Sherrer v. Covenant Health & Rehab Of Picayune, LLC

• Decision Date: 29 March 2012
• Docket Number: CAUSE NO. 1:11CV296 LG-RHW
• Parties: SHEILA SHERRER, Personal Representative of the Estate of HERSHEL DILLARD, and SHEILA SHERRER, on behalf of the wrongful death beneficiaries of HERSHEL DILLARD PLAINTIFF v. COVENANT HEALTH & REHAB OF PICAYUNE, LLC DEFENDANT
• Court: U.S. District Court — Southern District of Mississippi

SHEILA SHERRER, Personal Representative of the Estate of HERSHEL DILLARD and SHEILA SHERRER, on behalf of the wrongful death beneficiaries of HERSHEL DILLARD PLAINTIFF v. COVENANT HEALTH & REHAB OF PICAYUNE, LLC DEFENDANT

CAUSE NO. 1:11CV296 LG-RHW

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF MISSISSIPPI SOUTHERN DIVISION

Dated: March 29, 2012

MEMORANDUM OPINION AND ORDER GRANTING

MOTION TO ENFORCE ARBITRATION AGREEMENT

AND DISMISSING CASE

BEFORE THE COURT is the Motion to Enforce Arbitration [8], and to Stay [6] or Dismiss [7] during arbitration proceedings, filed by Defendant Covenant Health & Rehab of Picayune, LLC. Plaintiff Sheila Sherrer has responded to the Motions, and Covenant has replied. After due consideration of the parties' arguments and the relevant law, it is the Court's opinion that the arbitration agreement should be enforced and this case dismissed.

FACTS AND PROCEDURAL HISTORY

Sixty-seven-year-old Hershel Dillard entered Highland Community Hospital in Picayune, Mississippi on May 10, 2009, with a principal diagnosis of "unspecified septicemia." He had sixteen secondary diagnoses, including sepsis, rheumatoid arthritis, hyperpotassemia, and altered mental status. His long-time physician, Walter Gipson, was his attending physician.

After Dillard had been at Highland Community Hospital for ten days, he wastransferred to Covenant's facility on May 20 for "strengthening and further control of diabetes." (Pl. Resp. Ex. A 3, ECF No. 9-1). According to the Hospital's Transfer Summary, "[h]is family finally had convinced patient to go [sic] to agree to go to Rehab. . . . Patient understands the benefits." (Id.) He had ten diagnoses at the time of the transfer: altered mental status, failure to thrive, dehydration, sacral decubitus, sepsis, scrotal edema, anemia, coronary artery disease, rheumatoid arthritis, and type II diabetes uncontrolled. (Id.)

The Plaintiff states she executed Covenant's admission documents¹ on Dillard's behalf on May 20, while he was still in the Hospital. The documents included a separate Alternative Dispute Resolution Agreement. She states that Dillard signed a separate Alternative Dispute Resolution Agreement upon his arrival at the facility later that same day. (Def. Mot. Ex. A, ECF No. 8-1). Following admittance, Dillard was subjected to a complete systems review by a Licensed Practical Nurse. (Def. Reply Ex. C, ECF No. 12-3). Dillard responded when called by name, was able to make himself understood and able to express his needs. He was completely oriented, in that he responded to questions, told the LPN his name, the current season and that he was in a nursing home. He reported being in constant pain. An RN noted Dillard was alert and not confused, comatose or lethargic. He was receiving Lortab 7.5/325 by mouth every four hours as required for pain. (Id.)

Approximately one week later, on May 28, Dr. Gipson completed a PAS (Pre-Admission Screening) Summary and Physician Certification form, in which he stated Dillard could fully communicate, had the ability to understand others, and heard and saw adequately. (Def. Reply Ex. B, ECF No. 12-2). Dillard correctly answered all eleven orientation questions. (Id. at 1). He was not diagnosed with Alzheimer's, dementia, mental retardation, and had no history or current evidence of cognitive problems requiring further testing. (Id. at 2). Dillard did require considerable assistance with all physical activity, such as bathing, eating, toileting, dressing, meal preparation, and mobility. (Id. at 1).

Plaintiff alleges that the staff at Covenant failed to monitor Dillard's glucose levels and as a result, he became hypoglycemic for a prolonged period of time and fell into an irreversible coma. He died on June 27, 2009. Plaintiff filed this lawsuit bringing claims against Covenant for negligence resulting in Dillard's wrongful death.

Covenant seeks to enforce the Alternative Dispute Resolution Agreement signed by Dillard and the Plaintiff. Plaintiff argues the arbitration agreement signed by Dillard is unenforceable for three reasons: 1) Dillard lacked the requisite mental capacity to sign it; 2) the designated arbitrator did not exist at the time the arbitration agreement was executed, making the contract illusory; and 3) there was a lack of consideration. Plaintiff also argues that the arbitration agreement she signed is unenforceable because she lacked the legal capacity to enter into the agreement on Dillard's behalf, and Dillard was not a third-party beneficiary of theagreement.

The Court conducted a hearing on February 28, 2012, to inquire into the issue of Dillard's competency. Both Sheila Sherrer and Keri Ladner testified, but neither provided any information beyond the material they had previously submitted. Because there was no testimony from Dillard's attending physician, which the Court believed would be crucial to its decision, the parties were allowed time to depose Dr. Gipson and submit additional briefing based on his testimony. The Plaintiff has now provided the deposition testimony of Dr. Gipson.

DISCUSSION

A two-step inquiry governs whether parties should be compelled to arbitrate a dispute. First, the court must determine whether the parties agreed to arbitrate the dispute. Once the court finds that the parties agreed to arbitrate, it must consider whether any federal statute or policy renders the claims non-arbitrable. Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004) (citation and quotation marks omitted). In conducting this two-step inquiry, courts must not consider the merits of the underlying action. Id. (citation omitted)

The first step of the process entails determining "whether there is a valid agreement to arbitrate between the parties; and ... whether the dispute in question falls within the scope of that arbitration agreement." Id. (citation and quotation marks omitted). These questions are decided according to state law. Id. While there is a strong federal policy favoring arbitration, the policy does not apply to the initial determination whether there is a valid agreement to arbitrate. Id. (citationand quotation marks omitted).

An important initial consideration in this case is the Prima Paint rule, which requires the Court to distinguish between defenses to the arbitration agreement going to the arbitration provision itself, and defenses to the arbitration agreement going to the entire contract. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967). "A federal court may consider only issues relating to the making and performance of the agreement to arbitrate." Id. "Accordingly, unless a defense relates specifically to the arbitration agreement, it must be submitted to the arbitrator as part of the underlying dispute." Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 472 (5th Cir. 2002).

In this case, the arbitration "provision" or "agreement" is the Alternative Dispute Resolution Agreement. The Alternative Dispute Resolution Agreement is a separate, stand-alone document. It is not incorporated into the admission agreement establishing the terms of Dillard's stay at Covenant, nor is there an arbitration provision within the admission agreement. (See Pl. Resp. Ex. D, ECF No. 9-4). Plaintiff has called the making of the Alternative Dispute Resolution Agreement signed by Dillard into question; thus her defenses necessarily relate specifically to the arbitration agreement. Accordingly, the initial determination of whether there is a valid agreement to arbitrate, at least in regard to the document signed by Dillard, may properly be considered by the Court rather than submitted to the arbitrator. See Wash. Mut. Fin. Grp., LLC v. Bailey, 364 F.3d 260, 266 n. 4(5th Cir. 2004).

Dillard's Mental Capacity:

Sherrer argues that the medical records show Dillard was unable to physically care for himself, suffered from "altered mental status" and other infirmities, and was noted to be a very poor historian. Sherrer has also submitted her own affidavit, in which she states that she was with her father during the relevant time periods (although not at the time Dillard signed the Agreement) and in her opinion, he "could not and did not understand, appreciate, or comprehend any documents that he may have signed." (Pl. Resp. Ex. C 2, ECF No. 9-3). She states that from May 19 to the 21st,

He did not acknowledge the presence of his family and others; he could not and did not communicate with others, including me, except for an occasional "Yes" or "No" which often times was not an appropriate response; and he could not and did not engage in conversations with others including his immediate family.

(Id. at 1-2).

However, the medical records maintained by Dillard's caregivers paint a very different picture. According to the medical records, Dillard was a man suffering from a number of serious health issues, but whose mental facilities were intact. The admitting nurses and Dillard's treating physician found him to be alert and oriented on May 20, 2009 - the day he signed the Alternative Dispute Resolution Agreement. The Agreement was explained to him by Nicole Morales, the Business Office Manager, who "provided him with the opportunity to ask any questions he may have had regarding the agreement to either me or Keri Ladner, and he thensigned the Alternative Dispute Resolution Agreement in my presence." (Def. Reply Ex. H 2 (¶ 4), ECF No. 12-8). Keri Ladner, the Administrator, was present to witness Dillard's execution of the Agreement. (Def. Mot. Ex. B 2 (¶ 8), ECF No. 8-2). Ladner explained it was her practice to try to answer any questions Nicole Morales could not. (Id. at 2). It was also her practice to sign the Alternative Dispute Resolution Agreement only if she saw the resident sign on the resident's signature line of the Agreement. (Id). Her signature on the document indicates that she observed Dillard sign the Alternative Dispute Resolution Agreement. (Id). Neither of...