Being the power of attorney of a living will does not give that person the right to sign arbitration agreements on behalf of the patient, the California Supreme Court ruled last Thursday. The decision could hurt the use of arbitration agreements in long-term care, legal experts told McKnight’s Business Daily.
“As many residents are admitted to facilities with these types of powers of attorneys and the holders of these powers often choose to enter into arbitration agreements, this decision will have a significant negative impact on controlling litigation costs through the arbitration process,” Mark E. Reagan, managing shareholder of Hooper, Lundy & Bookman, told the McKnight’s Business Daily.
The California Supreme Court’s decision “threatens the ability of post-acute and long-term care operators to effectively use arbitration agreements for a significant number of residents. At its core, the decision holds that an agent who has been granted a durable power of attorney for healthcare for a resident lacks the authority to enter into a valid arbitration agreement for that resident,” Reagan added.
Conflicts regarding powers of attorney and providers are becoming more common in states that view arbitration as a financial decision rather than one related to healthcare. In Illinois, for example, an appellate court ruled that a skilled nursing provider couldn’t compel a resident’s daughter to arbitrate her negligence claims because the daughter held only a healthcare power of attorney.
Arbitration cases are beyond the scope of healthcare decisions to be made by the power of attorney, the seven-judge panel determined in a unanimous opinion written by Justice Martin J. Jenkins in the California case decided last week.
The plaintiff, Mark Harrod, had previously signed two contracts with a skilled nursing facility as power of attorney for his uncle. The question of whether the nephew had the authority to sign an optional, separate arbitration agreement on his uncle’s behalf was at the heart of the case.
Reagan said that last week’s decision “effectively reverses 50 years of California agency law and specifically overrules nearly 20 years of decisions by courts of appeal on this specific issue. Operators have relied on this precedent and have presented voluntary arbitration agreements to holders of these powers of attorneys for decades.”
Further, he said, “this decision also establishes a state requirement for the enforceability of arbitration agreements that has previously been determined by the United States Supreme Court to violate the Federal Arbitration Act.”
Reagan said that California has no admitted liability carriers writing new general or professional insurance policies for skilled nursing providers, and “the costs associated with obtaining coverage and defending civil liability cases in court are already immense.”
Costs for SNFS associated with defending themselves in court are “not remotely covered” by the primary payers for these services, including the Medi-Cal and Medicare programs, he said.
“If allowed to stand, this decision will continue to exacerbate the shifting of precious resources away from patient care and will only operate to limit access to care across California,” Reagan said.
