Background
Loris Paris was admitted to Saint Matthews Healthcare, LLC (the Facility), a South Carolina nursing home. At the time of admission, Loris had executed a springing durable power of attorney naming Beverly Vaughn as her attorney-in-fact—but only if Loris were deemed incompetent. George Paris, Loris’s son, arrived at the Facility and signed both an Admission Agreement and a separate Arbitration Agreement purportedly on Loris’s behalf. Loris was not declared incompetent until the day after George signed the Arbitration Agreement, meaning Vaughn’s authority under the power of attorney had not yet sprung into effect at the signing. When Loris died and Beverly Vaughn, as personal representative of the estate, filed suit against the Facility and individual employees for negligence, the Facility and its administrators moved to compel arbitration based on the signed Arbitration Agreement.
The circuit court denied the motion, finding on six grounds: (1) George did not have authority to sign the Arbitration Agreement on Loris’s behalf; (2) the Arbitration Agreement was unconscionable; (3) it lacked consideration or benefit to the estate; (4) the Admission Agreement and Arbitration Agreement did not merge; (5) Estate of Solesbee by Bayne v. Fundamental Clinical and Operational Services, LLC, 438 S.C. 638, 885 S.E.2d 144 (Ct. App. 2023), controlled; and (6) equitable estoppel did not apply to bar the estate from challenging the Arbitration Agreement. The Facility appealed all six rulings.
The Court’s Holding
The Court of Appeals affirmed the denial of arbitration on two independent grounds, leaving the remaining four arguments unaddressed under Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 518 S.E.2d 591 (1999).
First, the court held George lacked both actual and apparent authority to execute the Arbitration Agreement on Loris’s behalf. As to actual authority, no legal document conferred it: the springing DPOA named Vaughn, not George, and had not yet activated because Loris was not deemed incompetent until the day after George signed. The fact that Vaughn may have verbally authorized George to sign admission paperwork did not carry Loris’s authority forward because Vaughn’s own authority had not sprung. As to apparent authority, South Carolina law requires the principal—not the would-be agent—to consciously or impliedly represent the agent’s authority. There was no evidence Loris was present when George signed, that Loris had communicated anything to the Facility about George’s role, or that Loris in any other way held George out as her agent. The court emphasized that authority to make financial or healthcare decisions does not, without more, encompass executing an agreement to waive jury trial rights through arbitration.
Second, the court held the Admission Agreement and Arbitration Agreement did not merge, applying the four-factor analysis from Solesbee: (1) the Admission Agreement was governed by South Carolina law while the Arbitration Agreement was governed by federal law; (2) each document was separately labeled, paginated, and had its own signature page; (3) the Arbitration Agreement expressly acknowledged the two instruments were separate, providing that it “shall survive any termination or breach of this Agreement or the Admission Agreement”; and (4) signing the Arbitration Agreement was not a precondition to admission. Critically, in this case the two documents were also signed on different days, further evidencing their independent character. Because the documents did not merge, the equitable estoppel theory—which depends on merger as a predicate—also failed.
Key Takeaways
- A family member’s signature on a nursing home arbitration agreement does not bind the patient unless actual or apparent agency is established; a springing durable power of attorney that has not yet activated confers no authority, and a third party’s verbal permission to sign documents cannot bootstrap authority that has not yet vested in the permitting party.
- Apparent authority to bind a nursing home patient to arbitration requires affirmative conduct by the patient, not just by the family member signing: the Facility bears the burden of showing the patient consciously or impliedly represented the signer as her agent.
- The four-factor Solesbee merger test—governing law, separate pagination, survival clause, non-precondition to admission—remains the governing framework for determining whether a nursing home’s admission and arbitration agreements are integrated instruments; if they are not, equitable estoppel as a basis for enforcing arbitration against the estate also falls away.
- Once the court finds no merger, it need not reach unconscionability, consideration, or other challenges to the arbitration clause under Futch—a dispositive threshold ruling terminates the analysis.
Why It Matters
Vaughn v. Saint Matthews Healthcare extends and reinforces the post-Solesbee framework governing nursing home arbitration in South Carolina by adding a detailed analysis of the authority-to-sign question. Before Solesbee, much of the arbitration litigation in the long-term care context focused on unconscionability and consideration. Solesbee established the merger test as a threshold gateway; Vaughn now pairs it with an agency analysis that can independently defeat arbitration even before the merger question is reached.
For South Carolina plaintiffs’ counsel representing nursing home residents or their estates, the case offers a two-track pleading strategy: challenge both the signatory’s authority (focus on what legal instrument authorized signing, whether it was effective at the time, and whether the patient manifested consent) and the document structure (apply the Solesbee checklist). For long-term care facilities, the decision is a call to revisit admission procedures: verbal authorization from a family member is insufficient, the timing of any power of attorney relative to the signing must be verified, and the Facility must document that the patient herself in some way authorized the designated representative. Facilities whose arbitration agreement packages mirror the Solesbee/Hodge structure—separate governing law, separate signature pages, survival clause, optional signing—will also face the no-merger ruling regardless of how the authority question resolves.