Kindred Healthcare, Inc. v. Henson ex rel. Ferguson

481 S.W.3d 825, 2014 Ky. App. LEXIS 79, 2014 WL 1998728
Court of Appeals of Kentucky·Decided May 16, 2014·No. No. 2013-CA-000895-MR·Published·Cited by 18 cases

Opinion

OPINION

NICKELL, Judge:

The Warren Circuit Court denied Kindred’s motion to compel arbitration in compliance with an alternative dispute resolution (“ADR”) agreement Kindred maintains it had entered into with Mary Ferguson. The denial was based on the trial court’s interpretation and application of the holding in Ping v. Beverly Enterprises, Inc., 376 S.W.3d';581 (Ky.2012). Kindred timely appealed from the adverse ruling. Following a careful review of the record, briefs, oral arguments of counsel and applicable law; we affirm.

The relevant facts are generally undisputed. Ferguson was admitted to Kindred Transitional Cáre and Rehabilitation-Rosewood (“Rosewood”), a nursing home facility located in Bowling Green, Kentucky, oh January 13, 2011. Ferguson was accompanied to Rosewood by her son, Rick Henson, and his wife, Joyce Henson. At the time of her admission,.Ferguson was asked by Cyndi Jones, a’ Rosewood employee, to sign admission papers. She responded, “I’m too nervous and shaky. Rick; take care of it for me.” Based on his mother’s verbal request, Rick proceeded to execute admission documents as well as the optional ADR agreement, which he signed in his name.2 Ferguson was present throughout the admissions process, asked no questions; and voiced no concerns or reservations about any of the documents being executed.

[828] Jones stated during her deposition that although she had no independent recollection of Ferguson’s admission, her routine was to explain each and every document to the resident or his/her agent; permit time to read the documents, and offer copies of those documents if the resident desired. When asked whether she had ever directed a resident to sign the admissions paperwork without reading- it, Jones stated “No, I would never advise someone not to read a document and just sign it. That’s not only rude, but bad business.” In contrast, Rick stated at his deposition that Jones had rushed them through the admissions process, urged them not to read any of the documents, did not explain the paperwork to them, and merely placed the documents in front of him for signature.

Ferguson remained a resident at Rosewood until August 8, 2012, when she was discharged home. On October 12, 2012, Rick, as Ferguson’s next friend, brought the instant suit against the owners and operators of Rosewood alleging negligence in the care and treatment of his mother. In reliance on the ADR agreement executed at the time of Ferguson’s admission to Rosewood, Kindred moved to compel arbitration and dismiss or stay the pending lawsuit.

The trial court denied the motion, stating that although the admission documents and ADR agreement were executed by Rick at Ferguson’s verbal request and Ferguson remained silent when the document was discussed, Rick did not have sufficient explicit authority to settle claims and disputes as required by the holding in Ping. "While noting Ping. involved the scope of authority granted by a POA rather than a verbal directive, the trial court nevertheless concluded Ping was controlling and provided a framework by which it was to. determine whether Ferguson’s directive to Rick to “take care of it for me,” included authority to execute the optional arbitration agreement. The. trial court found there was no evidence Ferguson had contemplated the issue of claim resolution prior to authorizing Rick to' sign the documents related to her admission to Rosewood. Thus, in the trial court’s view and based on its reading of Ping, Rick was acting only as Ferguson’s health-care agent and was therefore unable to effectively bind Ferguson to the “wholly optional, binding arbitration agreement,” thereby waiving her right to judicial resolution of claims arising from her stay at Rosewood. The trial 'court went on to find that “[i]f all the statements of Mary Ferguson had been reduced to writing and signed by her, the document clearly would not satisfy the Ping test. Surely, its verbal form does not imbue her statements with the authority they otherwise lack.”

Kindred now appeals from the order dénying it's motion to compel arbitration. ' Generally,' orders' such ’ as this are interlocutory and not immediately appeal-able. However, pursuant to KRS3 41'7.220(l)(a), an order denying a motion to compel arbitration is immediately appeal-able. See also Conseco Finance Servicing Corp. v. Wilder, 47 S.W.3d 335, 340 (Ky.App.2001). The enforcement and effect of an arbitration agreement is governed by the Kentucky ' Uniform Arbitration Act (KUAA), KRS 417.045 et seq., and the Federal Arbitration Act, (FAA) 9 U.S.C. §§ 1 et seq. “Both Acts evince a legislative policy favoring arbitration agreements, or at least shielding them from disfavor.” Ping, 376 S.W.3d at 588.

Nevertheless, under both Acts, a party seeking to compel arbitration bears the initial burden of establishing the exis[829] tence of a valid agreement to arbitrate, id. at 590, a question controlled, by state law rules of contract formation. Id. The FAA does not preempt state law contract principles, including matters concerning the authority of an agent to.enter into a contract and which parties may be bound by that contract. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31, 129 S.Ct. 1896, 1902, 173 L.Ed.2d 832 (2009). Because this matter is entirely an issue of law, our standard of review is de novo. Conseco, 47 S.W.3d at 340.

The central question .presented revolves around the application of Ping to the facts of this case. As an intermediate appellate court, this Court is bound by published decisions of the Kentucky Supreme Court. SCR4 1.030(8)(a). The Court of Appeals cannot overrule the established precedent set by the Supreme Court or its predecessor Court. Smith v. Vilvarajah, 57 S.W.3d 839, 841 (Ky.App.2000). We are not bound, however, by precedents which are factually or legally distinguishable from those in the current case.

In urging reversal, Kindred argues Ferguson should be bound to the ADR agreement signed by her son under principles of actual authority, apparent authority, and adoption. Next, Kindred contends Ping is plainly distinguishable and applying the principles it set forth as the trial court did clearly exhibits hostility toward arbitration, an action violative of the FAA and preempted under federal law supremacy principles. Finally, asserting the right to contract for arbitration is a right protected by the Kentucky Constitution, Kindred alleges courts should enforce private agreements to arbitrate and any ambiguities should be construed in favor of arbitration.

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Kindred Healthcare, Inc. v. Henson ex rel. Ferguson, 481 S.W.3d 825, 2014 Ky. App. LEXIS 79, 2014 WL 1998728 (Ky. Ct. App. 2014).

481 S.W.3d 825 (Kindred Healthcare, Inc. v. Henson ex rel. Ferguson) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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