After determining that next of kin with a general power of attorney may bind a nursing home patient to an arbitration agreement in an admissions contract, a Georgia appellate court has held that a Georgia statute prohibiting the enforcement of pre-dispute arbitration agreements for medical malpractice claims is preempted by federal law.
In Triad Health Mgmt. of Ga., III, LLC v. Johnson, No. A09A0286, 2009 WL 1532509 (Ga. Ct. App. June 3, 2009), Johnson’s father was a patient at Triad’s nursing home facility. After Johnson’s father died, Johnson sued Triad for negligently causing his father’s hospitalization, illness, and death. Johnson sued Triad both as administrator of his father’s estate and as next of kin.
Triad moved to compel arbitration of Johnson’s claims pursuant to an arbitration agreement Johnson had signed as his father’s "fiduciary party" upon admission. The trial court denied Triad’s motion, finding that Johnson was without authority to enter into the arbitration agreement on behalf of his father.
On appeal, the Court first determined that the Federal Arbitration Act ("FAA") governed the instant agreement, noting that Triad’s facility had significant contacts with out-of-state vendors, insurers, and payors. This contact and interaction was clearly enough for the Court to find the FAA applied, as this activity "evidenced" or "involved" interstate commerce.
Next, the Court found the trial court erred in finding Johnson was without authority to bind his father to arbitrate the instant claims. Clear language in the agreement contemplated execution of the agreement by the patient "and/or" the fiduciary. Because Johnson expressly signed as a fiduciary, the Court found evidence that the parties’ intended Johnson and his father to be bound by the terms of the agreement.
The Court not only found the intent to bind, but the authority to bind as well. While Johnson only expressly designated himself as his father’s "immediate family member" on the face of the agreement, undisputed evidence showed that Johnson held a general power of attorney over his father’s affairs at the time the agreement was execute. This power included the "full power and authority to do and perform all and every act... necessary, requisite, or proper to be done...." To the Court, execution of the admission contract, including the attendant arbitration agreement, was "necessary, requisite, or proper," and therefore within his authority.
Because Johnson held express authority at the time of execution, the Court found Johnson’s subjective apparent authority to be irrelevant. Therefore, regardless of whether Triad thought Johnson had the authority to bind his father as an "immediate family member" on the face of the contract at the time of execution, Johnson’s express authority was determinative.
Finally, Johnson argued that Georgia state law precluded the enforcement of the instant agreement. Johnson cited Ga. Code Ann. § 9-9-62 for the proposition that "no agreement to arbitrate shall be enforceable unless the agreement was made subsequent to the alleged [medical] malpractice and after a dispute or controversy has occurred...." Because this statute singled out arbitration agreements for disparate treatment among contracts, the Court held the FAA preempted the state law. See Langfitt v. Jackson, 644 S.E.2d 460 (Ga. Ct. App. 2007); Doctor’s Assocs. v. Casarotto, 517 U.S. 681 (1996).
Accordingly, the Court reversed and remanded the matter to the trial court with an order to compel arbitration of the parties’ dispute.