Extendicare Homes, Inc. v. Whisman
2015 Ky. LEXIS 1867
| Ky. | 2015Background
- Three consolidated Kentucky cases where nursing homes (Extendicare, Kindred) sought interlocutory relief to compel arbitration of claims (personal injury, KRS 216.510 statutory claims, and wrongful death) after agents (attorneys‑in‑fact) signed pre‑dispute arbitration clauses at residents’ admissions.
- Each resident had executed a durable power of attorney (POA) appointing a family member who signed admission and optional arbitration paperwork on the resident’s behalf; the powers granted differed in breadth across the three POAs.
- Trial courts initially split: Trigg Circuit (Whisman/Adams) and Clark Circuit (Wellner, Clark) denied or later vacated dismissal/compulsion to arbitrate after this Court’s Ping decision; Courts of Appeals denied interlocutory relief to the nursing homes.
- Central dispute: whether the particular POA language conferred authority on the agent to enter a pre‑dispute arbitration agreement (and thus whether the principal validly assented), and whether wrongful‑death beneficiaries can be bound by decedent‑signed arbitration agreements.
- The Supreme Court of Kentucky affirmed the Courts of Appeals: two POAs did not authorize pre‑dispute arbitration; one (Clark) was broad enough to convey authority; in all three, waiver of fundamental rights (access to courts, jury trial, appeal) must be clearly and expressly authorized in the POA; wrongful‑death beneficiaries cannot be bound by the decedent’s arbitration agreement.
Issues
| Issue | Plaintiff's Argument (nursing homes) | Defendant's Argument (estates/beneficiaries) | Held |
|---|---|---|---|
| Whether an agent had authority under the POA to enter a pre‑dispute arbitration agreement | POA language granting power to sign “contracts/agreements” or to “institute/defend suits” implies authority to sign arbitration clauses | Agents lacked express authority to waive access to courts; general / financial language does not authorize a collateral pre‑dispute waiver | Held: Authority turns on the POA text. Adams (Whisman) and Wellner POAs were insufficient; Clark POA’s very broad language was sufficient to authorize arbitration. |
| Whether an agent’s execution of an arbitration clause can waive principal’s constitutional rights (access to courts, jury trial, appeal) absent explicit delegation | Nursing homes: express contract/suit powers in POAs suffice to bind principal to arbitration | Estates: waiver of fundamental constitutional rights requires clear, specific authorization in the POA; courts will not infer such delegations lightly | Held: Agent may not waive these fundamental rights absent an unambiguous, clearly expressed grant in the POA. |
| Whether wrongful‑death beneficiaries can be bound by an arbitration agreement executed by the decedent or the decedent’s agent | Nursing homes: arbitration clause signed at admission should bind claims arising from resident’s stay | Estates: wrongful‑death cause of action belongs to statutory beneficiaries (KRS 411.130) and is not derivative of decedent’s rights; decedent/agent cannot bind beneficiaries | Held: Wrongful‑death beneficiaries are not bound by decedent’s or agent’s pre‑death arbitration agreements. Ping reaffirmed. |
| Whether Clark Circuit Court had jurisdiction to vacate its earlier order compelling arbitration (CR 60.02) | Kindred: once court dismissed and ordered arbitration, it lost jurisdiction and CR 60.02 relief was ineffective | Estates: orders compelling arbitration are interlocutory under Kentucky practice; trial court retained power to revisit and vacate the prior order | Held: The trial court had jurisdiction to reconsider and vacate; orders compelling arbitration are interlocutory in Kentucky practice and may be revisited. |
Key Cases Cited
- Ping v. Beverly Enters., Inc., 376 S.W.3d 581 (Ky. 2012) (POA must expressly or clearly authorize agent to waive access to courts; wrongful‑death beneficiaries are not bound by decedent’s arbitration agreement)
- Pete v. Anderson, 413 S.W.3d 291 (Ky. 2013) (reaffirming wrongful‑death beneficiaries as real parties in interest; Ping controls)
- J.P. Morgan Chase Bank, N.A. v. Bluegrass Powerboats, 424 S.W.3d 902 (Ky. 2014) (formation of arbitration agreements is matter of state contract law; interlocutory orders compelling arbitration are subject to revisitation)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (state rules that single out arbitration or frustrate FAA objectives are preempted)
- Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201 (2012) (U.S. Supreme Court vacated state‑court rule refusing to enforce pre‑dispute nursing‑home arbitration clauses for personal‑injury/wrongful‑death claims)
- Doctors’ Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996) (state law that uniquely burdens arbitration clauses is preempted by the FAA)