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Monday April 1, 2013
The Alabama Supreme Court decided on a nursing home arbitration
case on 3/22/2013 that has restricted somewhat the enforceability
of our arbitration agreements, SSC Montgomery Cedar Crest Operating
Company v. Linda Bolding, as attorney in fact and next friend of
Norton Means. The decision specifically indicates that in the case
of an incompetent resident, arbitration agreements will be enforced
only if the person who signs the agreement has been appointed by
the resident as durable power of attorney (DPOA) or has some other
valid legal authority to act on the resident's behalf other than
simply being the next of kin or being appointed as the
sponsor.
What appears to be missing from the decision is whether the
resident was competent when the arbitration agreement was
signed. Unless a resident has been adjudicated to be
incompetent by a probate judge, having a diagnosis of dementia or
Alzheimer's diagnosis may not necessarily mean a resident is
considered incompetent. If unsure whether the resident may or may
not be competent to sign, we would suggest that you have the
resident sign along with the power of attorney(POA) or the
signature of someone with valid legal authority to act on the
resident's behalf such as a guardian, conservator, or health care
proxy.
It available, you may wish to review a copy of one of the three
cognitive tests that was or has been given to the resident shortly
before or after the resident signed the arbitration agreement.
Although not officially guaranteed, the score could give you a clue
as to whether the resident has or had the capacity to consent and
sign the arbitration agreement on their own behalf.
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With a SLUMS score of 20-21 or less consistently, the resident
probably should not consent or make their own decisions
unilaterally. With a score of ≤21, it would be helpful to have the
legally authorized representative sign too.
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With a BIMS score of 10 or less consistently, the resident
probably should not consent or make their own decisions
unilaterally. With a score of ≤10, it would be helpful to have the
legally authorized representative sign too.
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If the mini mental status score was less than 15, we presumed
that they probably could not consent or make their own decisions
unilaterally. With a MMSE score of ≤15, it would be helpful to have
the authorized representative sign and consent too.
In conclusion, the Alabama Supreme Court decision does seem to
indicate that an arbitration agreement is enforceable against
the resident and the resident's estate if it is signed by:
1. A competent resident;
2. By a family member on behalf of a
competent resident; or
3. By an attorney in fact under a
durable power of attorney.
The decision does seem to say that an arbitration
agreement is not enforceable if it is signed by:
1. An incompetent resident; or
2. A family member of an
incompetent resident that has not been
appointed as the holder of the DPOA
or appointed as another
authorized legal representative on
behalf of the resident.
If you would like a copy of the decision or to discuss this
case further, please contact Lavonya below:
Lavonya K. Chapman, Esq., RN.|Director of
Claims/Litigation
Arthur J. Gallagher Risk Management Services, Inc.
2200 Woodcrest Place, Suite 250
(:205.414.2649 (direct) | 7:205.414.2632 (fax)
(:205.542.2771 (mobile)