Although we healthcare lawyers generally view ourselves as a pretty healthy lot, there are times when we are patients too. In a recent experience I was asked by a provider’s employee to sign several registration and privacy documents using an electronic signature pad that captured only my signature. The signature pad provided none of the documents’ terms and conditions and I was not provided a copy of the materials, either before or after signing. Assume for purposes of this article that I was familiar with the documents and their terms and did not agree to any unknown terms – but I wondered whether such terms would be enforceable.
Enforcement of Consumer Agreements – General Overview
Courts have historically enforced the terms of consumer agreements where the consumer had actual notice of an agreement or was required to affirmatively acknowledge the agreement before proceeding with use of the product or service. However, courts have been less willing to enforce agreements where there is no evidence that the consumer had actual knowledge or that a reasonably prudent user would have been on notice to inquire about the terms of the agreement. Consumer arguments that they should not be bound to the terms of an agreement because it was signed on a signature pad rather than a written document have been rejected. See Blocker v. Wells Fargo Bank, No. CV 08-1196-PK (D. Ore. March 30, 2011).
In a case challenging Best Buy’s practices, where the electronic signature pad contained verbiage describing the transaction’s terms above the consumer’s signature, the court stated that:
Parties … have a duty to read what they sign. … (“In general, individuals are charged with knowledge of the contents of documents they sign – that is, they have ‘constructive knowledge’ of those contents.’ … (As a result of [the duty to read the contract,] a person who signs a written contract is bound by its terms regardless of his or her failure to read and understand its terms.”)). Plaintiffs cannot argue that they did not read the electronic signature pads when they signed their names; they are bound by what they signed.
McCracken v. Best Buy Stores, L.P., 248 F.R.D. 162, 167 (S.D.N.Y. 2008).
In a case involving H&R Block, the court held a contract to be enforceable, even if the consumer didn’t read the agreement, where (1) the software required the clients using an electronic signature pad and stylus to navigate through the entire document before they could tap a button confirming their agreement to apply their signatures to the document, and (2) the client controlled the signature pad and navigated through the documents. In Re: H&R Block IRS Form 8863 Litigation, MDL No. 2474/Case No. 4:13-MD-02474-FJG (W.D. Mo. 2014).
However, a few cases addressing the validity of documents executed on an electronic signature pad have questioned or held such documents unenforceable. For example, in a case involving an insurance policy, a Louisiana court prohibited the insurer from voiding the policy because the insurer could not show that the insured was aware of false statements contained in the insurance application. The insurer’s agent had the insured sign an application that contained false information using an electronic signature pad without presenting the application to the insured for review. Because of the signature capture process, the court found that the insurer could not prove that the insured made material misrepresentations with the intent to deceive, as the representations were not reflected on the signature pad.
In a recent case, the court refused to grant summary judgment upholding a bank’s contractual limitation of a liability provision contained in an account agreement that was incorporated by reference into documents signed with a signature pad. The bank was unable to prove that it provided the customer with the full terms of the incorporated account agreement or that the signature pad used by the customer to execute the various agreements contained any language advising the customer of the relevant terms or putting the customer on inquiry notice of the incorporated account agreement’s terms. The customer did not recall receiving the account agreement nor did they execute any agreement expressly acknowledging receipt of the account agreement. Accadia Site Contracting, Inc. v. Northwest Savings Bank, No. 1:14-cv-341 (W.D.N.Y. 2017). Further, the case suggests that delivering documents after signature pad execution may be insufficient if the documents do not require an affirmative acknowledgement of receipt.
In addition to the signature pad cases, there are similar cases holding that website terms and conditions are unenforceable where the consumer did not have adequate notice of the terms and conditions. See e.g., Nguyen v. Barnes & Noble, 763 F.3d.1171 (9th Cir. 2014) (link to terms and conditions on a website not sufficiently conspicuous to provide constructive notice of applicable terms and conditions). To that end, the court in Berkson v. Gogo LLC provided a useful four-part inquiry to analyze electronic contracts of adhesion:
- Did the merchant clearly draw the consumer’s attention to material terms that would alter what a reasonable consumer would understand to be her default rights when initiating an online consumer transaction from the consumer’s state of residence: The right to (a) not have a payment source charged without notice (i.e., automatic payment renewal); (b) bring a civil consumer protection action under the law of her state of residence and in the courts in her state of residence; and (c) participate in a class or collective action? If not, then (a), (b) or (c) should not be enforced against the consumer.
97 F.Supp. 3d 359, 402 (E.D.N.Y. 2015).
What Healthcare Providers Can Do
To help ensure the validity of signature pad executions, healthcare providers should make sure that their patients are presented with the document and its terms and conditions. Providers should also consider having their patients click on an “I agree” or similar box, in addition to their electronic signatures. Further, it is important that providers are able to associate a patient’s electronic signature with the corresponding agreement presented to the patient. Finally, providers should be sure that their electronic signature procedures comply with applicable healthcare regulatory requirements such as ensuring that a patient is given a copy of the agreement where required.