A U.S. Supreme Court ruling earlier this year regarding mandatory arbitration provisions in nursing home contracts will most likely overrule an earlier New Mexico case that represented a victory, albeit a small one, for individuals injured in a nursing home.
In general, nursing home admission documents contain mandatory arbitration clauses, under which patients give up their right to file a personal injury lawsuit against the nursing home if that nursing home commits negligence or abuse. Taking advantage of the fact that people are extremely vulnerable when entering a nursing home, these institutions attempt and generally succeed in getting patients to sign away rights that they would otherwise not had they not been in a vulnerable and stressful situation.
Recognizing this unequal bargaining position, the New Mexico Court of Appeals ruled in Strausberg v. Laurel Healthcare Providers that nursing homes that sought to enforce arbitration agreements had the burden of proving that the arbitration agreement is not unconscionable. This was a departure from previous case law regarding commercial transactions where the party challenging the validity of an arbitration agreement has the burden of proving the agreement is unconscionable.
While the New Mexico Court of Appeals decision was thought to be a minor victory for victims of negligence or abuse at the hands of a nursing home, it was short-lived. This ruling is likely to be affected and preempted by a February 2012 Supreme Court per curiam opinion regarding the validity of arbitration agreements under the Federal Arbitration Act (FAA).
In Marmet Health Care Center v. Brown the U.S. Supreme Court addressed a West Virginia law that declared arbitration agreements for personal injury or wrongful death claims against nursing homes unenforceable. The Supreme Court of Appeals of West Virginia held that that the state law against arbitration agreements was not preempted by the FAA. The Supreme Court disagreed.
The Marmet case made it clear that any state law that declared nursing home arbitration agreements for personal injury and wrongful death claims unenforceable was preempted by the FAA and previous Supreme Court decisions. The Supreme Court also stated that once that Court had interpreted a federal law, lower courts did not have the power to contradict or fall short of implementing the rule as interpreted by the Court.
Pursuant to the FAA, any and all arbitration clauses in commercial contracts are "valid, irrevocable, and enforceable," unless the arbitration clause is unconscionable. Moreover, the Supreme Court has held on several occasions that the FAA preempts state laws that prohibit arbitration clauses, and did so again in Marmet.
In light of this holding, the previous New Mexico ruling in Strausberg is likely to be overruled. Even though New Mexico law does not prohibit arbitration agreements outright in nursing home contracts, the ruling in Strausberg may be seen to be at odds with the holding in Marmet. Nursing homes will likely argue that having to prove an arbitration agreement is not unconscionable is inconsistent with the FAA rule that arbitration clauses are presumed "valid, irrevocable, and enforceable."
Should this occur, it is more important than ever that residents and family members refrain from signing any arbitration agreement in a nursing home document. It is illegal for the nursing home to refuse admission for refusal to sign the arbitration agreement. If a nursing home is trying to force the agreement on you or a loved one, it is highly advisable to speak with an elder law attorney.