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Diversicare Leasing Corp. v. Adams

Court of Appeals of Kentucky

January 6, 2017

DIVERSICARE LEASING CORP., D/B/A ELLIOTT NURSING & REHABILITATION CENTER; OMEGA HEALTHCARE INVESTORS, INC.; DIVERSICARE HEALTHCARE SERVICES, INC., F/K/A ADVOCAT, INC.; DIVERSICARE MANAGEMENT SERVICES COMPANY; AND BENITA ADKINS, IN HER CAPACITY AS THE ADMINISTRATOR OF ELLIOTT NURSING & REHABILITATION CENTER, APPELLANTS
v.
WAYNE ADAMS, EXECUTOR OF THE ESTATE OF PEARL ADAMS, DECEASED, APPELLEE

         APPEAL FROM ELLIOTT CIRCUIT COURT HONORABLE REBECCA K. PHILLIPS, JUDGE ACTION NO. 11-CI-00121.

          BRIEF FOR APPELLANT: Michael F. Sutton Sarah E. Tilley Louisville, Kentucky

          BRIEF FOR APPELLEE: Corey T. Fannin Robert E. Salyer Lexington, Kentucky

          BEFORE: ACREE, J. LAMBERT, AND THOMPSON, JUDGES.

          OPINION

          J. LAMBERT, JUDGE:

         Diversicare Leasing Corp. d/b/a Elliott Nursing & Rehabilitation Center; Omega Healthcare Investors, Inc.; Diversicare Healthcare Services, Inc., f/k/a Advocat, Inc.; Diversicare Management Services Company; and Benita Adkins, in her capacity as Administrator of Elliott Nursing & Rehabilitation Center have taken an interlocutory appeal from the orders of the Elliott Circuit Court entered June 1 and June 3, 2015. Those orders granted in part and denied in part the motion to compel arbitration in a complaint seeking damages for injuries Pearl Adams sustained and for her wrongful death while she was a resident at the nursing home facility. After a careful examination of the record and the applicable law, we affirm the orders on appeal.

         We shall begin with a description of the named parties in this action. Elliott Nursing & Rehabilitation Center is a nursing facility in Sandy Hook, Kentucky, where Adams was a resident beginning in March 2005 until her death in 2013. Diversicare Leasing Corp. is the licensee of the nursing facility and as such was legally responsible for this facility and for ensuring that it complied with all applicable laws and regulations. Omega Healthcare Investors, Inc., wholly owns Diversicare Leasing Corp., and Advocat, Inc., wholly owns Omega. Diversicare Management Services Company owns, operates, manages, controls, and provides services for nursing facilities, including the nursing home at issue in this case. Benita Adkins was the administrator of the nursing home when Adams was a resident. We shall collectively refer to these parties as "Diversicare" in this opinion.

         On December 22, 2011, Adams, through her guardian, Wayne Adams, filed a complaint against Diversicare alleging that she had suffered an accelerated deterioration of her health as a result of Diversicare's wrongful conduct, including recurring pressure ulcers, an ankle fracture, urinary tract infections, dehydration, weight loss, excoriation, blisters, skin tears, bruises, acute renal failure, upper respiratory tract infection, pneumonia, wound infections, cellulitis, and multiple respiratory failure incidents. Adams alleged causes of action for negligence, medical negligence, corporate negligence, and violations of long term care resident's rights, as well as claims of negligence against Adkins as the administrator.

         In early 2012, Diversicare moved the court to enforce the arbitration agreement found in Adams' admission documents and to stay the lawsuit. Multiple admission and readmission documents had been signed by either Adams or her daughter, Linda Elam, and each admission document contained an optional arbitration clause that had not been waived. These documents are as follows:

• Admission Agreement dated March 25, 2005, signed by Elam, Adams' daughter (Admission Agreement 1). Adams was at the nursing facility under this admission agreement until mid-April 2005. The Admission Agreement contained an Agreement for Care and a Financial Agreement. Paragraph 12 of the Agreement for Care section included an optional arbitration clause, which read as follows:
OPTIONAL ARBITRATION CLAUSE (If the parties to this Agreement do not wish to include the following arbitration provision, please indicate so by marking an "X" through this clause. Both parties shall also initial that "X" to signify their agreement to refuse arbitration.) Any controversy or claim arising out of or relating to the Agreement, or the breach thereof, shall be settled by arbitration in accordance with the provisions of the state code and judgement [sic] upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
• Admission Agreement dated July 18, 2005, signed by Adams (Admission Agreement 2). Adams stayed in the facility this time until late August 2005. This document also contained an Agreement for Care and a Financial Agreement. The same optional arbitration agreement was included in the Agreement for Care.
• Kentucky Admission/Financial Agreement dated September 15, 2005, signed by Adams (Admission Agreement 3). Adams was in the facility until January 7, 2006, under this admission agreement. The Agreement for Care section contained an optional arbitration provision in paragraph 12, but the language differed from the previous Admission Agreements.
OPTIONAL ARBITRATION (If either of the parties to this Admission Agreement do not wish to be bound by the Arbitration Agreement, which is being completed as an addendum to the Admission Agreement and is hereby incorporated by reference, [1] please indicate so by marking and [sic] "X" through this clause. Both parties shall also initial that "X" to signify their agreement to decline optional arbitration."
The facility and the resident or the resident's authorized representative recognize that future disagreements or disputes may arise and these parties both wish to agree now, in advance, to submit any disputes that may arise between the parties involving a matter or amount in controversy which is in excess of the sum of fifteen thousand dollars ($15, 000) exclusive of interest, costs, and attorneys fees, which they can not [sic] otherwise resolve to binding arbitration instead of court litigation. The parties believe binding arbitration to be a speedy and economical alternative to what is generally a more protracted, more expensive, more public and ...

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