In its opinion filed on March 2, 2016, the South Carolina Court of Appeals (“Appellate Court”) affirmed the lower court’s denial of the defendant nursing home’s motion to compel arbitration regarding the plaintiff’s wrongful death and survival action arising out the nursing home resident’s fall from her bed that had a malfunctioning side rail, which occurred within five hours after the resident was admitted to the defendant nursing home.
At the time of the resident’s admission to the defendant nursing home, while the resident was still in the process of being transported from the hospital to the defendant nursing home, the resident’s son signed both an Admission Agreement and a separate Arbitration Agreement on behalf of his mother, who suffered from dementia.
The defendant nursing home argued on appeal that the Arbitration Agreement “merged” with the Admission Agreement, which the son had authority to sign on behalf of his mother pursuant to the Adult Health Care Consent Act (“the Act”), thereby making both agreements one and the same. The Act confers authority on a health care surrogate to consent on the patient’s behalf “to the provision or withholding of medical care” and to make financial decisions obligating the patient to pay for the medical care provided.
The Appellate Court held that because the Arbitration Agreement signed by the son was separate from the Admission Agreement, any authority the son had to sign the Arbitration Agreement on his mother’s behalf could not come from the Act.
The Appellate Court also rejected the defendant nursing home’s argument that the son had the apparent authority to sign the Arbitration Agreement on his mother’s behalf, noting that the mother was not present when her son signed the Arbitration Agreement and further noting the mother’s incapacity due to her dementia prevented her from “consciously or impliedly” representing another to be her agent.
The Appellate Court further stated that the authority conveyed by a principal to an agent to handle finances or make health care decisions does not encompass executing an agreement to resolve legal claims by arbitration, thereby waiving the principal’s right of access to the courts and to a jury trial. The Appellate Court held that the evidence does not show that the son had either actual or apparent authority to execute the Arbitration Agreement on his mother’s behalf.
The Appellate Court also rejected the defendant nursing home’s argument that the estate of the mother was equitably estopped from refusing to comply with the Arbitration Agreement because the mother benefited from the Arbitration Agreement because she was admitted to the defendant nursing home, she received medical care, and she became capable of enforcing the Arbitration Agreement. The Appellate Court stated that the Arbitration Agreement was not incorporated into the Admission Agreement and therefore the defendant nursing home’s assertion that the mother received under the Admission Agreement, i.e., being admitted to the facility and receiving medical care, is of no moment: the two agreements are independent of one another, as reflected in the language of the Arbitration Agreement indicating its execution is not a condition for being admitted to the nursing home (the defendant nursing home represented the Arbitration Agreement to be a voluntary agreement that was not a condition to the mother’s admission to the defendant nursing home and was unconditionally revocable within thirty days of execution). Further, any possible benefit emanating from the Arbitration Agreement alone is offset by the Arbitration Agreement’s requirement that the mother waive her right to access to the courts and her right to a jury trial.
The Appellate Court stated that the mother’s incapacity prevented her from forming the intent or having the requisite knowledge to mislead the defendant nursing home or to assent to the Arbitration Agreement’s terms.
The Appellate Court therefore affirmed the trial court’s denial of the defendant nursing home’s motion to compel arbitration.
Source Thompson v. Pruitt Corporation, Opinion No. 5384.
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