“Prove Incapacity at the Moment of Signing”: Alabama Supreme Court Reaffirms Apparent-Authority Standard for Nursing‑Home Arbitration Agreements

Introduction

In Mobile Nursing and Rehabilitation Center, LLC v. Sliman, the Supreme Court of Alabama reversed a Mobile Circuit Court order that had denied a motion to compel arbitration of a wrongful-death claim brought by the personal representative of a nursing-home resident. The dispute centered on whether an arbitration agreement—executed by the resident’s spouse as his “Authorized Representative” on the eve of his admission—could be enforced when the resident suffered from dementia.

The opinion clarifies and reinforces two interlocking principles in Alabama law:

Dementia, even when diagnosed as chronic, does not by itself establish permanent incapacity; and
To defeat arbitration based on alleged incapacity, the challenger must prove either permanent incapacity (no lucid intervals) or temporary incapacity at the precise time the agreement was executed.

The defendants were Mobile Nursing and Rehabilitation Center, LLC (MNRC) and its administrator, Michael Britton. The plaintiff, Jeanne Sliman, sued as personal representative of the estate of her husband, Ernest Sliman, alleging negligent care at MNRC that led to sepsis and Ernest’s death. MNRC and Britton moved to compel arbitration based on a “Jury Trial Waiver and Arbitration Agreement” that Jeanne signed during admission paperwork on May 18, 2023. The trial court denied the motion; the Supreme Court reversed.

Summary of the Opinion

Applying de novo review, the Court held that MNRC met its initial burden to show a written arbitration agreement governed by the Federal Arbitration Act (FAA) and affecting interstate commerce. The burden then shifted to Jeanne to prove the arbitration agreement was invalid or inapplicable. Relying on Stephan v. Millennium Nursing & Rehab Center, Inc., 279 So. 3d 532 (Ala. 2018), and Troy Health & Rehabilitation Center v. McFarland, 187 So. 3d 1112 (Ala. 2015), the Court concluded that Jeanne failed to carry her burden to show:

Ernest was permanently incapacitated (i.e., had no lucid intervals), or
Ernest was temporarily incapacitated at the exact time she signed the agreement (May 18, 2023).

The Court emphasized the absence of contemporaneous evidence from May 18 and noted records from May 19 reflecting that Ernest could converse, make his needs known, answer questions about preferences, and was assessed as able to make decisions. The Court also rejected Jeanne’s argument that alleged noncompliance with Medicare/Medicaid arbitration-presentation regulations (42 C.F.R. § 483.70(n)(1)) rendered the agreement unenforceable, observing that she initialed acknowledgments that the agreement was voluntary and, in any event, offered no generally applicable contract defense (such as fraud, duress, or unconscionability) preserved below.

Result: The denial of the motion to compel arbitration was reversed and the case remanded with instructions consistent with compelling arbitration.

Detailed Analysis

Precedents Cited and Their Influence

Stephan v. Millennium Nursing & Rehab Center, Inc., 279 So. 3d 532 (Ala. 2018)
The controlling guidepost. Stephan holds that a resident’s apparent authority to empower another to sign an arbitration agreement is defeated if the resident lacked mental capacity. The challenger must prove either (1) permanent incapacity (no lucid intervals) or (2) incapacity at the precise time of execution. The Court imported Stephan’s burden framework and analytical focus on “precise-time” evidence and fluctuating cognition characteristic of dementia.
Troy Health & Rehabilitation Center v. McFarland, 187 So. 3d 1112 (Ala. 2015)
Establishes the presumption of capacity, the burden of proof for incapacity, and the distinction between permanent and temporary incapacity. Incorporates classic “lucid interval” doctrine from Alabama contract jurisprudence, quoting cases like Wilson v. Wehunt and Hall v. Britton.
Queen v. Belcher, 888 So. 2d 472 (Ala. 2003); Yates v. Rathbun, 984 So. 2d 1189 (Ala. Civ. App. 2007)
Applied in McFarland, these cases define competency for executing instruments (e.g., powers of attorney): whether the person could understand and comprehend the act. They support the presumption of capacity and the lucid-interval framework.
Wilson v. Wehunt, 631 So. 2d 991 (Ala. 1994); Hall v. Britton, 113 So. 238 (Ala. 1927)
These decisions provide the oft-quoted rule that proof of intermittent or temporary incapacity does not create a presumption continuing to the time of the transaction; the attacking party must prove incapacity at the very moment of contracting.
TitleMax of Alabama, Inc. v. Falligant, 328 So. 3d 244 (Ala. 2020) (plurality)
Reinforces that evidence of mental illness or inability to manage finances, without more, does not suffice to prove permanent incapacity to contract.
Diversicare Leasing Corp. v. Hubbard, 189 So. 3d 24 (Ala. 2015) and Noland Health Services, Inc. v. Wright, 971 So. 2d 681 (Ala. 2007) (plurality)
Examples where arbitration was not enforced because the resident's condition amounted to profound, continuous incapacity (e.g., mental capacity of an infant, nonverbal, completely dependent, “always confused”). Sliman distinguishes these as factually inapposite to Ernest's documented capacity to converse and perform activities at baseline.
SSC Montgomery Cedar Crest Operating Co. v. Bolding, 130 So. 3d 1194 (Ala. 2013)
A comparator where acute medical events (stroke, heart attack) compounded cognitive deficits. In Sliman, there was no analogous acute condition shown to have exacerbated cognition at the time of execution.
Elizabeth Homes, L.L.C. v. Cato, 968 So. 2d 1 (Ala. 2007); Ex parte Roberson, 749 So. 2d 441 (Ala. 1999); Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277 (Ala. 2000); Jim Burke Auto., Inc. v. Beavers, 674 So. 2d 1260 (Ala. 1995)
Standard of review and burden-shifting for motions to compel arbitration: the movant shows the existence of a written arbitration agreement affecting interstate commerce; the burden then shifts to the non-movant to show invalidity or inapplicability.
Ex parte Chris Langley Timber & Mgmt., Inc., 923 So. 2d 1100 (Ala. 2005); Hester v. Hester, 474 So. 2d 734 (Ala. Civ. App. 1985)
Support the rule that the party seeking to avoid a contract bears the burden of proving incapacity by a preponderance of the evidence.
Northport Health Services of Arkansas, LLC v. U.S. Dep’t of Health & Human Servs., 14 F.4th 856 (8th Cir. 2021) and AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011)
Cited to underscore that even if a facility violates Medicare/Medicaid arbitration presentation rules (e.g., by conditioning admission on arbitration), enforceability turns on generally applicable contract defenses; federal regulations do not themselves supply a per se invalidation rule for private arbitration agreements under the FAA.

Legal Reasoning

The Court proceeded in three steps:

Existence and scope of the arbitration agreement; FAA applicability.
MNRC proved the arbitration agreement existed, bore Jeanne’s signature as “Authorized Representative,” and invoked the FAA by reciting interstate commerce. Jeanne did not meaningfully dispute the FAA or the agreement’s existence; the agreement also broadly bound the resident, heirs, personal representatives, and related parties, easily capturing the wrongful-death claim arising from care provided at the facility.
Apparent authority and the incapacity defense.
Under Stephan and McFarland, the presumption of capacity controls unless the challenger proves:
- Permanent incapacity (i.e., no lucid intervals), in which case any purported apparent authority fails; or
- Temporary incapacity at the moment of execution, which would defeat the ability to vest apparent authority at that time.
The record contained no contemporaneous May 18, 2023 assessment (the day Jeanne signed). By contrast, May 19 records showed Ernest was “alert,” “verbally responsive,” could state preferences (sleep, music, TV), knew marital/children status, and was assessed by MNRC’s activities director as not cognitively impaired and “able to make his own decisions.” Providence records reflected he was at “baseline” on discharge and able to converse and perform activities of daily living. Other notes the same day referenced “moderate impairment” and a “stupor” description at one point, illustrating fluctuations typical of dementia. Crucially, the absence of evidence fixed to the moment of signing, combined with the next-day lucidity, undermined both permanent-incapacity and precise-time incapacity theories.
Regulatory argument under 42 C.F.R. § 483.70(n)(1).
Jeanne argued MNRC failed to explain that arbitration was optional or verbally explain the agreement. The Court noted:
- Jeanne initialed that the arbitration agreement was “voluntary” and “not a condition of admission.”
- She did not preserve a traditional contract-defense challenge (e.g., fraud, duress, unconscionability) in the trial court.
- Under the FAA and Northport Health, noncompliance with the CMS rule does not itself render the agreement unenforceable absent a generally applicable contract defense.

The Court also acknowledged MNRC’s postjudgment “new evidence” (early June hospital records suggesting Ernest was at baseline upon discharge and had been ambulating and eating reasonably two months prior). Although the trial court’s treatment of this evidence was unclear, the Supreme Court’s de novo review did not turn on it; the Court found Jeanne’s proof insufficient even on the original record to establish permanent or precise-time incapacity.

Impact and Significance

Sliman does not announce a wholly new rule; it fortifies and concretizes the Stephan/McFarland framework in a fact pattern common to nursing‑home litigation. Its practical implications are substantial:

“Moment-of-signing” proof is decisive. Parties seeking to invalidate a nursing-home arbitration agreement on capacity grounds must marshal evidence fixed to the execution moment (or show truly continuous, profound incapacity). Medical notes a day later, while probative, may be outweighed by contemporaneous or near-contemporaneous lucid assessments.
Dementia is not dispositive. A dementia diagnosis—even chronic—does not equal permanent incapacity. Courts will look for lucid intervals, the ability to converse, follow instructions, or make needs known, and activities of daily living, all of which can sustain apparent authority.
Regulatory noncompliance alone won’t void arbitration. Alleged violations of CMS arbitration-presentation rules do not automatically invalidate the agreement. Parties must plead and prove a generally applicable contract defense; preservation matters.
Documentation culture matters. Facilities that contemporaneously document cognitive status and choice-acknowledgments will be well-positioned to compel arbitration. Challengers must anticipate this by securing precise-time medical and lay evidence of incapacity.
Wrongful-death claims remain arbitrable when tied to the resident’s agreement. In Alabama, personal representatives may be bound by an arbitration clause that covers heirs, representatives, and claims “arising out of” the resident’s care, provided the agreement is otherwise valid.

Complex Concepts Simplified

Apparent Authority: When a person (the principal) behaves in a way that reasonably leads a third party to believe someone else (the agent) can act for the principal. If the principal is mentally incompetent, he ordinarily cannot create apparent authority—unless he had lucid capacity at the time of the authorization (or unless another doctrine, like ratification, applies).
Permanent vs. Temporary Incapacity:
- Permanent (no lucid intervals): the person is never competent; any signature or authorization dependent on their will is invalid unless the other side proves a lucid interval.
- Temporary (intermittent or fluctuating): the challenger must prove the person was incapacitated at the exact time of the transaction.
Lucid Interval: A period during which a person with cognitive impairment temporarily regains the ability to understand their actions. Contracts or authorizations made during a lucid interval can be valid.
FAA and Interstate Commerce: The Federal Arbitration Act enforces written arbitration agreements in contracts involving interstate commerce. Health-care facilities typically satisfy this via medications, supplies, and billing activities crossing state lines.
CMS Arbitration Rule (42 C.F.R. § 483.70(n)(1)): Medicare/Medicaid-certified facilities may not require arbitration agreements as a condition of admission and must meet disclosure/voluntariness requirements. However, violation of the rule does not independently void an arbitration clause; enforceability turns on standard contract defenses (fraud, duress, unconscionability) unless otherwise provided by law.
Burden-Shifting on a Motion to Compel Arbitration:
- Movant proves a written arbitration agreement and interstate commerce.
- Non-movant must prove invalidity (e.g., incapacity) or inapplicability (e.g., dispute outside scope).

Practical Takeaways

For challengers to arbitration: Gather medical and lay testimony pinpointed to the date and time of execution demonstrating the resident’s inability to understand or authorize. Broad narratives of cognitive decline, even if sincere and compelling, are unlikely to suffice without precise-time proof.
For facilities: Ensure admission packets conspicuously state that arbitration is voluntary, provide verbal explanations, and obtain initials acknowledging voluntariness. Document the resident’s cognitive status at or near execution and maintain assessments that reflect the resident’s ability to make decisions.
For counsel: Preserve contract defenses (fraud, duress, unconscionability) in the trial court if raising CMS rule-compliance arguments; absent preservation and proof, FAA preemption principles and cases like Northport Health will blunt regulatory arguments against enforcement.

Conclusion

Mobile Nursing & Rehabilitation Center, LLC v. Sliman reaffirms the Stephan/McFarland doctrine in sharp relief: to avoid arbitration on incapacity grounds, a plaintiff must show either permanent incapacity or incapacity at the precise moment of execution. Dementia—without more—is not enough. The decision also underscores that CMS arbitration-presentation rules do not per se invalidate agreements under the FAA absent traditional contract defenses, especially when the signer acknowledged voluntariness.

In the broader Alabama landscape, Sliman strengthens the enforceability of nursing‑home arbitration agreements where facilities contemporaneously document cognitive status and disclose voluntariness, and it raises the evidentiary bar for challengers to produce precise-time proof of incapacity. The opinion thus offers a clear procedural and substantive roadmap for future disputes at the intersection of elder care, contract capacity, and arbitration law.