Miss.App.: Nursing home can force arbitration

Mississippi’s intermediate court of appeals interpreted state third-party beneficiary law to compel arbitration of a wrongful death claim against a nursing home by a resident’s daughter. Trinity Mission Health & Rehabilitation v. Estate of Scott by Johnson, 2008 WL 73682 (Miss. App. Jan. 8, 2007) (No. 2006-CA-01053-COA).             The court held that the daughter was bound by the arbitration clause in the admission contract she signed on behalf of her mother, ignoring a contrary ruling by the state's supreme court.  The court, however, invalidated as unconscionable contract provisions giving the nursing home but not the family court access and requiring the family to pay all litigation costs.
 

                Johnson admitted her mother, Scott, to Trinity in 2001 and signed an admission agreement on her behalf. An amended agreement she signed in 2002 contained a mandatory arbitration clause. Johnson brought a wrongful death suit, and Trinity moved to compel arbitration.           

                Because wrongful death claims are derivative in nature – the surviving plaintiff “must stand in the position of the decedent” – Trinity had to show that Scott was bound by the admission agreement in order to enforce the arbitration clause against Johnson. The court concluded that Scott had been a third-party beneficiary under the contract and therefore bound by its terms:

While Scott did not sign the contract, the plain language of the contract makes it very clear that its sole purpose is to bind Trinity to provide services for Scott. The benefit that she received was the health-care services that were laid out in the admissions agreement. Finally, these rights and benefits bestowed upon Scott sprang forth from the terms of the contract.

The court gave short shrift to a recent decision of the Mississippi Supreme Court, which held that a nursing home resident was not a third-party beneficiary of an admission agreement signed by a family member. Grenada Living Center, LLC v. Coleman, 961 So.2d 33 (Miss. 2007). The court stated that while Coleman was “similar to the case before us, we do not find it determinative of the issue.” The court’s only explanation of this conclusion was that it “[did] not find sufficient evidence to avail [it]” of earlier Mississippi Supreme Court decisions discussed by both the court and the Coleman decision. This is particularly curious given that the facts of Coleman are much more similar to the facts of this case than are those of the earlier cases.

                The court went on to state that Johnson’s wrongful death claim fell within the scope of the arbitration clause, and that the clause was not unconscionable and therefore bound Johnson to arbitrate her wrongful death claim.           

            However, the court went on to invalidate some related portions of the admissions agreement as unconscionable. Applying recent precedent from the state’s supreme court, the court struck clauses that:

§         “reserve[d] to Trinity the right of access to the courts, while denying Johnson the very same right”

§         “provide[d] that in collections matters, the resident would be responsible for the costs of litigation,” and

§         “provide[d] that the parties must submit to a grievance resolution process for all matters, except payment of services.”

See Covenant Health Rehab of Picayune, L.P. v. Brown, 949 So.2d 732, 739 (Miss. 2007).