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Georgia Guardianship Code Grants a Guardian Authority to Enter Into a Binding Pre-Dispute Arbitration Agreement

In CL SNF, LLC v. Fountain (Ga. Supreme Court September 21, 2021), the Georgia Supreme Court reversed CL SNF, LLC v. Fountain, 355 Ga. App. 176, 183 (1) (843 SE2d 605) (2020), finding that the Georgia Guardianship Code grants a guardian authority to enter into a binding pre-dispute arbitration agreement.

The Clinch County Probate Court issued Letters of Guardianship of Adult Ward on November 15, 2006, naming Fountain as guardian for Wiggins. In 2014, Wiggins was admitted to a nursing home and Foundation signed an admission agreement containing an arbitration clause. Fountain also signed a separate arbitration agreement. The agreement expressly stated that signing the arbitration agreement was not a precondition for admission and that Fountain/Wiggins could seek legal counsel prior to signing.

In March, 2019, Fountain filed a lawsuit against the nursing home alleging claims of sexual battery committed by another resident. The nursing home moved to compel arbitration pursuant to the Federal Arbitration Act, 9 USC §§ 1-16. Wiggins responded, arguing the arbitration agreement was unenforceable because it violated federal law by giving Clinch, as a precondition to Wiggins’s admission to CHC, additional consideration over and above the Medicaid payments Clinch received for Wiggins’s care. See 42 USC §1396r (c)(5)(A)(iii). The trial court also found the agreement was not enforceable because it was (1) commercially unreasonable, failing to advance the purpose of the Admission Agreement, which was to provide nursing home services for payment, and (2) unconscionable, based on the court’s finding that the parties did not have an equal obligation to arbitrate under its
terms.

On appeal, the Georgia Court of Appeals held that Georgia’s Guardianship Code does not give a guardian authority to enter into a binding pre-dispute arbitration agreement.

Examining the authority granted to guardians, the Supreme Court found:

OCGA § 29-4-22 sets out the general duties of a guardian and states that “[e]xcept as otherwise provided by law or by the court, a guardian shall make decisions regarding the ward’s support, care, education, health, and welfare.” OCGA § 29-4-22 (a). The statute also directs that a guardian “shall consider the expressed desires and personal values of the ward” to the extent they are known and “shall at all times act as a fiduciary in the ward’s best interest and exercise reasonable care, diligence, and prudence.” OCGA § 29-4-22 (a). Consistent with the broad authority granted in subsection (a) of the statute, subsection (b) describes other duties that the guardian shall perform, including “[a]rrang[ing] for the support, care, education, health, and welfare of the ward, considering the ward’s needs and available resources.” OCGA § 29-4-22 (b) (6). A second statutory provision – OCGA § 29-4-23 – outlines what powers a guardian may exercise “[u]nless inconsistent with the terms of any court order relating to guardianship.” Among other things, the guardian may “[e]xercise those other powers reasonably necessary to provide adequately for the support, care, education, health, and welfare of the ward.” OCGA § 29-4-23 (a) (4). See also OCGA § 29-4-23 (a) (1). These statutes, when construed together, impose significant duties on the guardian to make arrangements for the ward’s care and grant the guardian expansive, though not unlimited, powers to do so. See generally In re Estate of Wertzer, 330 Ga. App. 294, 298 (1) (765 SE2d 425) (2014).

Although the guardianship code does not expressly address pre-dispute arbitration agreements, it does address alternative dispute resolution at OCGA § 29-4-23(a)(3). The Court was asked to imply power to enter into pre-dispute arbitration agreements, but found instead that power to enter into pre-dispute arbitration agreements is a power that is “reasonably necessary” to adequately provide for the ward under OCGA § 29-4-23(a)(4).

“No one questions that Fountain, as guardian, had the authority to enter into the Facility Admission Agreement to allow Wiggins to receive skilled nursing care from Clinch. But included in that agreement is an arbitration clause, and if we accept Fountain’s argument that she had no power to enter into a pre-dispute arbitration agreement because it was not necessary to secure care for Wiggins, then a guardian considering a contract proposed by a care provider that includes terms later determined to be not absolutely necessary to the provision of such services would be able to avoid those terms of the contract even though the guardian in the exercise of her fiduciary duties may have concluded at the time of contracting to agree to those terms.”

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