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A recent California Court of Appeals decision regarding arbitration agreements is putting senior living operators in the state on notice about who signs those agreements.
The agreements — a darling of the industry — help companies avoid costly jury trials, steering residents and their families into arbitration to settle disputes. But a JDSupra author said that a recent case should be “alarming” to operators who believe that arbitration agreements will shield them from jury trials.
In Theresa D. v. MBK Senior Living LLC, a resident living with dementia brought claims against the operators of MuirWoods Memory Care, alleging that negligence and unsanitary conditions led to multiple falls and deteriorating health. The woman’s daughter, who said she had the authority to make healthcare decisions for her mother, signed an arbitration agreement at the time of move-in.
The resident filed suit against the operator through her son, whom she authorized to act as general power of attorney. The court said that the state’s Residents Bill of Rights prohibits residential care facilities for the elderly from requiring their residents to waive any benefit or right, including the right to a trial by jury, as a condition of admission.
An RCFE arbitration agreement signed at admission is considered a separate agreement, distinct from an admission contract, the court said. The court held that the operator could not compel the resident to settle her claim through arbitration because the daughter was acting as a family member and did not have explicit authority under a power of attorney, advanced healthcare directive or otherwise to sign an arbitration agreement on her mother’s behalf.
MBK Senior Living, which is appealing the decision to the California Supreme Court, told McKnight’s Senior Living that the decision “overlooks matters of significant public policy.”
“Although the resident’s admission agreement was fully executed by the resident’s daughter, the court’s decision nullifies the authority of family members to act on behalf of their loved ones when making legal arrangements for care in a residential care facility,” MBK spokeswoman Constance Sablan said. “We believe that the public policy of the state is best served by affirming the legal rights and authority of family members who act in good faith to make decisions and arrange for care and services for their loved ones.”
Sablan said the decision “emphasizes form over substance” and is a “disservice to providers and family members trying to arrange important custodial care services.”
“While it may be too late to bind existing residents to arbitration, the Court of Appeal’s decision should teach RCFEs to pay extremely close attention to who signs agreements for new admissions,” attorney Sean McKissick of Downey Brand LLP wrote.
McKissick cited other recent decisions as cautionary tales for senior living operators when it comes to arbitration agreement signings:
- Hutcheson v. Eskaton FountainWood Lodge found that a person holding a power of attorney to make financial decisions — but not healthcare decisions — was not authorized to sign an arbitration agreement on behalf of a resident.
- Holley v. Silverado Senior Living Management Inc. ruled that adult children acting as temporary conservators did not have explicit authority to sign an arbitration agreement on a resident’s behalf.
