Tennessee Supreme Court Holds Court Can Consider Patient’s Competence To Sign Power of Attorney

The Tennessee Supreme Court today rejected a Memphis nursing home’s argument that the trial court could not consider whether a resident with Down syndrome was competent to authorize his brother to act as his agent.  The nursing home sought to enforce an arbitration agreement signed on the resident’s behalf by the brother.  The Supreme Court held the trial court correctly considered evidence that the resident did not have the mental capacity to understand the document that authorized his brother to sign the agreement.

David Welch was diagnosed with Down syndrome shortly after birth.  David had no formal education; he could not read and had difficulty understanding and following instructions.  In 2012, James filled out a healthcare power-of-attorney form for David, giving James authority to act as David’s health care agent.  David “scratched his name” on the form, and James used it for several years to help David obtain health care.   

In 2016, James brought David to Christian Care Center of Memphis, a nursing home, to admit David as a resident.  James showed Christian Care his signed power-of-attorney and signed all of the admission paperwork, including an optional arbitration agreement.  The agreement waived David’s right to a jury trial and agreed to arbitrate any disputes with Christian Care.  At the time, the nursing home understood that David had Down syndrome.

David lived at Christian Care for a number of months.  He died in 2017, at the age of 62. 

In 2018, James, as administrator of David’s estate, filed this health care liability lawsuit against Christian Care, arising out of its care while David was a resident.  Christian Care filed a motion to compel arbitration under the agreement James signed on David’s behalf.  The trial court found that David did not have the mental capacity to sign the power-of-attorney naming James as his agent, so it denied Christian Care’s motion to compel arbitration.

Christian Care appealed to the Court of Appeals, which reversed.  The Court of Appeals held that, under a Tennessee law, Christian Care could rely on the power-of-attorney form David signed.  It held that the trial court should not have considered evidence on whether David was mentally competent to sign it, and therefore should have granted Christian Care’s motion to compel arbitration.  The Tennessee Supreme Court then granted James’s request for permission to appeal.

The Tennessee Supreme Court noted that the Tennessee statute Christian Care cited protects health care providers from liability if they “rely” in good faith on an agent’s health care decision for a patient.  In this case, the arbitration agreement James signed was optional; Christian Care would have admitted David to the facility even if James had refused to sign it.  As a result, the Court said, Christian Care could not show it “relied” on James’s decision to sign the arbitration agreement— Christian Care did not do anything different based on the arbitration agreement.  The Court held that the Tennessee law cited by Christian Care did not prevent the trial court from considering evidence on whether David had the mental capacity to designate James as his lawful agent.

The Supreme Court reversed the Court of Appeals and affirmed the trial court’s decision to deny Christian Care’s motion to compel arbitration.   

To read the Court’s opinion in James A. Welch et al. v. Oaktree Health and Rehabilitation Center LLC D/B/A Christian Care Centers of Memphis et al., authored by Justice Holly Kirby, go to the opinions section of TNCourts.gov.