State top court rules against enforcing arbitration clauses

Family members must have explicit authority to sign pre-dispute arbitration agreement clauses.
Family members must have explicit authority to sign pre-dispute arbitration agreement clauses.

The Kentucky Supreme Court has added a significant decision to the body of rulings concerning nursing home pre-dispute arbitration agreements.

A family member must have an explicit right to waive a long-term care resident's right to a jury trial when signing an arbitration agreement. Otherwise it cannot be enforced, the court ruled on Sept. 24.

The ruling concerned three personal injury and wrongful death lawsuits filed against Extendicare nursing homes by relatives or representatives of residents who had died in the facilities. In all three cases, the providers moved to dismiss the suit and arbitrate the dispute based on signed arbitration agreements.

A previous case ruling from Kentucky's highest court had taken away the possibility of the beneficiaries making valid wrongful death claims. This Extendicare case addressed whether other personal injury claims had to be arbitrated.

The justices ruled that the arbitration agreements would be considered valid only if a power-of-attorney instrument was in place to allow the attorney-in-fact to bind the resident to arbitrate claims.

They said the Extendicare agreements were not enforceable because the signing parties did not “clearly and convincingly” show they had the authority to give up the decedent's right to a jury trial. In order to waive a decedents' right to trial, the families involved in the cases would have to “explicitly” set out their authority in the power-of-attorney document, the court ruled.

 “Without any doubt, one may expressly grant to his attorney-in-fact the authority to bargain away his rights to access the courts ... by entering into a pre-dispute arbitration agreement,” the court's opinion reads. “We will not, however, infer from the principal's silence or from a vague and general delegation of authority to ‘do whatever I might do,' that an attorney-in-fact is authorized to bargain away his principal's rights of access to the courts.”