Ask the Legal Expert about ... arbitration agreements

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John Durso, Esq.  Nixon Peabody LLP
John Durso, Esq. Nixon Peabody LLP

There has been so much in the news about arbitration agreements over the past year. Are we in the clear and can we use them again?

Except for a minority of states where their courts have found arbitration clauses in healthcare agreements to be invalid, you can continue to use arbitration clauses in your nursing home agreements. Even in the minority of state courts that have struck down arbitration clauses, a properly drafted clause is likely to withstand a challenge.

Over the last several years, a number of state supreme courts have ruled on the validity of arbitration clauses in nursing home residency agreements, usually finding them enforceable. Still, some state courts are reluctant to rule them valid. The United States Supreme Court, however, has overturned state efforts to invalidate nursing home arbitration clauses.

Most recently, in May 2017, the court held that the Federal Arbitration Act preempted a state law that limited the authority of a person, as a resident's power of attorney, to enter into an arbitration agreement for the resident. The court's decision has upheld the broad authority of a power of attorney.

On the administrative level, the Centers for Medicare & Medicaid Services attempted to ban arbitration clauses in nursing home agreements in October 2016. Before the ban took effect, however, a group of providers filed a lawsuit to enjoin CMS from enforcing it. In November 2016, the Court enjoined CMS from enforcing the ban, and, in January 2017, CMS appealed the injunction. In June 2017, CMS filed, without explanation, a motion to dismiss its appeal.

Therefore, unless a court in your state has found arbitration clauses unenforceable, you can condition a resident's admission on the signing a binding arbitration agreement.