Supreme Court's arbitration decision could pose threat to SNF industry, insiders say

The case will be argued in the Supreme Court on Feb. 22.
The case will be argued in the Supreme Court on Feb. 22.

A nursing home arbitration lawsuit that's scheduled to be argued in the Supreme Court this month may change the future of the industry, according to those close to the case.

The lawsuit, Kindred Nursing Centers v. Clark, revolves around three consolidated wrongful death cases in which arbitration agreements were signed by a person with power of attorney. The Supreme Court of Kentucky sided with the plaintiffs, finding that residents' arbitration agreements were not binding since the people with power of attorney were not specifically granted permission to waive the residents' right to a trial.

The American Health Care Association filed a brief in August requesting the Supreme Court review the case, calling the Kentucky high court's ruling “erroneous.” The Supreme Court will hear oral arguments Feb. 22.

Long-term care providers have said the Supreme Court's decision in the case could pose “a substantial threat to the long-term care industry at a time when demographic trends dictate that provision of long-term care could become increasingly important,” Bloomberg BNA reported Thursday. AHCA and the Kentucky Association of Health Care Facilities added in a court brief that a ruling in consumers' favor could leave providers without a cost- and time-saving method of dispute resolution.

The U.S. Chamber of Commerce also chimed in with a friend-of-the-court brief filed late last year arguing that arbitration “is a fair, efficient, and inexpensive alternative to litigation” that can save providers 41% of the costs required to defend themselves in court.  A brief siding with Kindred also was filed by a group of providers, including Genesis Healthcare.

It's unclear whether the fight over the arbitration ban included in last year's overhauled federal nursing home regulations will matter in the case, but the case itself “is part of the larger arbitration wars in American society,” Imre S. Szalai, an arbitration scholar and professor who filed a brief in support of the plaintiffs, told Bloomberg.