Arbitration/Agents: Third District Rules That Care Facility For Elderly Could Not Enforce Arbitration Provision, Because Sister’s Power Of Attorney Did Not Provide Authority To Make Health Care Decisions

Trial Court And Court Of Appeal Agreed That The Residential Care Facility For The Elderly Provided Health Care.

    Hutcheson v. Eskalon Fountainwood Lodge, C074846 (3rd Dist.  6/14/17) (Nicholson, Mauro, Duarte), is one of many cases in which a care facility for the elderly seeks to enforce an arbitration provision after an elderly person in the facility has died, and a successor in interest sues for elder abuse and related claims.  We note that in two cases the United States Supreme Court has invoked the Federal Arbitration Act to enforce arbitration clauses entered into by nursing homes.  State courts seem to have struggled to find ways to give the alleged tort victim a judicial forum. Kindred Nursing Centers, L.P. v. Clark, No. 16-32 (US S.Ct.  5/15/17 (see my May 17, 2017 post); Marmet Health Care Center, Inc. v. Brown,132 S. Ct. 1201, 1202 (2012) (see my March 27, 2012 post).

    Here the trial court and the Court of Appeal held the arbitration clause was unenforceable, because the sister who signed the admission agreement with an arbitration clause lacked the power to make health care decisions for the admittee.  The case provides a disquisition on the differences between a health care power of attorney, executed under the Health Care Decisions Law, and a personal power of attorney.  In this case, it was the decedent's niece who had the power under a health care power of attorney to make health care decisions, but she did not execute the admissions agreement with the arbitration provision.  Instead, the decedent's sister executed the admissions agreement under a power of attorney that specifically excluded the power to make health-care decisions.

    The facts necessarily required the court to consider the difference between personal care and health care.  Under the facts of the case, the court determined that the care facility for the elderly provided health care in addition to personal care.  Therefore, no one with the authority to do signed the admissions agreement, as it provided for health care.  This result is likely to alarm elder care facilities that may not have been universally viewed as providing for health care (alas, the lack of health care is part of the problem).

    The court also rejected that ostensible authority existed to enter into the arbitration agreement, because no facts showed that the decedent, who was the principal, had intentionally or negligently caused it to be believed that her sister was her agent for purposes of executing the admission agreement.  In fact, the elder care facility had possession of the niece's health care power of authority, showing that she was the person with the power to make health care decisions — and she did not execute the admissions agreement.