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Arbitration Clauses Upheld By SCOTUS In Nursing Home Agreements

The U.S. Supreme Court held in Kindred Nursing Centers v. Clark that a wrongful-death action brought by the deceased residents' relatives had to be arbitrated, not litigated in court. Each of the relatives were the power of attorney for their deceased family member. Admission agreements with the nursing home were signed by the relatives in their capacity as power of attorney. Additionally, both of the agreements included a arbitration clause requiring the parties to arbitrate such claims.

However, the right to enter into arbitration agreements was not expressly conferred upon the person who held the power of attorney in the underlying documents. The Kentucky Supreme Court held that the arbitration agreements could not be enforced because the powers of attorney could not bind the resident to arbitration.

The U.S. Supreme Court reversed, holding that the Federal Arbitration Act applied, which states that no federal or state law can make it harder to enforce an arbitration clause than any other clause in a contract. This holds with a line of SCOTUS decisions of late reflecting their deference to arbitration agreements in general.

Based upon this decision, plaintiffs attorneys nationwide should have some pause when addressing nursing home tort claims. A by-product of this decision will likely push nursing home owners to consider including an arbitration clause in their admissions agreements if they have not already done so.

Also of importance to plaintiffs lawyers, after the Kindred decision, the Centers for Medicare and Medicaid Services withdrew its proposed rule banning arbitration agreements from nursing home admission agreements. Unfortunately, arbitration clauses in nursing home admission agreements are going to be here to stay.