• Alabama Supreme Court Rules in Arbitration Case

    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.

     
    • 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.

    • 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.

    • 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

    Birmingham, Alabama 35209
    lavonya_chapman@ajg.com

    (:205.414.2649 (direct) | 7:205.414.2632 (fax)

    (:205.542.2771 (mobile)

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