In Wisconsin, a Residential Care Apartment Complex (RCAC) is a type of assisted living facility in which residents are provided with a limited level of care, more independence, and among other things, their own apartment with a door that locks. More specifically, an RCAC is defined by statute as a place “where 5 or more adults reside that consists of independent apartments, each of which has an individual lockable entrance and exit, a kitchen, including a stove, and individual bathroom, sleeping and living areas, and that provides, to a person who resides in the place, not more than 28 hours per week of services that are supportive, personal and nursing services.” Wis. Stat. § 50.01(6d). Many residents prefer this arrangement compared to the higher levels of care and stricter guidelines of Community Based Residential Facilities (CBRFs) or other nursing homes. For this reason, RCAC’s require residents to enter into a waiver, or “Risk Agreement.”
Waiver agreements are generally considered to be exculpatory contracts.
Wisconsin appellate courts have stated on numerous occasions that exculpatory contracts are not invalid per se, but nearly every Wisconsin court that has considered the enforceability of an exculpatory contract has found them to be unenforceable. See Bourne v. Quarles & Brady, LLP, 2013 WI App 128, 351 Wis.2d 225, 838 N.W.2d 866. (“each exculpatory contract that [the court] has looked at in the past 25 years has been held unenforceable.”)
In analyzing an exculpatory contract, courts begin by examining the facts and circumstances of the agreement to determine if it covers the activity at issue. Atkins v. Swimfest Family Fitness Center, 2005 WI 4 ¶13, 277 Wis.2d 303, 691 N.W.2d 334. If the contract covers the activity, courts proceed to a public policy analysis, “which remains the ‘germane analysis’ for exculpatory clauses.” Id., ¶13 (citing Yauger v. Skiing Enters., Inc., 206 Wis.2d 76, 86, 557 N.W.2d 60 (1996)). Wisconsin courts “generally define public policy as ‘that principle of law under which freedom of contract or private dealings is restricted by law for the good of the community.’” Id., ¶14. The Wisconsin Supreme Court has adopted a combination of factors to consider when determining whether such a waiver is against public policy: (1) is the waiver overly broad and all inclusive? (2) does the form serve two functions and did it provide the signer adequate notification of the waiver’s nature and significance? and (3) was there little or no opportunity to bargain or negotiate in regard to the exculpatory language in question? See Atkins, ¶18.
Can a waiver agreement be considered “against public policy” when it is required by law?
RCACs are created, defined, and regulated by Wisconsin Statute and by the Department of Health Services. These statutes and regulations not only explicitly approve of RCACs requiring residents to sign waiver agreements, they require it.
Under Wisconsin law, RCACs are required to have residents sign two different agreements: a Service Agreement and a Risk Agreement. An RCAC must “[e]stablish, with each resident of the residential care apartment complex, a mutually agreed-upon written service agreement that identifies the services to be provided to the resident, based on a comprehensive assessment of the resident’s needs and preferences that is conducted by… the residential care apartment complex.” Wis. Stat. § 50.034(3)(a)3. They are further required to “[e]stablish, with each resident of the residential care apartment complex, a signed, negotiated risk agreement that identifies situations that could put the resident at risk and for which the resident understands and accepts responsibility.” Wis. Stat. § 50.034(3)(d).
RCACs are regulated by the Department of Health Services (DHS). Wis. Stat. § 50.02. The DHS rules regarding RCACs are found in Wisconsin Administrative Code Chapter DHS 89. Under this chapter, “a comprehensive assessment shall be performed prior to admission for each person seeking admission as a basis for developing the service agreement under s. DHS 89.27 and the risk agreement under s. DHS 89.28.” DHS 89.26(1). The comprehensive assessment shall identify and evaluate the following factors relating to the person’s need and preference for services, including physical health, physical and functional limitations, social and leisure needs and preferences, and situations or conditions that could put the tenant at risk of harm or injury, among other things. DHS 89.26(2) The comprehensive assessment shall be performed with the active participation of the prospective tenant. DHS 89.26(3). The tenant’s capabilities, needs and preferences identified in the comprehensive assessment shall be reviewed at least annually to determine whether there have been changes that would necessitate a change in the service of risk agreement, and the review may be initiated by the facility, or at the request or on behalf of the tenant. DHS 89.26(4).
An RCAC shall enter into a mutually agreed-upon written service agreement with each of its tenants consistent with the comprehensive assessment under s. DHS 89.26. DHS 89.27(1). The service agreement shall be signed by a representative of the facility; by the tenant or by the tenant’s guardian, if any, and all other persons with legal authority to make health care or financial decisions for the tenant. DHS 89.27(3)(d).
DHS rules also require the Risk Agreement, and explicitly state that doing so is for the protection of the facility. “As a protection for both the individual tenant and the residential care apartment complex, a residential care apartment complex shall enter into a signed, jointly negotiated risk agreement with each tenant by the date of occupancy.” DHS 89.28(1) (emphasis added). A Risk Agreement shall identify any situation or condition which is or should be known to the facility which involves a course of action taken or desired to be taken by the tenant contrary to the practice or advice of the facility and which could put the tenant at risk of harm or injury, the tenant’s preference concerning how the situation is to be handled and the possible consequences of acting on that preference, what the facility will and will not do to meet the tenant’s needs and comply with the tenant’s preference relative to the identified course of action, the agreed upon course of action, including responsibilities of both the tenant and the facility, and the tenant’s understanding and acceptance of responsibility for the outcome from the agreed-upon course of action. DHS 89.28(2).
A typical example of this would be if a resident is determined to be a fall risk based on her comprehensive assessment. She still prefers to live at the RCAC rather than a CBRF or nursing home, so she agrees to enter into a Risk Agreement with the facility, which states that the resident agrees that the facility is not responsible for her injuries if she falls. Would such a contract prevent the resident from filing suit against the facility if she is injured in a fall?
The plain meaning of the statute and regulations suggest that it would. When interpreting a statute, courts begin with the language of the statute, because it is the language that expresses the legislature’s intent.” McLeod v. Mudlaff, 2013 WI 76, P29 citing Hocking v. City of Dodgeville, 2010 WI 59, ¶18, 326 Wis. 2d 155, 785 N.W.2d 398. “Statutory language is given its common, ordinary, and accepted meaning, except that technical or specially-defined words or phrases are given their technical or special definitional meaning.” Kalal v. Circuit Court for Dane Cnty., 2004 WI 58, ¶ 45, 271 Wis. 2d 633, 681 N.W.2d 110. The scope, context, and purpose of a statute, derived from statutory text and structure, are perfectly relevant to a plain-meaning interpretation. Id., ¶48.
Given their statutory backing, RCAC Risk Agreements should be more likely to be enforceable than most waiver agreements. The scope, context, and purpose of the statute is to create RCACs, and to protect the residents and the facilities.
However, no appellate court in Wisconsin has ever considered the validity of an RCAC Risk Agreement. It is anyone’s guess as to why this is the case. It is likely that the Risk Agreements do deter some potential litigants. It is also likely that any RCAC facility or law firm seeking to challenge a trial court’s ruling that a Risk Agreement is unenforceable must consider the broader effect of an appellate court’s affirming such a ruling. That said, RCACs should keep in mind the public policy factors in Atkins, as well as the requirements of Wisconsin statutes and chapter DHS 89 when drafting their Risk Agreements. A favorable ruling from an appellate court would go a long way toward protecting RCACs from litigation.