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In affirming a lower court order denying a nursing home's motion to compel arbitration, the California Court of Appeal held that the nursing home resident's husband did not have statutory authority to enter an arbitration agreement on her behalf.
In Flores v. Evergreen at San Diego, LLC, No. D048002, 2007 WL 738964 (Cal. Ct. App. Mar. 13, 2007), Luis Flores admitted his wife Josephina to an Evergreen nursing home. During the admission process, Luis signed an arbitration agreement on his wife's behalf.
When Josephina suffered a leg fracture, she and Luis sued Evergreen for alleged negligence. Evergreen filed a motion to compel arbitration. The trial court denied the motion on the ground that Luis had no authority to agree to arbitration on his wife's behalf.
On appeal, Evergreen argued that Luis had statutory authority to agree to arbitration on his wife's behalf. According to Evergreen, this authority derived from several California statutes governing the admission and treatment of nursing home residents who are legally incompetent.
Specifically, Evergreen argued that Luis' statutory authority derived primarily from sections 1418.8 and 1599.65 of the California Health and Safety Code. Section 1418.8 authorizes "next of kin" to make "medical treatment decisions" for nursing home residents who are incapacitated. Section 1599.65 requires prospective nursing home residents, if capable, to sign the admission contract with the caveat that it "does not preclude the facility from obtaining the signature of an agent, responsible party, or a legal representative, if applicable."
The Court determined that section 1599.65 was inapplicable because Luis was not Josephina's agent, her legal representative, or the responsible party. Despite the designation in the admission contract, the Court found that Luis was not the responsible party because there was no document "stating that he was assuming personal responsibility for Josephina's bills." Accordingly, the Court found it unnecessary to decide "whether the Legislature intended that a responsible party should have authority to make the arbitration decision."
Turning to section 1418.8, the Court found it "likely the Legislature . . . 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" but could not conclude that "the Legislature intended to include the arbitration decision as among the matters that may be decided by next of kin when signing a nursing home admission contract." In reaching this decision, the Court reasoned that "the decision whether to agree to an arbitration provision in a nursing home contract is not a necessary decision that must be made to preserve a person's well-being."
The Court distinguished Garrison v. Superior Court, 33 Cal. Rptr. 3d 350 (Cal. Ct. App. 2005) on the ground that the nursing home resident in that case signed a power of attorney authorizing the family member to make health care decisions. In another recent decision, the California Court of Appeal relied on Garrison in concluding that a health care power of attorney authorized the attorney-in-fact to enter an arbitration agreement on behalf of the nursing home resident. See Hogan v. Country Villa Health Services, 55 Cal. Rptr. 3d 450 (Cal. Ct. App. 2007).
The attempt to distinguish Garrison and, by extension, Hogan is somewhat specious. In Hogan, the nursing home resident used a statutory form to create a power of attorney authorizing her daughter to make "health care decisions" on her behalf, while in this case, section 1418.8 gave Luis authority to make "medical treatment decisions" on his wife's behalf. Given the similar grants of authority and opposite results, the only logical inference is that "health care decisions" somehow has a broader meaning than "medical treatment decisions." Cf. Covenant Health Rehab of Picayune, L.P. v. Brown, No. 2005-CA-02220-SCT, 2007 WL 529675 (Miss. Feb. 22, 2007) (construing statutory authority to make "health care decisions" as authority to enter arbitration agreement).
Finally, one other aspect of the case bears mention. The Court found that Luis was not a "responsible party" within the meaning of section 1599.65 because there was no document whereby he agreed to assume liability for his wife's bills. However, no such document was necessary because under California law, the marital estate "is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt." Cal. Fam. Code § 910(a).
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