Court invalidates West Virginia law prohibiting pre-dispute arbitration agreements in nursing home admissions contracts. This will likely impact other states who have similar prohibitions like Oklahoma.
The Supreme Court of the United States has recognized “an emphatic federal policy in favor of arbitral dispute resolution.” See KPMG LLP v. Cocchi, 132 S.Ct. 23, 25 (2011). This policy is codified in Section 2 of the Federal Arbitration Act (FAA) which makes arbitration clauses “valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
In contrast to the federal policy, West Virginia has recognized that the public policy of that state requires its Courts not to enforce in personal injury or wrongful death suits “[a]rbitration clauses in nursing home admission agreements—which were signed prior to the alleged occurrence of negligence that resulted in the person injury or wrongful death of a nursing home resident . . .” See Brown v. Genesis Healthcare Corp., 2011 WL 2611327 (W.Va. 2011). The tension between West Virginia’s policy and the FAA was apparent when three families brought suit against West Virginia nursing homes. In each instance, a family member signed an agreement with the nursing home on behalf of the resident. Each agreement included a clause to arbitrate disputes with the nursing home. The Supreme Court of West Virginia held that the public policy of West Virginia was not preempted by the FAA. According to the State Court, “Congress did not intend for the FAA to be, in any way, applicable to personal injury or wrongful death suits that only collaterally derive from a written agreement that evidence a transaction affecting interstate commerce, particularly where the agreement involves a service that is a practical necessity for members of the public. See Brown.