In December 2012, the Ninth District Court of Appeals reversed and remanded the judgment of the Lorain County Court of Common Pleas in the case of Koch v. Keystone Point Health and Rehabilitation, et al., finding that an arbitration agreement signed by an unauthorized person is not binding.

In May, 2009, Richard Kissinger appointed his son James Kissinger as his attorney in fact and his health care power of attorney.  In May, 2010, Richard was taken by ambulance to appellee Keystone Pointe Health and Rehabilitation nursing facility. His son’s wife, Carla Kissinger, met him there.  Upon his arrival, Richard was confused and unable to sign the admission documents.  Carla signed the admission agreement as well as a separate arbitration agreement.  The arbitration agreement stated that any disputes arising from nonpayment may be settled in court or, if mutually agreed upon by the parties, by binding arbitration.  All other disputes including “breach of contract …, negligence, medical malpractice, tort, breach of statutory duty, resident’s rights and any departures from accepted standards of care” must by settled by binding arbitration.

During his stay at Keystone, Richard also received treatment at a local hospital but after treatment was always returned to Keystone.  Upon return from one of these treatments, James, his power of attorney, signed a re-admission agreement on behalf of Richard.

In July, 2010, Richard suffered a fall at Keystone and died November 14, 2012.  The administrator of the estate filed a complaint for wrongful death and violation of the nursing home patient’s bill of rights.  Instead of filing an answer, Keystone moved to stay the proceedings and compel arbitration.  The trial court granted the motion.

Appellant argued that the trial court erred in granting the motion based on the fact that the contract, which required the arbitration, was not executed by Richard Kissinger or any of his appointees.  Keystone argued that Carla Kissinger, Richard’s daughter-in-law, acted with authority when she signed the initial admission and arbitration agreement.  Further, they argue that James ratified this authority when he signed a re-admission agreement thereby renewing any prior agreement.

In Master Consolidated Corp. v. BankOhio Natl. Bank, The Ohio Supreme Court found that “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 …” Master Consolidated Corp. v. BankOhio Natl. Bank, 61 Ohio St.3d 570 (1991), syllabus.

In this particular case, Richard had not appointed Carla to any such fiduciary role.    In addition, he was confused and unable to indicate to the workers at Keystone that Carla was not his agent nor was he able to hold her “out to the public” as having authority to act on his behalf.

Keystone argued that because James signed a re-admission agreement he had agreed to the arbitration agreement.  The Court, however, found that the language of the re-admission agreement stated that a copy of the original agreement was attached to the re-admission agreement which was not the case.  Further, the re-admission agreement was undated.

The Court of Appeals found that no contract existed which bound the parties to arbitration.   In addition, they found that there was no evidence that James was even aware of a prior agreement or its contents.  The Court therefore reversed the judgment of the Lorain County Court of Common Pleas.

The entire opinion of the Court is available and may be found here:

Many thanks to Kim Goldwasser for her contributions to this article.  Kim is a paralegal with Slovin & Associates Co., L.P.A.