Linda Elam resided at a nursing home operated by BLC Lexington in Kentucky shortly before her death in 2020. Her sister, Bonnie Townsend, served as her attorney-in-fact and signed the admission documents, including an optional arbitration agreement, on Elam's behalf. After Elam died from complications including sepsis and pneumonia, Townsend sued the nursing home in state court for wrongful death and negligence. The nursing home removed the dispute to federal court and moved to compel arbitration based on the signed agreement. The district court granted the motion, compelling nearly all claims to arbitration. After a week-long hearing, the arbitrator ruled in favor of the nursing home, finding Townsend failed to meet her burden of proof. The district court confirmed the award and denied Townsend's subsequent motions to reconsider the arbitration order and to vacate the award.
The Sixth Circuit reviewed the case under the Federal Arbitration Act, which establishes a liberal federal policy favoring the enforcement of arbitration agreements. The court first addressed whether the arbitration agreement was enforceable. Under Kentucky law, a valid contract requires voluntary assent. The court found that Townsend, as the resident's representative, signed the agreement without indicating she was acting in a personal capacity or as a spouse. Citing Kentucky precedent, the court ruled that an attorney-in-fact does not need to explicitly label their capacity as 'attorney-in-fact' to bind the principal, provided they sign as the authorized representative. The court distinguished a case where a spouse signed as 'wife,' noting that Townsend's silence regarding her specific capacity, combined with her signature as 'Resident Representative,' was sufficient to enforce the agreement. The court also rejected the argument that the agreement was indefinite, noting that the broader admission contract clarified the roles of 'Resident' and 'Resident Representative.' Next, the court addressed the denial of Townsend's motion for reconsideration. Townsend argued that a new state court decision changed the law regarding powers of attorney. The Sixth Circuit found no intervening change in controlling law, as the cited state case merely applied existing Kentucky Supreme Court principles to the facts. Finally, the court reviewed the confirmation of the arbitration award. The standard for vacating an award is narrow. Townsend claimed the arbitrator was partial due to a 1990 public censure and that he applied the wrong legal standard. The court held that the censure was too remote to show evident partiality and that the record showed the arbitrator correctly applied the preponderance of the evidence standard.
The decision reinforces the enforceability of nursing home arbitration agreements signed by power of attorney holders in Kentucky, provided the signer acts as a representative. It clarifies that a signer does not need to explicitly state their legal capacity as an attorney-in-fact to bind the principal. The ruling limits the ability of estate executors to challenge arbitration awards based on minor procedural history or remote arbitrator disclosures, emphasizing the narrow scope of judicial review under the FAA. The case is affirmed, meaning the dispute must be resolved through arbitration rather than litigation.
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