On June 19, 2015, the United States District Court for the Western District of Tennessee issued a favorable opinion for the firm's clients enforcing an assisted living facility’s arbitration agreement. In the case, the resident’s son, and attorney in fact through two powers of attorney, signed the arbitration agreement on behalf of his mother in the process of admitting her to an assisted living facility. Hagwood Adelman Tipton healthcare attorneys, Rebecca Adelman, PLLC, along with an associate, represented the firm’s clients.
Plaintiff argued that the alternative dispute resolution agreement (ADR) was not enforceable on multiple grounds, including the unavailability of the National Arbitration Forum (NAF) as the arbitration service provider and that the wrongful death beneficiaries were not bound by the ADR. The court disagreed with each of Plaintiff’s arguments. Of importance, the court relied heavily on the contract itself rather than analyzing extraneous factors and the circumstances surround the signing of the arbitration agreement. The court followed the trend of numerous federal courts in finding that the unavailability of the NAF does not render the ADR unenforceable because it was not an integral term of the contract and could be severed based on clear terms within the ADR.
The court also disagreed with Plaintiff’s argument that the wrongful death beneficiaries were not bound by the terms of the ADR. Tennessee follows a hybrid approach to the wrongful death statute, which finds that there can only be one cause of action under the wrongful death statute and the cause of action belongs to the deceased. The court held that since the wrongful death claim belongs to the estate/deceased, the beneficiaries must seek their damages in whichever forum the estate agreed to, including arbitration. As the court acknowledged, this issue had not been clearly decided under Tennessee law and, thus, this opinion provides clear guidance for future cases.
Of note, the court granted the motion to compel arbitration and dismissed the suit without prejudice. In many cases, courts stay the proceedings pending the conclusion of arbitration. Here, the court found that because all of Plaintiff’s claims are within the substantive scope of the ADR, all of the claims are subject to arbitration and dismissed Plaintiff’s claims without prejudice.
The decision in this case is very important for enforcing future motions to compel arbitration. Many of the issues decided in this opinion have been heavily debated in recent years and the court’s opinion provides clear guidance for future cases.
Attorney Adelman filed a memorandum and two sur-replies, per the court’s instruction, to fully brief the court on all issues, including specifically the wrongful death beneficiaries’ issue. The court’s order agreed with each of the arguments presented by defense counsel.