In its decision filed on June 22, 2017, the Court of Appeals of Georgia (“Georgia Appellate Court”) held that a nursing home arbitration agreement signed by the resident’s daughter was unenforceable because the defendant nursing home failed to carry its burden of proving a valid and enforceable arbitration agreement. The Georgia Appellate Court further held that the federal policy in favor of arbitration does not control because no valid and enforceable agreement to arbitrate was formed.
The Underlying Facts
At the time the nursing home resident was admitted to the defendant nursing home on June 12, 2013, the resident’s daughter signed a nursing home admission agreement and other documents, including an optional arbitration agreement naming her mother and the nursing home as parties.
The nursing home arbitration agreement provided that it was voluntary and not a precondition to admission to the nursing home, that the parties waived the right to a jury trial and instead agreed to have any future disputes between them resolved by binding arbitration, that an arbitration decision would be final and unappealable, that the agreement was governed by the Federal Arbitration Act and not by the Georgia Arbitration Act, and that the patient/resident could revoke the agreement within 30 days of signing it.
The resident’s daughter signed the nursing home arbitration agreement on the line designated for the signature of the patient/resident. However, her mother was not present when she signed the arbitration agreement, she never showed or discussed the arbitration agreement with her mother, and her mother never signed the nursing home arbitration agreement herself.
After the resident died on February 27, 2014, another daughter, who was the administrator of the resident’s estate, filed a lawsuit against the nursing home and other defendants that asserted multiple causes of action, including claims for nursing home negligence, wrongful death, and medical malpractice.
The defendant nursing home and the other defendants filed a motion to dismiss or, alternatively, to stay proceedings and compel arbitration, based on the nursing home arbitration agreement signed by the resident’s daughter. The trial court denied the defendants’ motion, finding that there was no valid and enforceable arbitration agreement because the daughter did not have the authority to sign the arbitration agreement on her mother’s behalf. The defendants filed an application for interlocutory appeal, which was granted.
The Georgia Appellate Court Decision
The Georgia Appellate Court stated that under Georgia law, to constitute a valid contract, there must be, among other things, the assent of the parties to the terms of the contract. OCGA § 13-3-1. A party cannot be required to submit to arbitration any dispute which she has not agreed to submit to arbitration.
The defendants acknowledged that the resident did not personally assent to the arbitration agreement but they argued that the daughter had both express and implied authority to act as her mother’s agent and sign the agreement on her mother’s behalf.
The Georgia Appellate Court held that the resident’s daughter did not have express or implied authority to sign the arbitration agreement on her mother’s behalf (the resident did not execute a power of attorney or any other written document expressly authorizing her daughter to sign the arbitration agreement or otherwise act for her, and the conduct of the parties does not establish that the resident expressly granted her daughter the general authority to act as her agent).
The Georgia Appellate Court further held that the defendants have not presented any evidence of words or conduct of the resident that could have caused the defendant nursing home to believe that she consented to having the arbitration agreement signed on her behalf by her daughter.
With regard to the defendants’ argument that the arbitration agreement in this case should be enforced because federal policy favors arbitration, the Georgia Appellate Court stated that the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate, and that the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute.
The Georgia Appellate Court held, “[h]ere, because no valid and enforceable agreement to arbitrate was formed, the federal policy in favor of arbitration does not control.”
Source United Health Services of Georgia, Inc. v. Alexander, A17A0335
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