The Tennessee
Supreme Court today rejected a Memphis nursing home’s argument that the trial
court could not consider whether a resident with Down syndrome was competent to
authorize his brother to act as his agent. The nursing home sought to
enforce an arbitration agreement signed on the resident’s behalf by the
brother. The Supreme Court held the trial court correctly considered
evidence that the resident did not have the mental capacity to understand the
document that authorized his brother to sign the agreement.
David
Welch was diagnosed with Down syndrome shortly after birth. David had no
formal education; he could not read and had difficulty understanding and
following instructions. In 2012, James filled out a healthcare
power-of-attorney form for David, giving James authority to act as David’s
health care agent. David “scratched his name” on the form, and James used
it for several years to help David obtain health care.
In
2016, James brought David to Christian Care Center of Memphis, a nursing home,
to admit David as a resident. James showed Christian Care his signed
power-of-attorney and signed all of the admission paperwork, including an
optional arbitration agreement. The agreement waived David’s right to a
jury trial and agreed to arbitrate any disputes with Christian Care. At
the time, the nursing home understood that David had Down syndrome.
David
lived at Christian Care for a number of months. He died in 2017, at the
age of 62.
In
2018, James, as administrator of David’s estate, filed this health care
liability lawsuit against Christian Care, arising out of its care while David
was a resident. Christian Care filed a motion to compel arbitration under
the agreement James signed on David’s behalf. The trial court found that
David did not have the mental capacity to sign the power-of-attorney naming
James as his agent, so it denied Christian Care’s motion to compel arbitration.
Christian
Care appealed to the Court of Appeals, which reversed. The Court of
Appeals held that, under a Tennessee law, Christian Care could rely on the
power-of-attorney form David signed. It held that the trial court should
not have considered evidence on whether David was mentally competent to sign
it, and therefore should have granted Christian Care’s motion to compel
arbitration. The Tennessee Supreme Court then granted James’s request for
permission to appeal.
The
Tennessee Supreme Court noted that the Tennessee statute Christian Care cited
protects health care providers from liability if they “rely” in good faith on
an agent’s health care decision for a patient. In this case, the
arbitration agreement James signed was optional; Christian Care would have
admitted David to the facility even if James had refused to sign it. As a
result, the Court said, Christian Care could not show it “relied” on James’s
decision to sign the arbitration agreement— Christian Care did not do anything
different based on the arbitration agreement. The Court held that the
Tennessee law cited by Christian Care did not prevent the trial court from
considering evidence on whether David had the mental capacity to designate
James as his lawful agent.
The
Supreme Court reversed the Court of Appeals and affirmed the trial court’s
decision to deny Christian Care’s motion to compel arbitration.
To
read the Court’s opinion in James
A. Welch et al. v. Oaktree Health and Rehabilitation Center LLC D/B/A Christian
Care Centers of Memphis et al., authored by Justice Holly Kirby, go to
the opinions section of TNCourts.gov