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Nursing home arbitration agreement invalid in Pikeville, Kentucky case

file0002056753077 vmorguefile cohdraIn HQM of Pikeville, LLC v. Collins, the granddaughter of a woman who died in a Pikeville, Kentucky, nursing home sued for wrongful death and negligence. The woman was admitted to the nursing home in 2007, where she remained until her death almost one year later. When the woman entered the facility, her granddaughter signed all of her admission paperwork, including a nursing home arbitration agreement. At the time of the woman’s admission, her granddaughter possessed court-ordered authority to determine the woman’s living arrangements, handle her financial matters, and provide medical consent on her behalf. Although she was later named the woman’s permanent guardian, her granddaughter did not have the legal right to enter into contracts on the woman’s behalf on the date she entered the nursing home.

In 2009, the woman’s granddaughter filed a wrongful death and negligence lawsuit on behalf of the woman’s estate against the skilled nursing facility in Pike County Circuit Court. In response to the lawsuit, the nursing home filed a motion to compel the dispute to arbitration under the Kentucky Uniform Arbitration Act and the Federal Arbitration Act based on the agreement that was signed by the woman’s granddaughter. After the trial court denied the facility’s motion, the company filed an appeal with the Kentucky Court of Appeals. On remand, the Pike County Circuit Court again denied the company’s motion. The lower court held that the long term care facility failed to demonstrate a valid agreement to arbitrate existed because the woman’s granddaughter did not have the authority to bind her to the arbitral agreement. The nursing home then sought review by the appellate court.

First, the Kentucky Court of Appeals examined the nursing home’s claim that the circuit court failed to address the instructions provided to it on remand. According to the nursing home, the Pike County Circuit Court ignored the appellate court’s mandate to examine whether or not the Federal Arbitration Agreement applied to the case at hand. The appeals court stated the question was irrelevant because the Kentucky Supreme Court’s subsequent decision in the case of Donna Ping, Executrix of the Estate of Alma Calhoun Duncan, deceased vs. Beverly Enterprises Inc. requires a party who seeks to enforce an arbitration agreement under either the Kentucky Uniform Arbitration Act or the Federal Arbitration Act to demonstrate that a valid arbitration agreement existed. In order to avoid further delay, the Kentucky Court of Appeals said it would assume the Federal Arbitration Agreement applied to the case and address the lower court’s holding that the nursing home failed to meet its burden under the law.

The court noted that, although the arbitration agreement at issue stated it was governed by the Federal Arbitration Agreement, the nursing home claimed both the Kentucky and federal law applied to the parties’ dispute. Next, the Court of Appeals said both the Kentucky Uniform Arbitration Act and the Federal Arbitration Act are “substantively identical,” based on Kentucky Supreme Court precedent. The appellate court then examined the estate’s claims against the skilled nursing home under Kentucky law.

The appeals court found Kentucky case law expressly provides that an arbitration agreement may not bind a decedent’s heirs with regard to a wrongful death claim. Because of this, the court held that the nursing home’s motion to compel arbitration on the wrongful death cause of action was properly denied, whether or not the arbitration agreement was valid.

Next, the Kentucky Court of Appeals said the estate’s negligence claims are survival actions under Kentucky Revised Statutes Section 411.140. After distinguishing the facts of the case at hand from Ping, the court addressed the nursing home’s argument that the woman’s granddaughter had the authority to enter into an arbitration agreement on her behalf based on principles of common-law agency. The court said no published case law directly applied to the situation before them. The appeals court then held that the Pike County Circuit Court properly denied the facility’s motion because the facts of the case demonstrated that the woman’s granddaughter lacked the authority to enter into the agreement to arbitrate on the woman’s behalf.

Finally, the Kentucky Court of Appeals dismissed the nursing home’s claim that the estate should be bound by the arbitration agreement at issue, based on the doctrines of apparent authority, third-party beneficiary, and estoppel. The court stated the same arguments were ruled invalid by the Kentucky Supreme Court in Ping. Since the arbitration agreement at issue was invalid and unenforceable, the Kentucky Court of Appeals affirmed the lower court’s order denying the nursing home’s motion to compel arbitration.

If you or someone you love suffered abuse or neglect in a Kentucky nursing home, you should discuss your rights with a knowledgeable Bowling Green lawyer. To schedule a confidential consultation with a diligent Kentucky nursing home negligence attorney, call English, Lucas, Priest & Owsley, LLP at (270) 781-6500 or contact us online.

Additional Resources:

HQM of Pikeville, LLC v. Collins, Ky: Court of Appeals 2014

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Photo Credit: cohdra, MorgueFile