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Alabama Supreme Court Rules Third Party’s Signature on Arbitration Contract Nonbinding – SSC Montgomery CCOC v. Bolding

As a Pennsylvania nursing home lawyer, I’ve been pleased to see a recent series of state supreme court decisions denying arbitration in cases where the arbitration agreement was not signed by the patient or a legal representative. A recent example is SSC Montgomery Cedar Crest Operating Company, LLC v. Bolding, in which the Alabama Supreme Court declined to compel arbitration with Linda Bolding, attorney in fact and next friend of Norton Means. Means, Bolding’s father, was admitted to a nursing home owned by the company, Cedar Crest, after experiencing heart problems in early 2012. Another daughter completed the paperwork including a mediation and binding arbitration agreement. When Bolding later sued Cedar Crest for negligence, the company attempted to compel arbitration, but the trial court denied the motion and the Supreme Court of Alabama affirmed.

Means was hospitalized in January of 2012 for heart attack and/or stroke symptoms. A few weeks later, he moved to Cedar Crest for rehabilitation and nursing services during his recovery. His daughter, Michelle Pleasant, filled out the paperwork for him, including a dispute resolution agreement waiving his right to a jury trial and agreeing to binding arbitration and mediation. The “parties” included in the agreement included the patient, a guardian, anyone who would have the right to bring a claim on the patient’s behalf, and anyone who would have the right to bring a wrongful death claim. Pleasant also signed a section indicating that Means had been adjudged incompetent. After about a month and a half, Means was readmitted to the hospital for dehydration, malnourishment and an infection. Bolding sued Cedar Crest four days later for negligence. She argued that Pleasant had no authority to sign on Means’s behalf and therefore the arbitration agreement was void. The trial court agreed, and SSC Montgomery appealed.

The Alabama Supreme Court noted that it has a distinct body of caselaw about whether and how to enforce nursing home arbitration agreements signed by residents or their families. A recent Eleventh Circuit review of one such case found that patients’ representatives are bound by contracts that bind the patients themselves–but the high court found that Means was not bound by the underlying contract. It noted that it’s uncontroversial that Means was not mentally competent when admitted. Prior cases have held that mentally incompetent nursing home residents are not bound by their representatives’ arbitration agreements, the court said. Pleasant signed the arbitration agreement as a “family member” and incorrectly represented that she had the authority to sign on her father’s behalf; it’s undisputed that she had no power of attorney for him. Nor did Pleasant have apparent authority, the court said, because Means was not competent to agree to make her his representative. Thus, the Supreme Court affirmed the trial court.

As a Philadelphia medical malpractice lawyer, I’m pleased to see another decision forbidding enforcement of contracts that the signer had no authority to enter into. Courts in many states have been reluctant to enforce these arbitration contracts when the signer is not the legal representative of the beneficiary. This upholds well-established legal norms as well as benefiting families that have been victimized by Pennsylvania nursing home abuse. If someone claims to speak for a mentally incompetent person, the speaker should be required to show some proof that she has legal authority, because to do otherwise invites serious abuses. As a Philadelphia injury lawyer, I’m glad judges are giving these families a chance to prove their allegations in open court.

If abuse, neglect or exploitation in an eastern Pennsylvania nursing home has hurt your family, you should contact Rosenbaum & Associates right away to discuss your rights and your legal options. For a free, confidential consultation, send us a message online or call toll-free at 1-800-7-LEGAL-7.

Similar blog posts:

West Virginia High Court Finds Arbitration Clause Signed by Health Care Surrogate Unenforceable – State ex rel, AMFM, LLC v. Circuit Court

Consolidated Opinion in West Virginia Nursing Negligence Cases: Could Federal Arbitration Act (FAA) Also Impact Your Case?

Florida Supreme Court Rules Courts Must Decide Whether Nursing Home Arbitration Applies – Shotts v. OP Winter Haven

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