The Superior Court of Pennsylvania (“Pennsylvania Appellate Court”) held in its March 29, 2018 Memorandum opinion that “we find no error in the trial court’s finding that there was no agency, and hence, no binding agreement to arbitrate [the plaintiff’s nursing home negligence claim]. The RPA [Responsible Person Agreement] was an agreement between the Facility [defendant nursing home] and Ms. Reilly personally; she did not execute it pursuant to any authority conferred upon her by her mother. By executing that document, Ms. Reilly agreed to submit the necessary paperwork to facilitate reimbursement from applicable insurance, to pay any amounts owing, and to be personally liable for non-payment.”
The Pennsylvania Appellate Court continued: “the Admission Agreement was an agreement between the Facility and Ms. Reilly as the Responsible Person. As the Responsible Person, Ms. Reilly had no authority from her mother to act on her behalf or bind her to the terms of the Admission Agreement. While ‘a party can be compelled to arbitrate under an agreement, even if he or she did not sign that agreement, if common-law principles of agency and contract support such an obligation on his or her part[,]’ … there was no proof of agency herein. There is no evidence that Ms. Clementson authorized Ms. Reilly to agree to arbitrate on her behalf, and thus, no agreement to arbitrate that is binding upon Ms. Clementson.”
The Underlying Facts
On February 16, 2012, Ms. Reilly signed the defendant nursing home’s (“Facility”) Responsible Person Agreement (“RPA”) “to facilitate the provision of care to the Resident,” her mother, Elsie Clementson. The RPA provided that, “the responsible person affirms that he or she has access to Resident’s income and resources and the Resident’s income and resources are available to pay for Resident’s care.” The Responsible Person agrees to pay for the costs of the stay from Resident’s income and resources in accordance with the Admission Agreement until the costs are paid by other sources, and to apply for and submit the documentation required to obtain benefits. If Responsible Person fulfills his or her obligations under that Agreement, “she shall not be held personally liable for the Resident’s charges.” If, however, Responsible Person does not fulfill the Agreement, “she shall be liable” to the Facility for any losses it sustains due to Responsible Person’s breach.
In short, the RPA obligated the Responsible Person to fulfill the duties of the Resident under the Admission Agreement, most of which were financial in nature, and subjected the Responsible Person to liability for failure to do so.
On February 21, 2012, Ms. Reilly was asked by the Facility to execute the Facility’s Admission Agreement. The Agreement details the nature of the services provided, the charges, billing, Medicare and Medicaid, and the “Obligations of Responsible Person.”
Paragraph 20 of the Admission Agreement is entitled “Community’s Grievance Procedure,” and provides that if the Resident, Resident’s Attorney-in-Fact, or Responsible Person believes that Resident is being mistreated or her rights violated, they are to make the complaint known to the Director of Nursing or Administrator. Such notice is a prerequisite to arbitration. It states further that any claim for personal injuries for inadequate care or medical malpractice while in the Facility are to be resolved “exclusively by arbitration.” The Agreement explains that this means that the Resident is relinquishing her right to a jury trial.
The Admission Agreement contains an integration clause providing that the Admission Agreement, the Application Agreement, and the RPA are the entire agreement and understanding between the parties. The Facility reserved, however, the right to modify unilaterally the terms of the Agreement to conform to subsequent changes in the law, regulation, or operations.
At the time these documents were executed, Ms. Reilly was not Ms. Clementson’s attorney-in-fact. The parties to the RPA and the Admission Agreement were Ms. Reilly and the Facility. Later, in 2014, Ms. Clementson executed a durable power-of-attorney conferring attorney-in-fact status upon her daughter.
Elsie Clementson filed her Pennsylvania nursing home negligence action seeking damages for a fractured tibia that she sustained in a fall while she was a resident at the Facility. The defendant nursing home filed its petition to compel arbitration with regard to the resident’s nursing home negligence claim.
Based on the admission documents, the trial court denied the petition to compel arbitration, finding there was no express or implied agency based on the RPA. The court also found that the power-of-attorney executed in 2014, more than two years after the execution of the Admission Agreement containing the arbitration clause, was not retroactive as the powers designated therein were not explicitly retroactive. The trial court further found that Ms. Reilly did not have apparent authority to act as there was no manifestation by the principal, Ms. Clementson, establishing such authority. The trial court also found no agency by estoppel, as there was no evidence that Ms. Clementson was present when the paperwork was signed, that the agreements were presented to her, or that she knew what they contained. Absent proof that Ms. Clementson knew that her daughter purportedly agreed to arbitrate, her failure to disavow her daughter’s authority to agree to same did not create agency by estoppel.
The Pennsylvania Appellate Court affirmed the trial court’s order that denied the defendant nursing home’s petition to compel arbitration.
Source Clementson v. Evangelical Manor D/B/A Wesley Enhanced Living Pennypack Park, J-A22011-17.
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