Principal Bound by Arbitration Agreement Only if Agent Had Authority

Principal Bound by Arbitration Agreement Only if Agent Had Authority

      In yet another consideration of whether an agreement to arbitrate included in health care facility admission documents would be enforced against the person admitted (or ultimately their estate), the Court of Appeals has again held that it is necessary that the person executing the admission documents on behalf of the patient have agency authority to do so.  Absent authority to bind the principal to the arbitration agreement, the agent’s action are for naught, and no valid agreement to arbitrate exists.  Kindred Hospitals L.P. v. Clark, No. 2011-CA-001663-MR (Ky. App. Feb. 15, 2013) (Not to be Published).

      Julie Clark held a medical surrogate power-of-attorney to make healthcare decisions with respect to Dorothy Harold (the opinion does not otherwise specify the nature of their relationship).  On at least four occasions, Clark, on Harold’s behalf, completed admissions paperwork to Kindred facilities, each of which contained an alternative dispute resolution provision.  After her last admission to a Kindred skilled nursing home, Harold died.  Subsequently thereto, Clark, as Harold’s executor, filed an action against Kindred for gross negligence and recklessness; in response Kindred moved to dismiss on the basis of the agreement to arbitrate.  The trial court denied Kindred’s motion, and it appealed to the Court of Appeals.  The Court of Appeals ultimately upheld the trial court’s decision.

       Essentially, Clark lacked agency authority to, on Harold’s behalf, bind her to the agreement to arbitrate.  In Ping v. Beverly Enterprises, 376 S.W.3d 581 (Ky. 2012), the Kentucky Supreme Court determined that the daughter of the deceased, who acted under a general durable power-of-attorney, did not have authority to waive her mother’s right to a jury trial or to bind her to arbitration.  In this case, the medical surrogate power-of-attorney held by Clark afforded even less authority on Harold’s behalf than had been the case in Ping.  Clark had only authority to make healthcare decisions on Harold’s behalf, and that authority did not extend to waiving her right to redress in the courts.  Further, estoppel would not work to bind Harold’s estate in that there was no evidence that Harold made an affirmative representation to Kindred or any reliance by Kindred upon her conduct.