Thursday, January 16, 2014
We've blogged several times in recent months about state court rulings on enforcement of arbitration provisions in nursing home admission contracts, especially in the wake of the U.S. Supreme Court's ruling in Marmet Health Care Center Inc. v. Brown, 132 S. Ct. 1201 (2012). See here, here and here.
The latest interesting decisions arrived on the same day, January 13, 2014, from the Massachusetts Supreme Court. First, in Johnson v. Kindred Healthcare Inc., the court held that although a "health care agent" operating under a written advance directive had signed the nursing home's admission agreement containing a mandatory arbitration provision governing "all disputes," such action was not an authorized "health care decision," and thus was not binding on the patient under Massachusetts' health care proxy statute.
The court notes that its decision is consistent with the view of the "majority" of courts in other jurisdictions that have considered similar issues, and emphasized the intention of the Massachusetts legislature in framing that state's governing statute:
"We frame the matter differently [than did a contrary decision by the Supreme Court of Tennessee in a 2007 decision]. That a competent principal could have decided to enter into an arbitration agreement does not answer the core question we confront: whether our Legislature intended the term 'health care decision' to include the decision to waive a principal's right of access to the courts and to trial by jury by agreeing to binding arbitration. Our health care proxy statute reflects no such intent."
The Massachusetts Supreme Court was unpersuaded by the nursing home's argument that its decision promotes "uncertainty concerning the scope of a health care agent's authority." The court reversed the trial court order compelling "mediation or arbitration," and remanded for trial on the allegations that the nursing home's negligence caused the death of a resident of the facility.
Second, on the same day, the Massachusetts Supreme Court issued a similar ruling in Licata v. GGNSC Malden Dexter LLC, having earlier transferred that case from the intermediate appellate court on its own initiative. The son's signature as "responsible party" on the contract did not change the outcome:
"[E]ven assuming that Salvatore [the son] qualified as a responsible party for purposes of giving informed consent to medical treatment, this role did not empower him to sign an arbitration agreement on [his mother] Rita's behalf."
Further, the court rejected the nursing home's argument in the Licata case that theories of "ratification," "third-party beneficiary" or "equitable estoppel" compelled arbitration of the personal injury claim, concluding that "no inequity results from denying enforcement of the arbitration agreement."
These decisions show the importance both of statutory authority and careful drafting of documents appointing agents for those wishing "freedom" from mandatory arbitration (hence, the Liberty Bell, courtesy of photographer Bev Sykes). My first reading of these two decisions suggests that attorneys in Massachusetts and states with similar health care decision-making laws will still customize the language of POAs for "general agents" acting under powers of attorney, to make it clear that any grant of general authority does not include authority to bind the principal to mandatory arbitration of nursing home disputes, even if the agent also has authority to make health care decisions. Other thoughts from our readers?