Kindred Nursing Centers Ltd. Partnership v. Chrzanowski

Citations: 338 Ga. App. 708; 791 S.E.2d 601; 2016 Ga. App. LEXIS 537Docket: A16A0803

Court: Court of Appeals of Georgia; September 28, 2016; Georgia; State Appellate Court

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The case involves a wrongful death claim questioning the trial court's determination that Jeanne Chrzanowski lacked the capacity to agree to arbitration with Kindred Nursing Centers. The trial court ruled she did not have the necessary capacity at the time of the agreement and denied Kindred’s motion to compel arbitration regarding claims from Jeanne’s estate. After reviewing the case de novo, it was found that the trial court applied an incorrect standard and improperly shifted the burden of proof, prompting the appellate court to vacate the trial court's order and remand for further proceedings.

In November 2011, Jeanne, who lived alone, suffered an ankle fracture after a fall. Following surgery, she was admitted to Kindred Nursing Centers for rehabilitation. Her medical history included chronic obstructive pulmonary disease (COPD), coronary artery disease, hypertension, and cognitive impairment. Prior to her fall, she experienced episodes of confusion and memory loss, including an instance where she had no recollection of a previous emergency room visit. Despite this, she was alert and oriented at the hospital post-fall and was able to consent to her treatment plan.

Upon her admission to Kindred, Jeanne required oxygen and medications for pain and infection. The admissions paperwork, including an alternative dispute resolution (ADR) agreement, was not completed until December 7, several days after her admission. The ADR agreement mandated that all claims related to her stay and care at the facility would be submitted to ADR, stating that signing the agreement was 'voluntary' and 'optional.' During the admission process, Jeanne signed the ADR Agreement after discussions with the admissions coordinator, although subsequent assessments noted her confusion and forgetfulness, particularly during a therapy evaluation two days prior to signing the agreement.

Between December 5 and December 12, occupational therapy documented Jeanne's significant anxiety and confusion, with her expressing disorientation regarding her surroundings. A speech pathologist's evaluation on December 7 indicated severe impairments in Jeanne's comprehension of yes/no questions and moderate impairments in concentration, understanding sentences, conversation, memory, reasoning, and judgment. A nutrition assessment on the same day revealed Jeanne's confusion regarding her meals. Additional assessments identified her as at risk for falls due to weakness, medications, confusion, and forgetfulness. A nursing report on December 8 noted increased confusion, although subsequent progress notes indicated periods of alertness and orientation to person and time, alongside Jeanne's expressed desire to return to independent living.

Following a decline in her condition, Jeanne experienced additional falls and hospitalizations, ultimately passing away on April 25, 2012. Her sons, Michael and Alan Chrzanowski, filed a wrongful death and negligence lawsuit against Kindred Nursing Centers. Kindred responded by seeking to dismiss the suit and compel arbitration, citing an ADR Agreement. The Chrzanowskis contended that Jeanne lacked the capacity to enter into this agreement.

During the proceedings, testimony was presented from family members and medical experts. Deborah Chrzanowski indicated that Jeanne had been somewhat independent prior to her fall but noted a decline in her mental capacity. In contrast, she acknowledged that Jeanne was aware of her location and situation upon admission to the nursing home, though she became increasingly confused thereafter. Michael Chrzanowski provided conflicting accounts regarding Jeanne's independence and mental state, asserting that she did not understand her circumstances upon admission. Dr. Daniel Lively, an expert for the Chrzanowskis, opined that Jeanne lacked the capacity to sign the ADR Agreement based on her medical records.

Michael Chrzanowski’s deposition supported the conclusion that Jeanne suffered from dementia. Dr. Lively reviewed evaluations from October and records from Kindred Nursing Centers, confirming Jeanne's chronic dementia. He noted no evidence of fluctuating mental status or lucidity, attributing her condition to multiple medical issues, including COPD, coronary artery disease, depression, and oxygen dependency. Lively also identified progressive dementia and medication-induced delirium linked to pain management and anesthesia. He stated that Jeanne's dehydration and urinary tract infection further affected her mental state, concluding with reasonable medical certainty that she lacked the capacity to understand the ADR Agreement when she signed it.

In contrast, Kindred Nursing Centers presented testimony from assistant administrator Stodghill, who completed the ADR Agreement with Jeanne shortly after her admission. Stodghill described Jeanne as intelligent and oriented, asserting that Jeanne was engaged in the paperwork process and did not exhibit confusion. Although she did not review Jeanne’s medical records prior to the signing, Stodghill claimed her extensive experience in nursing homes guided her interactions with residents.

Additionally, Kindred's expert, Dr. Grove, a geriatric psychiatrist, testified that he had not treated Jeanne but had reviewed her records. He argued that confusion does not imply incapacity, noting that patients can experience lucidity. Grove stated that Jeanne showed no formal dementia diagnosis until February 2012, arguing her impairment was likely acute delirium that would resolve with improved oxygen levels. He highlighted that Jeanne lived independently prior to hospitalization and that nursing notes indicated only intermittent confusion, ultimately opining that she possessed the capacity to sign the ADR Agreement on December 7.

The trial court denied Kindred Nursing Centers' motion to compel arbitration, applying a summary judgment standard and finding that the Centers did not prove Jeanne's capacity to enter into the ADR Agreement. The court determined there was sufficient evidence indicating Jeanne lacked capacity at the time of signing. Kindred Nursing Centers appealed, arguing the court erred in applying the summary judgment standard and placing the burden of proof on them. Under Georgia law, the party seeking arbitration must prove the existence of a valid agreement, while the party challenging the agreement must demonstrate incapacity. The court noted that a contract signed by someone deemed mentally incompetent is voidable, not void, and established that Kindred Nursing Centers had initially established a prima facie case for an enforceable contract. Consequently, the burden shifted to the Chrzanowskis to prove Jeanne's incapacity. Georgia law presumes individuals are of sound mind, and incapacity must be proven, not presumed. To void a contract on the grounds of mental incapacity, the individual must have been entirely without understanding at the time of execution, and even temporary loss of competency does not imply ongoing incapacity at the moment of the contract.

The trial court's ruling on a motion to compel arbitration improperly applied the summary judgment standard, as established in Anderson v. Benton, which was deemed inapposite. In Anderson, the standard was appropriate due to the parties' motions for summary judgment regarding a settlement agreement. Here, the trial court shifted the burden of proof onto Kindred Nursing Centers to demonstrate Jeanne's capacity, contrary to established case law that presumes competency and places the burden on the party claiming incapacity. This misapplication could not resolve conflicting evidence regarding Jeanne’s capacity, and using the summary judgment standard would convert arbitration challenges into extensive trials, undermining the purpose of arbitration. Georgia public policy favors arbitration and the trial court should have analyzed the facts and law with this in mind. The court was allowed to make factual determinations based on evidence outside the pleadings, but instead, it required Kindred Nursing Centers to prove a lack of evidence of incapacity. The burden rests on the party challenging the arbitration agreement. The ruling was vacated, and the case was remanded for the trial court to assess whether the Chrzanowskis met their burden of proving Jeanne’s incapacity at the time of signing the ADR Agreement. The appellate court refrained from expressing an opinion on the Chrzanowskis' ability to meet this burden. Other errors raised by Kindred Nursing Centers were not addressed due to the incorrect burden of proof being applied. The decision was made on September 28, 2016.