Owens v. Nat’l Health Corp., 2006 Tenn. App. LEXIS 448 (Tenn. Ct. App. 2006)

The trial court denied a motion to compel arbitration because the agent had no authority to execute the arbitration agreement. On appeal, the court found that the health care agent “had the authority to execute on King’s behalf any waiver, release, or other document which may be necessary to implement health care decisions that Daniel was authorized to assist or to make on King’s behalf.” The court found no Tennessee case deciding whether a health care proxy’s authority included the power to waive a jury trial. Citing cases from other jurisdictions, the court held a health care proxy’s authority to execute any necessary waiver, release, or other document for implementing health care decisions includes executing an admission contract which includes an agreement to arbitrate. The court reasoned that power to agree to care necessarily includes power to negotiate payment and that it is common for the same parties to enter into alternative dispute resolution agreements. The court then rejected other arguments, determining that requiring arbitration is not an additional consideration prohibited by Medicaid, that it was not unconscionable, and that it did not breach a fiduciary obligation because arguendo, if there was a fiduciary relationship, the arbitration provision was neutral and gave neither party an advantage. The court rejected Plaintiff’s argument that the agreement terminated upon Plaintiff’s discharge from the nursing home because claims arising out of the stay at the nursing home remain subject to arbitration. The court rejected Plaintiff’s contention that only the facility could compel arbitration and held that all of the related entities were entitled to arbitration. Finally, the court rejected Plaintiff’s contention that it was without a remedy unless the motion to compel was denied because the parties had stipulated that the arbitrator designated in the agreement would not accept the case; Tennessee has a “savings” statute that allows appointment of another arbitrator where the initial method of arbitration fails. Decided: June 30, 2006. An appeal was granted on November 20, 2006, in Owens v. Nat’l Health Corp., 2006 Tenn. LEXIS 1089 (Tenn. 2006).

Note 1: See Garrison v. Superior Court, 132 Cal. App. 4th 253 (Cal. Ct. App. 2005); Briarcliff Nursing Home, Inc. v. Turcotte, 894 So. 2d 661 (Ala. 2004); and Sanford v. Castleton Health Care Ctr., L.L.C., 813 N.E.2d 411 (Ind. Ct. App. 2004). The Court rejected the reasoning in Blankfeld v. Richmond Health Care, Inc., 902 So. 2d 296 (Fla. 4th DCA 2005), which held that a health care proxy did not have power to waive trial by jury.

Note 2: The resident’s representative signed agreeing to arbitration and the agreement, pages 9 and 10 within the admissions agreement, was headed in capital letters with language indicating that it was a waiver of trial by jury. Most important, though, “the arbitration agreement did not change the nursing home’s duty to use reasonable care in treating King, nor limit the nursing home’s liability for any breach of that duty, “but merely shifted the disputes to a different forum.”

Note 3: Other cases allowing appointment of an alternative arbitrator include Deeds v. Regence Blueshield of Idaho, 2006 WL 2089247 (Idaho 2006); and Blue Cross Blue Shield of Alabama v. Rigas, 923 So.2d 1077 (Ala. 2005).

Opinion at: http://www.tsc.state.tn.us/OPINIONS/TCA/PDF/062/OwensDorothyOPN.pdf.
Subsequent Supreme Court decision.