When Mom has dementia and her daughter, as her authorized representative, is handling her health care decisions, does the daughter have the power to sign a residential care facility’s arbitration clause on Mom’s behalf?

With a growing population of aging Americans relying on their adult children for help, and the broad use of arbitration agreements by care providers, a recent California Court of Appeal case spotlights an important issue for many families (Theresa D v. MBK Senior Living.)

In April of 2021, Raymond Donahue sued MBK, which operated Muirwoods Memory Care, a residential assisted living facility for the elderly. He was acting on behalf of his mother, Theresa, who had lived there for most of the previous year.

He alleged that Muirwoods knew that his mother suffered from dementia and was at risk of falling, and that they failed to provide her with adequate care and supervision.

The lawsuit claimed that these shortcomings in her care led to Theresa falling and fracturing her hip, causing her to suffer physical and emotional problems.

The complaint also alleged that she was left in unsanitary conditions at Muirwoods and became infected with scabies.

MBK asked the Sonoma County Superior Court to compel arbitration of the dispute, rather than having it resolved in a trial.

They said Theresa’s daughter, Kellie Tennier, her authorized representative who held authority to make health care decisions for her mother, had signed an agreement requiring binding arbitration of “any and all claims and disputes” related to Theresa’s care.

The document noted that “agreeing to arbitration is not a condition of admission to the Community.”

When Tennier signed the document, according to a company executive, she identified herself as her mother’s authorized representative, and said she had authority to make the health care decisions required for admission and to execute the residence and services agreement, including the arbitration agreement.

Theresa’s attorney argued that the arbitration agreement was unenforceable because she had not signed it herself, and her daughter did not have authority to do so on her mother's behalf.

The attorney noted that Raymond Donahue, not his sister, had a general power of attorney to act on Theresa’s behalf. Tennier had not been appointed as her mother’s agent under an advance health care directive, nor was she her mother’s conservator.

The trial court denied the motion to compel arbitration, ruling that Tennier was not plaintiff’s agent for purposes of binding her to arbitration. MBK, which operated Muirwoods, appealed.

The appellate justices noted that “when a party has filed a petition to compel arbitration, the trial court must determine … whether an agreement to arbitrate the controversy exists.”

When parties have agreed to arbitration, challenges to the validity of the underlying contract are for the arbitrator to decide. If they have not, then it is up to the court to rule on challenges to the validity of the arbitration clause.

Because a key question in this case was whether Theresa had entered into an arbitration agreement, they said, deciding whether Tennier was authorized to agree to arbitration on her mother’s behalf was something the trial court, not an arbitrator, had to decide.

Tennier, as Theresa’s daughter, may well have had the authority to place her mother in Muirwoods. That was a health care decision, which was permitted under the durable power of attorney for health care that Tennier held. But that authority did not extend to binding her mother to an arbitration agreement.

MBK argued that the rules are different because Muirwoods is a residential care facility for the elderly, or RCFE.

California law defines RCFEs as housing arrangements for the elderly which provide care, protective supervision, and health-related services, which are chosen voluntarily by the resident or “an individual who has authority to act on behalf of the resident.” This individual can be a spouse, family member, conservator, guardian, or other person designated by the resident.

As a family member, MBK said, Tennier was authorized to place her mother in an RCFE and to bind her to arbitration as part of the health care decision to admit her.

The justices rejected this argument. A family member may place someone in an RCFE, they said, but California laws and regulations don’t allow that family member to waive the resident’s legal right to seek redress to the courts.

There was no evidence that Theresa had given Tennier authority to waive Theresa’s legal rights, so Tennier could not bind her mother to arbitration.

The justices affirmed the decision of the lower court and ordered the company to pay Theresa’s costs on appeal.

By Laurie Murphy