Health Law Case Brief: Johnson v. Kindred Healthcare, Inc. and Licata v. GGNSC Malden Dexter LLC

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By: Sean Baird, Esq.

The Supreme Judicial Court of Massachusetts (the “SJC”) recently addressed a nursing home’s ability to compel a patient or the patient’s estate to arbitrate all disputes.[1] In both Johnson v. Kindred Healthcare, Inc. and Licata v. GGNSC Malden Dexter LLC, the SJC held that, based on the plain language, history, and context of the Massachusetts health care proxy statute, Mass. Gen. Laws. Ch. 201D, §§ 1-17, a health care agent may not enter into an arbitration agreement on behalf of the principal.[2]

 Johnson v. Kindred Healthcare, Inc.

On May 24, 2007, Dalton Johnson (“Dalton”) executed a health care proxy pursuant to Mass. Gen. Laws. Ch. 201D, §§ 1-17.[3] The health care proxy authorized Dalton’s wife, Barbara Johnson (“Barbara”), to act as Dalton’s health care agent.[4] Subsequently, on August 6, 2008, in her capacity as Dalton’s health care agent, Barbara signed an agreement with defendants (Kindred Healthcare, Inc., & others[5]) to submit any disputes for mediation or arbitration.[6]

In July of 2009, Dalton died after suffering burns he received while a resident of defendant’s nursing home.[7] Upon his death, administrators of Dalton’s estate filed a complaint in the Superior Court for negligence, seeking damages under the wrongful death statute as a result of Dalton’s care while he resided at defendant’s nursing home.[8] The Superior Court proceedings were stayed pending the conclusion of mediation and arbitration as required by the arbitration agreement.[9] At that time, plaintiffs sought leave to pursue an interlocutory appeal and the SJC transferred the case on its own motion.[10]

The SJC began by analyzing the plain language of the Massachusetts health care proxy statute.[11] The Court noted that the statute defines “[h]ealth care” as “any treatment, service or procedure to diagnose or treat the physical or mental condition of a patient.”[12] The SJC also noted that “health care decisions” are defined as “a decision which is made in accordance with the requirements of this chapter, is consistent with any limitations in the health care proxy, and is consistent with responsible medical practice.”[13] Accordingly the Court held that, “taken together, these definitions appear on their face to limit ‘health care decisions’ to those that directly involve the provision of responsible medical services procedures, or treatment of the principal’s physical or mental condition.”[14] The Court concluded that the statute does not include language to suggest that the health care agent has authority over any affairs beyond medical treatment decisions.[15]

In support of this conclusion, the Court pointed to the statute’s history and context to demonstrate that the Legislature intended to differentiate a health care proxy’s decision making power from that of a durable power of attorney, guardian, or conservator.[16] The SJC noted that a durable power of attorney, conservator, and guardian have statutorily enumerated powers beyond health care decisions, namely that these roles permit an individual to make decisions regarding the principal’s business, estate, finances, and legal relationships.[17]

Thus, based on the plain language and legislative history and context of Mass. Gen. Laws. Ch. 201D, §§ 1-17, the SJC held that a health care agent’s decision-making power is limited and does not include the ability to enter into binding arbitration and mediation agreements.[18]

 

Licata v. GGNSC Malden Dexter LLC

On August 19, 2008, Rita Licata (“Rita”) executed a health care proxy designating her son, Salvatore Licata, Jr. (“Salvatore”), as her health care agent.[19] On August 22, 2008, Rita was transferred from a medical center to a nursing facility operated by the defendant, GGNSC Malden Dexter LLC (“GGNSC”).[20] As part of her transfer to GGNSC’s nursing facility, Salvatore signed a number of documents on Rita’s behalf, including an arbitration agreement.[21]

One year later, on August 10, 2009, Rita died from personal injuries she received while a resident at GGNSC’s nursing facility.[22] Rita’s estate filed a complaint in Superior Court against GGNSC.[23] GGNSC moved to dismiss the complaint and to compel arbitration based on the agreement Salvatore signed as Rita’s health care agent.[24] The Superior Court concluded that Salvatore lacked authority to execute the arbitration agreement on Rita’s behalf and therefore denied GGNSC’s motion to dismiss.[25] GGNSC requested an interlocutory appeal and the SJC transferred the case on its own motion.[26]

On appeal, GGNSC argued that Salvatore was authorized to sign the arbitration agreement.[27] The Court disagreed and based on its reasoning in Johnson, held that a health care agent’s decision to enter into an arbitration agreement is not a health care decision as defined by Mass. Gen. Laws. Ch. 201D, §§ 1-17 and therefore found that the agreement was unenforceable.[28]

GGNSC also contended that Salvatore was authorized to sign the arbitration agreement as a “responsible party” under Mass. Gen. Laws ch. 201 D, §16.[29] The SJC indicated that it has permitted “responsible parties” to act on behalf of a patient in a medical emergency in certain instances but that there is no authority to suggest that a “responsible party” may bind an incompetent patient to an arbitration agreement.[30] Moreover, in light of the reasoning in Johnson, the SJC held that “[i]t would be unreasonable to recognize a wider scope of authority for a responsible party, not appointed by the principal, than exists for a health care agent, designated by the principal.”[31]

Additionally, GGNSC argued that Rita bestowed Salvatore with apparent authority to sign the arbitration agreement or later ratified the arbitration agreement.[32] The Court disagreed and pointed to facts developed by the Superior Court which indicate that there were no words or conduct by Rita to support such claims.[33] Likewise, the SJC noted that GGNSC did not provide any evidence that Rita even learned of the arbitration agreement. [34]

GGNSC also argued that the arbitration agreement bound Rita as a third-party beneficiary.[35] The Court, nevertheless, pointed to adopted language from the Restatement which provides that there can be no third-party beneficiary in the absence of a contract.[36] The SJC held that there was no contract because no one with signing authority signed the arbitration agreement.[37]

Finally, GGNSC contended that because Salvatore filed suit for breach of the admission agreement, he should be equitably stopped from denying the arbitration agreement.[38] Nonetheless, the Court concluded that Salvatore’s complaint sought enforcement of the contract to provide services, not the agreement to arbitrate.[39] For all of these reasons, the SJC affirmed the Superior Court’s finding and concluded that the arbitration agreement was unenforceable.[40]

In sum, it appears as though Massachusetts courts are unlikely to expand the authority of a health care agent to matters that are unrelated to health care decisions.[41]

 

Sean R. Baird is a member of Holland & Knight’s Healthcare and Life Sciences Team and of the Corporate Mergers and Acquisitions Group. He advises clients on a wide range of  healthcare regulatory matters, as well as on fraud, abuse and compliance matters, and on transactional matters.  During law school, Mr. Baird served as a legal intern for Judge O. Rogeriee Thompson, U.S. Court of Appeals for the First Circuit, and Judge James P. Donohue, U.S. District Court for Western Washington. Prior to law school, Mr. Baird worked as a public health professional at Harvard University, Johns Hopkins University, the United States Agency of International Development and various non-governmental organizations. He has extensive experience managing, designing, and evaluating large domestic and international public health programs.

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[1] See Johnson v. Kindred Healthcare, Inc., 2 N.E. 3d 849 (2014); Licata v. GGNSC Malden Dexter LLC., 2 N.E. 3d 840 (2014).

[2] See Johnson, 2 N.E. 3d at 851-59; Licata, 2 N.E. 3d at 842-49.

[3] See Johnson, 2 N.E. 3d at 851.

[4] See id.

[5] Kindred Nursing Centers East, LLC; Kindred Healthcare Operating, Inc.; Braintree Nursing, LLC d/b/a Braintree Manor Rehabilitation and Nursing Center (Braintree Nursing); Barbara Webster; and Robert E. Young.

[6] See Johnson, 2 N.E. 3d at 851.

[7] See id.

[8] See id.

[9] See id. at 851-852.

[10] See id.

[11] See id.

[12] See Mass. Gen. Laws. Ch. 201D, § 1.

[13] See id.

[14] See Johnson, 2 N.E. 3d at 853-54.

[15] See id.

[16] See id. at 854-56.

[17] See id.

[18] See id. at 851.

[19] See Licata, 2 N.E. 3d at 842-43.

[20] See id.

[21] See id.

[22] See id.

[23] See id.

[24] See id. at 843-44.

[25] See Licata, 2 N.E. 3d at 843-44.

[26] See id.

[27] See id. at 844-45.

[28] See id. at 844-45.

[29] See id. at 846.

[30] See id.

[31] See Licata, 2 N.E. 3d at 846.

[32] See id. at 846-48.

[33] See id.

[34] See Licata, 2 N.E. 3d at 846-48.

[35] See id. at 848.

[36] See id.

[37] See id.

[38] See id. at 848-49.

[39] See id.

[40] See Licata, 2 N.E. 3d at 842-49.

[41] See Johnson v. Kindred Healthcare, Inc., 2 N.E. 3d 849 (2014); Licata v. GGNSC Malden Dexter LLC., 2 N.E. 3d 840 (2014).

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