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Alabama Supreme Court Upholds Nursing Home Arbitration Agreement Preventing Lawsuit for Injuries

When admitting a loved one to a long-term care facility, contracts must be signed. In those contracts are little-known and little-understood clauses called “arbitration agreements.” These clauses state that if there is any dispute between a resident and his family, the parties must use a third-party arbitrator instead of going to court. In short, these agreements eliminate the right to sue. In some cases, skilled Florida personal injury attorneys are able to work around these agreements, because in many ways they are quite unjust and one-sided. However, there are times when courts will simply refuse to allow a lawsuit.

The Alabama Supreme Court recently heard a case that was originally filed in 2011, where an elderly nursing home resident died due to negligence. The arbitration agreement was ultimately upheld and the family was unable to further pursue the matter in court.

Troy Health and Rehabilitation Center v. McFarland

A 74-year-old woman, Garnell Wilcoxon, was admitted to Troy Health and Rehabilitation Center. Her daughter, Brenda McFarland, signed the admission papers using a durable power of attorney, as many family members do in such circumstances. Wilcoxon died about a year later from injuries that were allegedly sustained as a result of medical malpractice and negligence. Her daughter, McFarland, filed suit for the injuries. However, the nursing home filed a motion to dismiss, arguing that the initial contract included an agreement to be bound by arbitration, which would mean McFarland could not sue in court.

The key issue became whether Wilcoxon was mentally competent when she made the power of attorney naming her daughter. If so, then the daughter had the legal right to enter into the contract, and the court would have to enforce it. However, if the elderly woman was not mentally competent, then she lacked the legal ability to create the power of attorney in the first place, meaning her daughter never had the authority to sign her contract for her. Then, the agreement would be invalid, and the case could proceed in court. The trial court denied the nursing home’s motion, but the Supreme Court reversed, finding that there was no evidence Wilcoxon was incompetent when she made the power of attorney.

Powers of Attorney are a Double-edged Sword

The problem in the McFarland case stemmed from poor estate planning. Many attorneys will draft powers of attorney that are “one size fits all.” These typically will work for most purposes. However, when there is a high likelihood of nursing home care in one’s future, it may be worth considering the possibility of putting limitations in the power of attorney. Some skilled estate planning attorneys have begun putting clauses in powers of attorney that say the principal expressly does not permit the agent to enter into arbitration agreements. Since the fine print of such powers of attorney is rarely read closely, the document still permits the family member to sign the contract, but, in the event of a tragedy, the nursing home would have a difficult time arguing that arbitration should be upheld, when the person signing the contract had no authority to agree to that part of the agreement.

As with all matters involving Florida negligence and estate planning, you should contact a competent attorney at the Millhorn Elder Law Planning Group who has experience in these areas of law and who can best advise you based on your unique situation.

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