Federal Court Orders Mississippi Nursing Home Neglect Case to Arbitration Based on Resident’s Verbal Consent to Daughter’s Agency

The United States District Court for the Northern District of Mississippi has ordered a nursing home dispute to arbitration based on an individual’s oral consent to her daughter’s agency.  In Crowe v. GGNSC Ripley, LLC et al., No. 3:17-cv-00171-MPM-RP (July 17, 2018), a woman, Crowe, filed a nursing home neglect lawsuit against the skilled nursing facility that cared for her mother, Rowland, prior to her death.  The parent company of the facility, GGNSC Ripley, answered the lawsuit by filing a motion to compel the case to binding arbitration based on documentation that was signed by Crowe on behalf of her mother at the time Rowland was admitted to the nursing home.  Crowe responded to the company’s motion by claiming the arbitration agreement was invalid because her mother only provided Crowe with verbal consent to sign facility admission documents on her behalf.

In its opinion, the Mississippi court first discussed recent relevant Fifth Circuit case law:

This is this court’s first motion to compel arbitration since the Fifth Circuit’s opinion in Gross, and it will accordingly take this opportunity to make some observations regarding the current state of the law in this field. Importantly, the Fifth Circuit in Gross appeared to find that, even if this court’s reading of the Mississippi Supreme Court’s intentions vis a vis nursing home arbitration were correct, that state court would likely lack the authority under AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) to require powers of attorney in the specific context of nursing home arbitration. Specifically, the Fifth Circuit wrote that “[t]o require a ‘formal legal device[ ] such as a power of attorney’ specifically for arbitration agreements and other ‘important contracts’ is in tension, at the very least, with Concepcion, which disapproved of nominally neutral rules that, in practice, ‘would have a disproportionate impact on arbitration agreements.’” Gross, 817 F.3d at 178, citing Concepcion, 563 U.S. at 342, 131 S.Ct. 1740.

This court regards the Fifth Circuit’s reliance upon Concepcion in Gross as quite significant, since it casts doubt upon the Mississippi Supreme Court’s basic authority to interpret state law in a manner which, in the Fifth Circuit’s judgment, unduly burdens the pro-arbitration policy considerations undergirding the Federal Arbitration Act. This is quite significant in the nursing home arbitration context, since it is difficult to overlook the fact that while the Fifth Circuit has broadly supported arbitration in nursing home cases, the Mississippi Supreme Court has repeatedly rejected, in unanimous decisions, informal agency arguments made by nursing homes in arbitration cases. See, e.g. Mississippi Care Center of Greenville, LLC v. Hinyub, 975 So.2d 211 (Miss. 2008); Adams Community Care Center, LLC v. Reed, 37 So.3d 1155 (Miss. 2010), GGNSC Batesville, LLC v. Johnson, 109 So.3d 562 (Miss. 2013).

In light of these and other decisions, it seems clear that the Mississippi Supreme Court regards nursing home arbitration with far more skepticism than the Fifth Circuit does, and this places Mississippi district courts in the difficult position of attempting to reconcile the views of two appellate courts which seem to have significant differences of opinion on this issue. It is for this reason that this court regards the Fifth Circuit’s reliance upon Concepcion as so important, since Concepcion essentially represents the federal law “trump card” over what would otherwise simply be a matter of state contract law. Thus, the fact that the Fifth Circuit has invoked Concepcion in this context suggests that, even if the Mississippi Supreme Court were to make its view unmistakably clear that informal agencies to sign nursing home arbitration contracts were invalid under state law, there would be considerable doubt, in the Fifth Circuit’s view, regarding its authority to so interpret state law. As a federal district court, this court is, of course, answerable to the Fifth Circuit, and it will therefore put aside its own reading of the Mississippi Supreme Court’s intent in this context and simply apply the Fifth Circuit’s holding in Gross.

Next, the Northern District of Mississippi stated Crowe conceded that her mother had sufficient mental capacity “to execute an informal agency,” before applying the Fifth Circuit’s holding in Gross to the case before it.  According to the Mississippi court:

In considering the unsettled issues in this context, this court will begin with the language of the Fifth Circuit’s opinion in Gross. In its opinion, the Fifth Circuit made it clear that verbal instructions may be sufficient to create an agency to sign an arbitration contract on behalf of a nursing home resident and that no formal written document is required in this regard.

The federal court added:

In the court’s view, plaintiff’s assertion that she was “mainly” in charge of her mother’s health care decisions but that this power was exercised in “consultation” with her mother is simply another way of saying that the scope of the agency in this case was not established in any sort of fine detail. This court believes this sort of tacit, informal agency to be typical among trusted family members, who generally feel no need to specifically state the scope of their trust in one another. From reviewing the record, it appears that the agency in this case was a very informal one which arose out of Rowland’s simple trust in her daughter to act in her best interests. Such an agency is simply not consistent with plaintiff’s efforts to now argue that it had been limited to matters which were strictly required for admission to the nursing home.

Finally, the district court concluded:

If this court’s decision in Gross had been affirmed, then this case would be quite easy, and it seems doubtful that the motion to compel arbitration would have been filed at all. Nevertheless, the Fifth Circuit disagreed with this court’s approach in Gross, and its duty now is to apply the law as established by that court. Based on the foregoing considerations, it appears likely that the Fifth Circuit would determine that the agency in this case fell within the scope of the implied agency doctrine as set forth in Gross. Defendant’s motion to compel arbitration [7-1, 16-1] will therefore be granted, and this case is hereby stayed pending arbitration.

The United States District Court for the Northern District of Mississippi’s entire opinion is available for viewing online.

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