SCOTUS Overturns Supreme Court of Appeals of West Virginia Decision on Nursing Home Arbitration Agreements

On February 21, 2012, the U.S. Supreme Court vacated a ruling by the Supreme Court of Appeals of West Virginia in the matter of Marmet Health Care Center, Inc. v. Brown et al., 565 U.S.(2012). The Supreme Court of Appeals of West Virginia previously held that all pre-dispute arbitration agreements that applied to personal injury and wrongful death claims against nursing homes were unenforceable.  In a strongly worded opinion, the U.S. Supreme Court held that the West Virginia court misread and disregarded national precedent and controlling federal law regarding the Federal Arbitration Act. The litigation involved three negligence suits against nursing homes in West Virginia for the care they provided to three separate residents: Clayton Brown, Jeffrey Taylor, and Sharon Marchio. In each of the cases, a family member entered into a binding arbitration agreement on behalf of the resident with the respective nursing home. In all three cases, after the resident died, lawsuits were filed in state circuit courts alleging personal injury and wrongful death against the nursing homes. The Brown and Taylor cases were dismissed by the circuit courts based on the arbitration agreements. The Marchio case was consolidated with the other two cases when it was brought before the West Virginia Supreme Court on a certified question. In a decision concerning all three cases, the West Virginia Supreme Court held that "as a matter of public policy under West Virginia law, an arbitration clause in a nursing home admission agreement adopted prior to an occurrence of negligence that results in a personal injury or wrongful death, shall not be enforced to compel arbitration of a dispute concerning the negligence." Brown v. Genesis Healthcare Corp., No. 35494 (W.Va., June 29, 2011). The West Virginia Supreme Court found unpersuasive the U.S. Supreme Court's prior interpretation of the Federal Arbitration Act, calling it "tendentious" and "created from whole cloth." Brown v. Genesis Healthcare Corp., No. 35494 (W.Va., June 29, 2011). In vacating the West Virginia court's ruling, the U.S. Supreme Court held that the West Virginia court's interpretation of the Federal Arbitration Act was incorrect and inconsistent with its clear instruction and prior precedents. On remand, the West Virginia court was instructed to consider whether, absent the general public policy issue, the arbitration clauses in the Brown and Taylor cases are unenforceable under state common law principles that are not specific to arbitration and preempted by the Federal Arbitration Act. This leaves the possibility that certain arbitration clauses may be invalidated on such general contract grounds, such as fraud, duress, and lack of capacity, to name a few. For additional information you can review the documents filed in the matter the U.S. Supreme Court docket for the Marchio portion of the case. Also, the briefs filed in the Brown, Taylor, and Marchio matters filed before the Supreme Court of Appeals of West Virginia can be found here.   Thanks to Ryan A. Brown, a member of the Flaherty Sensabaugh Bonasso PLLC Health Care Practice Group who represents the defendant nursing home, Clarksburg Nursing & Rehabilitation Center, Inc., in the Marchio matter for the above summary of the decision. Also involved in the case was my partner, Mark Robinson.