Arbitration Agreement Applies to Wrongful Death Claim

Elder Law Answers case summary.The Supreme Court of Tennessee finds that an optional arbitration agreement, which the decedent’s daughter signed as his agent per a durable power of attorney, binds his survivors to arbitration in a wrongful death action. In Williams v. Smyrna (Tenn. No. M2021-00927-SC-R11-CV, February 16, 2024).

Granville Williams, Jr. created a durable power of attorney, appointing his daughter, Karen Sams, as his attorney-in-fact. He checked every power and included no limitations or end date.

When he entered an assisted living facility, Azalea Court, his daughter signed his admission agreement, acting as his agent. The agreement contained an arbitration clause. It also incorporated a separate arbitration agreement, which Ms. Sams also signed. That agreement provided that it is enforceable against the individual’s heirs. Consenting to arbitration was not a requirement for admission.

After Mr. Williams passed away while residing at the facility, his son James Williams brought a wrongful death action against two businesses that managed or operated Azalea Court: Smyrna Residential and Americare Systems. The businesses moved to compel arbitration.

The trial court declined to compel arbitration. It reasoned Ms. Sams did not have the authority to bind her father to arbitration because the power of attorney did not allow her to make health care decisions. The court considered signing the admission agreement to be a health care decision. The appellate court agreed that entering into an arbitration agreement was a health care decision. This appeal followed.

First, the highest court of Tennessee considers whether Ms. Sams could agree to arbitration on her father’s behalf. To do this, the Tennessee Supreme Court addresses whether an attorney-in-fact with general authority to act in all claims and litigation matters – but no specific health care decision authority – can enter an arbitration agreement when admitting the principal to a facility that does not require arbitration.

Signing the arbitration agreement was not a health care decision under the Durable Power of Attorney for Health Care Act. The statutory definition of health care decision is limited to treatment consent, refusal, and withdrawal. When agreeing to arbitration is not necessary for treatment, it is not a health care decision.

This case differs from Owens v. National Health Corporation. In Owens, a health care power of attorney authorized an agent to enter into an arbitration agreement because the arbitration agreement was required for treatment. Here, the facility did not require an arbitration agreement, so a health care power of attorney was unnecessary.

The durable power of attorney gave Ms. Sams authority in all claims and litigation matters. The arbitration agreement was a claim and litigation matter because it determined where they would resolve claims. As the agreement pertained to claims, she had the authority to sign it.

Second, the Supreme Court of Tennessee evaluates whether the agreement binds the wrongful death beneficiaries, who were not parties. Ordinary contract principles apply to arbitration agreements. So, an additional person who would be bound under contract principles is bound under the agreement.

Tennessee’s wrongful death statute preserves the decedent’s cause of action for survivors rather than creating a new claim. Granville Williams’ death transferred his wrongful death action to his beneficiaries. Tennessee precedent and decisions in other states support the view that wrongful death claims are derivative. Because the wrongful death action is derivative, the arbitration agreement applies to it.

The Tennessee Supreme Court draws three conclusions that support enforcing the arbitration agreement. First, entering an optional arbitration agreement is not a health care decision under the Durable Power of Attorney for Health Care Act. Second, Ms. Sams bound her father to the arbitration agreement, as the durable power of attorney gave her the authority for all claims and litigation matters. Finally, the arbitration agreement applies to the wrongful death action, as the action is derivative.

Read the full opinion, including concerns raised by dissenting opinions from two of the Tennessee Supreme Court Justices.