Ruben J. Krisztal
HARRISBURG – In a decision released Aug. 7, the Superior Court of Pennsylvania concurred with a 2014 decision of the Schuylkill County Court of Common Pleas to not force arbitration in a case against a health care facility.
Judge Mary Jane Bowes, Judge Christine L. Donohue and Judge Cheryl Lynn Allen ruled in this case, with Bowes writing the opinion to reject the appeal made by defendant Northern Health Facilities, Inc. (which does business as Tremont Health & Rehabilitation), an entity of fellow defendant Extendicare.
On March 4, 2011, Donald Washburn was transferred via ambulance from the East Orange Veterans’ Administration Medical Center to Tremont. His wife, Shirley Washburn, drove behind the ambulance.
When arriving at Tremont, nursing home personnel pulled Mrs. Washburn aside to sign the paperwork to enable her husband’s admission to the facility. Supposedly, the staff member assisting her was not the usual person receiving new patients to the facility.
Though Mrs. Washburn advised her she did not have power of attorney for her husband, the staff person insisted all the paperwork must be signed prior to his admission.
Among the documents Mrs. Washburn signed was a stand-alone “Alternative Dispute Resolution Agreement” between Extendicare, on behalf of its affiliates and subsidiaries including Tremont and Mr. Washburn, who did not sign the ADR agreement.
Mrs. Washburn signed next to the “Xs” placed by Tremont staff on the lines for “Legal Representative for Healthcare Decisions” and “Legal Representative for Financial Decisions.”
Washburn remained a resident at Tremont until April 28, 2011, and never regained mental competency before his death on March 1, 2012. On March 1, 2013, Mrs. Washburn filed the instant survival action in her capacity as administratrix of her late husband’s estate, alleging Tremont’s facility was “negligently understaffed and mismanaged, and unable to meet the Decedent’s needs.”
Mrs. Washburn contended Tremont’s care violated the Neglect of a Care/Dependent Person Statute and the Older Adults Protective Services Act. Further, she also maintained that due to Tremont’s failure to provide sufficient food, water, medication and overall care, her husband “became dehydrated, contracted pneumonia, urinary and respiratory infections, and sepsis, all of which contributed to his death.”
Tremont filed preliminary objections to both the original and amended complaints seeking to compel arbitration of the claim, pursuant to the ADR agreement signed by Mrs. Washburn in her representative capacity on behalf of her husband.
The Schuylkill County Court of Common Pleas ordered discovery on the enforceability of the arbitration agreement, and eventually overruled the preliminary objections. Tremont appealed, suggesting the trial court had erred in its decision.
Bowes explained the duty of the Superior Court of Pennsylvania was to determine whether there had been “an abuse of discretion and whether the trial court's findings are supported by substantial evidence.”
“We employ a two-part test to determine whether the trial court should have compelled arbitration: 1) whether a valid agreement to arbitrate exists, and 2) whether the dispute is within the scope of the agreement,” Bowes said.
Bowes said though Mrs. Washburn signed the documents as her husband’s legal representative, it was undisputed Mr. Washburn had dementia and lacked the capacity to execute the arbitration agreement. Further, Mrs. Washburn didn’t possess her husband’s power of attorney or status as his guardian, which she communicated to Tremont’s employee.
Thus, Bowes framed the question as being whether Mrs. Washburn had authority to bind him and his estate to arbitrate claims arising from his stay at Tremont.
Tremont asserted Mrs. Washburn, though having no written authority to act on her husband’s behalf, often handled her husband’s affairs and tax information, and created an implied sense of agency and a valid agreement. The Superior Court disagreed.
“The flaw in Tremont’s position is that while there is evidence that Mrs. Washburn previously acted on her husband’s behalf, the record is devoid of evidence that Mr. Washburn ever authorized his wife to do so. In addition, apparent authority exists where a principal, by words or conduct, leads people with whom the alleged agent deals to believe that the principal has granted agent authority he or she purports to exercise,” Bowes said.
“When the arbitration agreement was signed, Tremont was unaware that Mrs. Washburn had been signing her husband’s name to some documents. Thus, it had no basis to infer that she was authorized to act on his behalf. To the contrary, Mrs. Washburn specifically informed Tremont that she did not have a power of attorney or guardianship for her husband. On the record before us, we find no basis to disturb the ruling of the trial court,” Bowes added.
Bowes said the Superior Court also did not find any merit in Tremont’s claim that Mr. Washburn’s estate is required to arbitrate his survival action because he was an intended third-party beneficiary of the arbitration agreement signed by his wife – with there being no evidence in writing that the parties intended to confer third-party beneficiary status upon Mr. Washburn.
“Despite national and state policies favoring arbitration, a party cannot be compelled to arbitrate in the absence of a valid agreement to do so under either Pennsylvania law or the Federal Arbitration Act,” Bowes concluded, affirming judgment from the trial court to compel arbitration and thus remanding the case.
The appellants are represented by Ruben J. Krisztal of Wilkes & McHugh, in Philadelphia.
The appellees are represented by Joel I. Fishbein of Litchfield Cavo, also in Philadelphia.
The Superior Court of Pennsylvania case 1118 MDA 2014
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at firstname.lastname@example.org