State Supreme Court sends nursing home case to arbitration

By Kyla Asbury | Jun 18, 2018

CHARLESTON — The West Virginia Supreme Court of Appeals remanded a case back to a state court, ordering the case be dismissed and for arbitration to take place.

The Supreme Court concluded that a durable power of attorney (DPOA) granted an adult daughter the authority to enter into an arbitration agreement with her mother's nursing home on her behalf, according to the May 30 opinion.

The Supreme Court reversed the Kanawha Circuit Court's 2016 order and sent the case back to Circuit Judge Carrie Webster with an order to dismiss and compel arbitration in the case.

Justice Menis Ketchum authored the majority opinion. Chief Justice Margaret Workman dissented and authored a separate opinion.

Lena Nelson executed a DPOA in 2010, naming her son, Stephen Nelson, her attorney-in-fact, and stated that if he could not serve as the attorney-in-fact, that her daughter, Kimberly Shanklin, was to be attorney-in-fact.

When Lena Nelson was transferred to Hillcrest Nursing Home in 2013, she had dementia and Shanklin signed all of her documents upon arrival at the nursing home, one of which was an arbitration agreement.

Lena Nelson was a resident at the nursing home until March 2016 and she died the following month. Shanklin then filed a lawsuit on her mother's estate's behalf. She alleged the nursing home failed to properly care for her mother.

During discovery, documents showed that Shanklin had stated she was the attorney-in-fact over Lena Nelson and had been acting as her attorney-in-fact even before Lena Nelson was admitted to the nursing home.

When the arbitration agreement was brought up in the court case, Shanklin argued that the agreement was unenforceable because she did not have the actual authority to sign the document because her brother was the attorney-in-fact and she was the "alternate."

The circuit court agreed with Shanklin and denied a motion to dismiss and compel arbitration. The nursing home then appealed to the state Supreme Court.

Ketchum wrote that the court found that the nursing home had relied on Shanklin's authority at the time the documents were signed and that the Supreme Court did believe she had the authority to serve as the attorney-in-fact for her mother.

The nursing home argued that Shanklin had exercised her rights and duties under the DPOA at all times during the admissions process and while Lena Nelson was a resident at the nursing home. The Supreme Court agreed with that argument.

In her dissent, Workman called the majority's conclusion "nonsensical ... that a third party may enforce a contract entered into by a person who indisputably had neither actual nor apparent authority to do so."

She believes agreeing with nursing home violates contract and agency law. She also called the majority's decision "fatally flawed."

"First, it is clear that there was nothing 'defective' about the power of attorney--Ms. Shanklin simply had no authority to act pursuant to it," Workman wrote. "Secondly, the petitioner's undisputed possession of the power of attorney document which on its face demonstrated that Ms. Shanklin was not the power of attorney is unquestionably sufficient to create actual knowledge that she had no authority to act."

Workman wrote that the majority's opinion was without support and that she respectfully disagreed with it.

West Virginia Supreme Court of Appeals case number: 17-0096

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