Federal law doesn't override state decree: Family not bound by dead relative's OK for arbitration

Family members aren't compelled to arbitrate wrongful death cases in Kentucky when the deceased person alone signed the agreement, a court of appeals has ruled.

In a case involving a long-term care resident, the U.S. Court of Appeals for the Sixth Circuit said the Federal Arbitration Act doesn't supersede Kentucky's rules around family members and arbitration. Federal law “doesn't force arbitration upon a party that never agreed to arbitrate in the first place,” the court ruled in mid-January.

The case involved Charlie Nichols, who signed an arbitration agreement when he entered Richmond Health Facilities-Kenwood LP in Richmond, KY. After his death, his executor filed a wrongful death action against RHFK, which in turn filed a parallel action to compel arbitration.

After the district court denied RHFK's motion, the provider appealed. It said in its Sixth Circuit filing that the Kentucky Supreme Court's decision on wrongful death claims by non-signatories and arbitration agreements didn't apply. In the fall, the court said a family member must have an explicit right when signing an arbitration agreement.

The Sixth Circuit did not agree the FAA pre-empts the state rule and said it found no case in Kentucky where a court refused to uphold any type of contract against a wrongful death beneficiary that the beneficiary hadn't signed.

“Wrongful death beneficiaries are thus no more or less bound by a decedent's agreement to arbitrate than they are by a decedent's waiver of certain claims, selection of a forum to litigate disputes, or selection of the law governing the agreement,” the court said.

The full decision can be read here.