Cook v. GGNSC Ripley, LLC et al

Filing 47

MEMORANDUM OPINION re 46 Order on Motion to Compel Arbitration. Signed by Michael P. Mills on 4/14/2011. (lpm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
GRACIE COOK, on behalf of the Wrongful
Death Beneficiaries and the Estate of WILLIE
P. ADKINS, Deceased, as Administratrix

PLAINTIFF
CASE NO. 3:10CV018

v.

GGNSC Ripley , LLC d/b/a Golden
Living Center Ripley; GGNSC Administrative
Services, LLC; GGNSC Clinical Services, LLC;
and Golden Gate National Senior Care, LLC
DEFENDANTS
______________________________________________________________________________
MEMORANDUM OPINION
This cause comes before the court on the motion [10] of all Defendants to compel
arbitration.
Willie Adkins was admitted to Defendants’ nursing home on April 13, 2007 after
suffering a stroke. Ms. Adkins had a history of mental health issues and was institutionalized for
most of her life.
Patricia Cook executed arbitration and admission agreements on behalf of her mother at
the time Adkins was admitted. Alisha James, the Admissions Coordinator, stated that Cook
expressly represented herself as Ms. Adkins’ power of attorney. The arbitration agreement
reflects that Cook’s relationship to the resident is “POA/Daughter.” No document granting Cook
power of attorney exists; however, Cook did execute an appointment of health care agent.
Adkins passed away during her residency at the Defendants’ facility. Plaintiff instigated
the instant action on behalf of Adkins’ estate alleging negligence, medical malpractice, and
deviations from the standard of care owed to a nursing home resident. Defendants seek to

enforce the arbitration agreement.
Congress provided in the Federal Arbitration Act that a written agreement to arbitrate in a
contract involving interstate commerce “shall be valid, irrevocable and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. In
addition, the FAA expresses a strong federal policy in favor of arbitration, and any doubts
concerning the scope of arbitration issues should be resolved in favor of arbitration. Southland
Corp. v. Keating, 465 U.S. 1, 10 (1983); Mouton v. Metropolitan Life Ins. Co., 147 F.3d 453, 456
(5th Cir.1998).
There is a two-step inquiry to determine whether a party should be compelled to arbitrate.
Washington Mut. Fin. v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004). A court must determine if (1)
the parties agreed to arbitrate the dispute; and whether (2) “any federal statute or policy renders
the claims nonarbitrable.” Id.
Whether the parties agreed to arbitration requires a further analysis: (1) the existence of a
valid agreement to arbitrate; and (2) if the dispute in question falls within the scope of that
agreement. Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214 (5th Cir. 2003).
Generally, principles of state contract law govern the question of whether the parties
formed a valid agreement to arbitrate. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,
943 (1995); see also Bailey, 364 F.3d at 264. “A valid contract must have (1) two or more
contracting parties, (2) consideration, (3) an agreement that is sufficiently definite, (4) parties
with legal capacity to make a contract, (5) mutual assent, and (6) no legal prohibition precluding
contract formation.” Grenada Living Ctr., LLC v. Coleman, 961 So. 2d 33, 37 (¶ 9) (Miss. 2007)
(citing Rotenberry v. Hooker, 864 So. 2d 266, 270 (Miss. 2003)).
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Plaintiff contends that a valid agreement does not exist because (1) Cook did not have the
legal authority to waive Ms. Adkins’ right to a trial; (2) no mutual assent existed because James
did not sign on the line designated for a facility representative; and (3) James did not explain the
term “arbitration” to Cook.
Plaintiff contends that Adkins is not bound by the arbitration agreement. Plaintiff’s
evidence supporting Cook’s lack of binding authority is that no power of attorney exists. “The
power of attorney must be a writing that (a) authorizes an attorney-in-fact or other agent to do,
execute or perform any act that the principal might or could do, or (b) evidences the principal'
s
intent to give the attorney-in-fact or agent full power to handle the principal' affairs . . . .”
s
Monticello Cmty. Care Ctr., LLC v. Estate of Martin ex rel. Peyton, 17 So. 3d 172, 177 (¶ 15)
(Miss. Ct. App. 2009) (quoting Miss. Code Ann. § 87-3-7). There is no writing purporting to
give Cook this all-inclusive power.
Defendants contend that even absent a power of attorney, Cook could legally bind Ms.
Adkins to the arbitration agreement through a durable power of attorney for healthcare. Cook
executed an “Appointment of Health Care Agent” apparently on behalf of her mother. The
document purportedly gave Cook the authority to make health care decisions on her mother’s
behalf in the event that her mother was unable to do so. Adkins did not sign the document. It is
probable that the omission of Adkins’ signature was due to her incapacitation at the time of the
agreement’s execution in 2008. However, no proof has been presented that Adkins was
incapacitated or that she was unable to write at this time. Further, even if the health care agent
designation was valid, Adkins’ admission to the facility was not contingent upon the signing of
an arbitration agreement, as clearly stated in the terms. Thus, the arbitration agreement was not a
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health care decision as defined by Mississippi law and Cook did not have the authority to bind
Adkins to arbitration based on this theory. Mississippi Care Ctr. of Greenville, LLC v. Hinyub,
975 So. 2d 211, 218 (¶¶ 16-18) (Miss. 2008).
Defendant further asserts that Cook was acting as Adkins’ health-care surrogate under the
Uniform Health-Care Decisions Act. Miss. Code. Ann. § 41-41-201 et seq. (Rev. 2009). The
Act provides that “[a] surrogate may make a health-care decision for a patient who is an adult or
emancipated minor if the patient has been determined by the primary physician to lack capacity
and no agent or guardian has been appointed or the agent or guardian is not readily available.”
Miss. Code Ann. § 41-41-211(1) (Rev. 2009). The Act defines a primary physician as the
“physician designated by an individual or the individual' agent, guardian, or surrogate, to have
s
primary responsibility for the individual' health care or, in the absence of a designation or if the
s
designated physician is not reasonably available, a physician who undertakes the responsibility.”
Miss. Code Ann. § 41-41-203 (Rev. 2009).
Defendant claims that Adkins lacked capacity when she was admitted to the nursing
facility, as evidenced by her medical records and Cook’s own admission.
Defendant relies on Adkins’ records during her hospitalization after suffering a stroke,
immediately prior to her admission to the facility. These records reveal that hospital staff noted
Adkins was completely unable to provide any history, that a review of symptoms was
unattainable due to Adkins’ lack of communicative skills, and that Adkins had been
institutionalized for most of her life. Dr. John Averette, Adkins’ consulting physician prior to
her admission, stated that Adkins did not recognize his presence or interact in any way. Dr.
Averette further explained that he was unable to obtain a review of systems because Adkins was
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not interactive or communicative.
Further, Plaintiff’s complaint states that Adkins “was at all times material to this lawsuit
an adult, incompetent, resident of Ripley, Mississippi.” Cook admitted at her deposition that her
mother was incompetent, and had been institutionalized for over fifty years. Cook further stated
that Adkins could not speak or write following her stroke.
There is sufficient evidence that Adkins lacked the capacity to enter an agreement on her
own. However, surrogates may only make health-care decisions on behalf of an incapacitated
person. An arbitration agreement is not considered to be a health-care decision when admission
is not contingent upon its execution. Hinyub, 975 So. 2d at 218 (¶¶ 16-18). Thus, Cook did not
have the statutory power to bind Adkins to the arbitration agreement.
Defendants further argue that Cook had the authority to enter into the arbitration
agreement on Adkins’ behalf under the principle of apparent authority. Defendants rely on the
fact that Cook indicated to the admissions coordinator that she possessed the authority to execute
the agreement. Apparent authority exists when the evidence demonstrates “(1) acts or conduct
on the part of the principal indicating the agent' authority, (2) reasonable reliance on those acts,
s
and (3) a detrimental change in position as a result of such reliance.” Foster v. Globe Life & Acc.
Ins. Co., 808 F. Supp. 1281, 1287 (N.D. Miss. 1992) (citing Andrew Jackson Life Ins. Co. v.
Williams, 566 So. 2d 1172, 1181 (Miss. 1990)). Defendants’ theory fails on the first element as
there is no evidence of any act or conduct on the part of Adkins, the principal, to indicate Cook’s
authority. In fact, Adkins was incapacitated and unable to acquiesce in Cook’s actions. Cook
could not bind Adkins through apparent authority.
Defendants further argue that Cook had the authority to bind Adkins because she was a
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third-party beneficiary to the agreement under the principles of Mississippi contract law.
“[N]on-signatories may be bound by an arbitration agreement if they are determined to be a
third-party beneficiary.” Forest Hill Nursing Ctr. v. McFarlan, 995 So. 2d 775, 783 (¶ 25)
(Miss. Ct. App. 2008). The court must consider whether (1) the contract was entered into for the
benefit of the decedent; (2) whether the promisee owed a legal obligation to the third party; and
(3) whether that legal obligation connected the third party to the contract. Id. at 782 (¶ 21). The
facts surrounding the entry into the agreement in this case are similar to those in McFarlan.1 In
McFarlan, a resident’s granddaughter signed admission paperwork, including an arbitration
agreement, as the responsible party. The Mississippi Court of Appeals found that McFarlan, the
resident, received the benefits and services flowing from the admission agreement that
specifically referenced the terms of her care. Id. at 783 (¶¶ 18-24). The court determined that
McFarlan’s care was the essential purpose of the agreement and that she was bound by all the
terms of the contract, including the agreement to arbitrate any legal disputes related to the
contract. Id.
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

1

The Mississippi Court of Appeals has distinguished, but not overruled McFarlan. Monticello, 17 So. 3d at
179 (¶ 24). The Monticello Court did not perform an analysis of contract law in determining whether the resident
was a third party beneficiary. Instead, the court related the facts to Hinyub, as both cases involved the execution of
an arbitration agreement subsequent to an admissions agreement without an arbitration provision. In doing so, the
court applied law related to health-care surrogates in finding that the responsible party could not bind the resident
because arbitration was not necessary for admission. Id. Similarly, in the instant case Adkins is not a third party
beneficiary under statutory law, but is so under the principles of contract law.

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was the essential purpose of the agreement. Id. at 783 (¶ 24). Thus, she is an intended thirdparty beneficiary of the agreement between the facility and Cook. As such, Adkins is bound by
the terms of the contract, including the arbitration agreement. Id.
Plaintiff argues that even if Cook had the authority to bind Adkins, mutual assent did not
exist between Cook and the facility because James signed on the line designated for a witness to
the responsible party’s signature instead of the line for an authorized representative. James was
the admissions coordinator and as such, was an authorized representative of the facility. James
signed directly below the terms of the agreement. The fact that her signature is simply in a
different physical location on the contract is not enough evidence to prove a lack of mutual
assent. Cmty Care Ctr. of Vicksburg, LLC v. Mason, 966 So. 2d 220, 228 (¶¶ 17-20) (Miss. Ct.
App. 2007); see also United Miss. Bank v. GMAC Mortg. Co., 615 So. 2d 1174, 1175 (Miss.
1993). There are no facts that show Cook did not believe that James was unauthorized. Further,
the agreement would be valid on these grounds even if the facility did not bind itself to
arbitration, as Cook’s signature would be an offer and she did nothing to revoke the offer. Byrd
v. Simmons, 5 So.3d 384 (¶¶ 15-19) (Miss. 2009). The facility incorporated the arbitration
agreement into the admissions agreement and considered it to be part of the operating documents
controlling Adkins’ residency. The agreement did not lack mutual assent and this issue is
without merit.
Finally, Plaintiff argues that the arbitration agreement is unenforceable due to
unconscionability. In support, Plaintiff points to the fact that James did not explain the term
“arbitration” to Cook.
“Mississippi law defines an unconscionable contract as ‘one such as no man in his senses
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and not under a delusion would make on the one hand, and no honest and fair man would accept
on the other.’” Pride, 341 F.Supp.2d at 622 (quoting Entergy Miss., Inc. v. Burdette Gin Co., 726
So. 2d 1202, 1207 (Miss. 1998). Mississippi law provides for both procedural and substantive
unconscionability. York v. Georgia-Pacific Corp., 585 F.Supp. 1265, 1278 (N.D. Miss. 1984).
“Procedural unconscionability may be proved by showing ‘a lack of knowledge, lack of
voluntariness, inconspicuous print, the use of complex legalistic language, disparity in
sophistication or bargaining power of the parties and/or a lack of opportunity to study the
contract and inquire about the contract terms.’” East Ford, Inc. v. Taylor, 826 So. 2d 709, 714
(Miss. 2002) (quoting Pridgen v. Green Tree Fin. Servicing Corp., 88 F.Supp.2d 655, 657 (S.D.
Miss. 2000)). Substantive unconscionability may be proven by showing the terms of the
arbitration agreement to be oppressive. York, 585 F.Supp. at 1278.
James did not explain the concept of arbitration to Cook; however, Cook never inquired.
The agreement contained an explanation that by entering into an arbitration agreement, the
parties give up and waive their constitutional right to have any claim decided in a court of law
before a judge and jury. This explanation was written in large printed capital letter and in
boldface. Immediately above the signature line was a admission that the signor read the
agreement and fully understood its contents.
Further, “[i]t is well settled under Mississippi law that a contracting party is under a legal
obligation to read a contract before signing it.” Terminix Intern., Inc. v. Rice, 904 So. 2d 1051,
1056 (Miss. 2004) (citing McKenzie Check Advance of Miss., LLC v. Hardy, 866 So. 2d 446, 455
(Miss. 2004)). “A person is charged with knowing the contends of any document that he
executes.” Id. (quoting Russell, 826 So. 2d at 725). Cook does not dispute that she signed the
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arbitration agreement. Plaintiff cannot now argue that Cook was unaware of the terms contained
within the agreement at the time she executed the document. Further, Plaintiff claims that the
facility intentionally buried the agreement within other documents and forced Cook to sign, but
presents no evidence in support of this allegation. Plaintiff’s argument that the agreement was
procedurally unconscionable is without merit.
Plaintiff does not contend that the dispute falls outside the scope of the agreement. The
court notes that the arbitration agreement language is broad and encompasses all disputes related
to the admissions agreement or any service or health care provided by the facility to the resident.
Thus, the present dispute need only “touch” matters covered by the agreement to be arbitrable.
(citing Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1068 (5th Cir.
1998)). The dispute in this case involves alleged negligent acts related to the health care
provided to Adkins during her residency in the Defendants’ facility. The court finds the
arbitration agreement encompasses the present dispute.
The court then must determine whether any federal statute or policy renders the claims
nonarbitrable. Plaintiff argues that the arbitration agreement is violative of public policy, relying
on a law review article written by an arbitrator. The commentator claims that “[p]redispute
mandatory arbitration agreements inclusive of wrongful death nursing home claims are simply
wrong.” Suzanne M. Scheller, Arbitrating Wrongful Death Claims for Nursing Home Patients:
What is Wrong With This Picture and How to Make it “More” Right, 133 Penn St. L. Rev. 527,
529 (2008). The arbitration agreement in this case was not mandatory or required for admission
into the facility, as discussed above. Further, the Mississippi Supreme Court has not adopted this
view and this court declines to do so now.
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The court finds that a valid agreement exists and that no federal statute or public policy
renders this claim nonarbitrable. As such, the present claim is arbitrable and Defendants’ motion
[10] is GRANTED.
This the 14th day of April, 2011.
/s/ MICHAEL P. MILLS
CHIEF JUDGE
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF MISSISSIPPI

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