Arbitration is designed to provide a faster, less costly alternative to litigation in a courtroom. But what happens if it isn’t even clear when or whether the arbitration process has resolved the dispute?

Questions about the finality of an arbitration led to a case that was recently decided by the California Court of Appeal (Ortiz v Elmcrest Care Center).

Jose de Jesus Ortiz was admitted to the Elmcrest Care Center, a skilled nursing facility located in the Los Angeles area, in February of 2013. He was suffering from Parkinson’s disease, dysphagia (difficulty swallowing), and dementia.

In August of 2017 Elmcrest staff members found Mr. Ortiz on the floor, nonresponsive. They administered CPR and called paramedics. He was taken to a hospital, where he passed away four days later, at the age of 63.

Ericka Ortiz, acting as administrator of his estate, sued Elmcrest and several individual staff members in Los Angeles Superior Court, claiming they had subjected Mr. Ortiz to elder abuse, neglect, negligence, and fraud. The estate alleged that their failure to provide him with necessary care led to his fall, suffocation, deprivation of oxygen to his brain, and respiratory arrest.

Elmcrest asked the court to compel the estate to arbitrate its claims, based on an agreement Mr. Ortiz signed when he was admitted to the facility. The request was granted, and a retired judge was appointed to arbitrate the dispute.

On March 30, 2022, after a 15-day hearing, the arbitrator issued a 90-page document, referred to in court documents as the “First Interim Award,” that set forth her evaluation of the evidence, factual findings, and rulings on the disputed issues.

She determined that Elmcrest and some of its employees had failed to monitor the decedent’s fluid intake, causing him to become dehydrated; had been “reckless” in failing to supervise staff and in leaving him unattended on the day of the fall; failed to abide by his do-not-resuscitate (DNR) order; and “acted below the standard of care” in failing to assess and treat him.

However, the arbitrator ruled in favor of Elmcrest and its staff members. She concluded that the estate had not proven a causal connection between the failures and shortcomings in care and the death of Mr. Ortiz.

“This Award is intended to address all issues in dispute even if not expressly discussed herein,” the document stated. “This Interim Award will become final twenty days after service,” it added, unless either side asked for further relief.

Less than a week later, the estate filed a request asking the arbitrator to award damages to the estate for the “injury to dignity” Mr. Ortiz suffered prior to and at death.

The following month the arbitrator issued a “Second Interim Award” which reaffirmed that the estate had not proven its claims related to negligence, willful misconduct and fraud, but said it had successfully proven its claims of elder abuse and neglect.

After holding another hearing, the arbitrator issued a Final Award in September of 2022. This awarded the estate nearly $400,000, including $100,00 in damages on the elder abuse claim, over $200,000 in attorney fees, and nearly $93,000 in costs.

In October, Elmcare asked the trial court to vacate the Final Award and instead confirm the First Interim Award, meaning the estate would receive no money.

The estate asked the court to do the opposite: vacate the First Award and confirm the Final Award.

The trial court issued a ruling in favor of Elmcare in May of 2023 that vacated the Final Award and confirmed the First Interim Award. The trust would receive nothing.

In “hindsight,” the court said, the First Interim Award “did indeed address the necessary issues to determine the controversy, such that it should be confirmed.”

The estate appealed the trial court’s decision.

It argued that it was up to the arbitrator, not the trial judge, to decide what was necessary for her to make a final ruling on the controversy. For that reason, it said, the trial court had no authority to vacate what the arbitrator said was the Final Award.

The appellate justices agreed with the estate.

A trial court can confirm or vacate an arbitration award after the award has been made, the justices said. But if something labeled an “award” does not truly qualify as an award under the requirements of California statutes, a trial court has no jurisdiction over it.

A ruling is an “award” under the Arbitration Act, they said, only if it determines all questions submitted to the arbitrator that are “necessary in order to determine the controversy,” and it is up to the arbitrator “to determine which issues were actually ‘necessary’ to the ultimate decision,” they explained.

“Ensuring arbitral finality . . . requires that judicial intervention in the arbitration process be minimized. The deference due an arbitrator’s decision on the merits of the controversy requires a court to refrain from substituting its judgment for the arbitrator’s.”

The First Interim Award was not final, the justices said, because the First Award’s language stated that it would not “become final” for at least 20 days, to allow parties to raise any additional issues. The arbitrator had also left open the question of whether further hearings were needed to decide whether all of the issues presented to her had been resolved and whether either party was entitled to further relief.

The justices reversed the trial court’s order, ordering it to confirm the Final Award by the arbitrator. They awarded costs to the estate.

By Laurie Murphy