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Court erred in denying nursing home’s motion to compel arbitration

July 22, 2014

A trial court incorrectly concluded that an arbitration agreement contained in a nursing home’s facility admission agreement was ambiguous because the parties bound by the agreement are not clearly named, the Indiana Court of Appeals held Tuesday.

Birdie Sherls’ son, Oliver Sherls, signed an agreement with Lincolnshire Health Care Center to admit his mother to the facility after she suffered a stroke. In the agreement, “Lincolnshire” was handwritten in as a party. The agreement also included an arbitration clause.

Less than a year after she was admitted, Birdie Sherls died from bed sores and stage four decubitus ulcers, which led to sepsis. Her estate filed a lawsuit against Lincolnshire alleging its negligent care caused her death. Lincolnshire moved to compel arbitration. The trial court held that Oliver Sherls had the authority to sign the agreement on his mother’s behalf, but that the agreement is ambiguous because the judge could not determine which “facility” is supposed to be bound to provide care and services. The defendants named in the complaint are Tender Loving Care Management Inc. d/b/a TLC Management, LLC, d/b/a Lincolnshire Health Care Center, Inc., d/b/a Riverview Hospital, and Lincolnshire Health Care Center, Inc. The judge believed it wasn’t clear to which of these entities that the term “Lincolnshire” in the agreement refers.

The Court of Appeals reversed in part, finding based on extrinsic evidence, it’s clear that Oliver and Birdie Sherls understood they were entering into a contract with Lincolnshire Health Care Center. The judges affirmed that Oliver Sherls had authority to enter into the agreement on his mother’s behalf, which also includes the ability to agree to arbitration, and the finding that the agreement is not an unconscionable adhesion contract. The COA remanded for further proceedings in Tender Loving Care Management, Inc., d/b/a TLC Management LLC, et al. v. Randall Sherls, as Personal Representative of the Estate of Birdie Sherls, Deceased,
45A05-1311-CT-562.

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