Supreme Court Unanimously Upholds Validity of Nursing Home Pre-Dispute Arbitration Model

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The US Supreme Court has released a unanimous opinion affirming the use of pre-dispute arbitration agreements in nursing facilities; maintaining the Court’s long-standing position that the Federal Arbitration Act (FAA) has a strong public policy favoring arbitration.

The American Health Care Association (AHCA), the National Center for Assisted Living (NCAL) and the West Virginia Health Care Association (WVHCA) have long been involved with the case in hand, Clarksburg Nursing & Rehabilitation Center v. Marchio, later consolidated with the Marmet Health Care Center v. Brown into a single case before the US Supreme Court. The key issue in these cases is whether the Federal Arbitration Act (FAA) protects pre-dispute arbitration agreements involving personal-injury or wrongful-death claims. In June 2011, despite AHCA’s amicus brief, the West Virginia Supreme Court held that Congress did not intend for the FAA to protect these types of arbitration agreements from state interference, and therefore such agreements are unenforceable as a matter of state "public policy."  In October 2011, AHCA/NCAL and WVHCA submitted an amicus brief in support of a petition for review sent to the Supreme Court, who ruled on the case this week without the need for a full hearing. In an opinion released this week, the US Supreme Court 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.”  The US Supreme Court granted certiorari, vacated the lower court decision, and sent the case back to the Supreme Court of Appeals of West Virginia to consider whether the arbitration provisions in the underlying case are unenforceable under state common law principles that apply generally to all contracts and are not based on precluding only arbitration agreements.

This is an important “win” for the long term care profession because hostile state legislatures and courts cannot ban pre-dispute arbitration in nursing home agreements. AHCA/NCAL and our members have long supported voluntary, pre-dispute arbitration agreements as being timely, effective and fair.