Reinsurance & Arbitration Focus

Noting that the Federal Arbitration Act applies to nursing home admission agreements that include a mandatory arbitration provision, the Mississippi Supreme Court affirmed the trial court’s order denying Belhaven Senior Care LLC’s motion to compel arbitration of a wrongful death and negligence suit brought by the administrator and estate of a former patient. The court agreed with the trial court that the party who signed the admission agreement on behalf of the patient lacked the legal authority to bind the patient to the agreement.

When Mary Hayes was admitted to the Belhaven nursing home in November 2018, her daughter, Betty Smith (the administrator of her mother’s estate), executed an admission agreement on behalf of her mother that included a provision for binding arbitration of all claims related to Hayes’ residency at the nursing home. Hayes died in June 2020, and Smith filed a complaint against Belhaven in state court alleging claims for wrongful death, negligence, gross negligence, medical malpractice, and a statutory survival claim. Belhaven moved to compel arbitration, relying on the arbitration clause in the admission agreement. The trial court declined to compel arbitration because Smith did not have the legal authority to bind her mother to the admission agreement.

On appeal, Belhaven argued that under the Health-Care Decisions Act, Smith acted as a “statutory health care surrogate” for her mother when she signed the admission agreement and is estopped from denying the validity of the arbitration clause because she and Hayes benefited from the agreement, and Hayes was a third-party beneficiary. In rejecting Belhaven’s arguments, the court noted that it applies a two-prong inquiry in evaluating arbitration clauses, which includes first determining if there is a valid arbitration agreement, and if so, if the parties’ dispute is within the scope of the arbitration agreement. The court made clear that its focus in this case “rests wholly on the arbitration agreement’s validity.” The court concluded that the capacity to make health care decisions is presumed under the act, and a health care surrogate may only make health care decisions when the adult patient has been determined by the primary physician to lack capacity. Since Hayes was not evaluated by a physician when admitted, and was not found to lack capacity, Belhaven failed to prove the requirements of the act. The court then found that because Smith did not qualify as her mother’s health care surrogate, there was no valid contract. The court further found that Smith was not estopped from contesting the validity of the arbitration clause in the admission agreement. The court affirmed the trial court’s decision not to compel arbitration and remanded the matter.

Belhaven Senior Care, LLC v. Smith, No. 2022-CA-00050-SCT (Miss. Apr. 6, 2023).