An arbitration agreement signed by a woman’s romantic partner when she was admitted to a nursing home is not enforceable because the woman had not given her significant other the power to act as an agent on her behalf, a Philadelphia judge said in an opinion issued earlier this fall.
In his opinion, Judge Arnold L. New said he overruled the preliminary objections asserted by Manor Care Health Services of the Mercy Health System and HCR Manor Care Inc. because the woman’s significant other was not in an agency relationship with her through which he could bind her to arbitration.
Margaret A. McKelvey was admitted to Mercy Philadelphia Hospital December 11, 2009, because of a gangrenous infection in her left heel, New said. McKelvey was discharged from the hospital December 23, 2009, and returned to Manor Care, New said. At the time of McKelvey’s readmission to the nursing home, she not only had gangrene in her heel, but circulatory vascular disease and a pressure ulcer, or sore, at the base of her spine.
At the time of McKelvey’s readmission, her common-law husband, Leroy Pennycooke, executed an arbitration agreement, according to the opinion.
McKelvey died April 24, 2010, because of septic shock stemming from her pressure ulcer and her vascular disease, according to the opinion.
The health care providers are arguing against McKelvey’s lawsuit by seeking to enforce the arbitration agreement executed by Pennycooke.
The health care providers did not prosecute an argument that the arbitration agreement was binding because Pennycooke had express authority, New said.
Pennycooke did not have implied authority, New said. In order to show that Pennycooke had implied authority to sign the agreement and bind McKelvey to arbitration, the health care providers needed to show that signing the agreement was necessary, proper and usual in the course of Pennycooke’s alleged authority, but because Pennycooke was not vested with express authority, his acts can’t constitute implied authority to undertake actions that were necessary, proper and usual in exercising that authority, the judge reasoned.
Pennycooke did not have apparent authority either, New said. In order to show that Pennycooke had apparent authority to sign the agreement and bind McKelvey to arbitration, the health care providers need to show that McKelvey, by her words or conduct, had led them to believe she had granted Pennycooke the authority he allegedly exercised, New said.
“Defendants may not compel arbitration on their belief Pennycooke executed the agreement in his capacity as decedent’s husband,” New said.
New also rejected the health care providers’ argument that McKelvey’s health problems interfered with her capacity to read and understand documents, and that they had a “‘reasonable and proper basis to rely upon her husband, Mr. Pennycooke, as someone who had authority to act on her behalf, and in her best interests. In effect, Manor Care had no choice but to rely on Mr. Pennycooke’s apparent, if not actual, authority to act on his wife’s behalf,’” according to the opinion.
“This argument overlooks settled authority that Pennsylvania courts must look to the actions of the principal, not the agent, in determining the apparent authority of the agent,” New said. “Notwithstanding the fact defendants admit they were aware decedent lacked the capacity to execute the agreement, defendants offer no further evidence decedent knew of the arbitration clause or otherwise authorized Pennycooke to sign it on her behalf. … The court did consider the circumstances at the time of decedent’s admission, but determined defendants failed to point to any evidence of decedent’s conduct to establish decedent vested Pennycooke with the authority to bind her or her heirs by signing the agreement.”
McKelvey’s mother, Loretta M. Joe, is prosecuting the case on behalf of her daughter’s estate.
New’s opinion in Joe v. Mercy Fitzgerald Hospital was issued September 7.
James R. Radmore represents Joe. William H. Pugh V, of Kane, Pugh, Knoell, Troy & Kramer in Norristown, Montgomery County, represents Mercy Fitzgerald Hospital. William J. Mundy and John M. Skrocki of Burns White in West Conshohocken, Montgomery County, represent Manor Care.
No attorneys for any of the litigants responded to requests for comment.
(Copies of the nine-page opinion in Joe v. Mercy Fitzgerald Hospital, PICS No. 12-1910, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •