More On Powers of Attorney, Arbitration Agreements, and Wrongful Death

Where the person who executed an arbitration agreement in connection with decedent’s admission to a nursing home had a power of attorney for decedent, but that power of attorney did not mention the ability to make health care decisions, the arbitration agreement was unenforceable. Further, decedent’s wrongful death beneficiaries would not have been bound by the arbitration agreement even if it were enforceable.

In Williams v. Smyrna Residential, LLC, No. M2021-00927-COA-R3-CV (Tenn. Ct. App. April 8 2022), plaintiff was the son of decedent, who died while he was a resident at defendant assisted living center. Plaintiff filed this wrongful death action on behalf of decedent’s wrongful death beneficiaries. In response to the complaint, defendant filed a motion to compel arbitration. According to defendant, decedent’s daughter had executed an arbitration agreement on decedent’s behalf when decedent was admitted to the facility. At the time, the daughter was the named attorney-in-fact in decedent’s durable power of attorney (POA). Plaintiff argued that the arbitration agreement was not enforceable because the POA did not mention the authority to make health care decisions, and the trial court agreed, denying the motion to compel arbitration. On appeal, this ruling was affirmed.

The first issue considered on appeal was whether the trial court was correct in ruling that the daughter “lacked authority to execute” the arbitration agreement. The Court of Appeals cited extensively from a federal district court case while analyzing this issue, noting that Tenn. Code Ann. § 34-6-203 “is clear that, for an attorney-in-fact to have authority to make a health care decision for a principal, the power of attorney document must ‘specifically authorize’ the attorney-in-fact to make health care decisions.” (internal citation omitted). The POA that named daughter as attorney-in-fact did not mention health care decisions. Because of that, the Court explained that the daughter did not have the authority to execute the arbitration agreement at issue here:

Shorn of context, signing a stand-alone arbitration agreement is a legal decision. Here, however, it is undisputed that the Agreement was executed in the context of Decedent’s admission to [the facility]. While the Agreement was ‘optional,’ it was bound up in the context of a healthcare decision[.] …The agreement clearly was intertwined with the decision to admit Decedent. …We conclude that…[the daughter’s] signing the Agreement on Decedent’s behalf was part and parcel of a healthcare decision. …The POA did not provide or even contemplate healthcare decision-making power for [daughter]. Our General Assembly has made it clear by statute…that healthcare decision-making pursuant to a power-of-attorney in Tennessee requires specific authorization by healthcare power-of-attorney. …In the present case, the POA provides [daughter] no such authority.

The Court therefore affirmed the finding that the daughter lacked the capacity to enter into the arbitration agreement for decedent, and the agreement was thus unenforceable.

Defendant also argued that the agreement was enforceable because the daughter was Decedent’s surrogate and because the daughter was named in decedent’s living will. The Court pointed out, however, that the statutory requirements for surrogate status had not been established here, and that the living will was “of no avail to Defendants” as the admission to the facility was not an “end-of-life matter.”

Although the Court affirmed the ruling that the arbitration agreement was unenforceable, it still considered the second issue, which was whether the wrongful death beneficiaries would have been bound by the agreement if it had been enforceable. The Court looked to a 2017 Tennessee Supreme Court Case, Beard v. Branson, 528 S.W.3d 487 (Tenn. 2017), where the Supreme Court ruled that a surviving spouse does not bring “a wrongful death action in a representative capacity on behalf of either the decedent or the decedent’s estate,” but that the “surviving spouse asserts his own right of action for his own benefit and for the benefit of the other statutory beneficiaries who share in any recovery.”

Based on that holding, the Court ruled that the arbitration agreement would not have been binding on decedent’s wrongful death beneficiaries, writing:

Although Plaintiff is not Decedent’s surviving spouse, he is a statutory beneficiary. …[W]e are not at liberty to ignore the most recent instruction from the Tennessee Supreme Court on the matter, which Beard represents, no matter the longevity of the preceding interpretation. In the present case, Plaintiff is bringing his own right of action for his own benefit and the benefit of the other statutory beneficiaries for wrongful death; he is not merely a representative of Decedent or his estate. Plaintiff did not sign the Agreement. In keeping with Beard, even if the agreement were enforceable—and we have held it is not—Plaintiff and the wrongful death statutory beneficiaries on whose behalf this action was filed would not be bound by it as they were not parties to the Agreement.

Denial of the motion to compel arbitration was therefore affirmed.

The way I read the opinion, one of the beneficiaries did sign the arbitration agreement, just not the beneficiary who filed the wrongful death lawsuit.  I think it likely the Tennessee Supreme Court will review this case.

This opinion was released 1.5 months after oral arguments in this case.



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