Templeman v. Kindred Healthcare, Inc.

[Cite as Templeman v. Kindred Healthcare, Inc., 2013-Ohio-3738.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 99618
DONALD TEMPLEMAN, EXECUTOR
PLAINTIFF-APPELLEE
vs.
KINDRED HEALTHCARE, INC., ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED IN PART, REVERSED IN PART,
REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-792299
BEFORE: Rocco, J., Jones, P.J., and Kilbane, J.
RELEASED AND JOURNALIZED: August 29, 2013
ATTORNEYS FOR APPELLANT
Paul W. McCartney
Jeffrey M. Hines
Jessica C. Pratt
Rendigs, Fry, Kiely & Dennis, L.L.P.
600 Vine Street
Suite 2650
Cincinnati, Ohio 45202
ATTORNEYS FOR APPELLEE
Susan E. Petersen
Todd Petersen
Petersen & Petersen, Inc.
428 South Street
Chardon, Ohio 44024
FOR RAJESH AGARWAL, M.D., ET AL.
Marc W. Groedel
Reminger Co., L.P.A.
101 West Prospect Avenue
Suite 1400
Cleveland, Ohio 44115
KENNETH A. ROCCO, J.:
{¶1} Pursuant to R.C. 2711.02(C), defendants-appellants Kindred Healthcare Inc.,
Kindred Healthcare Operating, Inc., Kindred Nursing Centers East, L.L.C., Greens
Nursing and Assisted Living, L.L.C., and several of their employees 1 (hereinafter
referred to collectively as “the Kindred defendants”) appeal from the trial court order that
denied their motion to stay the action brought against them by plaintiff-appellee Donald
Templeman, Executor of the Estate of Willow Templeman, Deceased (“the estate”).
{¶2} The Kindred defendants present two assignments of error. They argue that
the trial court incorrectly determined that the arbitration clause Templeman signed on his
mother’s behalf did not apply to all of the estate’s claims. They also argue, alternatively,
that the trial court should have stayed the entire action until the estate’s survivorship
claims were resolved by arbitration.2
{¶3} Upon a review of the App.R. 9(B) record filed in the trial court, this court
finds neither of the Kindred defendants’ arguments has merit. The Kindred defendants’
assignments of error, therefore, are overruled. For the reasons that follow, the trial
court’s order is affirmed in part and reversed in part, and this case is remanded for further
proceedings consistent with this opinion.
1 Thedoctor and his limited liability company who also were named as
defendants in the complaint are not parties to this appeal.
2The estate has not filed a cross-appeal challenging the trial court’s
bifurcation of its claims.
{¶4} When the estate filed this action, it alleged that the Kindred defendants
operated a skilled nursing and residential health care facility known as “The Greens.”
The estate alleged that, in September 2011, the Kindred defendants “were specifically put
on notice of the below standard nursing patterns and practices” at that facility, but failed
to take appropriate action. The estate alleged that its decedent was admitted there in
October 2011, was negligently monitored and cared for, suffered an “untimely death” on
November 10, 2011, and died as a proximate result of the Kindred defendants’
negligence.
{¶5} The estate listed five causes of action: (1) negligence that caused its decedent
physical and emotional distress; (2) negligent hiring and supervision that caused injury to
the decedent; (3) wrongful death; (4) under the theory of respondent superior, violation of
the rights granted to the decedent by R.C. 3721.13; and (5) malice justifying an award of
punitive damages. The estate attached affidavits of merit as required by Civ.R. 10(D)(2).
{¶6} On January 16, 2013, after all of the named defendants filed answers to the
complaint, the Kindred defendants filed a motion to stay the proceedings pursuant to “a
valid agreement” for arbitration. The sole basis for the Kindred defendants’ motion was
their statement that Donald Templeman had signed this document upon the decedent’s
admission to the facility as the decedent’s legal representative, therefore, it was legally
binding and “inure[d] to the [Kindred defendants’] benefit.”
{¶7} The Kindred defendants attached an incomplete copy of this agreement to
their motion as “Exhibit A.” “Exhibit A” is reproduced in this opinion in pertinent part
as follows:
ATTACHMENT K
ALTERNATIVE DISPUTE RESOLUTION AGREEMENT
BETWEEN RESIDENT AND FACILITY (OPTIONAL)
This Alternative Dispute Resolution Agreement (“Agreement”) is
made and entered into this day * * * by and between 0792 - Kindred
Transitional Care and Rehabilitation-The Greens (“Facility”), Willow
Templeman, (“Resident”), and _______________ (“Legal
3
Representative”). The term “Resident” includes the Resident, his/her
Guardian or Attorney in Fact, or any other person whose claim is derived
through or on behalf of the Resident.
The parties wish to work together to resolve any disputes in a timely
fashion and in a manner that minimizes both of their legal costs.
Therefore, in consideration of the mutual promises contained in this
Agreement, the Resident and Facility hereby agree as follows:
A. Conduct of Alternative Dispute Resolution (“ADR”). The ADR process
will be conducted by an independent impartial entity that is regularly engaged in
providing mediation and arbitration services. DJS Administrative Services, Inc. * * *
Louisville, KY * * * may serve as this independent entity. * * * Requests for ADR,
regardless of the entity chosen * * * , shall be conducted in accordance with the Kindred
Healthcare Alternative Dispute Resolution Rules of Procedure * * * .
3While the other portions of this sentence were typed, this space was blank.
B. Scope of ADR. Any and all claims or controversies arising out of or in any
way relating to this Agreement or the Resident’s stay at the Facility including disputes
regarding the interpretation of this Agreement, * * * whether existing or arising in the
future, whether for statutory, compensatory or punitive damages and whether sounding in
breach of contract, tort or breach of statutory duties (including, without limitation, any
claim based on violation of rights, negligence, medical malpractice, any other departure
from the accepted standards of health care or safety
* * * ), irrespective of the basis for the duty or of the legal theories upon which the claim
is asserted, shall be submitted to alternative dispute resolution as described in this
Agreement. This Agreement includes claims against the Facility, its employees, agents,
officers, * * * and/or its medical director. Only disputes that would constitute a legally
cognizable cause of action in a court of law may be submitted * * *. All claims based *
* * on the same * * * or related course of care or services provided by facility to the
Resident, shall be * * * arbitrated in one proceeding. A claim shall be waived and
forever barred if it arose prior to mediation and is not presented in the arbitration hearing.
***
[Subsections C. through I. missing]4
***
K. Understanding of the Resident. By signing this Agreement, the Resident
is acknowledging that he/she understands the following: (1) he/she has the right to
seek legal counsel concerning this Agreement; (2) the execution of this Agreement is
not a precondition of admission or to the furnishing of services to the resident by the
Facility, and the decision of whether to sign the Agreement is solely a matter for the
Resident’s determination without any influence; (3) this Agreement may not even be
submitted to Resident for approval when Resident’s condition prevents him/her
from making a rational decision whether to agree; * * * (5) * * * if the parties are
unable to reach settlement
* * *, the dispute shall proceed to binding arbitration; and (6) agreeing to the ADR
process * * * means that the parties are waiving their right to a trial in a court, * * *
, and their right to appeal the decision of the arbitrator(s) in a court of law.
4The estate subsequently attached a complete copy of this document to its opposition brief
as an exhibit.
{¶8} The line for the “Signature of [Resident’s] Legal Representative” on “Exhibit A” was filled
out by Donald Templeman. However, Templeman did not include his “Printed Name & Authority
Title,” as the form required.
{¶9} Additionally, the Kindred defendants also attached to their motion a copy of what purported
to be the decedent’s “Durable Power of Attorney.” The document indicated Donald Templeman was
appointed on September 17, 1999. The document bore the signatures of two witnesses, one of whom
was Donald Templeman, and also had a notary’s seal and signature, but the attestation page contained
neither a line for the name of nor the signature of the decedent.
{¶10} On January 30, 2013, the estate filed a brief in opposition to the Kindred defendants’
motion for a stay. The estate argued that the ADR agreement was not enforceable for several reasons,
in part because it was procedurally and substantively unconscionable.
{¶11} The estate argued, alternatively, that, even if the ADR agreement were valid,
pursuant to Peters v. Columbus Steel Castings Co., 115 Ohio St.3d 134,
2007-Ohio-4787, 873 N.E.2d 1258, it could not apply to the wrongful death claim. The
estate supported its argument with Donald Templeman’s affidavit.
{¶12} Templeman averred that, on October 5, 2011, at the time the decedent first
was to be admitted to the facility with a “tracheotomy tube after being hospitalized with
respiratory issues,” a representative of the Kindred defendants presented a “stack” of
papers to him for his signature. He stated that: (1) the representative told him he “needed
to execute the admission paperwork”; (2) he received no “additional explanation” about
the paperwork; (3) he was “told where to sign in order to have his mother admitted”; (4)
the representative neither pointed out the arbitration agreement nor alluded to it; (5) his
mother developed pneumonia and returned to the hospital on
November 3, 2011; and (6) when his mother was “readmitted for a second stay” on
November 8, 2011, he received no additional papers to sign and, again, none of the
Kindred defendants mentioned the arbitration agreement. As previously stated, the
decedent died on November 10, 2011.
{¶13} Templeman averred that he “had no idea” that he was signing a document
either that he could refuse to sign or that limited his right to pursue claims if his mother
was a victim of abuse or neglect. He also stated that he never received a copy of the
“Kindred Healthcare Alternative Dispute Resolution Rules of Procedure.”
{¶14} Templeman also attached a copy of those rules of procedure. The rules
required, inter alia, that the written ADR agreement “should be knowing and voluntary,”
that it “must not be executed as a condition of admission,” that the party’s signature to it
“must be witnessed by an individual who has been trained to explain the * * * process to
consumers,” and that it “must provide for a minimum of five (5) business days right of
recission period during which the parties may have the agreement reviewed by counsel.”
{¶15} On February 15, 2013, the trial court issued a journal entry that “denied” the
Kindred defendants’ motion to stay. The trial court stated that, pursuant to Peters, 115
Ohio St.3d 134, 2007-Ohio-4787, 873 N.E.2d 1258, the ADR agreement could not bind
the decedent’s beneficiaries to arbitrate their wrongful death claims. The court indicated
that the arbitration agreement signed by the decedent’s power of attorney “governed only
the decedent’s claims,” therefore, the “matter was to go forward.”
{¶16} The Kindred defendants appeal from the foregoing order. They present two
assignments of error.
I. The trial court erred to the prejudice of
Defendant-Appellants [sic] when it determined the parties’ ADR
Agreement is inapplicable and denied Defendant-Appellants’ [sic]
Motion to Stay.
II. The trial court erred to the prejudice of
Defendant-Appellants [sic] when it failed to stay all claims pending
arbitration of those subject to the parties’ ADR Agreement.
{¶17} The Kindred defendants argue in their first assignment of error that (1) the
ADR agreement is “presumed valid”; (2) the decedent’s “survival claims are subject to
arbitration” under that agreement; (3) the parties’ agreement applied to the decedent’s
“entire stay” at the facility; and (4) the trial court should not have considered issues of
“unconscionability” because they had “no opportunity to investigate, conduct discovery
on the issues, or even respond to them in writing.”
{¶18} Prior to addressing the Kindred defendants’ arguments, this court notes that
they have attached to their appellate brief copies of documents that were not filed in the
trial court. This court cannot consider the material. State v. Ishmail, 54 Ohio St.2d 402,
377 N.E.2d 500 (1978), paragraph one of the syllabus.
{¶19} In addition, the Kindred defendants failed to raise the second and third
arguments in the trial court; therefore, they have waived these arguments for purposes of
appeal. Jacubenta v. Cadillac Ranch, 8th Dist. Cuyahoga No. 98750, 2013-Ohio-586, ¶
18; Thompson v. Preferred Risk Mut. Ins. Co., 32 Ohio St.3d 340, 342, 513 N.E.2d 733(1987).
{¶20} As a final preliminary matter, the Kindred defendants had the opportunity in
the trial court to request additional time to either supplement their motion or respond to
the estate’s brief in opposition to their motion, but failed to do so. Compare Hanson v.
Valley View Nursing & Rehab. Ctr., 9th Dist. Summit No. 23001, 2006-Ohio-3815, ¶ 2.
The Kindred defendants simply requested the trial court to grant their motion. Under
these circumstances, the Kindred defendants invited the claim of error they make in their
fourth argument. Lester v. Luck, 142 Ohio St. 91, 50 N.E.2d 145 (1943), paragraph one
of the syllabus.
{¶21} This court thus proceeds to determine whether the trial court correctly
determined that the ADR agreement was enforceable against the estate. In Brownlee v.
Cleveland Clinic Found., 8th Dist. Cuyahoga No. 99707, 2012-Ohio-2212, ¶ 8, this court
recently set forth the applicable standard of review as follows:
[T]he issue of whether a party has agreed to submit an issue to
arbitration [and] questions of unconscionability are reviewed under a de
novo standard of review. See Shumaker v. Saks Inc., 163 Ohio App.3d
173, 2005 Ohio 4391, 837 N.E.2d 393 (8th Dist.); Taylor Bldg. Corp. Of
Am. v. Benfield, 117 Ohio St.3d 352, 2008 Ohio 938, 884 N.E.2d 12.
(Emphasis added.) Compare Koch v. Keystone Pointe Health & Rehab.,
9th Dist. No. 11CA010081, 2012-Ohio-5817, ¶ 7 (applying an
abuse-of-discretion standard).
{¶22} In Koch at ¶ 9-10, on similar facts as those presented in this case, the court
aptly observed:
[B]efore a party may be bound by the terms of an arbitration
agreement, there must in fact be a contract which requires the arbitration of
the parties’ disputes and claims. In this case, the parties agree that [the
decedent] did not execute any agreements with Keystone on his own behalf.
Instead, Keystone argued in its motion to compel arbitration that [the
decedent’s] agent entered into the arbitration agreement on his behalf. * * *
Keystone * * * relied on agency law.
***
The Ohio Supreme Court held:
In order for a principal to be bound by the acts of his agent under the theory of
apparent agency, evidence must affirmatively show: (1) that the principal held the agent
out to the public as possessing sufficient authority to embrace the particular act in
question, or knowingly permitted him to act as having such authority, and (2) that the
person dealing with the agent knew of those facts and acting in good faith had reason to
believe and did believe that the agent possessed the necessary authority.
Master Consolidated Corp. v. BancOhio Natl. Bank, 61 Ohio St. 3d 570, 575 N.E.2d 817(1991), syllabus. It is the acts of the principal, not the agent’s acts, which implicate
apparent authority. Id. at 576. However, “‘[w]here a principal has by his voluntary act
placed an agent in such a situation that a person of ordinary prudence, conversant with
business usages, and the nature of the particular business, is justified in assuming that
such agent is authorized to perform on behalf of his principal a particular act, such
particular act having been performed the principal is estopped as against such innocent
third person from denying the agent’s authority to perform it.’” Id., quoting Gen.
Cartage & Storage Co. v. Cox, 74 Ohio St. 284, 294, 78 N.E. 371, 4 Ohio L. Rep. 60
(1906). (Emphasis added.)
{¶23} In this case, the competent evidence presented to the trial court demonstrated that, when
exchanges related to business matters, the Kindred defendants dealt only with Donald Templeman.
The decedent herself neither acted nor held her son out as her representative.
{¶24} As evidenced by the ADR form and the “Kindred Alternative Dispute
Resolution Rules of Procedure,” the Kindred defendants were conversant with both the
usages and the nature of the businesses of providing rehabilitative nursing health care and
compelling alternative dispute resolutions. The Kindred defendants must have been
aware, therefore, that pursuant to R.C. 1337.12 and R.C. 1337.13, a power of attorney for
health care is a specialized document.
{¶25} Nevertheless, when the Kindred defendants presented Templeman with a
“stack” of papers and “told” him to sign them on his mother’s behalf upon her admission
to the facility, they did not rely on such a document. Instead, they relied on a copy of a
“durable power of attorney,” purportedly given to Templeman from the decedent, but
that, despite the notary’s attestation, did not contain the decedent’s signature, as required
by statute. R.C. 1337.06 (“A power of attorney for * * * the transaction of business * * *
, in order to be admitted to record as provided in section 1337.07 of the Revised Code,
shall be signed [by the grantor] and acknowledged in the same manner as deeds and
mortgages * * * .”); R.C. 1337.25 (“A power of attorney must be signed by the principal
* * * .”). Neither did it indicate that Templeman’s authority to act on his mother’s
behalf, if any, extended to her health care as required by R.C. 1337.12 and 1337.13.
{¶26} In addition, in spite of what the Kindred defendants’ form specifically
required, none of the Kindred defendants required of Templeman that he provide his
“Printed Name & Authority” to sign the ADR agreement on his mother’s behalf. This
case, therefore, compels the same conclusion reached by the court in Koch, 9th Dist.
Summit No. 11CA010081, 2012-Ohio-5817, which, with substitutions of wording based
upon the facts of the instant case, noted at ¶ 14-19 as follows:
* * * [The defendants] did not [receive a valid power of attorney] to
act on [the decedent’s] behalf, but the nursing facility disregarded this fact
and told [the decedent’s son] that it would not admit [the decedent] if [he]
did not sign the forms. Under these circumstances, there was no evidence
that [the defendants] acted in good faith having reason to believe that [the
son] had authority to enter into any contract on behalf of [the decedent].
[Defendants’] demand that [the son] sign the forms [or his mother would]
be denied admission for necessary rehabilitation did not create the apparent
authority necessary * * * . Therefore, to the extent that the trial court
premised its order granting the motion to compel arbitration on a finding
[of] apparent authority to execute the arbitration agreement, such a finding
was unreasonable.
Ratification
“Ratification * * * [is] the approval by act, word, or conduct of that which
was improperly done.” Paterson v. Equity Trust Co., 9th Dist. No.
11CA009993, 2012-Ohio-860, ¶ 21, quoting AFCO Credit Corp. v.
Brandywine Ski Ctr., Inc., 81 Ohio App.3d 217, 221, 610 N.E.2d 1032 (9th
Dist.1992). In other words, “[a] principal may ratify the unauthorized acts
of his agent[.]” Paterson at ¶ 21. However, before ratification may occur,
“the ratifying party must know what actions [he] is ratifying.” Wells Fargo
Bank, N.A. v. Byrd, 178 Ohio App.3d 285, 2008-Ohio-4603, ¶ 13, 897
N.E.2d 722 (1st Dist.), citing Lithograph Bldg. Co. v. Watt, 96 Ohio St. 74,
86, 117 N.E. 25 (1917) (“before the principal can be held to ratify the
unauthorized acts of his agent, it must appear that he had knowledge of all
material facts”). “To establish ratification, it must be shown by conduct of
the principal, done with full knowledge of the facts, which manifests his
intention to ratify the unauthorized transaction.” (Emphasis in original).
Meyer v. Klensch, 114 Ohio App. 4, 6, 175 N.E.2d 870 (1st Dist.1961).
***
Based on the only evidence before the trial court, there was nothing to indicate that
[the decedent] was even aware of the existence of any * * * arbitration agreement, let
alone the terms of such an agreement. Under these circumstances, to the extent that the
trial court premised its order granting the motion to compel arbitration on a finding that
[the decedent] ratified the arbitration agreement signed by [her son], such a finding was
unreasonable.
Based on the above analyses, no contract existed which bound the parties to
arbitrate any disputes or claims. Therefore, the trial court erred by granting [the
defendants’] motion to stay the proceedings and compel arbitration.
{¶27} Because the record presented to the trial court fails to reflect that a valid ADR agreement
existed between the Kindred defendants and the decedent, the trial court correctly denied the Kindred
defendants’ R.C. 2711.02 motion to stay the proceedings. Compare Vogt v. Indianspring of Oakey, 1st
Dist. Hamilton No. C-110864, 2012-Ohio-4124 (executor–decedent’s representative did not show she
lacked valid authority to sign ADR agreement on her decedent’s behalf). Accordingly, the Kindred
defendants’ first assignment of error is overruled.
{¶28} However, for that same reason, the trial court erred in separating the estate’s survivorship
claims from that ruling. Without a valid ADR agreement in existence, none of the estate’s claims was
subject to arbitration. This disposition renders the argument the Kindred defendants make in their
second assignment of error meritless. Consequently, their second assignment of error also is
overruled.
{¶29} Therefore, although the trial court’s order is affirmed in part, it is also
reversed in part, and this case is remanded for further proceedings consistent with this
opinion.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
___________________________________
KENNETH A. ROCCO, JUDGE
LARRY A. JONES, SR., P.J., and
MARY EILEEN KILBANE, J., CONCUR