## Facts

- Mary Helen Cox, a 77-year-old patient needing post-hospital care and therapy, was admitted to a nursing home operated by NHC Healthcare/Knoxville, Inc.
- During admission, NHC presented an 11-page form contract containing a dispute-resolution provision requiring mediation and then binding arbitration, including a jury-trial waiver.
- NHC’s admissions coordinator testified the arbitration provision was non-negotiable and that a prospective resident who refused it would have to obtain care elsewhere.
- Mrs. Cox was mentally competent at the time of admission.
- Mrs. Cox’s husband, Charles Cox, signed the admission agreement; Mrs. Cox did not sign.
- Charles Cox lacked formal legal authority (e.g., power of attorney or guardianship) to act as Mrs. Cox’s agent.
- Mrs. Cox died about a month after admission; her representative alleged she died from abuse, neglect, negligence, and fraud in the facility’s care.

## Issues

1. Whether an arbitration clause in a nursing-home admission contract can be enforced against a competent resident who did not sign the contract when the contract was signed only by a spouse lacking authority to act as agent.
2. Whether wrongful-death beneficiaries are bound to arbitrate when the decedent was not bound by a valid agreement to arbitrate.

## Decision

- The Court of Appeals reversed the order compelling arbitration and remanded for further proceedings in the trial court.
- The court held there was no enforceable agreement to arbitrate as to Mrs. Cox because NHC failed to show that she agreed to arbitration through a legally authorized agent.
- The court rejected enforcement based on actual authority, apparent authority, or ratification.
- Because Mrs. Cox was not bound to arbitrate, her wrongful-death beneficiaries were likewise not bound.

## Legal Principles

- Arbitration is a matter of contract; a party cannot be compelled to arbitrate absent an agreement to do so.
- Ordinary agency principles govern whether a non-signatory is bound by an arbitration clause, including:
  - Actual authority requires a legally sufficient grant of authority from the principal.
  - Apparent authority must be based on the principal’s manifestations to the third party, not on the third party’s assumptions.
  - Ratification requires knowledge of the material term (here, the arbitration clause) and acceptance of benefits with that knowledge.
- A wrongful-death claim’s derivative character does not create an arbitration obligation where the decedent was never contractually bound to arbitrate.

## Conclusion

The court held the nursing-home could not compel arbitration of wrongful-death and related claims because the resident did not sign the admission contract, the spouse who signed lacked authority to bind her, and the record did not support apparent authority or ratification; therefore, the beneficiaries were not required to arbitrate.


Raiteri ex rel. Cox v. NHC Healthcare/Knoxville, Inc., No. E2003-00068-COA-R9-CV, 2003 Tenn. App. LEXIS 957 (Tenn. Ct. App. 2003)