A woman cannot be compelled to arbitrate her survival action against a nursing home because she did not have power of attorney when she signed an alternative dispute resolution agreement upon her husband’s admission, the state Superior Court has ruled.
In an Aug. 7 opinion, a three-judge panel of the court held that although Donald Washburn had dementia and was incapacitated when he was admitted to Tremont Health & Rehabilitation, his wife lacked the authority to sign for him, invalidating the agreement. The ruling affirmed a decision of the Schuylkill County Court of Common Pleas.
Shirley Washburn had previously signed joint tax returns, Medicaid forms and a do-not-resuscitate form on her husband’s behalf, but that wasn’t enough to grant her the power to act as his agent and legally bind his estate to arbitration for future claims, the court held.
“While there is evidence that Mrs. Washburn previously acted on her husband’s behalf, the record is devoid of evidence that Mr. Washburn ever authorized his wife to do so,” Judge Mary Jane Bowes wrote for the court in Washburn v. Northern Health Facilities. The panel also included Judges Cheryl Lynn Allen and Christine L. Donohue.
At the time of Donald Washburn’s admission to Tremont on March 4, 2011, nursing home staff insisted to Shirley Washburn that all paperwork had to be signed prior to admission, despite her notice that she did not have power of attorney, Bowes said. She signed the ADR agreement in the spaces marked for “‘legal representative for health care decisions’ and ‘legal representative for financial decisions,’” Bowes said.
Donald Washburn never regained mental competency, and died March 1, 2012. Shirley Washburn then brought a survival action as the administratrix of his estate, alleging Tremont was “understaffed and mismanaged,” contributing to his death, Bowes said. Tremont sought to compel arbitration pursuant to the ADR agreement signed by Shirley Washburn, but its preliminary objections were overruled by the trial court.
In its appeal to the Superior Court, Tremont argued that Washburn did not need specific authorization from her husband to make her signature valid, and that an agency relationship can be implied by the circumstances, Bowes said. Tremont argued Washburn signing certain documents for her husband, such as the tax and Medicaid forms, created this implied agency.
But, Bowes said, there was no evidence that Washburn had her husband’s authorization to sign those documents—Washburn said she believed he would have given her the authority but was too sick to do so, so she took it upon herself. In addition to Shirley Washburn’s lack of apparent authority, Bowes said, Tremont wasn’t aware at the time of Donald Washburn’s admission that his wife had previously signed documents for him.
“When the arbitration agreement was signed, Tremont was unaware that Mrs. Washburn had been signing her husband’s name to some documents,” Bowes said. “Thus, it had no basis to infer that she was authorized to act on his behalf. To the contrary, Mrs. Washburn specifically informed Tremont that she did not have a power of attorney or guardianship for her husband.”
The court also denied Tremont’s argument that Donald Washburn’s estate is equitably estopped from disavowing the arbitration agreement because he accepted the benefits of his wife’s agreements, including admission to the facility and the care he received there.
“The ADR agreement was separate from the admission agreement and admission was not conditioned upon agreeing to arbitrate,” Bowes said. “Thus, the agreement to arbitrate was not part of the contractual quid pro quo for admission to the facility and its attendant benefits.”
Bowes further denied Tremont’s claim that Donald Washburn’s estate is required to arbitrate the survival action because he was an intended third-party beneficiary of the arbitration agreement.
“Mr. Washburn could not be an intended third-party beneficiary of a contract to which he was ostensibly a party,” Bowes said.
Joel Fishbein of Litchfield Cavo in Philadelphia, who represents Northern Health Facilities, Tremont’s parent company, declined to comment.
Stephen Trzcinski of Wilkes & McHugh in Philadelphia, who represents Shirley Washburn, said he agreed completely with the court’s findings and that he expects a pending en banc decision from the Superior Court in MacPherson v. Magee Memorial Hospital to address the issue of unconsionability that the court in Washburn did not address.
(Copies of the 15-page opinion in Washburn v. Northern Health Facilities, PICS No. 15-1237, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.)