Arbitration Clause Struck Down By Court of Appeals in Wrongful Death Claim

 

If an arbitration agreement is present, courts rarely prevent parties from being required to arbitrate their disputes.  But the Court of Appeals did so in this case.

In Norton v. United Health Services of Georgia, Inc., (No. A15A2268, Ga. App., March 2, 2016), the Georgia Court of Appeals examined whether an arbitration agreement was enforceable.

This case began when Lola Norton became a resident of PruittHealth-Toccoa nursing home on April 25, 2013.  She stayed there until April 18, 2014, the date of her death.  While at the facility, Lola allegedly suffered personal injuries, including falls, fractures, weight loss, and ultimately death.

Lola’s husband Bernard Norton, by and through Kim Norton, who held a general power of attorney for Lola, filed suit on behalf of Lola’s wrongful death beneficiaries.  The complaint named nine different defendants who owned, operated, or managed the nursing home.  Claims included negligence, medical malpractice, a violation of Georgia’s Bill of Rights for Residents in Long-Term Care Facilities (Georgia Code sections 31-8-100 through 31-8-127), fraud and wrongful death.  Lola’s injuries and death were alleged to be the result of Defendants’ failure to provide adequate care and staff.

At the time of Lola Norton’s admission to the facility, Kim Norton, under her general power of attorney for Lola, signed an arbitration agreement.  Claims subject to arbitration included “[a]ny and all claims or controversies arising out of or in any way relating to . . . the Patient/Resident’s stay at, or the care or services provided by, the Healthcare center, or any acts or omissions in connection with such care or services . . . whether sounding in breach of contract, tort, or breach of statutory or regulatory duties.”  On its face, this agreement appears to require arbitration of all claims raised in Plaintiff’s complaint.

It also appears to apply to all of the parties involved in this suit.  The arbitration agreement provided specifically that it would “inure to the benefit of and bind the Patient/Resident and the Healthcare Center, their successors, assigns, and intended and incidental beneficiaries. . . .  [The term Patient/Resident also included] her guardian, attorney-in-fact, agent, sponsor, representative, or any person whose claim is derived through or on behalf of [her, including] any parent, spouse, child, executor, administrator, heir, or survivor entitled to bring a wrongful death claim.”  (Emphasis added.)

The arbitration agreement also specified that it “shall be governed by and enforced under federal law, specifically, the Federal Arbitration Act (9 U.S.C. sections 1 through 6).”

After Plaintiff filed suit, Defendants moved the Stephens County Superior Court to dismiss the complaint or, in the alternative, to stay the court proceedings and compel arbitration of all claims.  The trial court granted Defendants’ motion to stay all judicial proceedings and ordered all claims to proceed to arbitration.

Plaintiff applied for an interlocutory appeal, which the Georgia Court of Appeals granted.

The court first looked at the question of arbitrability.  It stated, “[W]hether an agreement creates a duty for the parties to arbitrate . . . is undeniably an issue for judicial determination. . . . Arbitration in Georgia is a matter of contract.  As such, the construction of an arbitration clause in a contract is subject to the ordinary rules of contract construction.”

The Georgia Court of Appeals then stated that to determine if a claim fell within the parties’ arbitration agreement, the court must focus on the factual allegations in the complaint rather than the claims being asserted.

According to the court, Plaintiff implicitly conceded that Lola Norton and her estate were bound by the arbitration agreement that Kim Norton had signed.  Plaintiff’s concern was whether the arbitration agreement applied to the wrongful death claims that he brought on behalf of himself and Lola’s beneficiaries.

Next, the Georgia Court of Appeals noted that a “wrongful death claim is derivative of the decedent’s right of action.  A survivor cannot recover for the decedent’s wrongful death if the decedent could not have recovered in . . . her own right.”

The court explained that wrongful death is a claim that belongs to the survivors “for the full value of the life of the decedent.  It is not addressed to the injuries suffered by the decedent prior to death, but to the injury suffered by the beneficiaries resulting from the death of the decedent.”

The Court of Appeals stated the rule that “Arbitration is a matter of consent, not coercion, and a party can be compelled to arbitrate only upon a showing that he entered into an enforceable agreement to arbitrate.”

It concluded there was “no evidence that Lola’s wrongful death beneficiaries entered into an agreement to arbitrate their separate, distinct claims.  And those claims never ‘belonged’ to Lola, so neither she nor her power of attorney could bind the beneficiaries to arbitration with regard to their wrongful death claims.”

Because litigation of the beneficiaries’ claims was not barred by the arbitration agreement, the lower court’s decision was reversed as to those claims.