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On October 12, 2017, the Wyoming Supreme Court issued its decision in Kindred Healthcare Operating, Inc. v. Boyd, 2017 WY 122 (Wyo. 2017).  The court held that an alternative dispute resolution (ADR) agreement signed by the decedent’s representative was valid and enforceable and instructed the district court to order the parties to arbitrate their dispute.

On January 8, 2010, Aletha Boyd was admitted to Kindred’s nursing home facility.  Prior to Ms. Boyd’s admission, Ms. Putnam, Ms. Boyd’s daughter and designated agent pursuant to a power of attorney, signed an ADR agreement on behalf of Ms. Boyd.  The ADR agreement specified that the parties (Kindred and Ms. Boyd) agreed that any disputes arising between them should be resolved by the specified ADR process.  Following Ms. Boyd’s death, her wrongful death personal representative, Susan Boyd, filed suit against Kindred.  Kindred moved to compel arbitration.  The district court denied the motion, and Kindred appealed.

On appeal, the Wyoming Supreme Court considered : (1) whether Ms. Boyd’s agent had authority to sign the ADR agreement; (2) whether the ADR agreement was unconscionable; and (3) whether the ADR agreement was unenforceable because it lacked mutuality of assent and consideration.  Regarding the first issue, the court held that the power of attorney executed by Ms. Boyd authorized her agent to execute the ADR agreement.  On the second issue, the court held that the ADR agreement was not unconscionable.  The court concluded that Susan Boyd failed to show that the ADR agreement was procedurally unconscionable; therefore, the court did not consider whether it was substantively unconscionable.  The court reasoned that Susan Boyd failed to present any evidence that Ms. Boyd’s agent was deprived of a meaningful choice of whether to sign the ADR agreement.  Additionally, she could not have been surprised by fine print or concealed terms, as the ADR agreement stated at the top and in bold that it was “optional.”  Finally, Susan Boyd failed to present any evidence to support her contention that Ms. Boyd’s agent was emotionally distraught such that her “grief and confusion placed her at a disadvantage” when signing the ADR agreement.

With respect to the third issue, the court held that the ADR agreement was not unenforceable for the reasons argued.  Susan Boyd argued on appeal that the ADR agreement was unenforceable because it required the arbitration to be conducted in accordance with the National Arbitration Forum (NAF)’s rules and code of procedure, that the NAF is the only entity that can administer those rules, and the NAF has been precluded since 2009 from serving as administrator in consumer arbitrations.  The court refused to consider this argument because it was not raised in the district court.  The court did consider the argument raised by Susan Boyd that the ADR agreement was unenforceable because it required the arbitration to be conducted with the NAF rules and procedure then in effect, and therefore, the parties did not know what they were agreeing to, as the rules and procedure could change.  The court rejected this argument.  The court explained that not all terms in a contract must be spelled out in minute detail; the parties need only to agree upon the essentials.  If possible, courts will construe agreement to carry out the reasonable intentions of the parties.  The court found that the parties intended to select a qualified administrator and to allow for a non-NAF process.  The court honored that intention by finding that the ADR agreement was enforceable.

Hirst Applegate, LLP has a long history of representing Wyoming professionals and healthcare facilities, including physicians, nurses, hospitals, and convalescent centers in litigation and licensing matters.  If you have questions about this decision or how it might impact you or your business, please call Billie Addleman or Kara Ellsbury.