N.D.Miss: Nursing Home Resident is Third Party Beneficiary to Arbitration Agreement

The District Court of the Northern District of Mississippi granted a nursing home’s motion to compel arbitration in a suit alleging negligence and medical malpractice following the death of Willie Adkins in a nursing home.

The court based its decision on the Federal Arbitration Act, which required examination into Mississippi state contract law.  Even though Adkins did not agree to arbitration herself, the court held that she was bound as a third-party beneficiary by the arbitration agreement signed by her daughter when Adkins was admitted.  Cook v. GGNSC Ripley, LLC, No. 3:10CV018, 2011 WL 1439458 (N.D.Miss. Apr. 14, 2011).

Upon Willie Adkins’ admission to the nursing facility in 2007, her daughter Patricia Cook executed arbitration and admissions agreements on her behalf.  Despite no document granting her the power of attorney, Cook expressly represented herself as such through the arbitration agreement.  Following Adkins’ death, Gracie Cook brought this action on behalf of Adkins’ estate alleging negligence, medical malpractice, and deviations from the standard of care owed to a nursing home resident.

In determining whether the facility could compel arbitration, the court looked to Mississippi contract law to determine whether the parties agreed to arbitration.  The plaintiff argued that a valid agreement did not exist and thus Adkins was not bound by the arbitration agreement.  The plaintiff challenged Patricia Cook’s legal authority to waive Adkins’ right to a trial, as well as the nursing facility’s admissions coordinator’s failure to sign the agreement in the right location and properly explain its terms.

After analyzing Cook’s legal authority, the court found that she did not have power of attorney.  The court determined that Cook’s potential authority as a durable power of attorney for healthcare and surrogate due to Adkins’ incapacitation could not bind Adkins to the arbitration agreement because it is not considered a health-care decision.  Furthermore, Cook could not bind Adkins through apparent authority.

However, the court found that despite being a non-signatory to the agreement, Adkins was still bound because she was an intended third-party beneficiary of the arbitration agreement between the facility and Cook.  The court explained:

“The arbitration agreement at issue in this case became part of the admission agreement upon execution, as reflected by its express terms. Adkins did not sign the admission agreement, however, she is named as the resident to be admitted to the facility. The terms of the agreement refer to benefits and responsibilities of both the resident and the responsible party. Adkins’ care was the essential purpose of the agreement. Thus, she is an intended third-party beneficiary of the agreement between the facility and Cook. As such, Adkins is bound by the terms of the contract, including the arbitration agreement.” (Citations omitted.)

The court dismissed the plaintiff’s arguments related to the admissions coordinator’s signing the agreement in the improper location.

The court also dismissed the plaintiff’s argument that the arbitration agreement was unenforceable due to unconscionability.  Even though the facility did not explain to Cook that agreeing to arbitration would waive the right to have a claim decided in front of a judge and jury, this explanation could be found within the agreement in large printed letter and boldface.  Plaintiff’s public policy arguments were dismissed because the arbitration agreement was not mandatory for admission into the facility.  As such, the court found the claim arbitrable and granted the nursing facility’s motion to compel arbitration.

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