Arbitration Agreement Not Valid between Nursing Home and Residents. Recently, the Kentucky Supreme Court held based on the language of the particular power-of-attorney instruments:
- an arbitration agreement was not validly formed between the respective nursing home facility and the resident whose interests were thereby affected;
- the expression of authority in the power-of-attorney document to institute or defend suits concerning the nursing home residents’ property rights did not confer the authority to enter into a pre-dispute arbitration agreement;
- the power “to draw, make and sign any and all checks, contracts, notes, mortgages, agreements, or any other document including state and Federal tax returns” did not confer the authority to enter in a pre-dispute arbitration agreement;
- the powers to “to transact, handle, and dispose of all matters affecting me and/or my estate in any possible way” and “[g]enerally to do and perform for me in my name all that I might if present” were broad enough and clear enough, unless otherwise prohibited, to encompasses the signing of a pre-dispute arbitration agreement; and
- none of the power-of-attorney documents conferred the authority to waive the nursing home resident’s constitutional rights of access to the courts by judge or jury and to appeal to a higher court.
In making these findings, they affirmed the appellate decision which denied the appeals of the nursing homes and their parent companies. The appellate court noted that the explicit authority to institute or defend suits concerning the nursing home residents’ property or rights did not imply the authority to initiate a claim in arbitration, or, correspondingly to waive the nursing home residents’ right to seek redress in a court of law.
The court held that an agent’s authority to do away with the principal’s constitutional right to access the courts and to trial by jury must be clearly expressed by the principal (nursing home resident). This authority was not explicitly set out in the power-of-attorney document which conferred the powers to “to transact, handle, and dispose of all matters affecting me and/or my estate in any possible way” and “[g]enerally to do and perform for me in my name all that I might if present.” Because none of the power-of-attorney instruments involved in these cases provided a clear direction by the resident of their intent to delegate that power to the agent, the court concluded that the agent was not so authorized, and that the principal’s assent to the waiver was never validly obtained. They went on to say whether the principal’s agreement to the arbitration agreement was obtained is a question of law that depends entirely upon the scope of authority set forth in the written power-of-attorney instrument. An arbitration agreement entered into by an attorney-in-fact, which exceeded the grant of authority conferred by his principal, is no agreement at all.
How did this all come about? Separately, three people executed a power-of-attorney document designating a family member as their attorney-in-fact. The first power-of-attorney document provided that the attorney-in-fact had full power to draw, make, and sign any checks, contracts, notes, mortgages, agreements, or any other document including tax returns and to institute or defend suits concerning the person’s property or rights. The second power-of-attorney document provided that the attorney-in-fact had the power “to demand, sue for, collect, recover and receive all debts, monies, interest and demands whatsoever now due or that may hereafter be or become due to me (including the right to institute legal proceedings therefor)” and “to make … contracts of every nature in relation to both real and personal property, including stocks, bonds, and insurance.” The third power-of-attorney document provided that the attorney-in-fact had the power “to transact, handle, and dispose of all matters affecting me and/or my estate in any possible way” and “[g]enerally to do and perform for me in my name all that I might if present.”
Subsequently, each person was admitted as a resident at a nursing home. The respective attorneys-in-fact executed the documents required by the nursing home for the person’s admission. Each attorney-in-fact also signed an alternative dispute resolution agreement presented by the nursing home’s admission staff. The document stated that signing the agreement was not a condition of admission to the nursing home; it stated that the parties understood that by signing the document they were waiving their constitutional right to have disputes decided by a court of law or to appeal any decision resulting from alternative dispute resolution; and it provided a list of covered disputes, which included wrongful death, personal injuries suffered by the nursing home resident, and violations of Kentucky law.
After admission to the nursing home, each person died. Separately, the estates sued the nursing homes and their parent companies. The complaints alleged personal injuries to the nursing home resident caused by negligence, violations of Kentucky law, and wrongful death.
Based on the arbitration agreements, the nursing homes and their parent companies, moved to dismiss the lawsuits and to order the estates to submit their respective claims to arbitration. They argued that the authority to institute or defend suits concerning a person’s property or rights included the authority to enter into the pre-dispute arbitration agreement. The estates argued that the power-of-attorney documents did not give the attorneys-in-fact the authority to agree all of the potential claims that the nursing home resident would have would be submitted to arbitration. The Trigg Circuit Court and Clark Circuit Court denied the motions of the nursing homes and their parent companies. The trial courts concluded that the power-of-attorney documents did not give the attorneys-in-fact the understanding that their authority would apply to a waiver of the important right of bringing a lawsuit before a jury rather than before an arbitration panel. The trial courts noted that there was nothing in the power-of-attorney documents that authorized the attorneys-in-fact to settle claims or disputes or expressly addressed dispute resolution.
Many Florida appellate decisions have had similar holdings as the Kentucky Supreme Court did in this case. In Sovereign Healthcare of Tampa v. Estate of Yarawsky, 2D13-2083, an elderly nursing home resident had lived at the plaintiff’s facility for 10 months prior to his death. Following his death, the decedent’s estate filed a lawsuit against the nursing home, alleging that the decedent died due to the nursing home’s negligence. After a trial court overturning their original holding to compel the case to arbitration, the matter was appealed. On appeal to the Second District, the court upheld the trial court’s overturning the motion to compel arbitration, finding that the decedent was not bound by the terms of the admission paperwork or the arbitration clause included therein. The Second District noted that the provisions at issue in Perry were identical to the provisions at issue in the present case, and that the decedent’s wife executed the agreement as the responsible party–not as the decedent’s representative. In Perry ex rel. Perry v. Sovereign Healthcare of Metro W., 100 So. 3d 146 (Fla. 5th DCA 2012), the Fifth District Court of Appeal held that the arbitration clause was not enforceable against the daughter of an individual who passed away during residency with the nursing home facility. The admission paperwork had no references to the resident, and the area where the daughter could have indicated her authority to execute agreements on behalf of the resident was left blank. Moreover, “there was ‘no evidence [that the resident] was incapable of singing the agreement on her own behalf’ and even if the daughter had signed on the mother’s behalf, there was ‘absolutely no evidence that [the daughter] had the authority to bind [the resident] to the arbitration agreement.” The court reasoned that an agreement could not be enforced against an individual who was not a party to the agreement, and who was not bound to its terms by a representative.
See Sovereign Healthcare of Tampa v. Estate of Yarawsky, 2D13-2083 http://caselaw.findlaw.com/fl-district-court-of-appeal/1682947.html
See Perry ex rel. Perry v. Sovereign Healthcare of Metro W., 100 So. 3d 146 (Fla. 5th DCA 2012) https://casetext.com/case/perry-ex-rel-perry-v-sovereign-healthcare-of-metro-w
See: Extendicare Homes, Inc. v. Whisman, 2015 WL 5634309 (Ky., September 24, 2015)