U.S. Supreme Court Upholds West Virginia Law on Arbitration in Nursing Home Cases

By | March 26, 2012

The U.S. Supreme Court has upheld a West Virginia law that allows nursing homes to use pre-dispute arbitration agreements with residents that prevent them from suing in medical malpractice cases.

In a recent case, [Marmet Health Care Center, Inc. v Brown 561 US (2012)], the Supreme Court ruled that the Federal Arbitration Act (FAA) preempted a Supreme Court of Appeals of West Virginia decision.

The FAA declares that arbitration agreements generally are enforceable in the court and outweigh any state law to the contrary. The only exceptions are in cases where individuals are forced to sign agreements under pressure or the agreements unfairly favored one party.

The West Virginia court had declared that all pre-dispute arbitration agreements that applied to personal-injury and wrongful-death claims against nursing homes were invalid as a matter of state law governing public policy.

The case originated with three medical malpractice law suits filed by the families of three residents who alleged that the nursing homes’ negligence had resulted in the death of their family member.

In each case, the families had signed contracts that required them to use mediation to settle their claims rather than go to court. A trial court dismissed the claims citing federal law. However, when the case made it to West Virginia’s high court, the justice’s overturned the decision.

They argued that West Virginia’s Nursing Home Act that barred the arbitration agreements as a matter of public policy and therefore the federal law didn’t apply.

“Congress did not intend for the FAA to be, in any way, applicable to personal injury or wrongful death suits… particularly where the agreement involves a service that is a practical necessity for members of the public,” opined the justices.

The Supreme Court, however, found that the justices’ ruling violated the FAA and was in clear conflict with a precedent set by the federal court in a case last year [AT&T Mobility LLC v. Concepcion 563 US (2011)].

“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,” stated the court.