Since 1925, the United States Congress and Supreme Court have recognized arbitration as the preferred means of dispute resolution, offering a faster, more private, and cheaper alternative to court systems. Unfortunately, despite an almost 100-year-old law favoring arbitration, some courts are hostile to the process. In a recent advisory opinion, the Georgia Supreme Court retried arbitration by overturning a lower court ruling that found a guardian was not empowered to enter into an arbitration agreement related to a nursing home admission.

The facts were clear. A guardian has a contract with a nursing home to look after their ward. A guardian is a person (usually a close relative or friend) appointed by a county probate court to act in the best interests of an incompetent person (the community). When her ward was admitted to the nursing home, the guardian signed a hosting agreement with an arbitration clause and a separate arbitration agreement in which she agreed that any disputes with the nursing home would be handled by an arbitrator (a neutral person, such as a lawyer or a retired judge the parties vote by mutual agreement). However, when a dispute later broke out, the guardian disregarded the arbitration agreements and took the nursing home to court. When the nursing home tried to enforce the arbitration agreements, the district court stated that the guardian was empowered to enter them. However, it found that the provision in the hosting agreement was unenforceable because it violated federal law by allowing the nursing home over and above the Medicaid payments earmarked for the care of the ward. And it found that the separate arbitration agreement was unenforceable because it was economically unreasonable and unreasonable.

The Georgia Court of Appeals upheld the trial court’s verdict, but for a different reason. It concluded that neither the guardianship statements issued by the probate court nor the Guardianship Act of Georgia entitle the guardian to consent to arbitration. Everyone agreed that a guardian could sign a contract for admission to a health facility. But the guardian argued – and the appeals court ruled – that that power precluded the power to decide in advance how disputes related to that very admission would be resolved. Despite a guardian’s extensive powers to make decisions on behalf of the ward, the appellate court allowed the guardian to deny her own power to enter into the arbitration agreement she signed. The nursing home then moved for a review by the Georgia Supreme Court.

Arnall Golden Gregory filed a friend of the court on behalf of the Georgia Health Care Association (GHCA) on this case. In a unanimous opinion from the qualified judges, the Supreme Court agreed with our arguments and overturned the appeals court. See CL SNF, LLC v. Fountain, No. S20G1292, 2021 WL 4268081 (Ga. 21 September 2021).

Congress passed the Federal Arbitration Act (FAA) in 1925 to “reverse the judiciary’s longstanding hostility to arbitration agreements. . . and to equate arbitration agreements with other contracts. ”Gilmer v Interstate / Johnson Lane Corp., 500 US 20, 24 (1991); EEOC v Waffle House, Inc., 534 US 279, 289 (2002). “When Congress passed the Arbitration Act in 1925, it was’ primarily motivated by a. . . Wish ‘to change this anti-arbitration rule. ”Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213,220 (1985). Consistent with this legal mandate, the United States Supreme Court has repeatedly affirmed arbitration as the preferred method of dispute resolution and has opposed any restriction on the parties’ rights to enter into arbitration agreements, including admission to nursing homes. See Marmet Health Care Center Inc. v. Brown, 565 US 530, 531-532 (2012); Related care centers LP v. Clark, 581 U.S.; 137 S.Ct. 1421, 1428 (2017). The Georgia Supreme Court has also adhered to these principles. See United Health Services of Georgia, Inc. v. Norton, 300 Ga. 736, 737 (2017) (Enforcement of an arbitration agreement signed by the nursing home resident’s general power of attorney).

Georgia’s Guardianship Acts, OCGA Sections 29-4-1 et seq., Allow a probate court to appoint a guardian when “an adult is unable to make or communicate important responsible decisions about their health or safety”. OCGA § 29-4-1 (a). “With every guardianship, the ward has the right to. . . [a] qualified guardian acting in the best interests of the community. ”OCGA § 29-4-20 (a) (1). The probate court is required to appoint a guardian who “best serves the interests of the ward”, with preference given to a “friend, relative or other person” if a spouse, adult child, parent or previous one appointed guardian is not available. OCGA § 29-4-3.

Georgia’s guardianship statutes state that the appointment of a guardian removes the authority of the community “to enter into, amend, or terminate other contracts” unless the court orders otherwise; “Consent to medical treatment”; and “initiate or defend any action in law or in equity, other than in any action relating to guardianship.” OCGA Section 29-4-21 (a). These withdrawn powers are then transferred to a guardian who “must make decisions about the support, care, education, health and welfare of the ward”. OCGA § 29-4-22 (a). “As far as is known, a guardian must take into account the expressed wishes and personal values ​​of the ward when making decisions.” Identity card. A guardian must act in trust in the ward’s best interests and exercise reasonable care, diligence, and caution. ID card. Unless the order of the court stipulates otherwise, a guardian can “[b]Call, defend, or participate in any legal, equity or administrative process, including alternative dispute resolution, on or on behalf of the community as appropriate for the community support, care, education, health or welfare. OCGA § 29-4-23 (a) (3). Before accepting the appointment, a guardian must “take an oath or affirmation in court that he will truthfully perform guardian duties and give a fair account of the estate”. OCGA § 29-4-25.

In its opinion on the enforcement of the arbitration, the Georgia Supreme Court found that the guardian signed all of the nursing home licensing documents, including the arbitration agreement, at the same time. The court therefore recognized that the agreements are related as part of the same process (i.e. the admission of the ward to the nursing home) and must be read and viewed together. In other words, the guardian could not selectively choose those parts of the agreement that she wanted to enforce (e.g. the admission) and not challenge the parts she later found inconvenient (e.g. arbitration).

The court concluded that the Guardianship Act of Georgia gives a guardian the power to enter into a binding arbitration agreement prior to the dispute if the exercise of that power is reasonably necessary to adequately provide the support, care, health and welfare of the ward. The court found that such authority was “reasonably necessary” to adequately care for the ward, and the guardian was empowered to enter into a pre-trial arbitration arrangement on behalf of the ward in connection with the care. Otherwise, without these appropriate powers, guardians would either be unable to perform routine contracts such as telephone, banking, and utility contracts (most of which contain arbitration agreements), or would have to seek the approval of the probate court for each agreement. an impracticable process.

According to the Supreme Court ruling, guardians can continue to enter into contracts for their wards that include arbitration provisions, and companies such as nursing homes can enforce these agreements without fear of the guardian changing their minds or selective rejection of the arbitration provision. But the opinion can also have greater implications. Eleven years ago, the Georgia Supreme Court agreed to investigate a case in which a family member – in this case a health care attorney – was authorized to sign an arbitration agreement to admit a loved one to a nursing home. See Life Care Centers v. Smith, 298 Ga. App. 739, 681 SE2d 182 (2009), certificates issued (February 1, 2010). As in the recent Fountain case, the appeals court had ruled that the family member had the authority to arrange admission to the resident’s nursing home, but not agree to arbitrate any disputes that might arise out of that admission. Before the Supreme Court could issue a judgment on Life Care, the parties came to an agreement, thereby depriving the Supreme Court of the opportunity to rule on the matter. Since then, the appeals court has issued at least six opinions on the authority of relatives to enter into nursing home arbitration agreements, with inconsistent and generally unfavorable results.

The recent Fountain Supreme Court ruling did not mention Life Care or the other Court of Appeal rulings that established a family member’s power to enter into an arbitration agreement related to a nursing home admission. But Fountain’s reasoning should apply equally when analyzing a family member’s authority to consent to arbitration in the context of a nursing home admission, whether that authority comes from a guardianship, a guardianship, or some other law. Typically, if the family member has the authority to admit the loved one to a nursing home, that family member should have the authority to arbitrate disputes arising out of that admission. As with the Guardianship Act, Georgian law allows a family member to admit a loved one to a health facility, such as a nursing home, under certain circumstances. Healthcare admission agreements cover a whole range of topics, from choosing a doctor to choosing a laundry service to agreeing to an operation. All of this is “reasonably necessary” to provide adequate care for the family member, as well as the power to decide how to resolve disputes arising out of such admission. Indeed, as in its most recent Fountain opinion, the Supreme Court has consistently enforced and upheld arbitration agreements on arbitration matters. See Norton, 300 Ga. 736 (stating that an arbitration agreement between a nursing home and a patient is enforceable against the patient’s husband in an unlawful death suit). Fountain’s reasoning should therefore apply equally to arbitration agreements signed by family members authorized to admit a patient into a health care facility.

Arbitration provides a fair, fast, private and efficient method of dispute resolution that is beneficial to residents, their families and the health system as a whole. The Georgia Supreme Court decision allows representatives to choose this preferred form of dispute resolution.