U.S. Supreme Court Rules on Nursing Home Arbitration

Arbitration Mediation

The United States Supreme Court ruled in favor of a national nursing home chain by reversing a decision by the Kentucky Supreme Court and, instead, held that persons who have broad “powers of attorney” may execute arbitration agreements even when state law grants a right to access to courts and jury trials.

In Kindred Nursing Centers Limited Partnership dba Winchester Centre for Health and Rehabilitation v. Clark, the issue was whether family members with broad powers of attorney could sign nursing home admission agreements for the incoming resident when those agreements also included a jury waiver and arbitration agreement.  The state court had decided that a power of attorney document would need to specifically grant authority to waive a person’s right to access to court and that general powers such as “full power… to transact, handle, and dispose of all matters affecting me and/or my estate in any possible way” and the power “to draw, make, and sign in my name any and all… contracts, deeds, or agreements” were not enough.

Justice Kagan, writing for the full court (minus dissenting Justice Thomas), held that the Federal Arbitration Act “preempts any state rule discriminating on its face against arbitration” and “displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.”  Of note, that parenthesis is, indeed, her words.  This opinion is VERY harsh in its assessment of anti-arbitration rules and rulings.  To that end, the Court noted the “suspect status of arbitration” which some lower courts wrongly hold in contrast to the perceived “sacred status of jury trials.”

Justice Thomas dissented on the grounds that he adheres to the view that the FAA does not apply to state court proceedings.

Justice Gorsuch did not participate in the consideration or decision of the case; given his anticipated conservative leanings and the fact that this was a 7-1 ruling, his participation would not have affected the outcome.

This is a clear “win” for companies which employ arbitration clauses in their customer contracts.  It is particularly a strong “win” for nursing homes since often family members sign these agreements for residents under powers-of-attorney or guardians.  This Opinion applies in states such as Florida which, like Kentucky, has a state constitutional right to access to courts.

Of note, the nursing home plaintiff law firm, Wilkes & McHugh, was underlying counsel for the plaintiff in this case; that firm has — sometimes creatively and sometimes persuasively — sought to argue against the application of arbitration clauses in long term care contracts.

Image credit: Encyclopaedia Britannica

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