Summary: Court Of Appeals Discussing Arbitration Clauses

The estate of a deceased 79-year-old woman sued a nursing home for injuries she suffered there and wrongful death. The nursing home moved the Trial Court to dismiss the complaint claiming that the deceased’s daughter had executed an arbitration agreement on admission to the nursing home. The court denied this motion because the daughter had no authority to agree to arbitration and the signature was obtained by wrongful means and without consideration.

The nursing home case
The nursing home appealed this and the Court of Appeals reversed it. Under KRS 417.045 et seq., Kentucky’s Uniform Arbitration Act, the agreement must be enforced. The Kentucky Supreme Court granted Discretionary Review and reversed the Court of Appeals reinstating the Circuit Court Opinion. The daughter’s Power of Attorney only allowed her to do what was reasonable and necessary to advance her mother’s health care and oversee her financial affairs. She was not authorized to settle claims, disputes or to waive legal rights. This was a unanimous opinion from Justice Abramson, in which she cited many other courts support this holding.

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A closer look at the case
When the daughter signed the admission papers for her mother, there was no indication that she was aware of the arbitration clause or that it was pointed out to her. The Court noted this when they rejected the nursing home’s claim of apparent authority. The Court rejected the nursing home’s defenses of equitable estoppel and third party beneficiary, holding that the daughter misrepresented nothing to the nursing home when she showed her Power of Attorney. It did not give her the right to waive her mother’s rights, according to the law. The Court also noted that the daughter did not have actual authority to enter the arbitration agreement. The daughter was not the party to the agreement. Therefore, the nursing home could not be a third party beneficiary to the agreement.

The conclusion
In conclusion, because the mother’s Power of Attorney did not authorize her daughter to do any more than make financial, property-related and healthcare decisions, under that wrongful death statute could not be bound by the agreement. Many companies have arbitration clauses hidden in their constraints. An arbitration clause has the effect of waiving your right to a jury trial should any disputes arise. I believe having a dispute heard by 12 Kentuckians is a right that should never be waived. An arbitrator often does multiple cases for the company and you have no right to appeal the decision. One should think long and hard before agreeing to arbitration!

To view that case, link here: http://opinions.kycourts.net/sc/2010-SC-000558-DG.pdf