Supreme Court: Federal Arbitration Law Preempts State Law on Nursing Home Power of Attorney

By a 7-1 vote, the U.S. Supreme Court reversed a Kentucky Supreme Court decision refusing to enforce nursing-home arbitration agreements entered into by agents with power of attorney on behalf of their principals.

The Kentucky Supreme Court "fails to put arbitration agreements on an equal plane with other contracts," according to the opinion, authored by Justice Elana Kagan. "By requiring an explicit statement before an agent can relinquish her principal’s right to go to court and receive a jury trial, the court did exactly what this Court has barred: adopt a legal rule hinging on the primary characteristic of an arbitration agreement."

Commentary by University of North Carolina law professor Mark Weidemaier

The Hill coverage

SCOTUS blog coverage

Supreme Court to Decide Nursing Home Arbitration Power-of-Attorney Case

The US Supreme Court agreed to hear Kindred Nursing Centers LP v. Clark, to review a Kentucky Supreme Court decision declining to give effect to an arbitration agreement signed by family members on behalf of a nursing home resident who had executed powers of attorney in favor of those family members.

Nursing Home Arbitration

Will courts enforce arbitration agreements covering wrongful death claims? Generally, yes, if the patient signed the agreement. But what if a family member signed on the patient's behalf? The New York Times discusses: Plaintiffs' lawyers "argued that unless family members had power of attorney, they lacked the authority to agree to arbitration." This argument often works: "Appeals courts across the country have been throwing out arbitration agreements signed by family members of nursing home residents." Basically an agency law question, although with undertones of unconscionability.

Arbitration and Non-Signatories

California Arbitration and Mediation summarizes a recent case in which defendants who did not sign an arbitration agreement could nevertheless enforce that arbitration agreement to stay litigation and compel arbitration of the claims against them.  The California Court of Appeal: “agents of a signatory party, sued in that capacity by another party to an agreement, are entitled to the benefit of the agreement’s arbitration provisions.”

First Circuit Interprets Arbitration Clause Broadly

As Jeremy Telman reports at Contracts Prof Blog, the First Circuit recently interpreted a Verizon arbitration clause broadly to encompass claims that the district court thought could be litigated.  In Grand Wireless, Inc. v. Verizon Wireless, Inc. the First Circuit also held that Verizon's employee could compel arbitration of claims against her: " "Verizon and Grand certainly wished to have their disputes settled by arbitration. Since Verizon could operate only through the actions of its employees, it would have made little sense to have agreed to arbitrate if the employees could be sued separately without regard to the arbitration clause."