Arbitration Agreements and Power of Attorneys

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Arbitration Agreements and Power of Attorneys

The U.S. Supreme Court recently ruled in Kindred Nursing Centers L.P. v. Clark that under the Federal Arbitration Act, States cannot put more stringent requirements to forming an arbitration agreement compared to other contracts. This is not the first time the U.S. Supreme Court has made this type of ruling, but State Courts have continued to try to circumvent the Federal Arbitration Act. In Kindred, two individuals signed arbitration agreements pursuant to durable power of attorneys during their respective relative’s admission process at a nursing home. The Kentucky Supreme Court ruled the arbitration agreements were invalid because the durable power of attorney documents did not explicitly give the attorney-in-facts the power to execute arbitration agreements, even though one power of attorney gave broad general powers (it was unclear whether the other POA was broad enough). The Kentucky Supreme Court’s requirement was overturned because it subjected arbitration agreements to a higher standard than regular contracts.

Nebraska law already encompasses the U.S. Supreme Court’s ruling. Nebraska’s Uniform Power of Attorney Act states individuals acting pursuant to a durable power of attorney which give the individual general authority to handle litigation claims, have the authority to sign arbitration agreements. See Neb. Rev. Stat. § 30-4035(5). An arbitration agreement waives the constitutional right to a trial in a court (whether by judge or jury) and the claim will proceed through arbitration and be decided by one or more arbitrators. The power of attorney document can take away the authority to enter into arbitration agreements, but it needs to be explicitly stated.

Before you execute a durable power of attorney which will give another individual authority to act on your behalf, you should determine what authority you want to give that individual, and as always make sure that individual will act in your best interests.

May 19th, 2017|Uncategorized|