In an important decision for long-term care providers, the United States Supreme Court (SCOTUS) held that state and federal courts must enforce the Federal Arbitration Act (FAA) with respect to all arbitration agreements covered by that statute, including pre-dispute arbitration agreements that apply to claims alleging personal injury or wrongful death against nursing homes.
The matter arose out of West Virginia in which, in three cases, a family member of a patient who had died sued the nursing home in state court, alleging that negligence caused injuries or harm resulting in death. In each case, the admission contracts included a clause requiring the parties to arbitrate all disputes, other than claims to collect late payments owed by the patient. In a decision concerning all three cases, the Supreme Court of Appeals of West Virginia held that “as a matter of public policy under West Virginia law, an arbitration clause in a nursing home admission agreement adopted prior to an occurrence of negligence that results in a personal injury or wrongful death, shall not be enforced to compel arbitration of a dispute concerning the negligence.” The Supreme Court of Appeals of West Virginia concluded that the FAA does not pre-empt the state public policy against pre-dispute arbitration agreements that apply to claims of personal injury or wrongful death against nursing homes.
In a per curiam decision, Marmet Health Care Center, Inc., et al. v. Clayton Brown et al, 565 U.S. _____ (2012), SCOTUS overturned the West Virginia ruling and unequivocally held that West Virginia’s prohibition against pre-dispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes is a categorical rule prohibiting arbitration of a particular type of claim, and that rule is contrary to the terms and coverage of the FAA. Slip Opinion at 4.
SCOTUS specifically stated that the Supreme Court of Appeals of West Virginia misread and disregarded precedents interpreting the FAA and failed to follow controlling federal law:
The West Virginia court’s interpretation of the FAA was both incorrect and inconsistent with clear instruction in the precedents of this Court. The FAA provides that a “written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U. S. C. §2. The statute’s text includes no exception for personal-injury or wrongful-death claims.
Slip Opinion at 2.
SCOTUS also noted that the West Virginia Court had also ignored the decision in AT&T Mobility LLC v. Concepcion, 563 U. S. ___, ___ (2011) (slip op., at 6–7). In AT&T, the USSC specifically held that, when state law prohibited outright the arbitration of a particular type of claim, the conflicting rule is displaced by the FAA. Clearly, the West Virginia statute prohibiting the arbitration of long-term care claims is contrary to the FAA and, as such, is rejected. SCOTUS did not prohibit analysis of whether the specific arbitration agreements are unenforceable under state common law principles as long as those principles are not specific to arbitration and are not pre-empted by the FAA.
This important opinion rejects efforts by many states to preclude blanket prohibitions on all pre-dispute arbitration agreements, including those that are otherwise enforceable under state common law. For long-term care providers, this provides much needed additional support in enforcing arbitration agreements. Providers should be encouraged to incorporate arbitration agreements into their admission documents.
Should you have any questions, please contact your regular Hall Render attorney.
