TSC Issues Arbitration Decision

The Tennessee Supreme Court has ruled that an arbitration provision in a nursing home contract signed by a person who had a power of attorney to act on behalf of the resident is not void as against public policy.  However, the court remanded the case to the trial court for a determniation of whether the inclusion of the provision was an unconscionable contract of adhesion.

Justice Holder wrote the opinion for the Court.  Here is a summary of the holding:

"the agreement is governed by the Tennessee Uniform Arbitration Act and that the power of attorney authorized Daniel to sign the arbitration agreement on behalf of King. We also affirm the  intermediate appellate court’s holding that the arbitration agreement is not unenforceable on the  ground that a material term of the agreement is incapable of performance. We likewise affirm the  Court of Appeals’ holding that the arbitration agreement does not violate federal law. We further  hold that a pre-dispute arbitration agreement in a nursing-home contract is not per se invalid as  against public policy. In addition, we affirm the intermediate appellate court’s holding that the  agreement is not unenforceable on the ground that requiring King to sign an arbitration agreement  breached a purported fiduciary duty owed to King by the defendants. We vacate, however, the Court of Appeals’ judgment insofar as it holds that the arbitration agreement is not an unconscionable  contract of adhesion, and we remand for further proceedings on that issue. In light of our remand for further proceedings on the unconscionability issue, we also vacate the intermediate appellate   court’s instruction to the trial court to enter an order compelling arbitration."

Read the entire opinion here