A district court in Mississippi determined that an arbitration agreement between a patient and nursing home was not valid because the person that signed the agreement was not the patient's actual or apparent agent.

In Robbins ex rel. Leonard v. Beverly Enterprises, Inc., No. 3:07CV047-B-A, 2008 WL 907465 (D. Miss. March 31, 2008), Dedric Robbins was admitted to Beverly Enterprises nursing home facility for a temporary stay to receive physical therapy. Robbins ultimately died during his stay at Beverly.

Leonard Robbins, individually and on behalf of Dedric's estate, filed a wrongful death suit against Beverly. In response, Beverly moved to compel arbitration per the arbitration agreement contained in the admissions contract, which was signed by Dedric's wife, Virginia. Beverly contended that Virginia was acting as an agent and personal representative and in fiduciary capacity for her husband when she signed the agreement. Leonard argued that Virginia had no legal authority to bind Dedric to the arbitration agreement.

In resolving this issue, the Court noted that the Fifth Circuit has set forth a two-step test to determine whether parties should be compelled to arbitrate a dispute. The court must first determine whether the parties agreed to arbitration. If the court finds that the parties agreed to arbitrate the claims, it must consider whether any federal statute or policy renders the claim non-arbitrable.

Arbitration agreements are a matter of contract between the parties and are governed by principals of state contract law. The Court noted that the crux of this dispute is whether Virginia had the legal capacity to make a contract. The Court noted that the record reflected that Dedric was mentally competent and that no power of attorney existed at the time of his admission. Thus, to bind her husband to the arbitration agreement, Virginia was required to have authority to act as Dedric's agent.

The Court examined whether any statutory authority existed which would allow Virginia to make healthcare decisions for her husband, absent a preauthorized agency relationship. Under Mississippi law, a surrogate makes healthcare decisions on behalf of a patient who lacks the capacity to make healthcare decisions for himself.

The Court noted that it is a prerequisite to having a surrogate that a patient not have the mental capacity to make decisions and not have any other person to legally care for them. Beverly failed to show any evidence that Dedric was mentally incapacitated at the time of his admission. Thus, Virginia could not have acted as Dedric's surrogate.

Further, the Court noted that Beverly did not produce a power of attorney or set forth evidence that Dedric gave Virginia actual or apparent authority to act as his agent. Because the there was no valid ground to determine that Virginia had the authority to act as Dedric's agent, the Court found that no valid arbitration agreement existed.