Triad Health Mgmt. of Georgia v. Johnson

• Decision Date: 03 June 2009
• Docket Number: No. A09A0286.,A09A0286.
• Citation: 679 S.E.2d 785,298 Ga. App. 204
• Parties: TRIAD HEALTH MANAGEMENT OF GEORGIA, III, LLC v. JOHNSON.
• Court: Georgia Court of Appeals

679 S.E.2d 785

298 Ga. App. 204

TRIAD HEALTH MANAGEMENT OF GEORGIA, III, LLC v. JOHNSON.

No. A09A0286.

Court of Appeals of Georgia.

June 3, 2009.

Bouhan, Williams & Levy, Todd M. Baiad, Savannah, for appellant.

Gwendolyn Fortson Waring, Savannah, for appellee.

ADAMS, Judge.

Anthony M. Johnson, individually, as administrator of Matthew Johnson's estate, and as Matthew Johnson's next of kin, sued Triad Health Management of Georgia, III, LLC d/b/a Tara at Thunderbolt Nursing and Rehabilitation Center ("Triad") in the State Court of Chatham County. According to the complaint, as a proximate result of Triad's negligence, Johnson's father, Matthew Johnson, developed bed sores, which led to his development of sepsis and his subsequent hospitalization, illness, and death. Triad answered and filed a contemporaneous motion to compel arbitration and stay proceedings. Following our grant of its application for interlocutory appeal, Triad appeals from the trial court's order denying its motion to compel arbitration of the disputes at issue in the complaint. For reasons that follow, we reverse.

"We review the record in this case de novo to determine whether the trial court's denial of the motion to compel arbitration is correct as a matter of law." Ashburn Health Care Center v. Poole, 286 Ga.App. 24, 648 S.E.2d 430 (2007). See Harris v. SAL Financial Svcs., 270 Ga.App. 230, 231, 606 S.E.2d 293 (2004). So viewed, the record shows that on September 27, 2005, Matthew Johnson was admitted to a Triad-operated nursing home in Chatham County. Pursuant to the admission, Johnson signed an "Admission Contract" among Triad, Matthew Johnson as "Patient/Resident," and Johnson as "Fiduciary Party." Matthew Johnson, who was incapacitated at the time, did not sign the Admission Contract. The agreement provides that any dispute, whether in contract or in tort, arising out of the provision of health care services by Triad be resolved by binding arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (the "FAA").

1. As a threshold issue, we conclude that the FAA governs the agreement to arbitrate. The FAA applies to "a contract evidencing a transaction involving commerce." 9 U.S.C. § 2. For purposes of 9 U.S.C. § 2, "the word `involving,' like `affecting,' signals an intent to exercise Congress' commerce power to the full." Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 277(III), 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). Whether or not the transaction at issue had a specific effect on interstate commerce, Congress' commerce power "may be exercised ... if in the aggregate the economic activity in question would represent a general practice subject to federal control. Only that general practice need bear on interstate commerce in a substantial way." (Citations and punctuation omitted.) The Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56-57(II), 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003).

The nursing home facility at issue here was located in Savannah, Georgia, and Triad had an additional office in Maryland. The Georgia facility purchased supplies from out-of-state vendors, including medical supplies from Wisconsin and Illinois. The facility treated out-of-state patients and had patients insured through medicaid and medicare and private insurance providers, and some of the private insurance claims were handled in locations outside the state. Given the evidence establishing a nexus between Triad's nursing home operations and interstate commerce, and in light of the United States Supreme Court's expansive interpretation of commerce for purposes of the FAA, we conclude that the Admission Contract was a contract evidencing a transaction involving commerce, and the FAA therefore applies. See Rainbow Health Care Center, Inc. v. Crutcher, 2008 WL 268321, *2-6, 2008 U.S. Dist. LEXIS 6705, *7-16 (N.D.Okla.2008) (arbitration agreement in nursing home admission contract was governed by FAA; the provision of nursing home care amounted to interstate commerce); Washburn v. Beverly Enterprises-Georgia, Inc., 2006 WL 2728627, *2, 2006 U.S. Dist. LEXIS 73267, *6(II)(A) (S.D.Ga.2006) (FAA applied since "nursing home care substantially affects interstate commerce in the aggregate and is also subject to federal control"); Briarcliff Nursing Home v. Turcotte, 894 So.2d 661, 667-668(V) (Ala.2004) (transaction evidenced by nursing home admission contract affected interstate commerce). Furthermore, the Admission Contract provided that the agreement to arbitrate was pursuant to the FAA. "[I]f the intent of the parties indicates that arbitration would be governed by the FAA, this Court will enforce the intentions of the parties." (Citation omitted.) Results Oriented v. Crawford, 245 Ga.App. 432, 437(1)(a), 538 S.E.2d 73 (2000).

2. Under the FAA, written agreements to arbitrate "a controversy thereafter arising out of such contract or transaction" are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Whether there is a valid agreement to arbitrate is generally governed by state law principles of contract formation, and is appropriate for determination by the court. See Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 452, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003); Galindo v. Lanier Worldwide, 241 Ga.App. 78, 83, 526 S.E.2d 141 (1999). "As the party seeking arbitration, [Triad] bears the burden of proving the existence of a valid and enforceable agreement to arbitrate." Ashburn Health Care, 286 Ga.App. at 25, 648 S.E.2d 430.

The trial court found Triad failed to carry its burden of proving the existence of a valid and enforceable agreement to arbitrate because the evidence did not establish that Matthew Johnson acknowledged or consented to waive his right to trial.¹ Triad contends that the trial court erred in so finding because Johnson bound his father by signing the Admission Contract as the fiduciary and pursuant to a valid power of attorney. We agree.

"Traditional principles of agency law may bind a nonsignatory to an arbitration agreement." Thomson-CSF, S.A. v. American Arbitration Assn., 64 F.3d 773, 777(I)(C) (2nd Cir.1995). The Admission Contract shows the parties intended that Johnson be bound thereby as the fiduciary, but that he was also acting in a representative capacity for Matthew Johnson. Matthew Johnson and Johnson are both named as parties. See Harp v. First Nat. Bank of Reynolds, 173 Ga. 768, 161 S.E. 355 (1931) ("if made by an agent or attorney, [a contract] must be in the name of the principal, in order that he may be a party, because otherwise he is not bound by it"). The contract contemplates execution by the patient, Matthew Johnson, "and/or" the fiduciary, Johnson. Below the signature of the fiduciary, the agreement provides "Fiduciary Party executes this Contract in the capacit(y)(ies) checked below and shall provide evidence of Fiduciary Party's capacit(y)(ies) at the time of signing of this Contract." Below this statement are 11 boxes corresponding to various capacities in which the fiduciary might be representing the patient, such as guardian, attorney-in-fact, and trustee, among others. The agreement also provides that "Fiduciary Party shall act on behalf of Patient/Resident for all purposes permitted under applicable law."

Although the Admission Contract contemplates that Matthew Johnson be bound by its provisions and that Johnson was acting in a representative capacity, whether Johnson had the authority to bind his father is a separate issue. The only box checked under Johnson's signature is "immediate family member," and such relationship is not in itself sufficient to establish that Johnson was his father's agent. See Ashburn Health Care, 286 Ga.App. at 25-26, 648 S.E.2d 430 (although decedent's husband signed an agreement providing that claims related to the decedent's care at the nursing home would be arbitrated, the nursing home was unable to show that the husband was the decedent's agent and could not enforce the arbitration agreement). "The relationship] of principal and agent arises wherever one person, expressly or by implication, authorizes another to act for him or subsequently ratifies the acts of another in his behalf." OCGA § 10-6-1.

The undisputed evidence shows that in effect at the time of Johnson's execution of the Admission Contract was a general power of attorney, executed by Matthew Johnson, designating Johnson as his attorney "with full power and authority to do and perform all and every act ... necessary, requisite or proper to be done, as fully ... as I might or could do if personally present," and without specific limitation. Thus Johnson was an immediate family member who was also Matthew Johnson's expressly appointed agent. Under the circumstances of the transaction, which involved Matthew Johnson's admission into a treatment facility while incapacitated, Johnson's execution of the Admission Contract on behalf of his father was "necessary, requisite or proper," within the scope of the agency contemplated by the power of attorney, and Matthew Johnson was bound thereby. See OCGA § 10-6-51 ("[t]he principal shall be bound by all the acts of his agent within the scope of his authority"); Dedousis v. First Nat. Bank of Cobb County, 181 Ga.App. 425, 426(2), 352 S.E.2d 577 (1986) (general terms of power of attorney, while strictly construed, "include those things which are usual and necessary to carry out [its] purpose") (citation and punctuation omitted). Since Johnson was his father's agent by express appointment, we need not consider whether his apparent authority was otherwise insufficient, as Johnson maintains. Rather, the trial court erred in concluding that Matthew Johnson had not agreed to arbitration under the Admission Contract.

3. Johnson further contends that the agreement to arbitrate is unenforceable in light of OCGA § 9-9-62, and that we should therefore affirm the trial court's...