On November 2, 2017, the Supreme Court of Kentucky (“Kentucky Supreme Court”), in a 4-to-3 decision, upheld its previous decision in a nursing home arbitration case that had been appealed to and decided by the U.S. Supreme Court, which remanded the case to the Kentucky Supreme Court to reconsider its decision in light of the U.S. Supreme Court’s decision.
The issue the Kentucky Supreme Court decided in its original opinion dealt with the enforceability of a pre-dispute nursing home arbitration agreement (alternative dispute resolution agreement). The Kentucky Supreme Court had held that an attorney-in-fact did not have the authority to bind his principal to a pre-dispute arbitration agreement unless that authority was clearly stated in the power-of-attorney document (the U.S. Supreme Court dubbed this the “clear statement rule”).
The U.S. Supreme Court held that Kentucky’s adoption of the clear statement rule in a companion case, insofar as it affected the nursing home’s pre-dispute arbitration agreement, impinged upon the supremacy of the Federal Arbitration Act. However, the U.S. Supreme Court was uncertain about whether the Kentucky Supreme Court had incorporated the clear statement rule into the alternative basis for the decision in the present case and therefore remanded that case for the Kentucky Supreme Court to determine whether the alternate grounds for its holding with respect to the pre-dispute arbitration agreement was “wholly independent” of the clear statement rule (the U.S. Supreme Court stated: “The Kentucky Supreme Court began its opinion by stating that the Wellner power of attorney was insufficiently broad to give Beverly the authority to execute an arbitration agreement for Joe. If that interpretation of the document is wholly independent of the court’s clear-statement rule, then nothing we have said disturbs it. But if that rule at all influenced the construction of the Wellner power of attorney, then the court must evaluate the document’s meaning anew. The court’s opinion leaves us uncertain as to whether such an impermissible taint occurred. On remand, the court should determine whether it adheres, in the absence of its clear-statement rule, to its prior reading of the Wellner power of attorney [POA]”).
On remand from the U.S. Supreme Court, the Kentucky Supreme Court stated that it had previously concluded that neither of the two POA provisions relied upon by Kindred (the defendant nursing home) gave the agent, Beverly Wellner, the authority to execute on behalf of her principal, Joe Wellner, a pre-dispute arbitration agreement. The Kentucky Supreme Court stated that by the explicit terms of the U.S. Supreme Court’s mandate, if the Kentucky Supreme Court’s original interpretation of the Wellner power of attorney (“POA”) was wholly independent of the clear statement rule, then it must stand as the final decision of the Kentucky Supreme Court.
The Kentucky Supreme Court stated in its November 2, 2017 opinion: “The premise behind the Supreme Court’s uncertainty seems to be its perception that our application of the clear statement rule, rather than the manifestation of our profound respect for the right of access to the Court of Justice explicitly guaranteed by the Kentucky Constitution and the right to trial by jury designated as “sacred” by Section 1 of the Kentucky Constitution, demonstrated instead a hostility to federal policies implicit in the Federal Arbitration Act and a resulting aversion to any implication of authority to make an arbitration agreement.”
The Kentucky Supreme Court stated in its November 2, 2017 decision that Kindred relied upon only two provisions of the Wellner POA as authority for Beverly Wellner’s execution of Kindred’s pre-dispute arbitration agreement: 1) 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, 2) the power “to make, execute and deliver deeds, releases, conveyances and contracts of every nature in relation to both real and personal property, including stocks, bonds, and insurance.”
The Kentucky Supreme Court stated that the “act” of Wellner’s agent which required authorizing language from the POA document was not the enforcement, through legal proceedings or otherwise, of something then due or to become due to Joe Wellner; nor was it the making of a contract or instrument pertaining to any of Joe Wellner’s property: the “act” that required authorization was signing an agreement which makes no reference at all to Joe’s property and instead pertains exclusively to his constitutional rights.
The Kentucky Supreme Court stated that Beverly Wellner did not execute Kindred’s optional free standing pre-dispute arbitration agreement within the context of a lawsuit or claim for the recovery of anything belonging to Joe Wellner, and Kindred’s pre-dispute arbitration contract did not relate to any property rights of Joe Wellner.
The Kentucky Supreme Court held: “Not a scintilla of our original analysis of the Wellner POA rested upon the premise that the authority to waive constitutional rights (or the corresponding authority to arbitrate a claim) must be clearly stated. Moreover, our analysis clearly expressed the opposite-that whenever reasonably consistent with the principal’s expressed grant of authority, we would infer without a clear statement the power to bind him to an arbitration agreement. Kindred’s agreement failed, not because the Wellner POA lacked a clear statement referencing the authority to waive Joe’s fundamental constitutional rights; it failed because, by its own specific terms it was not executed in relation to any of Joe Wellner’s property, and it was not a document pertaining to the enforcement of any of Joe’s existing claims … the Wellner POA was insufficient to vest Beverly Wellner with the power to execute a pre-dispute arbitration agreement as part of Joe Wellner’s admission to a nursing home was wholly independent of the clear statement rule decried by the United States Supreme Court. Therefore, as stated by the United States Supreme Court, that aspect of the Extendicare decision remains undisturbed.”
Kindred Nursing Centers Limited Partnership v. Wellner, 2013-SC-000431-I
If you or a loved one suffered injuries (or worse) while a resident of a nursing home in Kentucky or in another U.S. state due to nursing home neglect, nursing home negligence, nursing home abuse, nursing home understaffing, or resident on resident abuse, you should promptly contact a local nursing home claim attorney in your U.S. state who may investigate your nursing home claim for you and file a nursing home claim on your behalf, if appropriate.
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