Business Law

Holley v. Silverado Senior Living Management, Inc. (August 7, 2020, G058576) __Cal.App.5th__[2020 WL 4558940]

Temporary conservators cannot bind conservatee to arbitration agreement absent consent or lack-of-capacity ruling.

Elizabeth Holley became a patient at the Silverado Senior Living facility when she was 77 years old and suffering from dementia and other medical problems. Diane and James Holley became Elizabeth’s temporary conservators. When admitting Elizabeth to Silverado, Diane and James signed a “Resident-Community Arbitration Agreement” on her behalf.  Six days later, the probate court granted Diane and James’s petition, as Elizabeth’s temporary conservators, to place Elizabeth at Silverado and ordered them to assume the role of Elizabeth’s conservators with the authority to place her in a locked facility.

A few months later, Elizabeth died after suffering a humeral fracture, an injury to her arm, a fractured hip, and numerous bruises. Diane and James sued Silverado for elder abuse, negligence, breach of contract, and wrongful death. Silverado moved to compel arbitration, which the trial court denied after finding that Diane and James had no authority to bind Elizabeth to an arbitration agreement. Silverado appealed, arguing “the agreement to arbitrate was a ‘health care decision’ to which a conservator had the authority to bind a conservatee.”

The Court of Appeal affirmed.  The court explained that, as temporary conservators, Diane and James “lacked the power to bind Elizabeth to an agreement giving up substantial rights [such as ‘the right to use the courts for redress of grievances’]  without her consent or a prior adjudication of her lack of capacity.” Prior cases have held that the decision to execute an arbitration agreement upon admission to a senior living facility is a healthcare decision.  However, the power of a temporary conservator to make medical decisions on behalf of a conservatee is limited. If a conservatee’s lack of capacity has not been adjudicated, then the conservatee must consent to medical treatment (including arbitration). Here, there was no evidence of Elizabeth’s consent, and a court first ruled that she lacked capacity six days after Diane and James executed the arbitration agreement on her behalf.  Diane and James therefore lacked the power to bind Elizabeth to arbitration at the time they executed the agreement.

The bulletin describing this appellate decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission.

For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or htwatson@horvitzlevy.com.

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