Arbitration is meant to be an alternate to litigation. Yet arbitration is itself the subject of much litigation over who must arbitrate, what must be arbitrated, whether and how the arbitration should proceed, and the deference courts must show to arbitration awards. This blog is intended to be a resource for litigators, in-house counsel, arbitrators and anyone else who wants to stay on top of the many thorny issues that arise under the Federal Arbitration Act. Our Bloggers →

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Are Consumer Health Care Disputes Exempted From Arbitration?

West Virginia’s highest court acknowledged just weeks ago that a state statute, which nullified any nursing home resident’s waiver of his or her right to a court action, is preempted by the FAA.  Brown v. Genesis Healthcare Corp., et al, __ S.E.2d ___, 2011 WL 2611327 (W. Va. June 29, 2011).  More interesting, however, was a second holding from the Supreme Court of Appeals of West Virginia.  After criticizing the U.S. Supreme Court’s interpretation of the FAA, the West Virginia court held that West Virginia will not enforce arbitration clauses “in a nursing home admission agreement adopted prior to an occurrence of negligence that results in a personal injury or wrongful death,” because it concludes they are unconscionable.

While many state courts have applied their general unconscionability doctrines in an attempt to get around the Supreme Court’s arbitration case law, West Virginia’s is a new approach.  Instead of simply applying the state’s test for unconscionability to the particular facts of a case, West Virginia’s Supreme Court of Appeals looked at three cases involving wrongful death suits at nursing homes and analyzed facts that are common to the whole nursing home industry.  (Not surprisingly, there were amicus briefs from multiple health care associations.)

The Genesis Healthcare decision implied that Congress did not intend the FAA to apply to personal injury or wrongful death suits involving a pre-injury arbitration contract.  It cited no support for that proposition apart from a Tennessee decision finding that arbitration agreements between patients and health care providers raise issues of procedural unconscionability and a statement that “[m]any groups now only arbitrate personal injury and wrongful death claims where the agreement was signed after negligence occurred, and the parameters of the liability and damages could be clearly understood by the parties”

Stay tuned to see if this new avenue of unconscionability gains traction in other states, or if the health care defendants seek certiorari from the U.S. Supreme Court.  And if they did, would Genesis Healthcare stand up any better than the California unconscionability rules at issue in AT&T Mobility v. Concepcion?