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Kindred Healthcare Operating, Inc. v. Boyd

Supreme Court of Wyoming

October 12, 2017

KINDRED HEALTHCARE OPERATING, INC., a foreign corporation; KINDRED NURSING CENTERS WEST, LLC, a foreign corporation, d/b/a KINDRED NURSING AND REHABILITATION-WIND RIVER, Appellants (Defendants),
v.
SUSAN BOYD, as Personal Representative for purposes of bringing a wrongful death action on behalf of Aletha Boyd, deceased, Appellee (Petitioner).

         Appeal from the District Court of Fremont County The Honorable Norman E. Young, Judge.

          Representing Appellants: Thomas B. Quinn and Christopher R. Jones of Gordon & Rees, LLP, Denver, Colorado. Argument by Mr. Quinn.

          Representing Appellee: Diana Rhodes, Esq., Cheyenne, Wyoming; Jason Ochs, Esq., Casper, Wyoming. Argument by Ms. Rhodes.

          Before BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.

          DAVIS, Justice.

         [¶1] Ninety-three-year-old Aletha Boyd (Aletha) died following her discharge from Kindred Nursing and Rehabilitation - Wind River. Her daughter, Susan Boyd (Ms. Boyd), filed a wrongful death action against Kindred alleging that its negligence in caring for her mother caused her death. Kindred moved to compel arbitration pursuant to an alternative dispute resolution (ADR) agreement signed by Leanna Putnam, Aletha's other daughter and representative under a power of attorney at the time of her admission into the facility. The district court denied the motion. Kindred appeals, claiming the district court erred in denying the motion to compel arbitration. We reverse and remand with instructions for the district court to order arbitration.

         ISSUES

         [¶2] The issues for this Court's consideration are:

1. Whether Ms. Putnam had the authority to sign the ADR agreement on Aletha's behalf and bind her to arbitration.[1]
2. Whether the ADR agreement is unconscionable.
3. Whether the ADR agreement lacks mutuality of assent and consideration in light of the provision incorporating the National Arbitration Forum Mediation Rules and Code of Procedure.[2]

         FACTS

         [¶3] Kindred Healthcare Operating, Inc. and Kindred Nursing Centers West, LLC owned and operated a nursing home facility in Riverton, Wyoming under the name Kindred Nursing and Rehabilitation - Wind River (Kindred). On January 8, 2010, Aletha Boyd was admitted to the facility. Prior to her admission, in September of 2001, Aletha had signed a durable general and medical power of attorney designating Ms. Putnam as her attorney in fact and agent. At the time of Aletha's admission into the nursing home, Ms. Putnam signed the ADR Agreement at issue.

         [¶4] The title of the agreement is:

ALTERNATIVE DISPUTE RESOLUTION AGREEMENT (OPTIONAL)

         The next line of the agreement states (emphasis in original):

(THIS AGREEMENT IS NOT A CONDITION OF ADMISSION TO OR CONTINUED RESIDENCE IN THE FACILITY)

         [¶5] The agreement goes on to provide that the parties to the agreement, ("Kindred Nursing Centers West, LLC, [doing business as] Wind River Healthcare & Rehabilitation Center[3] . . . and Aletha Boyd"), agree that any disputes between them arising out of Aletha's stay at the facility "shall be resolved exclusively by an ADR [alternative dispute resolution] process that shall include mediation and, where mediation is not successful, binding arbitration." The agreement further provides:

THE PARTIES UNDERSTAND, ACKNOWLEDGE, AND AGREE THAT BY ENTERING INTO THIS AGREEMENT THEY ARE GIVING UP THEIR CONSTITUTIONAL RIGHT TO HAVE THEIR DISPUTES DECIDED BY A COURT OF LAW . . . .

         It further states:

The Parties recourse to a court of law shall be limited to an action to enforce a binding arbitration decision entered in accordance with this Agreement or to vacate such a decision based on the limited grounds set forth in the Wyoming Uniform Arbitration Act, Wyo. Stat. §§ 1-36-101 through 1-36-119. The parties agree that the speed, efficiency, and cost-effectiveness of the ADR process, together with their mutual undertaking to engage in that process, constitute good and sufficient consideration for the acceptance and enforcement of this Agreement.

         [¶6] Aletha remained in the nursing home until she was discharged on May 17, 2014. She died thirteen days later on May 30. The death certificate listed the primary cause of death as dementia.

         [¶7] Following Aletha's death, the district court appointed Ms. Boyd as her personal representative for purposes of bringing a wrongful death action. On May 13, 2016, Ms. Boyd, as personal representative of her mother's estate, submitted a notice of claim to the State of Wyoming's Medical Review Panel in accordance with Wyo. Stat. Ann. § 9-2-1513 et seq.[4] She asserted that during the time her mother resided at the nursing home, Kindred and its employees failed to meet their legal and contractual obligations to her. Specifically, Ms. Boyd asserted that Kindred and its employees failed to meet nutritional standards, perform proper nursing assessments, properly document, perform a complete assessment, develop and implement a comprehensive care plan, implement proper fall precautions and communicate them to staff, hire adequate and appropriately trained staff, train and supervise staff, provide adequate supervision and assistance for an individual with limited mobility and provide the necessary care to attain and maintain the highest practicable physical, mental and psychosocial well-being of Aletha. Ms. Boyd asserted that these failures on the part of Kindred led to Aletha falling on at least six occasions and suffering injuries, including a fractured hip.

         [¶8] Kindred responded to the notice of claim, contending that the dispute was subject to the ADR agreement, and that therefore, pursuant to Wyo. Stat. Ann. § 9-2-1518(a), [5]the medical review panel could not review the claim. As to the specific allegations in the notice, Kindred denied that the care provided to Aletha fell below the standard of care or caused her injuries or death. The Medical Review Panel dismissed the claim, and in August of 2016, Ms. Boyd filed a wrongful death action in district court, again asserting that Kindred's negligence caused her mother's injuries and subsequent death.

         [¶9] In response, Kindred filed a motion to compel arbitration. Kindred argued that when Ms. Putnam signed the ADR agreement, she was authorized to act as Aletha's legal and personal representative and had authority to sign the agreement. Kindred further asserted that Ms. Putnam's decision to agree to arbitrate disputes concerning Aletha's care was a health care decision within the meaning of the Wyoming Health Care Decisions Act and Wyo. Stat. Ann. § 35-22-406. Anticipating a potential argument by Ms. Boyd, Kindred contended that the ADR agreement Ms. Putnam signed was not unconscionable or void as against public policy. Finally, Kindred asserted that Ms. Boyd should be equitably estopped from refusing to honor the ADR agreement because she relied on the other admission documents concerning Aletha's care and should not be allowed to single out one document as invalid.

         [¶10] In response to Kindred's motion, Ms. Boyd argued that pre-dispute nursing home arbitration agreements are illegal pursuant to federal regulation; Kindred's ADR agreement was unconscionable; there is no presumption in favor of arbitration in a dispute concerning the validity of an arbitration agreement; Kindred's ADR agreement is invalid because it lacks mutuality and is not supported by consideration; and the invalid provisions are not severable because they go to the very essence of the agreement.

         [¶11] After considering the parties' arguments, the district court denied Kindred's motion to compel arbitration without providing reasons for doing so. Kindred timely appealed to this Court.[6]

         STANDARD OF REVIEW

         [¶12] Both the Federal Arbitration Act and the Uniform Arbitration Act adopted by the Wyoming legislature make arbitration agreements "valid, irrevocable, and enforceable save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C.S. § 2; Wyo. Stat. Ann. § 1-36-103 (LexisNexis 2017). Therefore, when deciding whether an arbitration agreement is enforceable, courts apply state law principles governing the formation of contracts. Fox v. Tanner, 2004 WY 157, ¶ 18, 101 P.3d 939, 944 (Wyo. 2004) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995)). When language is clear and unambiguous, the interpretation and construction of contracts is a matter of law for the courts. Thorkildsen v. Belden, 2011 WY 26, ¶ 8, 247 P.3d 60, 62 (Wyo. 2011) (citing Cheek v. Jackson Wax Museum, Inc., 2009 WY 151, ¶ 12, 220 P.3d 1288, 1290 (Wyo. 2009)). We review questions of law de novo without giving any deference to the district court's determinations. Id. The question of whether a contract is unconscionable is also one of law. Roussalis v. Wyoming Medical Center, Inc., 4 P.3d 209, 245 (Wyo. 2000).

         [¶13] Whether an agency relationship exists and the scope of the agent's authority can be questions of fact. Ohio Cas. Ins. Co. v. W.N. McMurry Const. Co, 2010 WY 57, ¶ 39, 230 P.3d 312, 327 (Wyo. 2010). However, as with other contracts, construction of a written contract creating an agency and the agent's authority thereunder are questions of law for the courts unless the instrument is ambiguous ...


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