# Amicus Curiae Brief — Kindred Nursing Ctrs. Ltd. P'ship v. Clark, 137 S. Ct. 1421 (2017) (No. 16-32)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2017

## Text

No. 16-32 Supreme Court, US.

; ‘Inte Aue 5 208
Supreme Court of the Gnited THE CLERK

KINDRED NURSING CENTERS LIMITED
PARTNERSHIP d/b/a WINCHESTER CENTRE FOR
HEALTH AND REHABILITATION n/k/a FOUNTAIN
CIRCLE HEALTH AND REHABILITATION;
KINDRED NURSING CENTERS EAST, LLC; KINDRED
HOSPITALS LIMITED PARTNERSHIP; KINDRED
HEALTHCARE, INC.; KINDRED HEALTHCARE
OPERATING, INC.; KINDRED REHAB SERVICES, INC.
d/b/a PEOPLEFIRST REHABILITATION,
Petitioners,
Vv.

JANIS E. CLARK, Executrix of the Estate of OLIVE G.
CLARK, deceased, and on behalf of the wrongful death
beneficiaries of OLIVE G. CLARK; and BEVERLY
WELLNER, Individually and on behalf of the
Estate of JOE P. WELLNER, deceased, and on behalf of
the Wrongful Death Beneficiaries of JOE P. WELLNER,

Respondents.
.

On Petition For A Writ Of Certiorari
To The Supreme Court Of Kentucky
.

BRIEF AMICUS CURIAE FOR GENESIS
HEALTHCARE, INC., DIVERSICARE HEALTHCARE
SERVICES, INC., GGNSC LOUISVILLE MT. HOLLY LLC

D/B/A GOLDEN LIVINGCENTER - MT. HOLLY,
BROOKDALE SENIOR LIVING INC., SIGNATURE
HEALTHCARE, LLC, HCR MANORCARE AND
KENTUCKY PARTNERS MANAGEMENT, LLC
IN SUPPORT OF THE PETITIONERS
.

DONALD L. MILLER, I

Counsel of Record

KRISTIN M. LOMOND

QUINTAIROS, PRIETO, Woop & Boyer, PA.
9300 Shelbyville Road, Suite 400
Louisville, KY 49222

(502) 423-6390

dmiller@gpwblaw.com
klomond@gpwblaw.com

Counsel for. Amici Curiae

COCKLE LEGAL BRIEFS (800) 225-6064
WWW COCKLELEGALBRIEFR.COM e new of Congres

1
QUESTION PRESENTED

Whether the FAA preempts a state-law contract rule
that singles out arbitration by requiring a power of at-
torney to expressly refer to arbitration agreements be-
fore the attorney-in-fact can bind her principal to an
arbitration agreement.

il

TABLE OF CONTENTS

Page
SPREE PES We UIT BE Risicecccussssevacssetenssnssssncess i
gv) PF Re ig pe REED iV
IDENTITY AND INTERESTS OF THE AMICT.... 1
STATUTORY PROVISIONS INVOLVED ...........
i REET CPL AROS ch CPU nee oR 4
SUMMARY OF THE ARGUMENT ...................... 7

ARGUMENT IN SUPPORT OF THE PETITION.... 9

I. FORARBITRATION CONTRACTS, WHIS-
MAN APPLIED DIFFERENT RULES AND
DEMANDED SPECIFICITY FOR EN-
FORCEMENT NOT REQUIRED FOR
OTHER CONTRACTS........ ies ddtaadpameamnndalass 10

Il. WHISMAN IGNORES THE FAA’S PROHI-
BITION AGAINST ELEVATED STANDARDS
FOR ARBITRATION CONTRACTS ........... 11

Ill. WHISMAN INCORRECTLY BASED ITS
HOLDING ON A “GOD-GIVEN RIGHT”
TO JURY TRIAL: NO SUCH “RIGHT” EX-
ISTS OR WAS EVER IMPLICATED ......... 12

IV. WHISMAN’S APPLICATION TO VALID
ARBITRATION AGREEMENTS VIOLATES
FUNDAMENTAL CONSTITUTIONAL
I sade ick cihchissonses secdvancsdethneateeenseiaabiaes 15

ii

TABLE OF CONTENTS — Continued
Page

A. Whisman Violates the Due Process
Clause of the Fourteenth Amendment
by Impairing the Fundamental Federal
By OP CR cccivesécoscveisscésoscncensevens 17

B. Whisman Violates the Equal Protec-
tion Clause of the Fourteenth Amend-
ment by Refusing to Treat Long-Term
Care Providers Similarly..................... 19

V. STATE COURT RESTRICTIONS ON
ARBITRATION RIGHTS POSE A SUB-
STANTIAL THREAT TO AN INCREAS-
INGLY IMPORTANT INDUSTRY ............ 22

ID i abisicsntnbteiiecidaititeiiehdiesscrcceabasesgins 24

iv

TABLE OF AUTHORITIES

Page
CASES
Aligeyer v. Louisiana, 165 U.S. 578, 17S. Ct. 427,
ek EE inceninceincide Lindabitinnttenonrepitinenianenes 18
Ally Cat, LLC v. Chauvin, 274 S.W.3d 451 (Ky.
EN iiedsininiaeseindssanbslbengesoausnvenantiaadtuedetinmeiaecasmennatsen 20

AT&T Mobility LLC v. Concepcion, 563 U.S. 333,
131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011)....9, 11, 15

Atlas Roofing Co., Inc. v. Occupational Safety,
Etc., 430 U.S. 442, 97 S. Ct. 1261, 51 L. Ed. 2d

BO Rada sveicn kcnatcal undanatuaeatenisnaddagsvintsbielecnbesnnnissens 13
Brown v. Hoblitzell, 307 S.W.2d 739 (Ky. 1956)......... 12

City of Cleburne, Texas v. Cleburne Living Cen-
ter, 473 U.S. 432, 105 S. Ct. 3249, 87 L. Ed. 2d

Be CE itctecinsicictien ch Gainininteshamnirensnnsiatiienipnteninitismistin 20

Cremin v. Merrill, Lynch, Pierce, Fenner &
Smith, Inc., 957 F. Supp. 1460 (N.D. Ill. 1997)....... 14

DirecTV, Inc. v. Imburgia, 577 U.S. __, 136

S. Ct. 463, 193 L. Ed. 2d 365 (2015)..............-....00000 9
D.F. v. Codell, 127 S.W.3d 571 (Ky. 2003).................. 21
EJS Properties, LLC v. City of Toledo, 698 F.3d

I A TT. cnc nnnokshavdkasesbuaesinneeinepneeeneians 19
Extendicare Homes, Inc. v. Whisman, 478 S.W.3d

I EE iriacncrricionioidicunannessshtnascennens consuinahaie passim
Ferguson v. Skrupa, 372 U.S. 726, 83 S. Ct. 1028,

i rcceenntsiinhainneitnsicebuyeinntyinenaickh 18

Geldermann Inc. v. Commodity Futures Trading
Comm., 836 F.2d 310 (7th Cir. 1987) ...........c000000+ 14

Vv

TABLE OF AUTHORITIES — Continued

Page
Granfinanciera v. Nordberg, 492 U.S. 33, 109
S. Ct. 2782, 106 L. Ed. 2d 26 (1989)................. 13, 14
Grosjean v. Am. Press Co., 297 U.S. 233, 56 S. Ct.
ee ie Be I I brett chaendassescninnncapesonciveuivedes 17
Hines v. Davidowitz, 312 U.S. 52, 61 S. Ct. 399,
Se ek ED gc cisanncestncenpeisensnestenspapsiumeans ds tiie 15
Illyes v. John Nuveen & Co., Inc., 949 F. Supp.
PIS “SII oso 1s so een cam inmmuauivinadsbanntansernbnecn 14
Kentucky Comm’n on Human Rights v. Fraser,
fe of |) eee 13
Kirby v. Lexington Theological Seminary, 426
I te CI eg sinnicnadccnnsniciintaciievnsécupsasscnsaienesnin 18
Kodak Mining Co. v. Carrs Fork Corp., 669
Se A MIE SD inciincsicnnvensécrnsccunncasentmesihdnacaan sees 20
Lochner v. New York, 198 U.S. 45, 25 S. Ct. 539,
a sciihidbbigitncbtin sondceatdgeeicisneraccveacres 18
Marmet Health Care Center, Inc. v. Brown, 132
S. Ct. 1201, 1823 L.. Bd. Bd 42 ([O1Z) ............000000.00005. 9
Marsh v. First USA Bank, N.A., 103 F. Supp. 2d
TIRE TII ID o, cccthccs bs cieditccinemiensnlicadinaebned 14
Martin v. Hunter’s Lessee, 1 Wheat 304, 14 U.S.
ee Rh | ne ee ee Oe rages 5

Medcom Contracting Services, Inc. v. Shepherds-
ville Christian Church Disciples of Christ, 290

S.W.3d 681 (Ky. App. 2009) .....ccccccseccsveccssssseeeseeeveen 20

Miller v. Johnson Controls, Inc., 296 S.W.3d 392
BN IN sti carcsisliadc npcmenanisinaitnaanensanecnaitungptenmesaiabialiised 17

vi

TABLE OF AUTHORITIES — Continued

Page
Nat'l Iranian Oil Co. v. Ashland Oil, Inc., 716
ae BS ee 14
Perry v. Thomas, 482 U.S. 483, 107 S. Ct. 2520,
Oe ie, i 16
Pierson v. Dean, Witter, Reynolds, Inc., 742 F.2d
COE a EE NL Sy a 14
Poggel v. Louisville Ry. Co., 225 Ky. 784, 10
oe RR a ee EN SR 20

Preferred Care of Delaware, Inc. v. Hopkins, 2016
WL 3546407, Case No. 5:15-CV-00191-GNS-
Ce ee Beis IIE Bly BD on eviecnenevicsansncncrecscnnvcice 10

Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270

2 ER EE ER ASR Arana SA ee eee 16
Reno v. Flores, 507 U.S. 292, 113 S. Ct. 1439, 123

Bs SINE te I ch ptendsdnchtaccoeceaiaiasetcrendectuaabaaeadlest 18
Rutledge v. Electric Hose & Rubber Co., 511 F.2d

| RR AE RSI ee ee ee 13
Schnuerle v. Insight Communications Co., L.P.,

Ue ee Pe I CI ED ie ecncsicinenseccddccscctsvcncessieces 19
Shelley v. Kraemer, 334 U.S. 1, 68 S. Ct. 836, 92

in: Sy BRIE UIE cies bcesscisetubacaseamcouesioxniieainmnccdnaseus 17,18
Southland Corp. v. Keating, 465 U.S. 1, 1048. Ct.

gp ei Ee 16

Sydnor v. Conseco Fin. Servicing Corp., 252 F.3d
BE IE CI, SE Rectnccstsretsaninnsensccdsorsniivenaaiecnienintias 14

vii

TABLE OF AUTHORITIES — Continued

Page
Vision Mining, Inc. v. Gardner, 364 S.W.3d 455
I SEI ic nasccncsanceeeebpienanisaninisinembinadaaeiiens 20, 21
Washington v. Glucksberg, 521 U.S. 702, 117
S. Ct. 2258, 138 L. Ed. 2d 772 (1997)............... 18,19
Yakus v. United States, 321 U.S. 414, 64 S. Ct.
Se, A Bey CEs Ee CID avn cecncbetscnccnoserccasinissdectneses 13
CONSTITUTIONAL PROVISIONS
Article III of the U.S. Constitution............................ 13
Due Process Clause of the Fourteenth Amend-
ment to the U.S. Constitution........... 8, 15, 17, 18, 19

Equal Protection Clause of the Fourteenth
Amendment to the U.S. Constitution8, 15, 19, 20, 21

Supremacy Clause of the U.S. Constitution, Art.

I checlecsdcnch niet base lala once ceaialadiahinted thd atte ee ibiaatiendisie 9
Seventh Amendment to the U.S. Constitu-

ESTE EI Re ee SE PETRA ET Ce 7, 8,14, 15
IT 0 ED icc ccadnsons puenioeninbaahiagsbiiaeiensdenteid 21
RE ee oe ee ee eee 21
UE EO OU apo scteniics sav secsiceeevenscnsctacinesbonnienasl 21
PEPTUCEY COORGBT, © 7 on. ccceceiescecesscccncccensee 7,12, 14,15

PUREE GI OB ooo cca So cateavedwasuasdacsocnanuce 11

vill .
%

TABLE OF AUTHORITIES — Continued

Page
STATUTES
Federal Arbitration Act, 9 U.S.C. §§ 1-16........... passim
Kentucky Revised Statute § 402.050...........0............. 11
Kentucky Revised Statute § 625.090...............0......... 11
RULES AND REGULATIONS
Federal Rule of Civil Procedure 38(d)........................ 12
Kentucky Rule of Civil Procedure 38.04.................... 12
OTHER
5 MOoRE’S FEDERAL PRACTICE 38.08 ..................020000000 13
$65 billion in Medicare cuts to rock U.S. nursing
homes over 10 years, analysis shows, McKnight’s
Long-Term Care News (Aug. 2, 2012), http://
www.mcknights.com/65-billion-in-medicare-
cuts-to-rock-us-nursing-homes-over-10-years-
analysis-shows/article/253036 ..................:cccceeeeeeeees 23
Editorial, When People Sign Away Their Right to
Sue, N.Y. TIMES, July 25, 2016................cccceceeeeeeee ee 21

Philip Moeller, Nursing Homes Squeezed by Med-
icare Cuts, U.S. News Money (Aug. 8, 2011),
http://money.usnews.com/money/blogs/the-best-
life/2011/08/08/nursing-homes-squeezed-by-
I ae na anicumad 23

U.S. Dep’t of Health & Human Servs., Admin, on

Aging, Aging Statistics, http://www.aoa.gov/
aoaroot/aging statistics/index.aspx ...................006- 22

1

AMICUS CURIAE BRIEF IN
SUPPORT OF PETITIONERS

Pursuant to Supreme Court Rule 37.2, Genesis
Healthcare, Inc., Diversicare Healthcare Services, Inc.,
GGNSC Louisville Mt. Holly LLC d/b/a Golden Liv-
ingCenter — Mt. Holly, Brookdale Senior Living Inc.,
Signature HealthCARE, LLC, HCR ManorCare and
Kentucky Partners Management, LLC, respectfully
submit this Amicus Curiae brief in support of Petition-
ers.’

+

IDENTITY AND INTERESTS OF THE AMICI

Amicus curiae Genesis Healthcare, Inc. is a hold-
ing company with subsidiaries that, on a combined ba-
sis, comprise one of the nation’s largest post-acute care
providers with more than 500 skilled nursing centers
and senior living communities in 34 states nationwide.
Genesis subsidiaries also supply rehabilitation ther-
apy to more than 1600 locations in 46 states and the
District of Columbia.

Amicus curiae Diversicare Healthcare Services,
Inc., headquartered in Brentwood, Tennessee, employs

1 Pursuant to Supreme Court Rule 37.2(a), notice of the
Amici’s intent to file this brief was received by all counsel of rec-
ord for all parties more than 10 days before the brief’s due date.
Petitioner and Respondent consented to filing. The undersigned
affirms that no counsel for a party authored this brief in whole or
in part, and no person or entity, other than Amici, their members,
or their counse!, made a monetary contribution specifically for the
preparation or submission of this brief.

2

6300 people offering wide-ranging, post-acute care in
multiple settings, to include: complex medical, skilled
nursing, short-term rehabilitative, long-term resi-
dency, memory assistance, respite and hospice care.
Through a subsidiary, Diversicare operates 55 skilled
nursing and long-term care facilities in nine Southern
and Midwestern states.

Amicus curiae GGNSC Louisville Mt. Holly LLC
d/b/a Golden LivingCenter — Mt. Holly is a member of
a family of companies based in Plano, Texas. The
Golden Living family of companies includes Golden
LivingCenters, Aegis Therapies, AseraCare, and 360
Healthcare Staffing. There are 300 Golden Liv-
ingCenters in 21 states. Golden Living also offers as-
sisted living services at more than 30 of its locations.
Golden Living companies provide services to over 1000
nursing homes, hospitals, and other healthcare organ-
izations in 40 states and the District of Columbia. The
Golden Living family of companies has more than
40,000 employees who provide healthcare to over
60,000 patients daily.

Amicus curiae Brookdale Senior Living Inc., based
in Brentwood, Tennessee, operates 647 senior care
communities in 36 states, including 74 retirement cen-
ters, 440 assisted living communities and 41 continu-
ing care retirement centers. Brookdale communities
have the ability to serve approximately 66,000 resi-
dents daily.

3

Amicus curiae Signature HealthCARE, LLC, is a
Kentucky based long-term health care and rehabilita-
tion company with 143 different facility locations (46
of them in Kentucky) that span across 11 different
states, providing jobs to nearly 24,000 employees. A
growing number of Signature centers are earning five-
star ratings from the Centers for Medicare & Medicaid
Services. Signature was named “Best Places to Work in
KY” in 2014 and 2015 by the Kentucky Chamber of
Commerce, and was nationally awarded by Modern
Healthcare in 2013 and 2015.

Amicus curiae HCR ManorCare is a leading pro-
vider of short-term, post-hospital services and long-
term care with a network of more than 500 skilled
nursing and rehabilitation centers, memory care com-
munities, assisted living facilities, outpatient rehabili-
tation clinics, and hospice and home health care
agencies. Based in Toledo, Ohio, ManorCare employs
more than 50,000 caregivers nationwide.

Amicus curiae Kentucky Partners Management,
LLC, based in Plano, Texas, manages 21 skilled nurs-
ing facilities in the Commonwealth of Kentucky, which
includes 1762 nursing beds. Services offered at these
nursing facilities include skilled nursing, short-term
rehabilitative, long-term residency, and hospice care.

Predispute arbitration agreements represent effi-
cient, cost-effective alternatives to traditional civil lit-
igation, vital to Amici and the entire long-term care
industry. Arbitration agreements aid cost reduction,
retaining more resources for resident care and claim

4

resolution. Amici typically present residents with arbi-
tration agreements upon admission. Some are stand-
alone agreements; some form part of the admissions
agreement. Amici enter into thousands of arbitration
agreements every year, many executed by an attorney-
in-fact for the resident, as in the Whisman cases. Be-
cause of their genuine interest in promoting consistent
enforcement of valid arbitration agreements, Amici
strongly encourage the Court to grant the Petition.

.

STATEMENT

Venue should play no part in substantive law, but
it means everything in Kentucky after Extendicare
Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2016).?

Justice Story long ago premonished the Court's
need to review Whisman:

Judges of equal learning and integrity, in dif-
ferent states, might differently interpret a
statute, or a treaty of the United States, or
even the constitution itself: If there were no
revising authority to control these jarring and
discordant judgments, and harmonize them
into uniformity, the laws, the treaties, and the
constitution of the United States would be dif-
ferent in different states, and might . . . never

2 See Petition at pp. 17-20. Every Kentucky federal district
court to consider Whisman’s rule has held Whisman violates the
FAA. Kentucky state courts are bound by Court Rule to follow
Whisman. See Rules of Kentucky Supreme Court 1.030(8) and
1.040(5). la

5

have precisely the same construction, obliga-
tion, or efficacy, in any two states. The public
mischiefs that would attend such a state of
things would be truly deplorable[.]

Martin v. Hunter’s Lessee, 1 Wheat 304, 348, 14 US.
304, 348, 4 L. Ed. 97 (1816).

Whisman creates precisely the “deplorable” state
envisioned: Kentucky parties to arbitration agree-
ments must “race to the courthouse”: to avoid enforce-
ment of an arbitration agreement, Kentucky state
courthouses. Kentucky’s federal district courts provide
the alternative for those hoping to enforce arbitration
contracts. Unfortunately, Kentucky citizens lacking di-
versity to remove or file an original federal action often
lose their right to enforce valid arbitration contracts.

Amici adopt and rely upon the facts as Petitioners
set forth in their brief, and here provide only a sum-
mary of pertinent facts. Whisman arose from a long-
term care facility’s attempt to enforce arbitration
agreements executed between it and its residents’
agents in Kentucky state courts.’ Pet. App. 7a. The res-
idents’ powers of attorney documents (“POAs”) desig-
nated the agents and their specific grants of power. See
Pet. App. 12a-23a. Each POA granted the power to
make and execute contracts, specifically and without

3 All arbitration agreements considered in Whisrnan were
optional and not a condition of admission. Pet. App. 17a.

6

limitation. Pet. App. 19a; 22a.*,° In both cases ad-
dressed in the Petition, Whisman held these powers to
be insufficient for the attorney-in-fact to enter into, or
enforce, an arbitration contract, specifically. Pet. App.
50a. The Supreme Court of Kentucky refused to en-
force the agent-entered predispute arbitration con-
tracts for reasons not applicable to any other contracts
under Kentucky law, reasoning that arbitration con-
tracts waived a “God-given right” to a jury trial and
such waiver could not be inferred from a “less than ex-
plicit grant” of the power to execute contracts in gen-
eral. Pet. App. 40a; 43a.

* Olive Clark’s “General Durable Power of Attorney to Con-
duct All Business and Personal Affairs of Principal” granted her
attorney-in-fact, “with full power for me and in my name... in
her sole discretion” to “transact, handle, and dispose of all matters
affecting me and/or my estate in any possible way.” Pet. App. 18a.
Her POA granted powers to “draw, make and sign in my name any
and all checks, promissory notes, contracts, deeds or agreements.”
Pet. App. 19a (emphasis added). Her POA granted authority to
“institute or defend suits concerning my property or rights,” and
“Generally to do and perform for me and in my name all that I
might do if present.” Pet. App. 19a.

° Joe Wellner’s Power of Attorney document granted his at-
torney-in-fact powers to “make, execute and deliver deeds, re-
leases, conveyances and contracts of every nature in relation to
both real and personal property, including stocks, bonds and in-
surance.” Pet App. 22a (emphasis added). His POA contained ad-
ditional grants to “demand, sue for, collect, recover and receive all
debts, monies, interest and demands whatsoever now due or that
may hereafter be or become due to me (including the right to in-
stitute legal proceedings therefor).” Pet. App. 21a.

7

SUMMARY OF THE ARGUMENT

Amici request this Court’s review because Whis-
man so disproportionately burdens long-term care pro-
viders given the industry’s regular use of agent-
executed predispute arbitration agreements. A signifi-
cant number of long-term care residents, because of
age or infirmity, utilize powers of attorney designating
individuals authorized to conduct their business and
personal affairs, including the right to enter into all
types of contracts for their resident. The Federal Arbi-
tration Act (“FAA”) says arbitration contracts must be
enforced like all other contracts. Whisman elevates the
standard for enforcement of agent-executed arbitra-
tion contracts beyond that required for enforcement of
any other agent-executed contract. Whisman’s stan-
dard exacerbates the progressively inordinate hard-
ships borne predominately by long-term care entities
seeking enforcement of their federal arbitration rights.

Whisman refused to acknowledge that courts and
legislatures can set higher standards for a multitude
of rights, including constitutionally protected rights,
because no federal law prohibits those elevated stand-
ards. On the contrary, the FAA does prohibit higher
standards for arbitration contracts as opposed to other
contracts.

Whisman grounded its holdimg on the erroneous
premise that a party waives his/rer fundamental
“right to jury trial,” provided by the Seventh Amend-
ment and Section 7 of the Kentucky Constitution, by

8

signing a predispute arbitration agreement. The Sev-
enth Amendment protects and preserves, but does not
confer, a “right” to jury trial. Having executed predis-
pute arbitration agreements to resolve their claims in
a non-judicial forum prior to any claim having arisen,
the “right” to jury trial was never implicated in the
Whisman cases. The very basis of Whisman’s holding
is incorrect.

Whisman by state action violates long-term care
providers’ constitutional right to enter into contracts
as guaranteed by the Due Process Clause of the Four-
teenth Amendment to the U.S. Constitution. Ken-
tucky’s highest court singles out the long-term care
industry in Whisman, targeting its reasoning to “nurs-
ing homes” in violation of the Fourteenth Amend-
ment’s Equal Protection Clause. See Pet. App. 43a; 44a;
46a. The long-term care industry should not be singled
out as required to divert valuable resources to litiga-
tion unnecessarily.

Whisman’s result-oriented reasoning finds no
credible basis in this Court’s precedent. By excepting
agent-executed arbitration contracts as “different”
from all other agent-executed contracts and requiring
a higher standard for their enforcement, Whisman re-
jects this Court’s precedent that arbitration contracts
must be enforced on “equal footing” with other con-
tracts. Kentucky attempted to disguise its discrimina-
tory reasoning as neutral agency law, relying on a
“God-given right” to a jury trial. Whisman all but
taunts this Court’s precedent. Absent review, Whisman
bestows a convoluted loophole for skirting the FAA.

9

Amici request this Court grant review and reverse
Whisman.

+

ARGUMENT IN SUPPORT OF THE PETITION

The Supremacy Clause forbids state courts from
dissociating themselves from federal law they do not
like. Cf, DirecTV, Inc. v. Imburgia, 577 U.S. ___, 136
S. Ct. 463, 468, 193 L. Ed. 2d 365 (2015). “[T] he Judges
of every State shall be bound” by “the Laws of the
United States.” U.S. Constitution, Art. VI, cl.2. Un-
daunted, the Supreme Court of Kentucky “rejected the
notion” that its tortured holding conflicted with this
Court’s decisions in Marmet Health Care Center, Inc. v.
Brown, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012), and
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 131
S. Ct. 1740, 179 L. Ed. 2d 742 (2011), on grounds that
“our holding does not prohibit arbitration of any ‘par-
ticular type of claim.’” Pet App. 46a.

The Petition demonstrates convincingly that
Whisman’s decision overtly violates the FAA and con-
flicts with this Court’s arbitration precedents and nu-
merous federal district courts’ holdings that an agent’s
“power to contract” provides authority to contract for
arbitration. Whisman all but proclaims the Kentucky
court’s judicial hostility towards arbitration, moving
district Judge Stivers of the Western District of Ken-
tucky to comment:

Applying Whisman to invalidate the arbitra-
tion agreement signed by Decedent’s husband

10

would run afoul of the FAA. Although the
Kentucky Supreme Court’s antipathy for ar-
bitration was more subtly expressed in its ear-
lier decision in Ping |v. Beverly Enterprises,
Inc., 376 S.W.3d 581 (Ky. 2012)], its true colors
were revealed fully in Whisman.... [T]he

rule expressed in Whisman contravenes the
FAA[.]

Preferred Care of Delaware, Inc. v. Hopkins, 2016 WL
3546407 (W.D. Ky., June 23, 2016).

Whisman particularly flaunted its animus of arbi-
tration contracts used in long-term care settings. Whis-
man’s aftermath leaves a significant jurisprudential
divide between Kentucky’s state and federal trial
courts. Amici support Petitioners’ arguments explain-
ing why Whisman violates the FAA and federal sub-
stantive arbitration law. Amici write separately to
provide additional reasons in support of the Petition.

I. FOR ARBITRATION CONTRACTS, WHIS-
MAN APPLIED DIFFERENT RULES AND
DEMANDED SPECIFICITY FOR ENFORCE-
MENT NOT REQUIRED FOR OTHER CON-
TRACTS

Whisman continues state courts’ campaign io find
nuanced, state-law “loopholes” to avoid arbitration en-
forcement in long-term care settings. Arbitration con-
cerns the forum only, not the claim or the damages
recoverable. Yet Whisman unapologetically champions
a preference for judicial trials over arbitration, disfa-
voring arbitration and violating this Court’s precedent.

11

See Pet. App. 89a (Abramson, J., dissenting). Cf, Con-
cepcion, 63 U.S. 333, 131 S. Ct. 1740, 179 L. Ed. 2d 742.

A significant number of long-term care residents,
because of age or infirmity, utilize powers of attorney
designating individuals to conduct their business and
personal affairs, often including the right to enter into
all types of contracts for the resident. Whisman ele-
vates the standard for enforcing agent-executed arbi-
tration contracts above the standard required for all
other agent-executed contracts. Amici and long-term
care industry members need this Court to act. The
Court has long-recognized that reliance on well-settled
law is an important legal principal and business con-
dition. Whisman’s decision overtly conflicts and even
disregards this Court’s arbitration precedents. As the
Petition shows, Kentucky’s federal district courts
unanimously find Whisman violates the FAA. See Pe-
tition, pp. 17-23. Absent review, the long-term care in-
dustry can count on inconsistent enforcement, at best.

Il. WHISMAN IGNORES THE FAA’S PROHI-
BITION AGAINST ELEVATED STANDARDS
FOR ARBITRATION CONTRACTS

Highlighting the Whisman court’s error is its re-
fusal to acknowledge that courts and legislatures can
indeed set higher standards for parental rights, slav-
ery and marriage, to name a few of Whisman’s “com-
parisons,” because no federal law prohibits those
elevated standards. See, e.g., Pet. App. 42a; see also
KRS § 625.090; Kentucky Const. §25; and KRS

12

§ 402.050. Whisman ignores that the FAA does pro-
hibit higher standards for arbitration contracts as
compared to other contracts. This fact renders mean-
ingless Whisman’s comparison to waivers of other fun-
damental rights. See, e.g., Pet. App. 97a (Abramson, J.,
dissenting). Notwithstanding its dislike for the federal
mandate, “redefining” or “elevating” the standard for
enforcing agent-executed arbitration contracts is
simply preempted by the FAA and this Court’s sub-
stantive arbitration precedent.

Ill. WHISMAN INCORRECTLY BASED ITS
HOLDING ON A “GOD-GIVEN RIGHT” TO
JURY TRIAL: NO SUCH “RIGHT” EXISTS
OR WAS EVER IMPLICATED

Whisman grounded its decision on the erroneous
premise that its agents waived their residents’ “God-
given right” to jury trial under the Seventh Amend-
ment and Section 7 of the Kentucky Constitution by
signing arbitration agreements. Pet. App. 43a. In fact,
no jury waiver occurred because no jury “right” ever
existed with respect to those claims.

Obviously, a jury trial is absolutely not a “God-
given right,” but rather a right provided under the
terms and conditions of a constitution written and
adopted by its people. It is alienable. In fact, one can
easily waive one’s right to jury trial simply by not ask-
ing for it. See Fed. R. Civ. P. 38(d); Kentucky Rule Civ.
P. 38.04. See also Brown v. Hoblitzell, 307 S.W.2d 739

13

(Ky. 1956). Waivers by omission do not violate the Con-
stitution. See Rutledge v. Electric Hose & Rubber Co.,
511 F.2d 668, 674 (9th Cir. 1975) (citing 5 MoorE’s FED-
ERAL PRACTICE 38.08, p. 83, n. 68). This Court stated:

No procedural principle is more familiar to
this Court than that a constitutional right
may be forfeited in criminal as well as civil
cases by the failure to make timely assertion
of the right before a tribunal having jurisdic-
tion to determine it.

Yakus v. United States, 321 U.S. 414, 444, 64 S. Ct. 666,
677, 88 L. Ed. 834 (1944). It follows that a “waiver” by
affirmatively entering into a contract does not violate
the Constitution. The Whisman decision is not sup-
ported by the laws of this Court.

The Seventh Amendment provides that jury trials
in suits at common law are “preserved.” Neither the
Seventh Amendment nor Section 7 of the Kentucky
Constitution creates a jury trial right. Both, by their
terms, simply “preserve” that right as it already ex-
isted at common law. See Atlas Roofing Co., Inc. v. Oc-
cupational Safety, Etc., 430 U.S. 442, 97S. Ct. 1261, 51
L. Ed. 2d 464 (1977). See also Kentucky Comm’n on
Human Rights v. Fraser, 625 S.W.2d 852, 854 (Ky.
1981).

Following the analysis in Granfinanciera v. Nord-
berg, 492 U.S. 33, 109 S. Ct. 2782, 106 L. Ed. 2d 26
(1989), in situations where Congress assigned resolu-
tion of the relevant claim to a non-Article ITI adjudica-
tive body that does not use a jury as a fact finder, there

14

is no right to a jury trial. Jd. at 54, 109 S. Ct. at 2796.
The Seventh Amendment does not confer the right to
a jury trial, only the right to have a jury hear the case
once it is determined that the litigation should proceed
before a court. If claims are properly before an arbitral
forum pursuant to an arbitration agreement, the jury
trial right vanishes. See Cremin v. Merrill, Lynch,
Pierce, Fenner & Smith, Inc., 957 F. Supp. 1460, 1471
(N.D. Ill. 1997).

The right to a trial by jury is necessarily incident
to, and predicated upon, the right to a judicial forum.
See, e.g., Marsh v. First USA Bank, N.A., 103 F. Supp.
2d 909, 921-22 (N.D. Tex. 2000). Consequently, the
“right” to a jury trial, under either the Seventh Amend-
ment or Section 7 of Kentucky’s Constitution, is not
implicated by a contractual provision that precludes
access to a judicial forum. Jd. at 921-22 (citing Gelder-
mann Inc. v. Commodity Futures Trading Comm., 836
F.2d 310, 323 (7th Cir. 1987); Illyes v. John Nuveen &
Co., Inc., 949 F. Supp. 580, 584 (N.D. Ill. 1996). See also
Nat'l Iranian Oil Co. v. Ashland Oil, Inc., 716 F. Supp.
268, 270 (S.D. Miss. 1989). “The ‘loss of the right to a
jury trial is a necessary and fairly obvious consequence
of an agreement to arbitrate.’” Sydnor v. Conseco Fin.
Servicing Corp., 252 F.3d 302, 307 (4th Cir. 2001) (quot-
ing Pierson v. Dean, Witter, Reynolds, Inc. , 742 F.2d 334,
339 (7th Cir. 1984)).

No claims against the nursing home had yet
arisen in any court at the time Ms. Clark’s and Mr.
Wellner’s agents executed the arbitration contracts.
Pet. App. 32a (“An arbitration agreement signed before

15

a cause of action exists cannot be ‘reasonably neces-
sary to the resolution of that cause.”) (Emphasis
added). The Whisman court failed to comprehend the
truth of its errant analysis: no “right” to jury trial ex-
ists until it is determined that litigation should pro-
ceed before a court. Having executed predispute
arbitration contracts before a claim arose, neither the
Seventh Amendment nor Section 7 of the Kentucky
Constitution was ever implicated.

IV. WHISMAN’S APPLICATION TO VALID ARBI-
TRATION AGREEMENTS VIOLATES FUN-
DAMENTAL CONSTITUTIONAL RIGHTS

The Kentucky court, by state action in Whisman,
violated the Due Process Clause of the Fourteenth
Amendment, the Equal Protection Clause of the Four-
teenth Amendment, and the long-term care provider’s
attendant rights thereunder by impairing its funda-
mental right to enter into contracts with agents acting
under powers of attorney, and unfairly discriminating
against enforcement of the long-term care provider’s
arbitration contracts with its residents.

A “state law that ‘stands as an obstacle to the ac-
complishment and execution of the full purposes and
objectives of Congress’ is preempted by the Supremacy
Clause.” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct.
399, 85 L. Ed. 581 (1941). As federal substantive law,
the FAA preempts all contrary or inconsistent state
law. See Concepcion, 563 U.S. 333. The Whisman Court
agreed the FAA governed the arbitration agreement at

16

issue. Pet. App. 24a. As Justice Thurgood Marshall ex-
plained:

A state-law principle that takes its meaning
precisely from the fact that a contract to arbi-
trate is at issue does not comport with this re-
quirement of §2.. .. A court may not, then, in
assessing the rights of litigants to enforce an
arbitration agreement, construe that agree-
ment in a manner different from that in which
it otherwise construes nonarbitration agree-
ments under state law. Nor may a court rely
on the uniqueness of an agreement to arbi-
trate as a basis for a state-law holding that
enforcement would be unconscionable, for this
would enable the court to effect what we hold
today the state legislature cannot.

Perry v. Thomas, 482 U.S. 488, 492 n. 9, 107 S, Ct. 2520,
96 L. Ed. 2d 426 (1987) (citing Prima Paint Corp. v.
Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801,
18 L. Ed. 2d 1270 (1967) and Southland Corp. v. Keat-
ing, 465 U.S. 1, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984)
(emphasis original). Regardless, the Whisman court
likely invalidated countless arbitration contracts
signed by agents under powers-of-attorney without
even considering those ramifications because it so de-
tests the agreements in the nursing home context,

17

A. Whisman Violates the Due Process
Clause of the Fourteenth Amendment
by Impairing the Fundamental Federal
Right to Contract.

The Due Process Clause of the Fourteenth Amend-
ment provides and protects the fundamental right to
enter into contracts, which includes entering contracts
with agents acting under powers of attorney. Whis-
man’s application violates the Due Process Clause by
impairing long-term care providers’, including Amici’s,
federal common law right to enter into contracts.®

The Supreme Court of Kentucky itself previously
acknowledged, “[t]}he term ‘due process’ has two mean-
ings in American jurisprudence: (1) substantive due
process, which is based on the idea that some rights
are so fundamental that the government must have an
exceedingly important reason to regulate them, if at
all, such as the right to free speech or to vote; and (2)
procedural due process, which requires the govern-
ment to follow known and established procedures, and
not to act arbitrarily or unfairly in regulating life, lib-
erty or property.” Miller v. Johnson Controls, Inc., 296
S.W.3d 392, 397 (Ky. 2009). In Shelley v. Kraemer, 334
U.S. 1, 14, 68 S. Ct. 836, 92 L. Ed. 1161 (1948), this
Court explained “[t]hat the action of state courts and
of judicial officers in their official capacities is to be re-
garded as action of the State within the meaning of the

* It is well established that a corporation is a “person” within
the meaning of the due process of law and equal protection clauses
of the Fourteenth Amendment. See Grosjean v. Am. Press Co., 297
U.S. 233, 244, 56 S. Ct. 444, 447, 80 L. Ed. 660 (1936).

18

Fourteenth Amendment, is a proposition which has
long been established by decisions of this Court.” See
also Kirby v. Lexington Theological Seminary, 426
S.W.3d 597, 619 (Ky. 2014) (citing Shelley for the prop-
osition that decisions of both legislature and judiciary
are considered state actions).

The Due Process Clause specially protects those
fundamental rights and liberties which are, objectively,
deeply rooted in this nation’s history and tradition,
and implicit in the concept of ordered liberty, such that
neither liberty nor justice would exist if they were sac-
rificed. See Washington v. Glucksberg, 521 U.S. 702,
720-21, 117 S. Ct. 2258, 2268, 138 L. Ed. 2d 772 (1997).
This Court long ago recognized that the general right
to make a contract in relation to his business is part of
the liberty of the individual protected by the Four-
teenth Amendment of the Federal Constitution.
Allgeyer v. Louisiana, 165 U.S. 578, 17 S. Ct. 427, 41
L. Ed. 832 (1897); see also Lochner v. New York, 198
U.S. 45, 25 S. Ct. 539, 49 L. Ed. 937 (1905) (overruled
on other grounds, Ferguson v. Skrupa, 372 U.S. 726, 83
S. Ct. 1028, 10 L. Ed. 2d 93 (1963)).

The Fourteenth Amendment “forbids the govern-
ment to infringe . . . fundamental’ liberty interests at
all, no matter what process is provided, unless the in-
fringement is narrowly tailored to serve a compelling
state interest.” Reno v. Flores, 507 U.S. 292, 302, 113
S. Ct. 1439, 1447, 123 L. Ed. 2d 1 (1993). The right to
contract is a long-recognized liberty interest. The
“Fourteenth Amendment liberty includes the right...

19

to enter into all contracts which may be proper, neces-
sary and essential” to a citizen’s needs. See EJS Prop-
erties, LLC v. City of Toledo, 698 F.3d 845, 859 (6th Cir.
2012) (citing Glucksberg, 521 U.S. at 760) (internal
quotation marks omitted).

By requiring a specific grant of authority solely for
enforcement of an arbitration contract, versus other
contracts, Whisman flagrantly infringes on a long-term
care provider's right to enter into an arbitration con-
tract with an agent empowered to make all contracts
on her principal’s behalf. Whisman places agent-exe-
cuted arbitration contracts into a special category with
a different standard for enforcement, directly violating
the FAA, and its application impairs Amici’s funda-
mental right to contract. Application of the Whisman
Court’s rule of law virtually eliminates Amici’s right to
enter into arbitration contracts freely with their resi-
dents’ agents — who otherwise hold the unqualified
power to execute “any and all contracts” — violating
Amici’s Fourteenth Amendment substantive due pro-
cess right to make and enter into contracts.

B. Whisman Violates the Equal Protection
Clause of the Fourteenth Amendment
by Refusing to Treat Long-Term Care
Providers Similarly

Kentucky Courts are willing to enforce some arbi-
tration contracts, but apparently not all. In Schnuerle
v. Insight Communications Co., L.P., 376 S.W.3d 561
(Ky. 2012), the court held that “arbitration is a favored

20

method of dispute resolution. ‘Arbitration has always
been favored by the courts.’ Poggel v. Louisville Ry. Co.,
225 Ky. 784, 10 S.W.2d 305, 310 (1928). ‘Kentucky law
favors the enforcement of arbitration agreements.’
Medcom Contracting Services, Inc. v. Shepherdsville
Christian Church Disciples of Christ, 290 S.W.3d 681,
685 (Ky. App. 2009) (citing Kodak Mining Co. v. Carrs
Fork Corp., 669 S.W.2d 917 (Ky. 1984)); see also Ally
Cat, LLC v. Chauvin, 274 S.W.3d 451, 457 (Ky. 2009).”
But, in refusing to honor agent-executed arbitration
contracts involving long-term care facilities, the Whis-
man court brazenly singled out the long-term care in-
dustry in its holding. See Pet. App. 46a (“Nursing home
facilities may still enforce arbitration agreements with
their residents when the resident has signed the agree-
ment or validly authorized his agent to sign in his
stead.”). See also Pet. App. 43a (“A durable power-of-
attorney document often exists long before a relation-
ship with a nursing home is anticipated.”); and Pet.
App. 44a (“It makes no difference that arbitration
clauses are commonplace in nursing home contracts
and that a principal might anticipate that someday his
agent will act to admit him into one.”).

Long-term care providers are entitled to the same
equal protection as any contract signator. The Four-
teenth Amendment commands persons who are simi-
larly situated must be treated alike. See City of
Cleburne, Texas v. Cleburne Living Center, 473 U.S.
432, 439, 105 S. Ct. 3249, 87 L. Ed. 2d 313 (1985). Like-
wise, the Supreme Court of Kentucky affirmed in Vi-
sion Mining, Inc. v. Gardner, 364 S.W.3d 455, 465 (Ky.

21

2011), “[clitizens of Kentucky enjoy equal protection of
the law under the 14th Amendment of the United
States Constitution and Sections 1, 2, and 3 of the Ken-
tucky Constitution” (citing D.F. v. Codell, 127 S.W.3d
571, 575 (Ky. 2003)). Whisman does not even try to
disguise its discrimination against enforcing agent-
entered arbitration contracts utilized in long-term care
settings.

Amici increasingly find their use of arbitration un-
der siege. The New York Times recently campaigned
against use of arbitration agreements in nursing home
settings. See Editorial, When People Sign Away Their
Right to Sue, N.Y. TIMES, July 25, 2016 at A22. The Su-
preme Court of Kentucky, however, should be fulfilling
its duty to enforce the laws equally for all citizens, not
favoring politically-trending views via unconstitu-
tional decisions. In fact no rational basis or substantial
and justifiable reasons exist for treating long-term
care facilities differently from other industries that
rely on arbitration agreements. Whisman’s distinction
creates an arbitrary one between similarly situated in-
dividuals, and thus violates the equal protection guar-
antees of the Federal and State Constitutions. Cf,
Gardner, 364 S.W.3d at 474.

22

V. STATE COURT RESTRICTIONS ON ARBI-
TRATION RIGHTS POSE A SUBSTANTIAL
THREAT TO AN INCREASINGLY IMPOR-
TANT INDUSTRY

The Whisman case virtually eliminates use of
agent-executed, predispute arbitration agreements in
the long-term care industry. Its holding poses a sub-
stantial threat to the long-term care industry at a time
when demographic trends dictate that the provision of
long-term care will become even more important in the
near future. As the U.S. population ages, the long-term
care industry will play an increasingly prominent role
in providing health care to the nation’s elderly.’ Even
as efforts to expand independent living options con-
tinue, it is undisputed that a strong long-term care in-
dustry is essential for the future well-being of the

country’s aging population.

In addition to undue litigation burdens hindering
its ability to enforce its federal arbitration rights, the
nation’s long-term care industry faces a number of
other challenges to threaten it, including economic,
governmental, and regulatory pressures. For example,

' The population age 65 and over has increased from 36.2
million in 2004 to 46.2 million in 2014 (a 28% increase) and is
projected to more than double to 98 million in 2060. By 2040, there
will be about 82.3 million older persons, twice the number in 2000.
People 65+ represented 14.5% of the population in the year 2014
but are expected to grow to 21.7% of the population by 2040. The
85+ population is projected to triple from 6.2 million in 2014 to
14.6 million in 2040. See U.S. Dep’t of Health & Human Servs.,
Admin, on Aging, Aging Statistics, http:/Awww.aoa.gov/aparocot/
aging statistics/index.aspx (updated through 2015).

23

in 2011, the Centers for Medicare & Medicaid Services
implemented a rule cutting payments to skilled nurs-
ing facilities in the 2012 fiscal year by 11.1 percent, af-
fecting provider reimbursement for post-acute care for
seniors who have been hospitalized and require reha-
bilitative services before returning to their homes.®
Moreover, skilled nursing facilities are facing a cumu-
lative Medicare funding reduction worth $65 billion

over the next ten years.°®

Efficient dispute resolution in long-term care set-
tings should be encouraged, not discouraged as in
Whism~n. The long-term care industry is often unable
to seek legislative protection against this onslaught in
states like Kentucky, Illinois, Arkansas, and Georgia,
where state constitutional doctrines are used to defeat
efforts of all tort reform legislation. See Bayer Crop-
Science LP v. Schafer, 2011 Ark. 518, 385 S.W.3d 822
(Ark. 2011); Lebron v. Gottlieb Mem'l Hosp. , 930 N.E.2d
895, 914 (Tl. 2010); Atlanta Oculoplastic Surgery, PC.
uv. Nestlehutt, 691 S.E.2d 218, 220 (Ga. 2010); Williams
v. Wilson, 972 S.W.2d 260, 267 (Ky. 1998).

® Philip Moeller, Nursing Homes Squeezed by Medicare Cuts,
U.S. News Money (Aug. 8, 2011), http://money.usnews.com/
money/blogs/the-best-life/201 1/08/08/nursing-homes-squeezed-by-
medicare-cuts.

® $65 billion in Medicare cuts to rock U.S. nursing homes over
10 years, analysis shows, McKnight’s Long-Term Care News (Aug.
2, 2012), http://Awww.mcknights.com/65-billion-in-medicare-cuts-
to-rock-us-nursing-homes-over-10-years-analysis-shows/article/
253036.

24

The long-term care industry can contract to arbi-
trate personal injury claims, just like any others. Amici
join the Petitioners in asking this Court to grant re-
view.

*

CONCLUSION

For the reasons stated above and in the petition
for a writ of certiorari, the petition should be granted
and the judgment below reversed. Whisman is enor-
mously detrimental to the long-term care industry,
particularly if its reasoning spreads beyond Kentucky
to other states.

Respectfully submitted,

DONALD L. MILLER, IT

Counsel of Record

KRISTIN M. LOMOND

QUINTAIROS, PRIETO, WooD &
Boyer, P.A.

9300 Shelbyville Road, Suite 400

Louisville, KY 40222

(502) 423-6390

dmiller@qpwblaw.com

klomond@qpwblaw.com

Counsel for Amici Curiae

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0688%3A06. Public record. Not legal advice.