Arbitration agreement scrapped in nursing home case

CHARLESTON – The state’s high court has denied a petition by a nursing home seeking to prevent a circuit court from enforcing its order that prevented the nursing home’s invocation of an arbitration agreement.

Justice Robin Jean Davis delivered the Jan. 24 opinion of the court, which dealt with an agreement signed by the "designated health care surrogate" of a decedent.

“The facts of the instant proceeding are straightforward and not disputed by the parties. On Sept. 7, 2009, Ms. (Beulah) Wyatt’s physician determined her to be indefinitely incapacitated and incapable of making her own medical decisions; therefore, Ms. Wyatt’s physician selected Ms. Wyatt’s daughter, Ms. Belcher, to serve as her health care surrogate,” the opinion states.

W. Va. Code § 16-30-8 authorizes a physician to select a health care surrogate for an incapacitated patient.

On Sept. 9, Beulah Wyatt, suffering from Alzheimer’s disease and dementia, was admitted to McDowell Nursing and Rehab Center with the aid of her daughter, Nancy Belcher. During the admission process, Belcher signed numerous documents, including an arbitration agreement.

The agreement stated, “The parties understand and agree that by entering this arbitration agreement they are giving up and waiving their constitutional right to have any claim decided in a court of law before a judge and a jury.”

“For the next 10 months, Ms. Wyatt resided at McDowell Nursing. During the course of her residency there, she allegedly sustained pressure sores, infections, dehydration, malnutrition, and other injuries which the respondent herein, Lelia Gresham Baker, another of Ms. Wyatt’s daughters and the personal representative of her estate, claims contributed to Ms. Wyatt’s death on July 31, 2010,” the opinion states.

After a wrongful death suit was filed against McDowell Nursing by Baker on Dec. 1, 2011, McDowell Nursing filed a motion to dismiss the suit and enforce the arbitration agreement. The circuit court denied the motion, concluding that the arbitration agreement was unenforceable.

Judge Charles E. King of the Circuit Court of Kanawha County ruled that Belcher was only authorized to make “health care decisions” for her mother and the arbitration agreement “does not address any type of medical or surgical treatments, life-prolonging interventions, psychiatric treatment, nursing care, hospitalization, treatment in the nursing home…” or any health care matter.

“The Court does not believe that the Health Care Decisions Act, codified at W. Va. Code § 16-30-1, et seq., was intended to allow a surrogate to waive one’s constitutional right to trial by jury or access to the Courts of this State. Therefore the Court finds that Nancy Belcher, as surrogate of Beulah Wyatt, did not have authority to waive her constitutional right to a jury trial,” King concluded.

McDowell nursing then filed a petition for a writ of prohibition to the state Supreme Court in an attempt to block the adverse ruling.

Davis summarized the parties' positions: “Petitioner McDowell Nursing contends that Ms. Belcher had the authority to sign the subject Arbitration Agreement on behalf of her mother, Ms. Wyatt, and, thus, the circuit court erred by refusing to enforce the Arbitration Agreement. Ms. Baker disagrees and contends that the Arbitration Agreement was not a health care decision within the ambit of Ms. Belcher’s authority as Ms. Wyatt’s health care surrogate.

“[T]o be valid, an arbitration agreement must conform to the rules governing contracts, generally. We long have held that the fundamentals of a legal contract are competent parties, legal subject matter, valuable consideration and mutual assent. There can be no contract if there is one of these essential elements upon which the minds of the parties are not in agreement.

“To be a competent party, the persons or entities signing the Arbitration Agreement must have had the authority to do so. Ms. Belcher, who had been appointed her mother’s health care surrogate prior to Ms. Wyatt’s admission to McDowell Nursing, signed the Arbitration Agreement on her mother’s behalf as part of the admission paperwork.

“The pivotal inquiry, then, is the nature and scope of a health care surrogate’s authority."

Davis then did an extensive analysis considering the intent of the Legislature in creating the “health care surrogate” role and the plain meaning of the statute language.

“From both the statutory pronouncements defining and clarifying the scope of a health care surrogate’s authority and the actual form used by physicians to select a health care surrogate, it is clear that a decision to arbitrate disputes regarding care provided by a nursing home to an incapacitated person is not within the ambit of a health care surrogate’s authority,” Davis concluded.

“Therefore, the circuit court correctly refused to compel arbitration based upon Ms. Belcher’s lack of authority to bind Ms. Wyatt to the Arbitration Agreement. Accordingly, we find that McDowell Nursing is not entitled to relief in prohibition because the circuit court did not err in rendering its rulings.”