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Nursing Home Litigation and Arbitration Clauses

Thursday, May, 17, 2012

By way of disclaimer, this presentation is neither advocating for nor against arbitration clauses in nursing home admission agreements, but is simply trying to present the current state of the law in Florida, as it may be impacted by event taking place in the Federal government.


Typical Arbitration Clause in Admission Agreement


W. Todd Harvey states in his article in Trial:


“The typical arbitration clause for long-term care facilities states:


Pursuant to the Federal Arbitration Act, any action, dispute, claim, or controversy of any kind (e.g., whether in contract or in tort, statutory or common law, legal or equitable, or otherwise) now existing or hereafter arising between the parties in any way arising out of, pertaining to, or in connection with the provision of health care services, any agreement between the parties, the provision of any other goods or services by the Health Care Center, or other transactions, contracts, or agreements of any kind whatsoever, and past, present, or future incidents, omissions, acts, errors, practices, or occurrence causing injury to either party whereby the other party or its agents, employees, or representatives may be liable, in whole or in part, or any other aspect of thepast, present, or future relationships between the parties shall be resolved by binding arbitration administered by the American Health Lawyers Association.”


In deciding that the Federal Arbitration Act, as the Supreme Law of the Land takes precedence over the California Franchise Investment Law, Chief Justice Burger, in writing for the United States Supreme Court in Southland Corporation v. Keating states;


 “In enacting §2 of the Federal Act, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration9.


“The problems Congress faced were therefore twofold: the old common law hostility towards arbitration, and the failure of state arbitration statutes to mandate enforcement of arbitration agreements.” 10


 “In creating a substantive rule applicable in state as well as federal courts, Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements. We hold that § 31512 of the California Franchise Investment Law violates the Supremacy Clause.”11


More recently, in Buckeye Check Cashing, Inc. v. Cardegna,12 546 U.S. 440 (2006), the United States Supreme Court reversed the Supreme Court of Florida and notes:


“We reaffirm today that regardless of whether the challenge is brought in federal or state court, a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator.”


 9 Southland Corporation v. Keating, 465 U.S.1, 9 (1984). 10 Id. at 14. 11 Id. at 16 12 Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 448 (2006).


Here the Plaintiff had asserted that the personal check cashing transaction was highly usurious and therefore criminal and thus void ab initio.


Justice Scalia, writing for the majority states earlier in the opinions:


“The issue of the contract's validity is different from the issue whether any agreement between the alleged obligor and obligee was ever concluded. Our opinion today addresses only the former, and does not speak to the issue decided in the cases cited by respondents (and by the Florida Supreme Court), which hold that it is for courts to decide whether the alleged obligor ever signed the contract, (citation omitted) whether the signor lacked authority to commit the alleged principal, (citation omitted), and whether the signor lacked the mental capacity to assent, (citation omitted)”13


Thus, it is clear that the United States Supreme Court has generally come down on the side of the enforceability of arbitration agreements under the Federal Arbitration Act, whether in a Federal Court context or a State Court context.14


Steven A. Stinson

Stinson Mediation, LLC