Upcoming from the Ky Supreme Court - More on Arbitration

Upcoming from the Kentucky Supreme Court –

Agent’s Ability to Bind Principal to Arbitration

      In Beverly Enterprises, Inc. v. Ping, the Court of Appeals reversed a determination by the trial court denying a motion to compel arbitration.  Beverly Enterprises, Inc. v. Ping, No. 2009-CA-001361-MR (Ky. App. July 23, 2010) (Not To Be Published).

      Alma Duncan was admitted to a long-term nursing facility maintained by Beverly Enterprises.  On her mother’s behalf, Ping signed the nursing facility’s document and as well a separate Alternative Dispute Resolution Agreement.  By its terms, the agreement provided that it would be governed by and interpreted in accordance with the Federal Arbitration Act.  See id., slip op. at 6, fn. 5.  At the time of doing so, Ping presented to the facility a copy of the General Power of Attorney from her mother.  After her mother passed away, Ping, now as executrix of her mother’s estate, filed a lawsuit against Beverly Enterprises alleging negligence with respect to her mother’s care.  Beverly answered and sought enforcement of the ADR agreement, which motion was denied by the trial court. 

      On the basis that the Power of Attorney did not specifically set forth authority to enter into the ADR agreement, the trial court found it to be unenforceable.  In turn, the Court of Appeals reviewed the language of the General Power of Attorney held by Ping and determined that its scope included the ability to enter into the ADR agreement.  The Court of Appeals also rejected the trial court’s determination that there had been fraud in the execution of the agreement, finding that the agreement to arbitrate was open and obvious, that no contrary statements had been made as to its legal effect and further that there was included a right to seek the advice of counsel and the ability to revoke the agreement within thirty days of its making.

      Ping’s brief to the Supreme Court reasserts each of the bases rejected by the Kentucky Court of Appeals, beginning with the assertion that the trial court, under the Alley Cat holding, does not have the ability to compel arbitration.  She also makes the curious argument that, as the healthcare facility stood in a judiciary relationship with its patient, there was a breach of its fiduciary duties in presenting the ADR Agreement, it having enticed Ms. Duncan “to waive her constitutional rights in order to receive medical care.”  Appellant’s Brief to the Kentucky Supreme Court filed August 8, 2011, page 19. 

      Oral arguments were heard on February 15, 2012.