Powers of attorney are powerful documents. A financial power of attorney allows another, the agent, to make financial decisions on behalf of the person creating the document, the principal. In a recent blog, the issue of whether a financial power of attorney can authorize the agent to create a trust on behalf of a principal was discussed. Another case has come out on authorization in a power of attorney, but this time it concerns a healthcare power of attorney. Specifically, the Second Appellate District in California decides whether a healthcare power of attorney that gives the agent the power to make healthcare decisions allows the agent to enter into an arbitration agreement on behalf of the principal.
In this case, Charles was elderly and designated his nephew, Mark, as his agent under a healthcare power of attorney. Thereafter, Charles entered into a nursing home. Nineteen days later, Mark signed the admission agreement and also signed a separate arbitration agreement. A few months later, Charles was moved to a different nursing home, and a suit was brought against the first one for abuse and neglect. Was Mark, as agent, authorized to sign the arbitration agreement?
The trial court concluded that Mark was not authorized to enter into the arbitration agreement. The nursing home’s argument was that the power of attorney gave Mark the authority to choose a healthcare facility, and so Mark could also sign the paperwork to enter Charles into the facility. The appeals court wasn’t buying this argument.
Entering into an arbitration agreement is more than simply filling out paperwork; it waives the principal’s right to a jury trial. A healthcare power of attorney gives the agent authority to make healthcare decisions for the principal. The appeals court looked at how health care is defined under CA Prob Code § 4615: “’Health care’ means any care, treatment, service, or procedure to maintain, diagnose, or otherwise affect a patient’s physical or mental condition.” The decision to waive the principal’s right to a jury trial doesn’t fit into that definition of healthcare. Thus, the appeals court ruled that Mark did not have the right to enter into the arbitration agreement, as agent for Charles.
Notably, federal regulations came out a few years ago that prohibit mandatory arbitration agreements for any facility that participates in Medicare or Medicaid. (See 84 FR 34728 (2019).) The arbitration agreement in the instant case was optional. Nevertheless, many times patients and their families think that arbitration agreements presented to them by nursing homes are mandatory and must be signed for admission to be granted.