Yet Again, An Agreement to Arbitrate Falls on the Lack of Actual Agency Authority

Yet Again, An Agreement to Arbitrate Falls on the Lack of Actual Agency Authority

      In yet another of a now long string of cases, a Kentucky court has struck down a purported agreement to arbitrate, again in a healthcare facility admissions document, based upon the failure of the person who executed that agreement to have actual authority to do so.  LP Pikeville, LLC v. Pinson, 2013 WL 3335013 (Ky. App. June 28, 2013).

      Lettie Totten was admitted to a long-term care facility on February 21, 2008.  She was assisted by her daughter Nannette Pinson, who signed the admission documents on her mother’s behalf.  In connection therewith, Nannette executed an agreement providing for arbitration of disputes.  Nannette did not hold from Lettie a power of attorney, nor had she been appointed her mother’s legal guardian.  Shortly after that admission, Lettie executed a health care surrogate form designating Nannette her surrogate.  The agreement to arbitrate was not re-executed subsequent to the delivery of that healthcare surrogacy, and neither was it a condition of receiving services. 

     Lettie subsequently passed away, and Nannette, on behalf of the estate, brought an action; the facility and other defendants sought to compel arbitration of the dispute.  The trial court denied arbitration, and the Court of Appeals heard an appeal thereof on an interlocutory basis.

      Starting with the rule set forth by the Kentucky Supreme Court in Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky. 2012), the court set forth, inter alia, a trio of rules to be applied in determining whether an agreement to arbitrate will in this situation will be enforced, namely:

·                     The party seeking arbitration bears the burden of showing there exists a valid agreement to arbitrate;

·                     The proponent of the arbitration bears the burden of showing that any agent who executed the agreement on behalf of a principal had actual authority to do so; and

·                     If entering into the arbitration agreement is not a prerequisite to admission into the healthcare facility, the determination to bind the admittee to arbitration is not a healthcare decision.