Arbitration Agreements and Healthcare Proxies

Two recent Massachusetts cases provide an exception to a trend of upholding arbitration agreements under the Federal Arbitration Act. See Johnson v. Kindred Healthcare, SJC-11335, slip op. (Jan. 13, 2014) and Licata v. GGNSC Malden Dexter LLC, SJC-11336, slip op. (Jan. 13, 2014). In these cases the S.J.C. found that an arbitration agreement was unenforceable when signed by a health care proxy on behalf of a principal.

An arbitration agreement states that you will bring any legal disputes to alternative dispute resolution such as mediation and arbitration, rather than using the court system. Arbitration agreements tend to favor large businesses and organizations over individuals—individuals tend to fare better in court. Nevertheless, the binding power of arbitration agreements has grown under the Federal Arbitration Act and subsequent cases. See, e.g. American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304, 2312 (2013); Feeney v. Dell, Inc. (rescript), 466 Mass. 1001 (2013).

In the recent Massachusetts cases, Johnson and Licata, the major issue was whether arbitration agreements were enforceable against nursing home residents, where the agreements had each been executed by the resident’s healthcare proxy rather than the resident. In both cases the S.J.C. held that “a health care agent’s decision to enter into an arbitration agreement is not a health care decision,” and so the agreement does not bind the principal where the agreement was signed solely by a health care proxy. Proxies’ authority is limited to decisions that directly involve the provision of “medical services, procedures, or treatment of the [patient’s] physical or mental condition.” Johnson; see also G.L. c. 201D, § 1.

In Licata the S.J.C. also declined to enforce the arbitration agreement because the son signing on behalf of his mother lacked actual and apparent authority to sign on her behalf. A transfer medical report was insufficient to meet the statutory requirements for a finding of incapacity that activates a health care proxy.

Signing away one’s legal rights can be very unsettling, whatever the context. Yet arbitration clauses and health care proxies are two very common legal issues. The attorneys at Hutchins Law, P.C. can guide you through these and many other legal issues. Call today, and face the future with confidence.

The purpose of this article is to inform our clients of developments in the law and to provide information of general interest. It is not intended to constitute legal advice or to assume a client relationship. The content of this article could be considered advertising under the rules of the Massachusetts Supreme Judicial Court. Copyright © 2012 Hutchins Law, P.C. All Rights Reserved.