The U.S. Supreme Court decided Friday to weigh in on the validity of nursing home arbitration agreements, granting review to a case involving Kindred Healthcare nursing homes.
A Kindred subsidiary that operates nursing homes in Kentucky asked the justices to address the validity of their arbitration agreements with residents. The company maintains that federal law allows them to use such provisions to avoid litigation.
In the case at hand, Kindred is fighting the daughters of two former residents of one of their nursing facilities. Although the daughters—Janis Clark and Beverly Wellner—signed admission paperwork for their parents, Kentucky's Supreme Court said the arbitration agreements in those contracts violated the residents' “God-given” right to litigate any disputes. The daughters sued Kindred Nursing Centers for negligence and wrongful death after their parents died at the facility.
According to Kentucky's Supreme Court, it would be “strange” to allow an individual to waive another's rights through a binding contract. The state court determined the residents would have needed to specifically agree to hand over power of attorney for arbitration agreements in order for the disputed arrangements to be valid. Clark and Wellner both had power of attorney for their parents when they signed the disputed contracts, Kindred says.
Nursing home arbitration agreements have been drawing scrutiny as a number of lawsuits challenging the practice have made their way through the courts, and judges are increasingly striking down the provisions.
The CMS issued a rule in September that bars nursing homes from entering binding arbitration agreements before a dispute arises. Industry groups were taken aback by the scope of the prohibition and signaled they would explore options to challenge the rule.
