The U.S. Supreme Court's decision to hear a case related to arbitration agreements in nursing homes could affect the Obama administration's attempt to stop the practice that binds residents to contracts that waive their right to litigate disputes.
On Friday, the high court agreed to hear a case in which Kindred Healthcare is fighting the daughters of two former residents of one of its 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 sue. The daughters are suing 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 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 said.
Industry stakeholders support greater clarity around the issue of who can sign an arbitration agreement, according to Greg Crist, a spokesman for the American Health Care Association, an industry group.
The case could reveal how the high court would respond to legal challenges against the Obama administration's attempts to limit use of such agreements at nursing homes, Crist said.
The CMS issued a rule in September that takes aim at the common practice of requiring new nursing home residents to sign arbitration agreements as part of the stack of paperwork they or their families fill out when they arrive.
The American Health Care Association filed a request for a preliminary injunction to bar the CMS from implementing the final rule effective Nov. 28.
The U.S. District Court for the Northern District of Mississippi will hear arguments related to the injunction on Nov. 3. A ruling is expected by Nov. 7.
Attorney Jason Bring, who oversees the long-term-care industry practice at Arnall Golden Gregory, expects the court will use the case as an opportunity to reaffirm its support for arbitration agreements. And that “may foretell how it would handle challenges to the CMS rule,” he said.
Norm Tabler, an attorney at Faegre Baker Daniels, agreed a Supreme Court decision on Kindred could affect the CMS rule.
Arbitration agreements have historically not been viewed as a partisan issue, which means the fact that the Supreme Court justices are a split panel likely will not affect the outcome of this case, Bring said.
The last time the issue of nursing home arbitration agreements came in front of the Supreme Court was in 2012. In that case, the high court reversed a decision of the Supreme Court of Appeals of West Virginia, which sought to invalidate all predispute arbitration agreements that applied to personal-injury and wrongful-death claims against nursing homes.
The high court found that the ruling violated the Federal Arbitration Act. “When state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA,” the high court said in its opinion.