December 26, 2020

The Superior Court of Pennsylvania, in its non-precedential opinion filed on November 18, 2020, refused to enforce a nursing home arbitration agreement signed by the resident’s spouse at the time of her husband’s discharge from the nursing home, holding “we conclude that the trial court properly denied ManorCare’s motion to enforce the Agreement because no valid contract was formed where Ms. Lovett lacked the authority to sign it on her husband’s behalf.”

The Underlying Facts

On February 8, 2016, eighty-two-year-old McKinley C. Lovett (“Mr. Lovett”) presented to Prospect CCMC, LLC. He had sustained a fall and was suffering from pressure ulcers, skin impairments and malnutrition. He was transferred to ManorCare on February 13, 2016. He resided there for twenty-one days until March 4, 2016, when he was discharged to the home he shared with his wife, Hattie D. Lovett (“Ms. Lovett), per their wishes. On March 4, 2016, the day of discharge, Ms. Lovett signed the admissions paperwork ( twenty seven pages including over ten separate
documents requiring a signature), including an arbitration agreement that provided that signing it was voluntary and not required for admission, that the resident was waiving his right to a jury trial, and all disputes were to be arbitrated. Mr. Lovett died on May 23, 2016.

On January 17, 2018, the Estate filed a nursing home negligence complaint against ManorCare, alleging negligence, corporate negligence/liability and custodial neglect for failure to properly examine, treat and care for Mr. Lovett during his admission at ManorCare, from February 13, 2016 through March 4, 2016. ManorCare subsequently moved to compel enforcement of the arbitration agreement, which the trial court denied, finding that Ms. Lovett lacked authority to sign it where “the record fails to establish that the late McKinley C. Lovett was requested to sign any of the admission papers, that the Voluntary Arbitration Agreement was presented or discussed with Mr. Lovett or that he was aware of the execution of the documents at discharge.” ManorCare appealed.

Pennsylvania Superior Court Opinion 

The Pennsylvania Superior Court stated “we first note that it is undisputed that Ms. Lovett was not her husband’s legal guardian, and although Mr. Lovett provided his wife with a Wachovia Bank Limited Power of Attorney, it did not grant her authority outside of handling banking matters. Although ManorCare argues that granting Ms. Lovett with the Wachovia Bank Power of Attorney establishes a course of conduct, we find such argument unavailing for express/actual authority, which requires that Mr. Lovett “deliberately and specifically grant[ed] authority” to Ms. Lovett to sign the [arbitration] Agreement.”

The Pennsylvania Superior Court continued: “More importantly, there was no evidence that Mr. Lovett granted his wife with the specific authority to sign the [arbitration] Agreement and waive his constitutional right to a jury trial.”

The Pennsylvania Appellate Court held: “Based on the foregoing, we discern no abuse of discretion in the trial court’s finding that ManorCare failed to prove that Mr. Lovett granted Ms. Lovett with the actual authority to bind him to the Agreement.”

The Pennsylvania Superior Court further held: “merely because Mr. Lovett was in the room when the Agreement was signed does not establish Ms. Lovett with the apparent authority to sign it … he exhibited no course of conduct in granting Ms. Lovett with legal authority to sign an arbitration agreement on his behalf where this was his first admission to ManorCare and he had elected not to grant her with a legal power of attorney. Therefore, there was nothing in his actions that would lead a person to believe that he granted Ms. Lovett the apparent authority to sign the Agreement on his behalf.”

Lastly, the Pennsylvania Superior Court held: “the Agreement expressly stated that admission was not contingent on the Agreement being signed, so Mr. Lovett realized no benefit from his wife signing it. Moreover, there is no evidence that he ratified the Agreement after Ms. Lovett signed. Therefore, we conclude that ManorCare has failed to establish agency by estoppel.”

Source Lovett v. HCR ManorCare, Inc., J-A23031-20.

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