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Citing "ambiguous" language in arbitration agreements regarding the legal status of signatories, a California appellate court has refused to compel arbitration of a decedent's claims against a nursing home, finding the signatory's next-of-kin status insufficient to agree to arbitration on the decedent’s behalf.
In Waterman v. Evergreen at Petaluma, LLC, No. A117682, 2008 WL 4359556 ( Cal. Ct. App. Sept. 25, 2008), Waterman admitted her ailing father to Evergreen's nursing home facility. At the time of admission, Waterman signed two separate arbitration agreements. After her father died while in Evergreen's care, Waterman sued Evergreen as her father's successor-in-interest for personal injuries, as well as on her own behalf for his wrongful death. Evergreen moved to compel arbitration.
The trial court denied Evergreen's motion to compel, noting that the signature lines in the agreements ambiguously referred to "legal representative, responsible party, and/or agent." Therefore, the Court could not "determine[] from the form whether or not [Waterman] signed as an agent or otherwise." It also held that neither the patient's advance health care directive nor his power of attorney had been triggered by the relevant conditions precedent at the time of admission.
On appeal, the Court agreed that Waterman did not possess the authority to bind her father to arbitrate his claims at the time of admission. As to health care decisions, the Court found that Waterman's authority was subject to a determination by her father's primary physician that her father was unable to make his own health care decisions. Because no evidence suggested he lacked that ability at the time of admission, Evergreen could not maintain that Waterman had authority under the health care directive to agree to arbitration.
Furthermore, the Court did not find any evidence that Waterman had acted as her father's ostensible agent at the time of admission. Evergreen argued that Waterman could not have executed the paperwork necessary for admission without holding herself out as her father's agent. The Court rejected this contention on two grounds.
First, it agreed with the trial court that the ambiguous wording on the arbitration agreements' signature lines did not allow the Court to determine whether Waterman was signing as a legal representative, as a responsible party, or as her father's agent. Also, the Court was struck by the fact that Waterman did not sign the one signature line in the documents designated for the "Agent/Guarantor/Attorney-in-Fact."
Second, the Court opined that by authorizing next-of-kin to make medical decisions and enforce California's Patient's Bill of Rights, legislators "also intended to allow next of kin to sign a nursing home contract for the limited purpose of admitting a mentally incompetent relative to the facility, even if the family member did not technically qualify as an agent, legal representative, or responsible party."
While the Court found this next-of-kin status to be sufficient to admit her father and make other decisions regarding medical treatment, the Court did not agree with Evergreen that this same status bestowed the authority to sign the arbitration agreements presented at the time of admission.
Accordingly, the Court refused to find that Waterman possessed the legal authority to agree to arbitration on her father’s behalf, and it affirmed the trial court's order denying Evergreen's motion to compel.
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