Signature Healthcare, LLC v. Mary Farris, as Administratrix of the Estate of Shirley Mae Farrell

RENDERED: DECEMBER 10, 2021; 10:00 A.M.
NOT TO BE PUBLISHED

Commonwealth of Kentucky
Court of Appeals

NO. 2020-CA-1138-MR

SIGNATURE HEALTHCARE, LLC; E.
JOSEPH STEIER; JEROME
BISCHOFF; JJLA, LLC; JOHN
HARRISON; LAS PALMAS SNF,
LLC; LP LOUISVILLE HERR LANE,
LLC, D/B/A SIGNATURE
HEALTHCARE AT JEFFERSON
PLACE REHAB AND WELLNESS
CENTER; LPSNF, LLC; SANDRA
ADAMS; SHC LP HOLDINGS, LLC;
SIGNATURE HEALTHCARE
CLINICAL CONSULTING
SERVICES, LLC; SIGNATURE
HEALTHCARE CONSULTING
SERVICES, LLC; AND TIMOTHY
TRAVIS APPELLANTS

APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE AUDRA J. ECKERLE, JUDGE
ACTION NO. 19-CI-002524

MARY FARRIS, AS
ADMINISTRATRIX OF THE ESTATE
OF SHIRLEY MAE FARRELL APPELLEE
 OPINION
AFFIRMING

** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; ACREE AND LAMBERT, JUDGES.

ACREE, JUDGE: Signature Healthcare appeals the Jefferson Circuit Court’s

August 21, 2021 opinion and order denying its motion to dismiss and compel

arbitration with Mary Farris. Signature contends the circuit court erred in denying

its motion because Farris had apparent authority to enter into the arbitration

agreement. Finding no error, we affirm.

BACKGROUND

Mary Farris is the niece and primary caregiver of Shirley Farrell.

Farris lived with Farrell for over thirty years, shared a bank account, signed

Farrell’s checks, drove Farrell where she needed to go, and assisted her in making

decisions. Yet, Farrell never granted Farris her power of attorney.

In 2018, Farrell fell down the steps in their home. After the fall,

Farris drove Farrell to the emergency room where she signed the admission

paperwork and consents for treatment on behalf of her aunt. The doctors

diagnosed Farrell with a rib fracture and admitted her to the hospital. Her doctors

discussed the need for rehabilitation. Ultimately, Farris and Farrell agreed she

needed to transfer to Jefferson Place to undergo rehabilitation.

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 Prior to Farrell’s arrival at Jefferson Place, Farris signed and executed

the paperwork on behalf of her aunt. At the time of admission, she signed

numerous documents, one of which was an arbitration agreement. Some

documents Farris signed with “POA” following her name. However, the

arbitration agreement did not indicate Farris was Farrell’s attorney-in-fact.

Farris alleges that during Farrell’s time at Jefferson Place, she

developed a painful pressure ulcer that remained untreated, eventually became

septic, and caused Farrell’s death after being at Jefferson Place for only a month.

The caregivers at the facility charted care for Farrell as if the pressure ulcer did not

exist, raising an issue of false charting.

Farris, as the administratrix of Farrell’s estate, brought an action

against Signature Healthcare at Jefferson Place for claims of medical malpractice,

wrongful death, breach of contract, and various other causes of action. Signature

moved to dismiss the action and compel arbitration. It argued Farris had apparent

authority to sign the arbitration agreement; therefore, Signature claimed,

determination of the rights and obligations of the parties should be by arbitration

and not by the courts.

The circuit court found Farris did not have the apparent authority to

sign the arbitration agreement, nor did she have actual authority to bind Farrell to

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an arbitration agreement; therefore, the arbitration agreement is unenforceable.

This appeal followed.

STANDARD OF REVIEW

The issues raised by Signature on appeal are issues of law; therefore,

our review is de novo. Carroll v. Meredith, 59 S.W.3d 484, 489 (Ky. App. 2001).

ANALYSIS

Although Kentucky law generally favors enforcement of arbitration

agreements, Kodak Mining Company v. Carrs Fork Corporation, 669 S.W.2d 917,

919 (Ky. 1984), “the existence of a valid arbitration agreement as a threshold

matter must first be resolved by the court.” General Steel Corp. v. Collins, 196

S.W.3d 18, 20 (Ky. App. 2006) (emphasis omitted). The court must determine

whether an arbitration agreement is “valid, enforceable, and irrevocable, [based]

upon such grounds as exist at law for the revocation of any contract.” KRS1

417.050.

Signature argues Farris had the apparent authority to sign the

arbitration agreement on behalf of Farrell; therefore, it was entitled to rely on

Farris’ signature as binding on Farrell. Apparent authority “is not actual authority

but is the authority the agent is held out by the principal as possessing. It is a

matter of appearances on which third parties come to rely.” Mill Street Church of

1
Kentucky Revised Statutes.

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Christ v. Hogan, 785 S.W.2d 263, 267 (Ky. App. 1990). Signature argues that at

all relevant times, Farris repeatedly held herself out as the agent representing

Farrell. She signed multiple documents with “POA” and Farrell knew her niece

was acting on her behalf. Additionally, Farris and Farrell had a joint bank account,

signed the checks, and signed Farrell’s hospital admission paperwork.

This case is analogous to Kindred Nursing Centers Limited

Partnership v. Brown, 411 S.W.3d 242, 249 (Ky. App. 2011). In Brown, the

patient’s mother did not have a guardianship or power of attorney of the patient,

but she signed the paperwork for his admission to a nursing home. Included in that

paperwork was a document agreeing to arbitrate rather than to litigate any claims

against the nursing home. The trial court declined to enforce the arbitration

agreement, and this Court affirmed. As in the case before us, the decisive issue

was whether the patient’s mother had the authority to enter into an agreement

binding her son to arbitration. Here, we follow Brown and hold the niece did not

have the authority to bind her aunt to arbitration.

An arbitration agreement is a waiver of a constitutional guarantee to a

jury trial. U.S. CONST. amend. VII. As we have emphasized in past opinions, the

significance of waiving a constitutional right “cannot be compared to tasks such as

opening mail, paying bills, and depositing checks.” Diversicare Healthcare

Services, Inc. v. Higgins, No. 2014-CA-000601-MR, 2015 WL 509633, at *3 (Ky.

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App. Feb. 6, 2015), discretionary review denied (Dec. 10, 2015). Signature had no

prior course of dealings with Farris and Farrell such that a reliance on the former’s

apparent authority might be justified. Again, we emphasize that “[a]pparent

authority . . . is the authority the agent is held out by the principal as possessing.”

Mill Street Church, 785 S.W.2d at 267. Farrell did nothing to hold out Farris as

her agent. Farrell was not even present when Farris signed the documents upon

which Signature bases its argument.

Additionally, when Farris signed the arbitration agreement, she did

not “check” a box to indicate she possessed Farrell’s power of attorney, nor did she

indicate “POA” after her name. There was no evidence that Farris, or Signature,

informed Farrell that she was waiving her right to a jury trial, or that Farrell knew

the arbitration agreement was part of the admission packet. Based upon the

foregoing, we can find no error in the circuit court’s ruling that the arbitration

agreement is unenforceable.

Signature also argues the circuit court improperly severed the

wrongful death issue. We disagree. This circuit court was addressing the policy

argument made by Signature, not severing an issue. It stated that Ping v. Beverly

Enterprises, Inc., 376 S.W.3d 581, 594 (Ky. 2012), settled the issue of wrongful

death claims within arbitration agreements. We agree. The wrongful death claim

accrues separately and cannot be bound by arbitration agreements. Id. at 599.

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 CONCLUSION

Based on the foregoing, we affirm the Jefferson Circuit Court’s

August 21, 2021 opinion and order denying Signature’s motion to compel

arbitration.

ALL CONCUR.

BRIEFS FOR APPELLANTS: BRIEF FOR APPELLEE:

Marc L. Breit Justin S. Peterson
William K. Burnham Laraclay Parker
Louisville, Kentucky Alexandra DeMoss-Campbell
Lexington, Kentucky

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