Optional arbitration agreement at nursing home was legal decision.

Signing an optional arbitration agreement during the process of signing other nursing home admission paperwork is a legal decision, not a healthcare decision, according to the Tennessee Supreme Court.

In Williams v. Smyrna Residential , LLC, 685 S.W.3d 718 (Tenn. 2024), Granville Williams, Jr. (“Williams”) executed a durable power of attorney (“POA”) appointing his daughter, Karen Sams (“Sams”), as his attorney-in-fact. This POA gave Sams authority to act for Williams “in all claims and litigation matters.” The POA did not mention healthcare decisions and no healthcare POA was executed.

In 2020, Sams assisted with Williams’ admission to defendant nursing home. Sams signed the admission paperwork for Williams, which included an arbitration agreement. Although the admission contract stated that it incorporated the terms of the arbitration agreement, the arbitration agreement itself stated that it was optional and “not a condition of admission” to the nursing home. Two months later, Williams died.

After Williams died, Plaintiff James Williams filed this suit against the nursing home. Plaintiff was Williams’ son, and he sued as next of kin and on behalf of Williams’ wrongful death beneficiaries. Defendant filed a motion to compel arbitration, which the trial court denied, ruling that the execution of the arbitration agreement was a healthcare decision and that Sams therefore lacked authority to execute it. The Court of Appeals affirmed, but in this opinion, the Supreme Court reversed.

In determining whether the wrongful death beneficiaries were bound by the arbitration agreement here, the Supreme Court began by considering whether Sams had the authority to enter into the arbitration agreement on behalf of Williams. This issue hinged on whether the Court classified signing the arbitration agreement as a health care decision or a legal decision. Plaintiff argued that it was a health care decision “because it was part of the process of admitting Williams to an assisted-living facility.” Defendant asserted that it was legal, even though it occurred in a health care context. The Tennessee Supreme Court agreed with defendant.

Both parties argued that Owens v. National Health Corp., 263 S.W.3d 876 (Tenn. 2007) supported its position. The Court stated that Owens held that an attorney-in-fact acting under a health care power of attorney had the authority to execute an arbitration agreement that was a condition of admission to a nursing home. The Court differentiated this case from Owens, putting great emphasis on the non-mandatory nature of the arbitration agreement in the present matter. Ultimately, the Court found that Sams did not make a health care decision when signing the arbitration agreement at issue. The Court wrote that signing this document was not consenting to medical treatment, stating that “an optional agreement to arbitrate in no way confers or withdraws consent to receive any care, treatment, or service…to maintain, diagnose or treat an individual’s physical or mental condition.” (internal citation and quotation omitted). The Court held that signing an arbitration agreement that is not a condition of admission to a nursing home is not a health care decision.

Next, the Court quickly analyzed whether Sams had the authority to sign the arbitration agreement pursuant to the POA. The Court relied on the language giving Sams authority over “claims and litigation matters” to find that she was authorized to execute this document. The language “all claims and litigation matters” in the POA was found to encompass the ability to execute arbitration agreements.

Finally, the Court determined whether Williams’ wrongful death beneficiaries were bound by the arbitration agreement. Looking to ordinary contract principles, the Supreme Court explained that Tennessee wrongful death law has been referred to as “survivor legislation,” as it preserves the cause of action of the decedent rather than creating a new cause of action. Accordingly, the beneficiaries’ claims are derivative and “are subject to the same limitations as [the decedent’s] claims.” The wrongful death beneficiaries were thus bound by the arbitration agreement.

Two justices filed dissents in this case. Justice Lee wrote that the majority “rewrites a health care facility admission contract, disregards the Durable Power of Attorney for Health Care Act, ignores precedent, and creates confusion in an important area of law.” She noted that the arbitration agreement was merged into the admission contract. She also urged that Owens required finding that this was a health care decision, and that a health care POA should be required for making such a decision.

Justice Kirby wrote a separate dissent, stating that she was “concern[ed] about the practical implications of the majority’s decision to leave the law so unsettled in an area that touches so many.” She noted that having both this case and Owens as precedent could make it unclear whether a health care POA were sufficient to execute admission documents.

The dissenting opinions point out some serious questions and issues that may arise following this opinion, especially regarding what types of POAs are necessary to execute certain documents.

This opinion was released one year after oral arguments in this case.

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