Two bills in Kentucky are currently under discussion that will, if enacted, impact litigation of contracts with arbitration clauses and cases involving malpractice of long-term care providers. These bills significantly alter the current process for such actions.
One bill, introduced as House Bill (HB) 88, changes the established treatment of arbitration clauses in contracts. Currently in Kentucky, contracts that contain an arbitration clause are enforceable; a party must demonstrate that there was fraud in the inducement of the arbitration clause in order to present the issue before a court prior to arbitration. HB 88 changes this by making three issues, 1) unconscionability of the entire agreement, 2) fraudulent inducement of the entire agreement, and 3) other fraud involving the making of the agreement itself, grounds to present the contract to a court prior to arbitration. This bill would remove these questions from the arbitrator’s scope of authority.
This bill, if enacted, has the potential to erode the efficiency generated from the use of an arbitration clause in a contract. Parties subject to an arbitration clause would be able to present an issue related to the entire contract prior to engaging in arbitration, creating an unnecessary and costly additional hurdle to overcome before arbitration.
The second bill, HB 361, would establish a medical review panel system for use in civil litigation relating to long-term care facilities. While details remain to be developed, this bill is expected to reduce the risk of frivolous lawsuits for long-term care providers. Often, such cases are without legal merit, but pose significant defense difficulties. Such a panel could potentially allow nursing facilities to maintain their focus and expenses on quality of care issues and not defending such lawsuits.
This model has been successful in other states for malpractice actions and does not impede a legitimate lawsuit. A panel generally reviews all malpractice claims against a provider prior to the commencement of an action in court. The panel is compromised of an odd number of medical professionals (generally physicians), and a non-voting attorney to act as the chairperson. The result of the medical review panel is admissable evidence in any later action, and should provide an excellent independant medical determination as to if the facility committed an act of malpractice.
These are issues in Kentucky that propose significant changes in litigation, we are watching to see how they develop during this legislative session.
Should you have any questions, please contact:
Courtney Guild at 502.568.1890 or acguild@wp.hallrender.com; or
David Bufford at 502.568.9368 or dbufford@wp.hallrender.com,
or your regular Hall Render attorney.
