United States District Court, W.D. Kentucky, Bowling Green Division
PREFERRED CARE OF DELAWARE, INC.; FRANKLIN HEALTH FACILITIES, L.P. d/b/a FRANKLIN-SIMPSON NURSING & REHABILITATION CENTER; PREFERRED CARE PARTNERS MANAGEMENT GROUP, LP; PCPMG, LLC; KENTUCKY PARTNERS MANAGEMENT, LLC; and FRANKLIN HEALTH FACILITIES GP, LLC PETITIONERS
TAMMY HEWGLEY, as Administratrix of the ESTATE OF JUNE HEWGLEY, Deceased RESPONDENT
MEMORANDUM OPINION AND ORDER
N. Stivers, Judge.
matter is before the Court on Petitioners' Motion to
Compel Arbitration (DN 3) and Respondent's Motion to
Dismiss (DN 8). The motions have been fully briefed by the
parties and are ripe for adjudication. For the reasons
outlined below, the Motion to Compel Arbitration is
GRANTED IN PART and DENIED IN
PART, and the Motion to Dismiss is GRANTED
IN PART and DENIED IN PART.
SUMMARY OF FACTS AND CLAIMS
January 15, 2017, a Warren District Court jury determined
that June Hewgley (“Hewgley”) was wholly disabled
and incapable of managing her personal affairs and financial
resources. (Pet. Ex. C, at 1, DN 1-3). The Warren District
Court then appointed the Kentucky Cabinet for Health and
Family Services (“CHFS”) to act as Hewgley's
guardian. (Pet. Ex. C., at 2-3).
period of time-exclusive of hospitalizations-from January 16,
2015, to July 18, 2016, Hewgley was a resident of the
Franklin-Simpson Nursing & Rehabilitation Center in
Franklin, Kentucky, which is owned and operated by Franklin
Health Facilities GP, LLC and other entities. (Pet. Ex. A,
¶ 3, DN 1-1). At the time of her admission, Mark Smith
(“Smith”), who is a representative of CHFS and
was acting as Hewgley's guardian, executed the necessary
admission paperwork, which included a document entitled
“Alternative Dispute Resolution Agreement”
(“Arbitration Agreement”). (Pet. Ex. B, at 5, DN
1-2). In relevant part, the Arbitration Agreement provided
that “[t]he Parties voluntarily agree that any disputes
covered by this Agreement (herein after referred to as
‘Covered Disputes') that may arise between the
Parties shall be resolved exclusively by an ADR process that
shall include mediation and, where mediation does not
successfully resolve the dispute, binding arbitration.”
(Pet. Ex. B, ¶ 3). As defined, the term “Covered
Disputes” included any dispute arising from or related
to care rendered by Preferred Care. (Pet. Ex. B, ¶ 4).
The Agreement also defined the term “Resident” as
[A]ll persons whose claim is or may be derived through or on
behalf of the Resident, all persons entitled to bring a claim
on behalf of the Resident, including any personal
representative, responsible party, guardian, executor,
administrator, legal representative, agent or heir of the
Resident, and any person who has executed this Agreement on
behalf of the Resident.
(Pet. Ex. B, ¶ 2(b)).
26, 2017, Tammy Hewgley, as Administratrix of the Estate of
June Hewgley (“Estate”), filed a lawsuit in
Simpson Circuit Court entitled Hewgley v. Preferred Care
of Delaware, Inc., Civil Action No. 17-CI-00211
(the “State Court Action”). (Pet. Ex. A, at 1, DN
1-1). In the state court complaint, the Estate asserted
claims for, inter alia, negligence, medical
negligence, and wrongful death. (Pet. Ex. A, ¶¶ 27-40,
¶¶ 55-66). Following the initiation of the State
Court Action, Preferred Care filed this action in federal
court asserting jurisdiction under 28 U.S.C. § 1332(a)
and Section 4 (9 U.S.C. § 4) of the Federal Arbitration
Act (“FAA”), 9 U.S.C. §§ 1-16.
Preferred Care seeks to enforce the Arbitration Agreement
executed by Hewgley's court-appointed guardian, and
Respondent has moved to dismiss this case. (Pet. ¶¶
28-37, DN 1; Pet'rs' Mot. Compel Arbitration, DN 3;
Resp't's Mot. Dismiss, DN 8).
support of its motion to dismiss, Respondent asserts various
bases pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(6), and
12(b)(7). In particular, Respondent raises the following
arguments: (i) the Court lacks subject matter jurisdiction;
(ii) Preferred Care failed to join indispensable
parties-namely nursing home personnel who are defendants in
the State Court Action-as parties to this action; (iii) the
Court should abstain from exercising jurisdiction based upon
the Colorado River abstention doctrine; (iv) the
Arbitration Agreement is invalid and unenforceable; and (v)
the Arbitration Agreement is unconscionable.
(Resp't's Mem. Supp. Mot. Dismiss 2-28, DN 8-1).
These same arguments have been unsuccessfully raised in
numerous other recent cases before this Court challenging the
enforcement of arbitration agreements between nursing homes
and its residents or the residents'
estates. See GGNSC Louisville St. Matthews v.
Grevious, No. 3:16-cv-829-DJH, 2017 WL 3623805 (W.D. Ky.
Aug. 23, 2017); GGNSC Louisville St. Matthews, LLC v.
Phillips, No. 3:17-CV-00406-JHM, 2017 WL 3446181 (W.D.
Ky. Aug. 10, 2017); GGNSC Louisville Camelot, LLC v.
Coppedge, No. 3:16-CV-00834-TBR, 2017 WL 3430579 (W.D.
Ky. Aug. 9, 2017); GGNSC Louisville St. Matthews v.
Madison, No. 3:16-CV-00830-TBR, 2017 WL 2312699 (W.D.
Ky. May 26, 2017); GGNSC Louisville St. Matthews, LLC v.
Saunders, No. 3:17-cv-00185-CRS-CHL, 2017 WL 2196752
(W.D. Ky. May 18, 2017); GGNSC Louisville Mt. Holly, LLC
v. Turner, No. 3:16-CV-00149-TBR, 2017 WL
537200 (W.D. Ky. Feb. 9, 2017); GGNSC Louisville Mt.
Holly LLC v. Stevenson, No. 3:16CV-00423-JMH, 2016 WL
5867427 (W.D. Ky. Oct. 6, 2016); Preferred Care of Del.
Inc. v. Estate of Hopkins, No. 5:15-CV-00191-GNS-LLK,
2016 WL 3546407 (W.D. Ky. June 22, 2016); Diversicare
Highland, LLC v. Lee, No. 3:15-CV-00836-GNS, 2016 WL
3512256 (W.D. Ky. June 21, 2016); Golden Gate Nat'l
Senior Care, LLC v. Fleshman, No. 3:15-CV-00891-GNS,
2016 WL 3406159 (W.D. Ky. June 17, 2016); Owensboro
Health Facilities, L.P. v. Henderson, No.
4:16CV-00002-JHM, 2016 WL 2853569 (W.D. Ky. May 12, 2016);
Riney v. GGNSC Louisville St. Matthews, LLC, No.
3:16CV-00122-JHM, 2016 WL 2853568 (W.D. Ky. May 12, 2016);
GGNSC Louisville Mt. Holly, LLC v. Mohamed-Vall, No.
3:16-cv-136-DJH, 2016 WL 9024811 (W.D. Ky. Apr. 6, 2016);
Preferred Care of Del., Inc. v. Crocker, No.
5:15-CV-177-TBR, 2016 WL 1181786 (W.D. Ky. Mar. 24, 2016);
GGNSC Louisville Hillcreek, LLC v. Watkins, No.
3:15-cv-902-DJH, 2016 WL 815295 (W.D. Ky. Feb. 29, 2016);
Sun Healthcare Grp., Inc. v. Dowdy, No.
5:13-CV-00169-TBR, 2014 WL 790916 (W.D. Ky. Feb. 26, 2014);
Life Care Ctrs. of Am., Inc. v. Estate of Neblett,
No. 5:14-CV-00124-TBR, 2014 WL 5439623 (W.D. Ky. Oct. 22,
2014). See also Preferred Care, Inc. v. Howell, 187
F.Supp.3d 796 (E.D. Ky. 2016); GGNSC Frankfort, LLC v.
Tracy, No. CIV. 14-30-GFVT, 2015 WL 1481149 (E.D. Ky.
Mar. 31, 2015).
considering the arguments of the parties and the cases
referenced above, the Court denies the motion to dismiss for
the reasons set forth in Estate of Neblett and
Crocker. In short, the Court finds that it has
subject matter jurisdiction; that the nursing home personnel
are not indispensable parties to this action; and that
abstention is not appropriate. See Estate of
Neblett, 2014 WL 5439623, at *2-7; Crocker,
2016 WL 1181786, at *4-6. With regard to the specific
circumstances here, the Court will address the validity,
unconscionability, and enforceability of the Arbitration
Agreement executed by Hewgley's court-appointed guardian
the FAA, a written agreement to arbitrate concerning a
dispute arising out of a contract involving interstate
commerce “shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the
revocation of any contract.” Stout v. J.D.
Byrider, 228 F.3d 709, 714 (6th Cir. 2000) (quoting 9
U.S.C. § 2). Respondent asserts that the Arbitration
Agreement is invalid because it does not evidence a
transaction involving interstate commerce. Specifically,
Respondent argues that“[t]he mere fact that the ADR
Agreement asserts that it is a contract involving interstate
commerce does not make it so.” (Resp't's Mem.
Supp. Mot. Dismiss 24).
argument, however, lacks merit. As this Court reasoned in
The Supreme Court has interpreted the phrase “involving
commerce” in the FAA as signaling the broadest
permissible exercise of Congress' Commerce Clause power.
Based upon that interpretation, this Court has found on
multiple prior occasions that nursing home admission
agreements implicate interstate commerce. In [GGNSC
Louisville Hillcreek, LLC v. Warner, No. 3:13-CV-752-H,
2013 WL 6796421 (W.D. Ky. Dec. 19, 2013)], this Court
emphasized that while the nursing care may occur wholly
within the borders of Kentucky, the food, medicine, medical,
and other supplies all likely come from elsewhere and that it
would be impracticable for the nursing home to procure all
goods necessary for the daily operations purely through
intrastate channels. The Warner Court also noted
that, like here, Defendant's state court complaint
alleged that foreign entities owned, operated, managed,
controlled, and provided services for the nursing home.
Id. at 83 (internal citations omitted) (citation
omitted). Because the present facts are indistinguishable
from Turner, the Court concludes that the
Arbitration Agreement is a contract ...