Shockwaves rippled through Kentucky’s long-term care communities in 2012 when the Kentucky Supreme Court ruled in Ping v. Beverly Enterprises, Inc. that a power of attorney (POA) for property, financial affairs and health care was insufficient the principal (or her estate) to an optional arbitration agreement^[1]

In Ping, Alma Duncan issued a general power of attorney to her daughter, Donna Ping, in 1998. Several years later, after a stroke, Ping directed that her mother be placed in a nursing home. Ping was presented with an admissions packet from the nursing home that included an arbitration agreement.  The arbitration agreement was not a requirement for admission, but Ping signed it on behalf of her mother.  A short time later, Ms. Duncan passed away and Ping brought a wrongful death suit against the nursing home.  Because Ms. Duncan’s POA was limited to matters regarding the management of her property, financial affairs and health care decisions, the Court found Ping never had authority to sign away her mother’s right to a trial.

The Ping Court said that the arbitration agreement that Ms. Ping signed for Ms. Duncan was not covered under the POA as a health care decision because it was optional to admission to the nursing home.  Had the arbitration agreement been required for admission, the POA for health care decisions may have been effective to bind Ms. Duncan to the arbitration agreement.  The apparent consequence of Ping was that a POA needed to expressly authorize dispute resolution before an arbitration agreement would be enforced.

In October, 2013, the Kentucky Court of Appeals issued a decision that ostensibly lessens the power of Ping.  In Kindred v. Cherolis, the Court of Appeals reversed a trial court’s decision not to enforce an arbitration agreement executed under a broad POA on behalf of a nursing home resident. ^[2]

In Kindred v. Cherolis, Thelma Fuqua was admitted to the Hillcrest Health Care Center (owned and operated by Kindred Healthcare, Inc.) and her daughter, Artie Cherolis, signed an arbitration agreement upon her entrance.  After Fuqua’s death, Cherolis sued Kindred for negligence, personal injury, wrongful death and violation of the state long term care resident’s rights statute.

Kindred moved to compel arbitration, but the trial court denied the motion based on Ping.  On appeal, Kindred argued that the power of attorney at issue was broader than the one in Ping and the Court agreed. The Court pointed out that the power of attorney in Cherolis granted broad and unrestricted authority to execute contracts and agreements (the POA in Ping identified a scope tied to property and financial matters, and health care decisions).  Fuqua did not place any limitation on the scope or objectives for her power of attorney.  The Cherolis POA’s broad language led the Court of Appeals in its ruling to find that, “[a]lthough the power of attorney did not expressly authorize Cherolis to enter into an arbitration agreement, we can find no reasonable interpretation of the document which would limit her authority to do so.”

Based on the Court of Appeal’s holding, a power of attorney need not specifically authorize an agent to enter into dispute resolution agreements, as long as the scope of the POA is sufficiently broad that there is no basis to find that an act, like that of signing an optional arbitration agreement inPing, is beyond the scope of the POA.  The Cherolis decision may help long-term care facilities by providing more guidance for executing enforceable arbitration agreements. 

_{[1] Ping v. Beverly Enterprises, 376 S.W.3d 581 (Ky. 2012).}

_{[2] Kindred Healthcare, Inc. v. Cherolis, No. 2012-CA-002074-MR (Ky. Ct. App. Oct. 11, 2013).}