Kentucky’s highest court has held that attorneys-in-fact cannot enter arbitration agreements on behalf of nursing home residents, unless they are expressly authorized to do so in a power of attorney (POA). In so holding, the Court offered a bit of clarity on what was a somewhat murky issue under Kentucky law.
In Ping v. Beverly Enterprises, Donna Ping was executrix of her mother’s estate. Her mother, Alma Duncan, executed a general power of attorney naming Ping as her agent. In the process of admitting an incapacitated Duncan to a long-term care facility, the admissions director presented Ping with an application packet. It included an arbitration agreement that clearly stated it was not a condition of admission. Ping signed all the documents in the packet, but she did not read them and was otherwise unaware of their contents. Duncan later died at the facility, and Ping brought a wrongful death suit on behalf of her mother.
The Court held that Ping did not have the authority to enter an optional arbitration agreement on behalf of her mother and waive the mother’s right to bring suit. And despite the POA’s broad language, it was not interpreted to authorize all decisions a guardian might make. Rather, the Court held that an agent’s authority must be construed with reference to the types of transactions expressly authorized in the document. Duncan’s POA related only to property, financial affairs, and health care decisions. Absent authorization to settle disputes, there was nothing to suggest that the mother intended the daughter to have such authority.
By holding that Ping was not authorized to enter an optional arbitration agreement, the Court implied that a health care POA (as opposed to a general POA) would authorize an attorney-in-fact to enter an arbitration agreement on behalf of the resident if the agreement were mandatory. However, this raises other potential issues such as unconscionability, which can draw ire from state and federal authorities and serve as grounds for invalidating the agreement altogether. But if the arbitration agreement is optional, the Court indicated that the choice is not within the purview of a health care POA, since the decision in that circumstance is not one of health care.
The upshot of Ping is that an attorney-in-fact cannot enter into an arbitration agreement on behalf of a potential nursing home resident unless the POA expressly authorizes dispute resolution.
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