Current Topics in Nursing Home Arbitration Agreements
We previously wrote a blog concerning what has become a common practice of nursing home owners: the inclusion of arbitration provisions in nursing home admission documents. Except in very limited circumstances, Florida courts have routinely found that such arbitration provisions are legally valid. See Manocare Health Service, Inc. v. Stiehl, 22 So. 3d 96, 104, n.7 (Fla. 2d 2009). This current blog on such arbitration agreements is divided into two parts. Part I provides a discussion of the validity of nursing home arbitration agreements signed by individuals acting under a durable power of attorney. Part II discusses the legislative efforts which are being made to make nursing home arbitration agreements illegal.
Part I. The Validity of Nursing Home Arbitration Agreements Signed Under the Authority of a Durable Power of Attorney
Many times nursing home admission documents are signed by a family member acting as the resident’s durable power of attorney and not by the actual resident. The grant of powers under a durable power of attorney is known as an advanced directive. To be valid, a grant of durable power of attorney requires the execution of a formal document which specifies the powers being granted in accordance with the formalities specified by Florida Statute 709.06. A durable power of attorney is one which remains effective should the grantor become incapacitated in the future.
The following issue has arisen in nursing home negligence and abuse cases: whether nursing home admission documents requiring that claims arising under the admissions agreement be arbitrated are valid when the admissions agreement was signed by a person acting under a durable power of attorney. That is, does an individual acting under a durable power of attorney (DPOA) have the authority to consent to arbitrate claims arising from the resident’s nursing home care?
According to Florida courts, the answer depends upon the scope of the authority granted under the durable power of attorney document. In the Estate of Smith v. Southland Suites of Ormond Beach, LLC, et al., So. 3d (Fla. 5th DCA 2010), the decedent’s nursing home admission contract had been signed by her daughter acting under a durable power of attorney. The mother died while a resident at the nursing home, and her estate sued the nursing home for wrongful death. The estate argued that the daughter’s durable power of attorney did not authorize her to consent to arbitrate claims arising from her mother’s nursing home care. Hence, the action for wrongful death could be brought in a court of law.
The Smith Court noted that the DPOA did not specifically state that the daughter was being granted the right to enter into arbitration agreements on behalf of her mother. Nevertheless the Smith Court went on to state that the DPOA at issue did provide the daughter with broad authority to effectuate her mother’s legal rights and that “[t]he language of the DPOA is clearly broad enough to encompass arbitration and to authorize [the mother’s] daughter to enter a binding agreement on her mother’s behalf.” The Smith Court based its opinion on the following provision in the DPOA signed by the daughter:
“generally to do and perform all matters and things, transact all business, execute, and acknowledge all contracts, whether involving real property or not, orders, deeds, writings, assurances, and instruments, which may be requisite or proper to effectuate any matter or thing appertaining to or belonging to me, and generally to act for me in all matters affecting my business or property . . .”
In reaching its conclusion that the DPOA authorized the daughter to enter into a binding arbitration agreement, even though the DPOA did not specifically “allow” such an agreement, the Smith Court cited Florida Statute 709.08(6) which provides that “[u]less otherwise stated in the durable power of attorney, the durable power of attorney applies to any interest in property owned by the principal, including . . . all other contractual or statutory rights or elections.” The Smith Court basically concluded that the DPOA granted the daughter the right to enter into all contracts on behalf of her mother without limitation as to the nature and type of contract and/or the provisions within the contract.
Other Florida appeals courts have reached the same conclusion when the DPOA at issue granted broad powers. See, for example, Jaylene, Inc. v. Steur ex rel. Paradise, 22 So. 3d 711 (Fla. 2d DCA 2009) and Five Points Healthcare, Ltd. v. Mallory, 998 So. 2d 1180 (Fla. 1st DCA 2008). But see our previous blog on arbitration agreements for examples of arbitration agreements which were deemed void by Florida courts.
The premise underlying the Smith Court’s holding is that a nursing home admission agreement, as a contract, constitutes an interest in property. As consideration for the acceptance into the nursing home, the resident or his/her DPOA, whichever the case may be, is agreeing to both: (a) pay for the resident’s care; and (b) also give up the right to pursue legal action in a court of law for injuries sustained as the result of nursing home negligence and abuse at the facility which is being paid to provide proper care. Seems a little one-sided, doesn’t it, especially when one considers why nursing home arbitration agreements are so popular these days: because awards of damages in arbitration proceedings for nursing home negligence will generally be substantially less relative to awards of damages by juries.
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