Ky. Ruling Casts Doubt on Health Care Arbitration Agreements

Health care institutions in Kentucky may want to take a fresh look at their patient arbitration provisions, in light of a September 24 decision by the Kentucky Supreme Court.  Out-of-state institutions may want to take a look, as well.

In three cases personal representatives or survivors sued nursing homes for wrongful death and personal injury.  In each case the nursing home moved to dismiss, citing an arbitration agreement signed by the decedent’s attorney-in-fact at the time of admission.  The trial courts denied the motions, and the cases went to the Kentucky Supreme Court.

The Supreme Court analyzed the wrongful death and personal injury claims differently.  Under state law a wrongful death action belongs to the beneficiary of the right of action—not to the decedent.  The decedent can’t give up that right or commit it to arbitration because it doesn’t belong to the decedent.

A personal injury claim does belong to the decedent, and the decedent can commit it to arbitration.  So the question was whether the three decedents had granted the attorneys-in-fact the authority to commit such claims to arbitration.

The court concluded that in two of the cases, the language of the attorneys-in-fact appointment documents, while broad, was insufficient to grant authority to commit the decedent to arbitration of claims that didn’t exist at the time of the appointment.  So the attorneys-in-fact who signed the arbitration documents lacked the authority to do so.

The court acknowledged that the third appointment document was different: it did implicitly grant the attorney-in-fact the authority to commit to arbitration.  But the court still ruled the grant ineffective.  Why?  Because the right to go to court is so fundamental that the power to waive it “must be unambiguously expressed in text of the power-of-attorney document.”  An implicit grant is no better than no grant at all.

The case is Extendicare Homes v. Whitman, 2015 BL 309131, No. 2013-SC-000426-I (Ky., Sept. 24).

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