U.S. Supreme Court Questions Validity of Nursing Home Arbitration Agreements

The U.S. Supreme Court recently weighed whether arbitration agreements for nursing homes should be valid, seemingly taking a critical stance on the practice, despite ruling in favor of arbitration agreements in several recent cases. supreme court

The matter before the court involves three consolidated cases of alleged nursing home abuse, naming as defendant Kindred Healthcare, a corporation which operates nursing homes and assisted living facilities throughout the country, including three in North Carolina. In each case, plaintiffs filed claims in the state court of Kentucky alleging violations of patients’ civil rights, and in each case, an attorney-in-fact for the resident signed an arbitration agreement. The Kentucky Supreme Court ruled those arbitration agreements aren’t valid. The question for the U.S. Supreme Court is whether a person with power of attorney can legally enter into a nursing home arbitration agreement on behalf of the resident.

Justice Samuel Alito noted that, “the context here seems different from arbitration cases we’ve had in recent years.” Specifically, these disputes are not about a discrepancy of something like a phone bill. Rather, these involve elderly persons who need care. 

Legal analysts say justices were searching more aggressively to find a reason to favor “the little guy” in this situation. You may recall that arbitration agreements require both parties to settle disputes before a private arbitrator, rather than in a courtroom. Proponents argue it costs less/is faster, but that’s not always true. The bigger downside for plaintiffs in nursing home abuse cases is that arbitrators tend to favor businesses (which keep them contracted/paid), aren’t bound by the law and even when they do decide a case in favor of plaintiff, the amount tends to be for far less than what they would have won in court.

It isn’t the first time nursing home arbitration agreements have drawn intense scrutiny from high levels of government. In fact, last year the U.S. Centers for Medicare & Medicaid (CMS) passed a rule that banned nursing homes that accept federal money from the agency from requiring residents to agree to binding arbitration. However, a federal judge blocked that rule in November, and the matter is on hold for now. The nursing home industry, of course, is widely opposed to that rule. That’s part of why the pending U.S. Supreme Court case is being watched so closely.

In that matter, the Kentucky Supreme court ruled that the authority to enter a pre-dispute arbitration agreement is not among the powers granted to respective attorneys-in-fact (those with power-of-attorney), and therefore the arbitration agreements weren’t formed with consent by the bound party (the nursing home resident) and are therefore invalid. There was nothing in the power-of-attorney contract that specifically mentions arbitration agreements.

An attorney for the nursing home company argues the ruling against arbitration agreements is discriminatory and in violation of the Federal Arbitration Act.

While Chief Justice John Roberts noted the state supreme court never mentioned the word, “arbitration agreements,” and thus could not be discriminatory toward them, Justice Stephen Breyer said the issue was still open. Breyer asked an attorney representing plaintiffs to explain the difference between an arbitration agreement (which keeps a lawsuit out of court) and a pre-trial settlement agreement. Plaintiff attorney answered that while a power-of-attorney can decide whether to accept a settlement out-of-court, the arbitration agreement will prevent the power-of-attorney from handling the matter in court.

Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:

U.S. Supreme Court questions validity of arbitration agreements for nursing homes, Feb. 23, 2017, By Maria Castellucci, Modern Healthcare

More Blog Entries:

Wrongful Death Lawsuit Appealed on Procedural Grounds, Feb. 20, 2017, Charlotte Nursing Home Abuse Lawyer Blog

Contact Information