Dolores J. Rousseau was admitted to Millennium Nursing and Rehabilitation Center (“Millennium”) in January of 2008. Dolores’s daughter Barbara Rousseau signed numerous forms, including an arbitration agreement, on Dolores’s behalf as required by Millennium for Dolores’s admission to the facility. Barbara signed the admission forms in the various capacities of the patient’s representative, the patient or a responsible party, the resident’s representative, the resident/family, the family or legal representative, the legal representative, or the responsible family member. There is no evidence indicating that Dolores ever objected to Barbara’s signing the various admission forms on her behalf or that Dolores was mentally incompetent when she was admitted to Millennium.

Dolores was a resident at Millennium for only six days. Later that year, Dolores and Barbara sued the facility, alleging that while Dolores was a resident of Millennium, she suffered dehydration, a urinary-tract infection, an abdominal blockage, and other bodily injuries, as well as mental anguish and emotional distress. Dolores stated claims alleging negligence, wantonness, and breach of contract.

Millennium tried to compel arbitration in the case, but an Alabama trial court denied the motion. The Supreme Court’s April decision overturned two lower court rulings. The Alabama Supreme Court ultimately ruled that Dolores was checked in “under circumstances in which no reasonable person could consider the admission possible without the intervention of an agent to act on Dolores’s behalf,” according to the court’s decision. That is, Dolores permitted Barbara to appear to the nursing home to act on Dolores’s behalf, and Barbara’s apparent authority to sign such agreements was, therefore, implied.

Texas courts have been somewhat inconsistent in the enforcement of arbitration agreements in nursing home cases. Generally, Texas courts have focused on the signatory issue when examining whether an arbitration agreement should be enforced. A Texas court enforced an arbitration agreement in In re Ledet, 2004 Tex. App. LEXIS 11474 (Tex. App. 2004); in that case, the court rejected the argument that the arbitration agreement was procedurally unconscionable because the resident’s son, who signed the admittance papers as the responsible party, did not understand, speak, or read English. However, in Texas Cityview Care Ctr., L.P. v. Fryer, et al. 227 SW3d 345, 352 (Tex. App. 2007), the court held that nothing in a medical power of attorney indicated that it was intended to confer authority to make legal, as opposed to health care, decisions.

Congress is considering the Fairness in Nursing Home Arbitration Act of 2008, which make pre-admission arbitration agreements invalid and unenforceable. The House Judiciary Subcommittee on Commercial Law and Administrative Law just approved the bill and refused amendments which would prevent it from being applied retroactively, among other things.

Specifically, the bill:

…requires that agreements to arbitrate nursing home disputes be made after the dispute has arisen and not at the time of admittance into the home. While the new Act does not prohibit arbitration in nursing home disputes, it does prevent a nursing home corporation—which typically has greater bargaining power–from forcing residents and their families into arbitration via a non-negotiable contract that was forced on the resident prior to the dispute. The Act also ensures arbitration occurs on a voluntary basis and is not forced.

The bill now moves to the Senate Judiciary Committee and will be heard on Thursday, July 31st beginning at 10 A.M. E.T..