Arbitration and Nursing Home Admittance Agreements

Last week we looked at the perils of not having a well-crafted estate plan in place. This week we examine a component of a well-crafted estate plan - a health care power of attorney - in light of a nursing home admittance, and why fully understanding both sets of documents is crucial.

In the recent case of Bockelman, et al. v. GGNSC Gallatin Brandywood, LLC, et al., Mrs. Wilson appointed her daughter, Billy Bockelman, to serve as her health care agent. The specific power of attorney that Ms. Wilson signed only triggered the health care agency when Ms. Wilson could no longer make health care decisions on her own. In 2010, a physician declared that Ms. Wilson lacked mental capacity. 

Thereafter, Ms. Bockelman admitted her mother to a nursing home where she executed all of the admission forms as her mother's health care agent. One such form was an agreement which stated that any disputes with the nursing home must be arbitrated.

Ms. Wilson subsequently died and her daughter filed a lawsuit for several claims, essentially asserting that the nursing home was negligent. The nursing home moved to compel arbitration, which Ms. Brockelman opposed. In opposition, she testified that she didn't read the papers she signed, that her mother in fact had capacity, which rendered the health care power of attorney ineffective, and that the arbitration agreement was not a health care decision which she had the power make as her mother's agent.

Both the trial court and the court of appeals disagreed and found that the arbitration agreement, as part of the nursing home admittance packet, was a health care decision, even though it was not a prerequisite for admission. Further, the court reasoned that the arbitration agreement was not unconscionable, and hence, it was enforceable.

In practice, arbitration agreements appear in numerous contracts clients likely see daily. They can be either effective or completely ineffective depending on the circumstances. Further, arbitration may not be desirable in every situation, yet often clients will include arbitration agreements in their contracts without really considering all of the pros and cons of it and whether such a clause actually fits the transaction, let alone is enforceable. Finally, regarding the health care power of attorney, having such a form in place is a great first step, but clients should understand how and when to properly use it.