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A nursing home patient's agreement to arbitrate "any and all disputes" against the facility doesn't prevent his estate from bringing a wrongful death suit after he died in the home's care, the Sixth Circuit ruled last Friday.
The court rejected arguments that the Federal Arbitration Act gave the nursing home the right to compel arbitration, finding that the FAA did not change Kentucky state law on wrongful death suits.
Charlie Nichols was admitted to the Kenwood Nursing and Rehabilitation Center in Richmond, Kentucky in 2011. There is little public information about Nichols' time there, but one thing is certain: he wasn't happy. Nichols sued the nursing home over the care provided just seven months later. Then he died.
His estate took over Nichols' lawsuit and amended it to include wrongful death. But when he entered the nursing home, Nichols had signed an arbitration agreement that applied to "any and all disputes" including wrongful death and bound both Nichols and "all persons with claims through or on behalf of him."
The home sought to compel arbitration under the agreement. The district court agreed, sending all claims into arbitration, except for the wrongful death claim, which, the court found, withstood the arbitration agreement. On appeal, the Sixth Circuit agreed.
According to the nursing home, the Federal Arbitration Act required Nichols' estate to arbitrate all its claims against. The FAA creates a general national policy "favoring arbitration" and "places arbitration agreements on equal footing with other contracts." The FAA has been found by the Supreme Court to preempt state laws limiting arbitration, but the Act itself does not "alter background principles of state contract law" including who is encompassed by the scope of a contract.
Speaking of state law, Kentucky caselaw holds that wrongful death claims are 'independent' of any claims held by a decedent," the Sixth Circuit explained. In Ping v. Beverly Enterprises, the Kentucky Supreme Court found that a wrongful death claim is "distinct interest in a property right that belongs only to the statutorily-designated beneficiaries."
Ping was not preempted by the FAA, under the Supreme Court's Concepcion analysis, the Sixth Circuit explained. Under Concepcion, state laws outright prohibiting arbitration are preempted by the FAA. So too are those which have a "disproportionate impact" on arbitration agreements.
But Ping did neither of those things, the Sixth Circuit found. It did not ban wrongful death claims from arbitration, nor did it disfavor arbitration agreements. It simply clarified the nature of wrongful death suits: to vindicate the rights of the beneficiaries, not the decedent.
For Nichols' estate, that meant that, at least in Kentucky, the wrongful death claim was did not arise from Nichols' agreement with the nursing home nor did it come "claims through or on behalf of him." As such, it wasn't subject to the arbitration agreement, the Sixth Circuit ruled, since Nichols' kin were not a party to the agreement. "At its heart, this case is not about preemption; it is about consent," the court explained.
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