The Supreme Court of Alabama (“Alabama Supreme Court”) held in its opinion filed on October 5, 2018 that the daughter of a resident of the defendant nursing home did not have the authority to bind her father to the arbitration agreement contained in the nursing home admission documents, for the claim that the nursing home’s negligence led to the untimely death of the resident.
The Alabama nursing home negligence wrongful death lawsuit alleged that on or around December 9, 2015, the staff at the defendant rehab center (nursing home) found the resident unresponsive and transported him to the hospital. On December 20, 2015, the resident passed away as a result of septic shock and an associated urinary-tract infection.
Nursing Home Arbitration Agreement
On October 23, 2015, which was three days before the resident was admitted to the defendant nursing home, the resident’s daughter signed a number of documents to prepare for her father’s transfer from the hospital to the defendant nursing home, including an “Agreement to Alternative Dispute Resolution” (“the agreement”). The daughter signed the agreement in the space provided for the “signature of family member responsible for PATIENT.” The spaces for the signature of “PATIENT (unless PATIENT lacks sufficient mental capacity)”; “Conservator/Guardian, Durable Power of Attorney for Health Care or other Legal Representative(s) (if any)”; and “Health Care Decision Maker (if one has been named or appointed)” were left blank.
After the Alabama nursing home wrong death lawsuit was filed, the defendant filed a motion to compel arbitration and to dismiss or to stay the proceedings pending arbitration, arguing that the daughter, by filing her complaint, had failed to comply with the terms of the agreement. The trial court subsequently granted the motion to compel arbitration, and the plaintiff appealed.
Alabama Supreme Court Opinion
The Alabama Supreme Court stated that there is no dispute that a clause calling for arbitration exists and that the agreement, which contains the clause, evidences a transaction affecting interstate commerce. It is also undisputed that the resident did not sign the agreement and that the daughter signed on her father’s behalf as a family member. The daughter asserts that the arbitration provision is not enforceable because she did not have the legal or apparent authority to execute the agreement on behalf of her father. Specifically, the daughter argues that her father was mentally incompetent at the time she signed the agreement.
The Alabama Supreme Court stated that a party seeking to avoid a contract based on the defense of incapacity must prove either permanent incapacity or contractual incapacity at the very time of contracting.
The Alabama Supreme Court stated that the father’s diagnosis of dementia, by itself, does not establish permanent incapacity. The Alabama Supreme Court stated that it cannot conclude, based on the medical records submitted, that the daughter has overcome her burden of proving that her father’s condition rose to the level of permanent incapacity as that term is used under the law to void a contract. However, “t]he more important question is whether [the daughter] has overcome her burden of demonstrating contractual incapacity.”
The Alabama Supreme Court stated that “[i]t is clear that [the daughter] has presented evidence establishing that, at the time of execution of the agreement, [her father] “‘had no reasonable perception or understanding of the nature and terms of the contract.'” The Alabama Supreme Court held: “under the particular circumstances in [this] case, it is clear that, at the time [the daughter] signed the paperwork for [the defendant] in preparation for his transfer from [the hospital] to the Rehab Center, [the father] did not have “‘”‘sufficient capacity to understand in a reasonable manner the nature and effect of the act which he [or his daughter] was doing.'”‘
The Alabama Supreme Court held: “In this case, [the daughter] signed the agreement solely as a family member. Because this Court concludes that [the father] lacked the capacity to contract at the time the agreement was signed, [the daughter] did not have apparent authority to execute the agreement on his behalf,” noting that the submitted records are replete with references to the father suffering from confusion and frequently lacking orientation to date, time, and place before and during his hospitalization; the father suffered from dementia, was heavily medicated, and was recovering from surgery at the time his daughter signed the paperwork and at the time he was admitted to the Rehab Center. Furthermore, the daughter never represented to the defendant that she was her father’s legal representative.
Source Stephan v. Millennium Nursing and Rehab Center, Inc., 1170524, October Term, 2018-2019.
If you or a loved one suffered injuries (or worse) while a resident of a nursing home in Alabama or in another U.S. state due to nursing home neglect, nursing home negligence, nursing home abuse, nursing home under-staffing, or the nursing home failing to properly care for a vulnerable adult, you should promptly find a nursing home claim lawyer in Alabama (Alabama medical malpractice lawyer) or a nursing home claim lawyer in your state who may investigate your nursing home claim for you and file a nursing home claim on your behalf or behalf of your loved one, if appropriate.
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