Pa. Court Says Nursing Home Suit Belongs In Arbitration
Law360, New York (January 27, 2017, 10:05 PM EST) — A Pennsylvania state appeals court has reversed a lower court’s decision rejecting Kindred Healthcare Inc.’s claims that the nephew of one of its patients had to arbitrate negligence and wrongful death claims, holding Friday that the matter should indeed be arbitrated.
The three-judge panel concluded that a Berks County court incorrectly overruled the company’s preliminary objections to a complaint brought by Bret Cardinal — as executor of Carmen Cardinal’s estate — over his now-deceased uncle’s stay at a Kindred facility. The judges held that there wasn’t clear and convincing evidence to support the conclusion that the patient lacked the capacity to enter into the agreement he signed, nor was the pact unenforceable.
“To be sure, decedent was an elderly man suffering from physical infirmity and exhibiting some amount of confusion,” the panel said. “However, the evidence presented in this matter is not of such a ‘clear, direct, weighty and convincing’ nature, such that we can agree with the trial court’s conclusion that decedent lacked capacity to execute the agreement.”
For one, the panel found the trial court’s focus on the knowledge possessed by employee Maria Reyes — who conducted admissions at the facility when Carmen Cardinal was admitted in 2012 — misplaced.
Reyes had testified that she never advised residents to have an attorney review arbitration agreements and didn’t have a full understanding of the rights the patients were giving up, according to the panel. But what Reyes knew about the agreement is entirely irrelevant, the panel said Friday, noting that it’s the patient’s state of mind that matters, not hers.
Other factors the lower court found persuasive include that Carmen Cardinal had executed a power of attorney in 2008, granting his nephew certain powers, which the judge had said may strongly suggest a lack of confidence in his ability to manage property and protect his rights, according to the opinion.
Plus, the trial court held, on the day of his June 2012 admission to the Kindred facility, hospital medical records indicated that he was lethargic and disoriented, and progress notes from the next day — when he signed the arbitration agreement — indicated that he had “confusion,” according to the opinion.
The trial court concluded that all this together made it “abundantly clear” that the patient wasn’t of sound mental capacity to understand the agreement and enter into it voluntarily, but the panel disagreed Friday.
The lower court’s reliance on the fact that the patient had executed a power of attorney years before signing the agreement was entirely off-base, the panel said.
“Powers of attorney are executed for many and various reasons, including simple convenience, and are a routine component of the estate planning process,” the panel said. “The court’s suggestion that decedent’s power of attorney evidenced his incapacity is wholly unsupported by our case law, based on flawed reasoning, and not supported by any facts of record in this matter.”
In addition, the panel said, the lower court referenced statements in medical records and notes supporting the conclusion that Carmen Cardinal lacked capacity, but didn’t mention other notations from the same dates indicating that he was alert and oriented.
Ultimately, there just wasn’t enough evidence that the patient lacked the capacity to execute the arbitration agreement on June 22, 2012, the panel held.
The panel also agreed with Kindred that the lower court incorrectly found the arbitration agreement substantively and procedurally unconscionable and thus unenforceable.
Similar to an arbitration agreement the appeals court considered in a 2015 matter called MacPherson v. Magee Memorial Hospital for Convalescence, the Kindred document contained a capitalized, bolded notification at the top saying the pact wasn’t a condition of admission and contained emphasized language on the first page noting that the parties were giving up their right to bring disputes in court, the panel said.
Like the agreement in MacPherson, the Kindred agreement wasn’t unconscionable, and the trial court was wrong to refuse to enforce it on those grounds, the panel held.
“In light of this finding, the liberal policy favoring arbitration, and our conclusion that the court erred in determining that decedent lacked capacity to execute the agreement, we are compelled to remand the matter to the trial court for referral to arbitration,” the judges said.
Bret Cardinal filed suit in October 2013 against Kindred and several related entities, alleging negligence, corporate negligence, custodial neglect and wrongful death, according to the opinion.
Kindred filed preliminary objections in November 2013, seeking to enforce an arbitration agreement Carmen Cardinal had signed upon admission to the facility, the opinion said. In response, his nephew contended that the agreement was unenforceable and signed by someone under duress or without proper legal authority, according to the opinion.
The trial court ultimately overruled Kindred’s objections, triggering the appeal.
Kindred is represented by Ira L. Podheiser, John Michael Skrocki, William James Mundy and Melissa C. Morris of Burns White LLC.
Bret Cardinal is represented by Stephen Trzcinski of Wilkes & McHugh PA.
The suit is Bret Cardinal, as executor for the estate of Carmen Cardinal, deceased v. Kindred Healthcare Inc. et al., suit number 1547 MDA 2014, in the Superior Court of the State of Pennsylvania.
–Editing by Breda Lund.