Triad Health Mgmt. of Georgia v. Johnson, No. A09A0286.

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

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.

[679 S.E.2d 787]

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

679 S.E.2d 788

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...