Arbitration Clauses Put to the Test in LTC Suits
Arbitration agreements are relatively common in nursing home agreements but often are not enforced by courts. One basis courts rely upon in refusing to enforce arbitration agreements are state court rules that require certain claims to proceed to trial. The U.S. Supreme Court recently declined to hear the appeal of a Pennsylvania Supreme Court decision requiring a survival claim to proceed to arbitration, despite a local rule that requires trial for such claims. The decision provides some clarity on how courts will assess clashes between the Federal Arbitration Act (FAA) and contrary state laws at a time when clarity is needed on this topic in light of the recent decision by CMS (Center for Medicare & Medicaid Services) to postpone its ban on arbitration agreements in nursing homes.
Taylor v. Extendicare Health Facilities, Inc. involved survival and wrongful death claims brought by the family of a nursing home resident. The arbitration agreement on its face covered the survival claim but did not cover the wrongful death claim. The plaintiffs relied upon the state law to argue that their survival claim could not be arbitrated because it was brought in conjunction with their wrongful death claim. The Pennsylvania Supreme Court disagreed, finding that the FAA preempted the state law and required the bifurcation of the plaintiffs’ claims, with the survival claim proceeding to arbitration and the wrongful death claim proceeding to trial.
The U.S. Supreme Court’s decision not to hear the plaintiffs’ appeal should give providers some relief that courts will not allow state laws to override the FAA’s mandate that claims covered by arbitration agreements must go to arbitration.