Testa ex rel. Testa v. Emeritus Corp.
168 F. Supp. 3d 1103
N.D. Ill.2016Background
- Samuel Testa was admitted to Emeritus assisted-living facility; his son Joseph signed admission documents on Samuel’s behalf using powers of attorney.
- Joseph signed an Establishment Contract on Nov. 1, 2012, and separately signed an Arbitration Agreement on Nov. 22, 2012, as Samuel’s "Authorized Representative."
- Samuel had executed (1) an Illinois statutory short-form Health Care Power of Attorney (2010) granting Joseph broad health-care decision authority and an enabling clause, and (2) a 2001 Arizona durable power of attorney granting broader asset, litigation, and health-care powers.
- Emeritus moved to compel arbitration under the November 22 Arbitration Agreement; Joseph challenged the agreement’s validity, arguing he lacked authority under the POAs to bind Samuel.
- The central legal question narrowed to whether either the Illinois or Arizona POA conferred actual, express authority on Joseph to sign a pre-dispute arbitration agreement that was optional and not a condition of admission.
- The court concluded neither POA expressly authorized Joseph to enter the optional arbitration agreement and denied Emeritus’s motion to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Illinois statutory health-care POA authorized Joseph to sign an optional pre-dispute arbitration agreement for admission-related services | Joseph: the Illinois POA only covers health-care decisions necessary for care/admission; an optional arbitration agreement not required for admission is not a healthcare decision | Emeritus: arbitration agreement is part of the admission/healthcare process and the POA’s enabling language authorizes signing necessary instruments | Held: Illinois POA did not authorize signing an optional arbitration agreement because the arbitration was not necessary to admission and the POA must be construed narrowly (Fiala distinguished) |
| Whether the Arizona durable POA (litigation and healthcare provisions) authorized Joseph to sign the pre-dispute arbitration agreement | Joseph: Arizona POA’s litigation and healthcare clauses do not explicitly authorize pre-dispute waiver/agreement to arbitrate; powers must be clearly and narrowly expressed | Emeritus: broad Article I and litigation/healthcare clauses (and Article III applying authority to property) permit Joseph to bind Samuel to arbitration | Held: Arizona POA did not expressly authorize signing a pre-dispute arbitration agreement; litigation clause might allow post-claim arbitration decisions but not pre-claim waiver |
Key Cases Cited
- Janiga v. Questar Capital Corp., 615 F.3d 735 (7th Cir.) (federal law places arbitration clauses on same footing as other contracts)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S.) (Supreme Court precedent on arbitration clause enforcement principles)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (U.S.) (doubts about arbitrability resolved in favor of arbitration)
- Fiala v. Bickford Senior Living Group, 32 N.E.3d 80 (Ill. App. Ct.) (agent under statutory healthcare POA could bind principal to arbitration when arbitration provision is integral and necessary to admission)
- Estate of Nicholls v. Nicholls, 960 N.E.2d 78 (Ill. App. Ct.) (powers of attorney construed narrowly; broad/catchall language does not authorize powers not expressly granted)