Kindred Nursing Centers Limited Partnerhship D/B/A Winchester Centre for Health and Rehabilitation N/K/A Fountain Circle Health and Rehabilitation v. Beverly Wellner Individually and on Behalf of the Estate of Joe P. Wellner, and on Behalf of the Wrongful Death Beneficiaries of Joe P. Wellner
2013 SC 000431
| Ky. | Nov 29, 2017Background
- Consolidated appeals arose from nursing-home arbitration disputes; this decision is a remand from the U.S. Supreme Court after its decision in Kindred Nursing Centers v. Clark.
- Kentucky Supreme Court had earlier issued Extendicare Homes, Inc. v. Whisman, adopting a "clear-statement rule" requiring express POA language to authorize an agent to execute pre-dispute arbitration agreements.
- Kindred challenged only the clear-statement rule in the U.S. Supreme Court; the Court held the rule conflicted with the Federal Arbitration Act and vacated/reversed that portion of Kentucky's decision.
- The Wellner appeal involved whether Joe Wellner’s power of attorney (POA) authorized his agent Beverly Wellner to sign a free‑standing pre-dispute arbitration agreement upon his admission to a Kindred facility.
- Kentucky Supreme Court had three alternative grounds in Extendicare: (1) construction of the Wellner POA language (found insufficient), (2) application of the clear-statement rule, and (3) other reasoning applied to Clark POA. The Supreme Court remanded to determine whether the POA construction was "wholly independent" of the now-rejected clear-statement rule.
- On remand the Kentucky Supreme Court held its original construction that the Wellner POA did not authorize pre-dispute arbitration was wholly independent of the clear-statement rule and therefore remains undisturbed; a dissent argued the majority remained tainted by anti‑arbitration bias and should re-evaluate the POA.
Issues
| Issue | Plaintiff's Argument (Wellner) | Defendant's Argument (Kindred) | Held |
|---|---|---|---|
| Whether the Wellner POA authorized Beverly to execute a pre-dispute arbitration agreement on Joe's behalf upon nursing-home admission | POA language (powers to "demand, sue for..." and "make...contracts...in relation to both real and personal property") does not authorize executing a freestanding pre‑dispute arbitration agreement affecting only constitutional rights | The cited POA powers encompass litigation decisions and contracts relating to choses‑in‑action (personal property), so they authorize signing arbitration agreements | Held: POA did not authorize Beverly to sign the pre‑dispute arbitration agreement; that conclusion stands on grounds independent of the clear‑statement rule |
| Whether the court’s original POA construction was impermissibly influenced by the clear‑statement rule | The court relied on traditional contract/agency interpretation and distinguished arbitration agreements not tied to property enforcement; independent of clear‑statement rule | Kindred argued prior construing was influenced by anti‑arbitration rule and must be re‑evaluated | Held: The court finds its POA interpretation was "wholly independent" of the clear‑statement rule; no re‑evaluation required |
| Whether authority to waive access to courts/jury must be clearly stated in POA (the clear‑statement rule) | Wellner supports protecting fundamental rights; favors requiring clear statement (as earlier adopted) | Kindred contends the clear‑statement rule singles out arbitration, conflicting with the FAA | Held: U.S. Supreme Court rejected Kentucky's clear‑statement rule as preempted by the FAA; but that holding does not disturb the court’s independent POA construction in Wellner |
| Whether broad/vague POA language (as in Clark) can imply authority to sign arbitration agreements | Wellner distinguishes Clark (vague, all‑encompassing language) from Wellner POA; narrower Wellner provisions do not authorize pre‑dispute arbitration | Kindred points to Clark to argue implied authority can exist without express language | Held: Clark POA was sufficiently broad to permit implication; Wellner POA language was construed differently and found insufficient — that determination is independent of the clear‑statement doctrine |
Key Cases Cited
- Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015) (Kentucky Supreme Court opinion adopting the clear‑statement rule and construing POAs in consolidated arbitration cases)
- Ping v. Beverly Enters., Inc., 376 S.W.3d 581 (Ky. 2012) (announcing general caution about inferring agent authority to waive access to courts and jury rights)
- Kindred Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct. 1421 (2017) (U.S. Supreme Court reversing Kentucky’s clear‑statement rule as preempted by the Federal Arbitration Act and remanding Wellner for determination whether POA construction was tainted)
- Mannet Health Care Ctr., Inc. v. Brown, 565 U.S. 530 (2012) (per curiam) (example of vacatur/remand where it is unclear to what degree an alternative state‑law holding was influenced by an erroneous arbitration‑specific rule)