The Mississippi Court of Appeals has compelled a non-signatory nursing home resident to arbitrate her claims against the home, holding that the resident was an intended third-party beneficiary of the admission contract and its arbitration agreement.

In Forest Hill Nursing Center, Inc. v. McFarlan, No. 2007-CA-00327-COA, 2008 WL 852581 (Miss. Ct. App. Apr. 1, 2008), McFarlan was admitted to Forest Hill's nursing home facility. Upon admission, McFarlan's granddaughter, Mathews, signed the admission contract, which included an arbitration agreement.

McFarlan later sued Forest Hill, alleging it was responsible for injuries she suffered while in its care. Forest Hill moved to compel arbitration of the claims, but the trial court denied the motion, holding that Mathews only had the authority to bind McFarlan to health care and business agreements, which did not include agreements to arbitrate.

On appeal, the Court rejected Forest Hill's argument that McFarlan was required to arbitrate because Mathews had acted as McFarlan's statutory health-care surrogate. The Court was not satisfied that McFarlan was incapacitated at the time of admission, as required by the Mississippi Uniform Health-Care Decisions Act for Mathews to act as her health-care surrogate. See Miss. Code Ann. § 41-41-211(1).

The Court also determined that Mathews did not act as an express or implied agent of McFarlan at the time of admission. Not only did Forest Hill fail to present any evidence of an express agreement between Mathews and McFarlan regarding agency, but Forest Hill also failed to point to any words or conduct by McFarlan that would have implied agency or suggested apparent authority at the time of admission. Mathews's conduct alone, according to the Court, was insufficient to show the agency relationship or the apparent authority necessary to bind McFarlane to the arbitration agreement.

However, the Court did hold that McFarlan was an intended third-party beneficiary of the admission contract between Mathews and Forest Hill, and that McFarlan did in fact benefit from the contract. Because McFarlan's care was the essential purpose of the contract, and the arbitration agreement was a part of that contract, McFarlan was bound as a third-party beneficiary to arbitrate claims within the scope of the agreement. Due to the broad scope of the agreement, McFarlan's claims were held to be arbitrable.

In rendering its decision, the Court specifically distinguished the Mississippi Supreme Court's decision in Grenada Living Center, LLC v. Coleman, 961 So.2d 33, 38 (Miss. 2007), because the trial court in Coleman had made a specific finding of fact that no one had the authority to speak for Coleman at the time of admission. Barring such a specific factual finding at trial, the Court declared that it would "continue to follow binding precedent that non-signatories may be bound by an arbitration agreement if they are determined to be a third-party beneficiary."