On May 15, 2017, the U.S. Supreme Court overturned a Kentucky Supreme Court decision and sided with a nursing home operator regarding an attorney-in-fact’s ability to bind principals to arbitration clauses.  The U.S. Supreme Court determined that Kentucky state law, which required an explicit reference to arbitration in the power-of-attorney agreement, was preempted by the Federal Arbitration Act.

The plaintiffs, two relatives of individuals who died in nursing homes, sought to bring suit against the nursing home operator, Kindred Nursing Centers, L.P., for wrongful death.  Each plaintiff held a power of attorney on behalf of their family member, affording them broad authority to manage that patient’s affairs.  As attorneys-in-fact, the plaintiffs had completed the paperwork required to move their principals (the named family member) into the nursing home and had both signed an arbitration agreement.  

The Kentucky Supreme Court previously held that the arbitration agreements were invalid because neither power of attorney specifically entitled the representative to enter into an arbitration agreement.  The Kentucky Supreme Court decided that the rights of access to courts and trial by jury were “sacred” and “inviolate” and thus an agent could only deprive a principal of such rights if expressly provided in the power of attorney agreement. 

The U.S. Supreme Court found that the Kentucky Supreme Court’s ruling violated the Federal Arbitration Act by singling out arbitration agreements for disfavored treatment.

To view the U.S. Supreme Court’s opinion, click here.