Operators of skilled nursing facilities want their patients to enter into arbitration agreements. While such agreements don’t eliminate the risk of litigation, they at least reduce the expense and exposure associated with potential jury trials.
California appellate courts, however, have taken an ever narrower view of who can sign arbitration agreements on behalf of patients. Just over the last few years, courts have found that agreements may be unenforceable when signed by family members, conservators, and even attorneys-in-fact. The latest decision in this line of cases is Logan v. Country Oaks Partners, LLC (2022) ___ Cal.App.5th ___.
Charles Logan created an advance health care directive using the form published by the California Medical Association. He named his nephew, Mark Harrod, as his health care agent.
Two years later, Logan was transferred from a hospital to Country Oaks Care Center, a skilled nursing facility. He stayed at Country Oaks for 33 days. During the stay, Harrod signed an arbitration agreement on Logan’s behalf.
Logan later filed a lawsuit in Los Angeles County Superior Court against Country Oaks. Logan alleged elder abuse and neglect, negligence, and violation of the Residents’ Bill of Rights under Health and Safety Code section 1430(b).
Country Oaks petitioned to compel arbitration. Country Oaks acknowledged that CMA’s form did not expressly authorize the agent to consent to arbitration, but argued that the such authority could be inferred from the agent’s general power to make health care decisions and choose health care facilities.
The Superior Court judge denied the petition and the Court of Appeal agreed.
The Court of Appeal looked at the Health Care Decisions Law, at California Probate Code sections 4600-4805, which defines “health care” as “any care, treatment, service, or procedure to maintain, diagnose, or otherwise affect a patient’s physical or mental condition.” The court reasoned that the decision to execute an arbitration agreement, which boils down to a decision to waive a jury trial in favor of binding arbitration, had nothing to do with a patient’s physical or mental condition.
Nor did the Court of Appeal give credence to Country Oaks’s argument that the authority to place a patient in a care facility necessarily encompassed the authority to sign an arbitration agreement. Instead, the court noted that federal regulations prohibit a care facility from requiring the execution of an arbitration agreement as a precondition for admission. As a result, the court found that the decision to enter into a care facility had been “expressly decoupled” from the decision of whether to consent to arbitration.
The court noted two circumstances in which a patient’s agent under an advance health care directive might have authority to execute an arbitration agreement on the patient’s behalf: (1) where the directive explicitly grants such authority; and (2) where the patient expressed a preference for arbitration in some other way.
Finding that neither circumstance existed in Logan’s situation, the Court of Appeal affirmed the trial court’s holding that the arbitration agreement was void and unenforceable.
Interestingly, the Logan court declined to follow an earlier decision of the Court of Appeal, in Garrison v. Superior Court (2005) 132 Cal.App.4th 253, which took a broader view of a health care agent’s authority to consent to arbitration, leaving a split of authority on the issue.
The Logan case provides yet another reminder that skilled nursing facilities cannot rely on executed arbitration agreements to keep them out of court and away from a jury. If not signed by the right person, an arbitration agreement isn’t worth the paper it’s printed on.
It will be interesting to see if the California Medical Association revises its form to empower agents to consent to arbitration.