Day on Torts
Where decedent’s daughter was her attorney-in-fact but did not have the authority to make health care decisions, an arbitration agreement signed by the daughter in conjunction with decedent’s nursing home admission that specifically stated that it was a health care decision was not enforceable.
In Buchanan v. Franklin Operating Group, LLC, No. M2022-01017-COA-R9-CV (Tenn. Ct. App. Nov. 19, 2024), plaintiff filed a negligence and wrongful death suit on behalf of her mother, who passed away while at defendant nursing home. In 2015, decedent had executed a power of attorney (“POA”) naming her daughter attorney-in-fact. This POA specifically stated that the daughter did not have the authority to make medical or healthcare decisions.
In 2018, decedent was admitted to defendant nursing home, and her daughter filled out the paperwork. One document executed by the daughter was an arbitration agreement, which stated that it was not required for admission and also that “the signing of this Agreement, both by conjunction with the corresponding admission and receipt of services, is a health care decision.”
When plaintiff daughter filed this suit, defendant moved to compel arbitration pursuant to the arbitration agreement. Plaintiff asserted that the arbitration agreement was not enforceable because plaintiff did not have the authority to make medical decisions for decedent. The trial court granted defendant’s motion, but also gave plaintiff permission to appeal that ruling. In this opinion, the Court of Appeals ruled that the arbitration agreement at issue was not enforceable.
In its opinion, the Court cited two Tennessee Supreme Court cases. In Owens v. National Health Corp., 263 S.W.3d 876 (Tenn. 2007), the Supreme Court ruled that the signing of an arbitration agreement in conjunction with nursing home admission was a health care decision. More recently, in Williams v. Smyrna Residential, LLC, 685 S.W.3d 718 (Tenn. 2023), the Supreme Court ruled that signing an arbitration agreement in conjunction with nursing home admission that was not required for admission to the facility was not a health care decision. After reviewing both, the Court of Appeals found that the facts in the present case were more similar to Williams, but that there was one fact that distinguished this case from both Owens and Williams.
Here, plaintiff was appointed attorney-in-fact by a POA that specifically excluded health care decisions. Importantly, the arbitration agreement in this case specifically stated that it was optional, and it also explicitly stated that signing it constituted a health care decision. Noting that “a cardinal rule of contractual interpretation is to ascertain and give effect to the intent of the parties,” the Court reasoned:
Here, the language of both the POA and arbitration agreement is clear and unambiguous, and the parties’ intent is clear from the face of the documents. Decedent excluded Ms. Buchanan from making health care decisions for Decedent, and the contract at issue states that its signing is a health care decision. Under these circumstances, we have no choice but to conclude that although this case is similar to Williams, it differs in this material, dispositive way.
Because of the language of the documents, the Court found that this arbitration agreement was a health care decision not permitted by the existing POA.
The trial court had also found the arbitration agreement enforceable by finding that plaintiff had apparent authority to execute it under the Tennessee Healthcare Decisions Act, Tenn. Code Ann. § 68-11-1801. This act allows a surrogate to be appointed in certain circumstances, but “if, and only if, a designated physician determines the patient lacks capacity.” (internal citation omitted). In this case, nothing in the record supported a finding that a physician found that decedent lacked capacity for purposes of this Act. Moreover, the trial court applied this Act sua sponte, giving plaintiff no notice or ability to respond. The Court of Appeals therefore reversed application of this Act and the finding that plaintiff had apparent authority.
Because plaintiff did not have the authority to execute the arbitration agreement at issue, which was deemed a health care decision, the trial court’s ruling was reversed.
Judge McBrayer wrote a concurring opinion wherein he agreed with the ultimate ruling, but he wrote that the limitation in the POA was enough to conclude that plaintiff did not have authority to execute the arbitration agreement at issue.
Cases interpreting the enforceability of arbitration agreements in the nursing home admission context have come to differing conclusions depending on the specific facts at play. If you have a case litigating this issue, but sure to read this opinion, as well as the Supreme Court cases cited herein, to get an idea of what facts will be considered.
This opinion was released 3.5 months after the case was assigned on briefs.