Kindred Healthcare, Inc. v. Horton, 2013-CA-001795-MR

• Decision Date: 16 September 2016
• Docket Number: NO. 2013-CA-001795-MR,2013-CA-001795-MR
• Parties: KINDRED HEALTHCARE, INC.; KINDRED NURSING CENTERS LIMITED PARTNERSHIP D/B/A KINDRED TRANSITIONAL CARE AND REHABILITATION-HILLCREST; KINDRED NURSING CENTERS EAST, LLC; KINDRED HOSPITALS LIMITED PARTNERSHIP; KINDRED HEALTHCARE OPERATING, INC.; KINDRED REHAB SERVICES, INC., D/B/A PEOPLEFIRST REHABILITATION N/K/A REHABCARE APPELLANTS v. CYNTHIA HORTON, AS EXECUTRIX OF THE ESTATE OF JAMES E. RICHARDSON, DECEASED APPELLEE
• Court: Kentucky Court of Appeals

KINDRED HEALTHCARE, INC.; KINDRED NURSING CENTERS LIMITEDPARTNERSHIP D/B/A KINDRED TRANSITIONAL CARE AND REHABILITATION-HILLCREST;KINDRED NURSING CENTERS EAST, LLC; KINDRED HOSPITALS LIMITED PARTNERSHIP;KINDRED HEALTHCARE OPERATING, INC.; KINDRED REHAB SERVICES, INC., D/B/APEOPLEFIRST REHABILITATION N/K/A REHABCARE APPELLANTS v. CYNTHIA HORTON, AS EXECUTRIX OF THE ESTATEOF JAMES E. RICHARDSON, DECEASED APPELLEE

NO. 2013-CA-001795-MR

Commonwealth of Kentucky Court of Appeals

SEPTEMBER 16, 2016

NOT TO BE PUBLISHED

APPEAL FROM DAVIESS CIRCUIT COURT

HONORABLE JOE W. CASTLEN III, JUDGE

ACTION NO. 13-CI-00160

OPINION

AFFIRMING

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BEFORE: DIXON, MAZE, AND TAYLOR, JUDGES.

DIXON, JUDGE:

Kindred Healthcare, Inc.; Kindred Nursing Centers Limited Partnership D/B/A Kindred Transitional Care and Rehabilitation-Hillcrest; Kindred Nursing Centers East, LLC; Kindred Hospitals Limited Partnership; Kindred Healthcare Operating, Inc.; Kindred Rehab Services, Inc., D/B/A Peoplefirst Rehabilitation N/K/A RehabCare (hereinafter collectively "Kindred") appeal from an order of the Daviess Circuit Court denying its motion to compel arbitration of the personal injury and wrongful death claims initiated by Cynthia Horton, as Executrix of the Estate of James E. Richardson, deceased ("Estate"). For the reasons set forth herein, we affirm.

On July 5, 2000, James Richardson executed a Power of Attorney (POA), appointing Cynthia Horton, his daughter, as his attorney-in-fact with respect to all matters including Richardson's real and personal property, financial affairs, legal affairs and healthcare decisions. The POA authority included the following powers:

1. To demand, sue for, recover and receive all sums of money . . . and . . . to execute and deliver such receipts, releases or other discharges therefor as My Attorney may deem appropriate.

. . .

3. To commence, prosecute, discontinue or defend all actions or other legal proceedings touching my estate or any part thereof, or touching any matter in which I or my estate may be concerned in any way.

. . .

11. For all or any of the purposes of these presents to enter into and sign, seal, execute, acknowledge and deliver any Contracts, . . . other instruments whatsoever . . . .. . .

17. In general, to do all other acts, deeds, matters and things whatsoever in or about my estate, property and affairs, or to concur with persons jointly interested with myself therein in doing all acts, deeds, matters and things herein, either particularly or generally described, as fully and effectually to all intents and purposes as I could do in my own proper person if personally present.

Thereafter, on October 18, 2010, Richardson was admitted to Kindred Transitional Care and Rehabilitation-Hillcrest, a nursing home located in Owensboro, Kentucky. On that date, Horton, as Richardson's attorney-in-fact, executed an optional Arbitration Agreement on Richardson's behalf during the course of the admission process. The arbitration agreement provided, in pertinent part:

A. Any and all claims or controversies arising out of or in any way relating to this ADR Agreement ("Agreement") or the Resident's stay at the facility including disputes regarding interpretation of this agreement, whether arising out of State or Federal Law, whether existing or arising in the future, whether for statutory, compensatory or punitive damages and whether sounding in breach of contract, tort or breach of statutory duties (including, without limitation, any claim based on violation of rights, negligence, medical malpractice, any other departure from the accepted standards of health care or safety or the Code of Federal Regulations or unpaid nursing home charges), irrespective of the basis for the duty or of the legal theories upon which the claim is asserted shall be submitted to alternative dispute resolution in the Commonwealth of Kentucky . . . .

B. It is the intention of the parties to this Agreement that it shall inure to the benefit of and bind the parties,their successors and assigns, including the agents, employees, servants, officers, directors and any parent or subsidiary of the Facility, and all persons whose claim is derived through or on behalf of the Resident, including any parent, spouse, child, guardian, executor, administrator, legal representative, or heir of the Resident. The term "Resident" includes the resident, his or her Guardian or Attorney in Fact, his or her agent(s) or any person whose claim is derived through or on behalf of the resident.

In addition, the first paragraph of the arbitration agreement stated, "BINDING ARBITRATION MEANS THAT THE PARTIES ARE WAIVING THEIR RIGHT TO A TRIAL, INCLUDING THEIR RIGHT TO A JURY TRIAL, THEIR RIGHT TO TRIAL BY A JUDGE AND THEIR RIGHT TO APPEAL THE DECISION OF THE ARBITRATOR(S)

Richardson resided at Hillcrest until August 26, 2012. He died a few days later on August 31, 2012. Thereafter, on February 13, 2013, Horton, as Executrix of the Estate, filed an action in the Daviess Circuit Court seeking damages for personal injury, violations of the long-term care resident's rights statute, KRS 216.515, and for wrongful death allegedly caused by Kindred's negligent care. Kindred, in turn, filed a motion to compel arbitration and stay or dismiss the pending lawsuit, arguing that the arbitration agreement Horton signed on behalf of Richardson encompassed the claims asserted by Estate and mandated that the matter be referred to binding arbitration. By order entered August 1, 2013, the trial court denied the motion, stating therein:

[T]he Court being sufficiently advised finds that Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky. 2012) iscontrolling, its reasoning applies squarely to the facts of this case:

"The Estate and the beneficiaries . . . are neither estopped from disavowing the Arbitration Agreement, nor bound to it under third-party beneficiary principles. Finally, the wrongful death claimants would not be bound by their decedent's arbitration agreement, even if one existed, because their statutorily distinct claim does not derive from any claim on behalf of the decedent, and therefore do not succeed to the decedent's dispute resolution agreements."

Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581, 600 (Ky. 2012) cert. denied, 133 S.Ct. 1996, 185 L.Ed.2d 879 (U.S. 2013)

The parties to the Arbitration Agreement did not include the wrongful death claimants, and for the reasons aforesaid, it Ordered that the Defendant's Motion to Compel Arbitration is denied.

Kindred thereafter filed a motion to alter, amend or vacate arguing that Ping did not mandate that the wrongful death beneficiaries consent to arbitrate personal injury, medical negligence, corporate negligence and statutory violation claims. The trial court summarily denied the order and this appeal ensued.

An order denying a motion to compel arbitration is immediately appealable. KRS 417.220(1). Conseco Financial Service Corporation 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.3 § 1 et seq. "Both Actsevince a legislative policy favoring arbitration agreements, or at least shielding them from disfavor." Ping, 376 S.W.3d at 588. Under both Acts, a party seeking to compel arbitration has the initial burden of establishing the existence of a valid agreement to arbitrate. Unless the parties clearly and unmistakably manifest a contrary intent, that initial showing is addressed to the court, not the arbitrator, and the existence of the agreement depends on state law rules of contract formation. An appellate court reviews the trial court's application of those rules de novo. However, the trial court's factual findings, if any, will be disturbed only if clearly erroneous. Id. at 590 (internal citations omitted).

Kindred argues that the trial court misinterpreted Ping when it refused to enforce the arbitration agreement for all of the Estate's claims solely because the wrongful death claimants were not a party to the agreement. To the contrary, Kindred contends that Ping specifically recognized that an estate's survival claims can be bound by an arbitration agreement even when the wrongful death claims could not be. Ping at 597 -98. Kindred further argues that Horton's authority granted in the POA to execute any contract on Richardson's behalf, and to commence, prosecute, discontinue or defend all legal actions or proceedings necessarily included the power to sign a binding arbitration agreement. Although we agree with Kindred that the trial court's interpretation of Ping was erroneous, we nevertheless conclude that based upon our Supreme Court's recent decision in Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2016), the POA at issue herein did not confer upon Horton the authority to waive Richardson's rightto a jury trial so as to compel arbitration of the Estate's claims for personal injuries and statutory violations.

In Ping, the Kentucky Supreme Court addressed the question of whether a decedent, by her own action or through the action of her attorney-in-fact, could enter into contracts of any kind that would bind the rights of the beneficiaries of wrongful death claims made in connection with her own death. The Ping Court determined that a wrongful death claim does not "derive from any claim on behalf of the decedent, and [the wrongful death beneficiaries] do not succeed to the decedent's dispute resolution agreements." Id. at 600. Recently, in Whisman, the Court reaffirmed said principle:

Under Kentucky law, a wrongful death claim is a distinct interest in a property right that belongs only to the statutorily-designated beneficiaries. Decedents, having no cognizable legal rights in the wrongful death claims arising upon their demise, have no authority to make contracts disposing of, encumbering, settling, or otherwise affecting

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