Skilled Nursing Facility Cannot Enforce an Arbitration Agreement

A Kentucky Court of Appeals finds that a skilled nursing facility failed to demonstrate that an arbitration agreement was valid and enforceable. In Cherokee Park Rehabilitation v. Callens (Ky. Ct. App., No-2021-CA-0694-MR, August 12, 2022).

On July 14, 2018, Robert Callens, a resident of Cherokee Park Rehabilitation, a skilled nursing facility, fell out of his wheelchair and sustained severe injuries.

After he passed away in November 2018, his children — Collins Callens and Debra Trowell — sued Cherokee Park Rehabilitation for medical and corporate negligence. Both children were executors of the late Mr. Robert Callens’ estate. Mr. Collins Callens served as his agent under a General Power of Attorney, and Mrs. Trowell was his successor agent.

When Mr. Robert Callens moved into the nursing home in June 2017, Signature Healthcare owned the establishment. Upon her father’s admission to the facility, Mrs. Trowell signed Signature Healthcare's arbitration agreement.

Signature Healthcare executed a transfer agreement giving ownership of the nursing home to Cherokee Park in January 2018. The transfer agreement had a contracts section that provided an extensive list of the agreements Cherokee Park assumed, which excluded the arbitration agreement.

In response to the negligence lawsuit, Cherokee Park asked the circuit court to compel arbitration and enforce Signature Healthcare's arbitration agreement. The facility argued that the transfer agreement with Signature Healthcare conveyed the contract.

The circuit court denied the nursing home’s motion, determining that the arbitration agreement was unenforceable. Cherokee Park appealed.

The appeals court concludes that the arbitration agreement is invalid. For a valid transfer of the arbitration agreement, Signature Healthcare must demonstrate clear intent to convey the contract to Cherokee Park. The transfer agreement must identify the arbitration agreement. Despite its long list of contracts, the transfer agreement did not reference the arbitration agreement. Neither Signature Healthcare nor Cherokee Park informed the family that Cherokee Park would take over the arbitration contract.

The court of appeals affirms the circuit court’s order denying Cherokee Park Rehabilitation’s motion to compel arbitration.

Read the entire case here.