Appeals Court OK's Trial Judges' Order Nixing Nursing Home Arbitration Clause

The panel stopped short of ruling on the Cobb County judge's decision that the arbitration agreement was unconscionable.

By Greg Land

Bethany Schneider, Atlanta. (Photo: John Disney/ ALM)

The Georgia Court of Appeals ruled a nursing home’s mandatory arbitration agreement signed by the guardian of an elderly man raped at the facility is unenforceable because his guardian lacked authority to sign away his right to trial.

But the court on Tuesday did not rule upon the trial court’s determination that the agreement was unconscionably one-sided in favor of the nursing home, determining it needn’t reach that issue because it already declared the agreement void.

“As far as we can tell, this is an issue that’s never been addressed in Georgia: whether a guardian appointed by the probate court has the power of attorney to waive someone’s constitutional rights,” said Bethany Schneider of Schneider Injury Law, who represents the now-deceased man and the aunt who served as his guardian.

Schneider said that, while the court did not rule on the unconscionability of the arbitration agreement, such documents are commonplace in the nursing home industry.

“This decision shows that nursing homes usually think it’s automatic that any dispute is going to arbitration. This gives us more teeth on the trial level to fight those agreements,” said Schneider, whose co-counsel includes Katherine Hughes and Gretchen Holt of Wagner Hughes, and appellate lawyers Michael Terry and Jennifer Peterson of Bondurant, Mixson & Elmore.

The Clinch Healthcare Center in Homerville is represented by Kevin Quirk and Kellie Holt of Quirk & Quirk and Karen Smiley of Huff, Powell & Bailey. They did not reply to request for comment Wednesday.

According to Schneider and court filings, Leroy Wiggins, who died in December at 70, had been mentally incapacitated for many years when his aunt, Minnie Fountain, was appointed his guardian by the Clinch County Probate Court in 2006.

In 2014, Fountain sought to have Wiggins admitted to the nursing home, and she signed an arbitration agreement stipulating, among other things, that “any and all claims or controversies … whether arising out of State or Federal law, whether existing or arising in the future, whether for statutory, compensatory or punitive damages, and whether sounding in breach of contract, tort, or breach of statutory or regulatory duties (including, without limitation, any claim based on an alleged violation of the state bill of rights for residents of long-term care facilities or federal resident’s rights, any claim based on negligence, any claim for damages resulting from death or injury to any person arising out of care or service rendered by the Facility or by any officer, agent, or employee thereof acting within the scope of his or her employment, any claim based on any other departure from accepted standards of health care or safety, or any claim for unpaid nursing home charges), irrespective of the basis for the duty or of the legal theories upon which the claim is asserted, shall be submitted for arbitration.”

The agreement also said the resident “has the right to seek legal counsel concerning this Agreement; [t]he signing of the Agreement is not a precondition to admission … and this Agreement may be revoked by written notice to the Facility from the Resident within thirty (30) days of signature.”

Fountain, whom Schneider said is also about 70, would later sign an affidavit saying she had to “sign this large stack of paperwork to admit Leroy” and that she “must sign all of the documents in order for Leroy to be admitted.”

She also said she was not told she could consult a lawyer and never discussed the agreement with Wiggins or asked his permission to sign it.

Fountain was “not permitted to make any changes to any of the documents or cross anything out” or “negotiate any of the documents or the wording on any of the documents,” according to her appellate brief.

In 2017, another resident who had already been accused of sexually assaulting other residents over a period of two months raped Wiggins.

Schneider said the police were called but that nursing home staff denied the accused assailant had been on site that day, and no charges were ever filed.

Fountain sued Clinch Healthcare’s corporate parent, CL SNF LLC and several related entities for negligence and other claims in Cobb County State Court last year.

Clinch filed a motion to enforce the arbitration agreement and stay the case.

Judge Jane Manning denied the motion to compel, writing that the arbitration agreement was “decidedly one sided” in favor of the nursing home. But Manning also denied Fountain’s motion to declare that she had no authority to sign the agreement waiving his rights including those to a jury trial.

Both sides agreed that the issues should go before the Court of Appeals, and Manning granted a certificate for an interlocutory appeal.

The May 19 opinion authored by Judge Brian Rickman with the concurrence of Judges Stephen Dillard and E. Trenton Brown III agreed with Manning that the arbitration agreement was unenforceable but not necessarily because it was unconscionable.

Instead, Rickman wrote, Fountain’s letters of guardianship issued by the probate court bestowed “the general duty ‘to protect and maintain the person of the ward” and more specifically, ‘to see that [Wiggins] is adequately fed, clothed, sheltered and cared for, and that [Wiggins] receives all necessary medical attention.’

“In addition,” he wrote, “the Letters of Guardianship provide that Fountain’s ‘authority to act pursuant to these Letters is subject to applicable statutes and to any special orders entered in this case.’”

The “plain language” of the statute declaring the duties of a guardian “does not provide Fountain authority to sign the Arbitration Agreement,” Rickman said.

The law “empower[s] a guardian to establish a place of dwelling and provide any necessary consents or approvals for ‘medical or other professional care, counsel, treatment, or service.’”

There is no evidence that Fountain’s signing of the agreement was a decision made in Wiggins’ best interest, “because signing it was not a condition of admission to the facility and the claims that were bound to arbitration had not yet arisen, making it impossible for her to determine at that time whether waiving Wiggins’s right to a jury trial would be in his best interest,” Rickman said.

“Accordingly, the Arbitration Agreement is not enforceable against Wiggins, and the trial court properly denied the motion to compel arbitration,” the opinion said.

Hughes, who specializes in nursing home litigation, said such agreements are routinely presented to family members or guardians trying to admit a residency, and few realize that they may not have to sign them.

“Unfortunately, almost all Georgia nursing homes are presenting families with arbitration agreements to sign along with their admission paperwork and people do not realize or understand what they are signing or the significance of the agreement (that it takes away the right to a jury trial) and that the agreement is usually voluntary and not required for admission,” said Hughes via email.

“We need a public service announcement for families to stop signing these agreements,” she said. “There is no upside to the families to signing these agreements.”

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Appeals Court OK's Trial Judges' Order Nixing Nursing Home Arbitration Clause