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U.S. Supreme Court declines to review PA high court decision on arbitration agreement

Arbitration agreements are a common feature in many business contracts. One area where arbitration agreements have become common is with agreements used by nursing homes when admitting residents. These agreements typically require an individual seeking admission for nursing home care to waive his or her right to sue the facility in court if any harm comes to the resident as a result of negligent care.

Nursing home arbitration agreements have raised hackles among advocates for the elderly, who argue that they are typically set up to favor nursing home facilities and that they leave elderly residents who have been injured by substandard care without recourse in the court system. Recently, the U.S. Supreme Court had the opportunity to review a case involving the legality of arbitration agreements, and declined to do so. 

The law involved arbitration agreements struck by Golden LivingCenters and HCR ManorCare Inc., nursing home facilities in Pennsylvania. One of the plaintiffs had filed a complaint against the facilities, claiming that a resident’s condition became worse under the care of staff at both nursing homes. The suit alleged both abuse and neglect, but the facilities attempted to bar it on the basis of the arbitration agreement.

The agreement reportedly relied on the procedures set forth in the National Arbitration Forum’s code of procedure. The NAF has come under criticism for various reasons, including hiding its ties to the debt collection industry, and actually no longer arbitrates consumer disputes. The Pennsylvania Supreme Court ended up voiding the agreement and others like it which relied only on the NAF code of procedure. The U.S. Supreme Court’s refusal to hear the nursing home facilities’ appeal of that decision confirms the judgment against the forum and highlights the importance of neutrality in arbitration.

Arbitration can be an effective way to resolve disputes, but it is critical to work with an arbitrator who is neutral and who has the right knowledge and experience. In a future post, we’ll look further at this issue.

Source:

McKnights.com, “Supreme Court shuts down arbitration case involving Golden LivingCenters, HCR ManorCare facilities,” Emily Mongan, March 1, 2016.

ABA Journal, “Minn. AG Sues Credit Card Arbitration Company, Claims Hidden Industry Ties,” Dec. 18, 2016.

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