 624)); see also
Rhodes, 374 S.C. at 127, 647 S.E.2d at 252. Here, in its order finding that HHE
waived its right to enforce the arbitration agreement, the circuit court set forth the
relevant facts in detail, and made various factual and legal findings. However, in
contrast, the court of appeals summarily reversed the circuit court, with no mention
of any factual or legal errors. See Johnson, Op. No. 2014-UP-318 (stating only
"[w]e reverse as to whether the trial court erred in ruling [HHE] waived
arbitration"). In this fact-driven issue, we find the court of appeals' summary
reversal inappropriate, particularly when compared with the circuit court's order,
which clearly considered the facts of the case.
The initial dispute between HHE and Johnson began prior to the TRO
proceedings, when HHE refused to release Mrs. Roberts's medical records to
Johnson. At various times, Johnson functioned as Mrs. Roberts's power of
attorney, GAL, and personal representative. Thus, both Mrs. Roberts and the court
appointed Johnson to speak and act on Mrs. Roberts's behalf. Nonetheless, on
multiple occasions, HHE unreasonably refused to release the records to Mrs.
Roberts's duly-appointed representative, resulting in Johnson incurring
unnecessary litigation expenses. Moreover, even after Johnson filed her complaint,
HHE continued to delay by seeking limited discovery of issues that HHE wished to
pursue, but ignoring Johnson's requests for discovery of issues that, in HHE's
opinion, were irrelevant at that point in the litigation. Unsurprisingly, HHE's
tactics caused Johnson to incur further expenses, both in responding to HHE's
requested discovery, and in preparing for litigation in the event that HHE never
moved to compel arbitration at all.
HHE contends that the delay and expenses are insignificant because Johnson
was on notice that it intended to compel arbitration in the future. However, we
note that similarly, after Johnson filed her motion to strike, HHE was on notice that
Johnson intended to pursue a defense of waiver, and that further action before
filing a motion to compel would be costly and dilatory. See Evans, 352 S.C. 551,
575 S.E.2d at 77 (noting that the party seeking to compel arbitration has the burden
to halt discovery and seek the court's protection from further discovery pursuant to
Rule 26(c)(1), SCRCP, and stating that "Accent's prolongation of discovery
necessitated Evans's pursuit of discovery, thereby forcing her to incur costs she
would not have incurred in arbitration. Thus, we find evidence that Accent's
continuation of discovery, rather than seeking arbitration in a timelier manner,
prejudiced Evans by forcing her to incur discovery costs."). Nonetheless, HHE
waited another eight months to file its motion to compel, in the meantime
conducting its own discovery and appearing in court multiple times. Cf. Gen.
Equip. & Supply Co., 344 S.C. at 557, 544 S.E.2d at 645–46 (finding no waiver
when the parties only appeared in front of the court twice in eight months to
substitute a defendant, and to refer the action to a Master-in-Equity, and that as
such, neither party had yet incurred substantial attorney's fees); Liberty Builders,
336 S.C. at 666, 521 S.E.2d at 753 (finding waiver when the parties sought the
court's assistance approximately forty times prior to the filing of the motion to
compel, on matters such as motions to amend, compel, dismiss, add parties, and
restore under Rule 40(j), SCRCP); see also Rhodes, 374 S.C. at 126, 647 S.E.2d at
251.
Accordingly, in light of the court of appeals' summary reversal and failure to
outline any factual or legal errors committed by the circuit court, we reverse and
find that HHE waived its right to enforce the arbitration agreement.
CONCLUSION
For the foregoing reasons, the court of appeals' decision is
REVERSED.
BEATTY, HEARN, JJ., and Acting Justice James E. Moore, concur.
PLEICONES, C.J., dissenting in a separate opinion.
CHIEF JUSTICE PLEICONES: I respectfully dissent and would dismiss the
writ of certiorari as improvidently granted since I believe the Court of Appeals
correctly reversed the trial court's order finding HHE waived its right to
arbitration.3
I disagree with the majority that Johnson's first litigation, seeking her mother's
medical records, is somehow relevant to the issue whether HHE waived its right to
seek arbitration in this medical malpractice suit. In this matter, HHE raised
arbitration in its answer filed on November 24, 2010, and Johnson filed a motion to
strike that defense on December 1, 2010. It was only after the circuit court denied
Johnson's motion to strike in March 2011 that HHE was permitted to engage in
discovery related to the arbitration issue. The majority holds, however, that when
Johnson moved to strike HHE's arbitration defense shortly after the answer was
filed, HHE was obligated to immediately move to compel arbitration, because
3
The majority suggests that reversal is somehow compelled because "of the Court
of Appeals' summary reversal and failure to outline any factual or legal errors
committed by the circuit court . . . ." The Court of Appeals adequately addressed
the waiver issue in its opinion:
3. We reverse as to whether the trial court erred in ruling
Heritage waived arbitration. See Dean at 47 (ruling the
appellants did not delay in filing their demand for arbitration
when the appellants participated in the statutorily required
mediation process, and after the respondent filed her formal
complaint, moved to compel arbitration at their first
opportunity).
Johnson v. Heritage Healthcare of Estill, LLC, Op. No. 2014-
UP-318 (S.C. Ct. App. filed August 6, 2014).
Even if this passage did not to meet the requirements of Rule 220(b), SCACR, the
proper remedy would be to remand the case to the Court of Appeals and not a
reversal, as it is not within a party's power to compel that court to give a fuller
explanation. In my opinion, however, there is simply no evidence in this record
that Johnson overcame "the presumption against finding a party has waived its
right to compel arbitration," Dean v. Heritage Healthcare of Ridgeway, LLC, 408
S.C. 371, 388, 759 S.E.2d 727, 736 (2014) (internal citation omitted), and therefore
no necessity for such a remand.
anything less was both "costly and dilatory." It is undisputed, however, that the
arbitration issue was in limbo until Johnson's motions to strike were resolved in
March 2011, and that the multiple court appearances were the result of Johnson's
own "multiple motions to compel," and that "HHE appeared before the court [only]
to defend [against Johnson's] motions." Johnson v. Heritage Healthcare of Estill,
LLC, supra. I do not see any facts in this record supporting the majority's
conclusions that HHE's actions were costly or dilatory, nor any evidence that
Johnson was prejudiced by HHE's failure to move to compel arbitration for
approximately nine months after filing its answer raising the issue, especially since
the arbitration discovery process was unavailable from December 2010 until
March 2011 as the result of Johnson's filing the motion to strike the defense.
Compare, e.g., Evans v. Accent Mfg'd Homes, Inc., 352 S.C. 544, 575 S.E.2d 74
(Ct. App. 2003) (finding waiver where arbitration was neither pleaded nor raised
for first nineteenth months of litigation)
In my opinion, nothing in this record supports a finding that Johnson met her
"heavy burden" of overcoming the presumption that HHE did not waive its right to
arbitrate, nor that she suffered an "undue burden" caused by HHE's "delay" in
demanding arbitration. Dean, supra. I therefore dissent, and would dismiss the
writ as improvidently granted.