For more than a decade, the U.S. Supreme Court has adhered to the legal theory that the Federal Arbitration Act (FAA) preempts any state law on arbitration.
There was a challenge, for example, in 2011 when the SCOTUS struck down the state law in California that held class-arbitration waivers were unconscionable. Then in 2015, the SCOTUS held that parties weren’t allowed to contract around the FAA’s preemption of class-arbitration waivers.
However, those earlier cases involved cell phone companies and cable providers. The case now before the SCOTUS is much different in that it involves arbitration agreements that bind nursing home residents. In Kindred Nursing Centers Limited Partnership v. Clark, Justice Samuel Alito commented during oral arguments that this is not like a dispute on a charge for cable services. It involves proper care of vulnerable and elderly residents.
Legal analysts suspect, based on the questions raised by the justices during oral arguments that they were aggressively looking for a reason to favor “the little guy” in this situation.
The issues raised in this case will have broad implications no matter how the court decides.
Specifically at issue here is whether a nursing home has the right to prevent the daughters to two elderly residents who died at the same facility from taking their dispute to court. They allege their parents died as a result of nursing home abuse. Arbitration agreements, often buried in the bulk of nursing home admission agreements, strip residents and their family members of the right to have their case heard in a court of law. Proponents of arbitration agreements argue they are faster and less expensive.
But that depends on what metrics one is using. The fact is, arbitration agreements cost vulnerable residents and their loved ones because matters that go before an arbitrator are more likely to be decided in favor of the nursing home. Further, even cases that are decided in the resident’s favor tend to be far less than what they would be awarded had the case been weighed by an impartial jury.
Arbitrators are not bound to follow the law or legal precedent. Judgments by arbitrators can’t be appealed. Plaintiffs really are at a disadvantage at every turn.
As it relates to nursing home residents, there is often a question of whether the resident had his or her faculties and could legally sign such paperwork. But even if a loved one has power of attorney, should they be allowed to sign away certain rights on behalf of the vulnerable elderly person?
Families say they often feel pressured into signing the agreements, and don’t really understand what they are signing.
The U.S. Centers for Medicaid Services passed a rule last year – prior to the election – banning any nursing home that receives federal funding from Medicare or Medicaid (virtually all of them) from requiring mandatory arbitration agreements from new patients. However, since Donald Trump was elected, there is uncertainty about which way his administration will land on this issue. We do know the administration has been primarily pro-business, so it’s plausible they would not support the CMS ban. It has been effectively put on hold.
That’s another reason the U.S. Supreme Court’s upcoming decision will be so important.
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U.S. Supreme Court questions validity of arbitration agreements for nursing homes, Feb. 23, 2017, By Maria Catelluci, ModernHealthcare.com
More Blog Entries:
Lawmakers in Some States Seek Crackdown on Bad Nursing Homes, March 9, 2017, Nursing Home Abuse Lawyer Blog