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Documented Decrease in Mental Capacity Dooms ADR Agreements (PA)

September 19, 2019

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<p style="text-align: justify;">On September 16, 2019, the Superior Court of Pennsylvania affirmed an order overruling Kindred Hospital Philadelphia-Havertown’s preliminary objections seeking the enforcement of an alternative dispute resolution agreement signed by decedent Grace Kelly in <em><a href="https://www.wcmlaw.com/wp-content/uploads/2019/09/Davis-v.-2507-Chestnut-Street-Operations-et-al.-1.pdf">Davis v. 2507 Chestnut Street Operations et al</a><a href="https://www.wcmlaw.com/wp-content/uploads/2019/09/Davis-v.-2507-Chestnut-Street-Operations-et-al..pdf">.</a>  </em>The case stems from a medical professional liability action alleging Kindred provided her inadequate care and treatment during her time at Kindred.  Grace Davis had 3 separate stays at Kindred during 2015 from April 2, 2015 to April 20, 2015, June 19, 2015 to July 9, 2015 and July 30, 2015 to August 25, 2015.</p>
<p style="text-align: justify;">The issue on appeal was whether the ADR agreements, which mandated any dispute between Grace Davis and Kindred be heard by an arbitrator, were enforceable.  During her 3 separate stays at Kindred, Grace Davis and her husband Horace Davis executed 3 ADR agreements that were identical and contained the same terms.  In response to Kindred’s preliminary objections, Horace Davis argued that Grace Davis lacked the mental capacity to enter into the ADR agreements, Horace Davis lacked authority to bind Grace Davis, the agreements were unconscionable contracts of adhesion and that enforcing the ADR agreements would deny the wrongful death beneficiaries their constitutional right to a jury trial.</p>
<p style="text-align: justify;">On March 27, 2018, the trial court entered an order overruling Kindred’s preliminary objections.  The trial noted that Grace Davis lacked the mental capacity to enter into the ADR agreements, Horace Davis did not have authority to enter into said agreements and the agreements were also unconscionable.  The key piece of evidence in the trial court’s mind was the fact that employees of Kindred had documented Grace Davis’ decreased mental state.  The Court also noted that there was no writing indicating that Horace Davis had authority to execute agreements on behalf of his wife.</p>
<p style="text-align: justify;">On appeal, the PA Superior Court agreed with the lower court that Grace Davis did not have authority to enter into the ADR agreements.  There was ample documentation during Grace Davis’ stay at Kindred that she had an altered mental status and her husband testified she did not understand the ADR agreements when she signed them.  Additionally, as there was no written agreement giving Horace Davis authority to execute the ADR agreements on Grace Davis’ behalf, the Court ruled Horace Davis had no such authority.  Due to these two facts, the Court ruled the ADR agreements were unconscionable.</p>
<p style="text-align: justify;">Thanks to Garrett Gittler for his contribution to this post.  Please email <a href="mailto:BGibbons@wcmlaw.com">Brian Gibbons</a> with any questions.</p>

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