James A. Welch, ET AL. v. Oaktree Health and Rehabilitation Center LLC D/B/A Christian Care Centers of Memphis, ET AL.

This appeal involves an arbitration agreement executed in connection with a patient’s admission to a nursing home. The arbitration agreement was executed by the patient’s brother, who had been designated as the patient’s attorney-in-fact for health care pursuant to a durable power of attorney for health care executed by the patient several years earlier. When the patient’s brother filed this wrongful death suit in circuit court, the nursing home defendants filed a motion to compel arbitration. The patient’s brother then asserted that he did not have authority to bind the patient to the arbitration agreement because the patient had been mentally incompetent when he executed the durable power of attorney for health care years earlier. The defendants argued that the trial court was not permitted to “look beyond” the durable power of attorney for health care to determine the competency of the patient at the time of its execution. The trial court ruled that it would “look beyond” the power of attorney for health care in order to consider the patient’s competency and allowed the parties to engage in discovery related to the issue of incompetence. Discovery ensued, and the parties submitted additional evidence regarding the patient’s competency. The trial court then found by clear and convincing evidence that the patient was incompetent at the time the durable power of attorney for health care was executed. As a result, the trial court concluded that the patient’s brother lacked authority to sign the arbitration agreement as attorney-in-fact for health care. The trial court denied the motion to compel arbitration, and the defendants appealed. Pursuant to the Tennessee Supreme Court’s decision in Owens v. National Health Corp., 263 S.W.3d 876 (Tenn. 2007), we hold that the trial court erred in looking beyond the durable power of attorney for health care to examine the patient’s competency at the time it was executed. We reverse the decision of the trial court and remand for further proceedings consistent with this opinion.