CHARLESTON — A trial lawyers group says it commends the West Virginia
Supreme Court of Appeals for its recent decision in a set of cases
stating that arbitration agreements in nursing home contracts were
"unconscionable and unenforceable."

On Wednesday, the state’s
highest court filed its 99-page opinion in the cases Clayton Brown v.
Genesis Healthcare Corp., et al.; Sharon A. Marchio v. Clarksburg
Nursing & Rehabilitation, et al.; and Jeffrey Taylor v. MHCC, Inc.,
f/k/a Marmet Health Care Center, et al.

The three cases involve arbitration clauses buried within nursing home admission agreements.

In
each case, a plaintiff alleges that a nursing home negligently caused
the death of a nursing home resident. In each case, a representative for
the resident had signed an agreement, admitting the resident to the
nursing home for treatment, which contained a clause stating that any
disputes arising from negligent treatment by the nursing home would be
submitted to arbitration. And in each case, the nursing home is arguing
that any claims arising from the death of the resident must be dismissed
from the circuit court and resolved by an arbitrator.

The
plaintiffs argued that the arbitration clauses are prohibited by, and
null and void under, Section 15(c) of West Virginia’s Nursing Home Act.

The defendant nursing homes argued that Section 15(c) is preempted by Section 2 of the Federal Arbitration Act.

The Court sided with the nursing homes, finding that Section 15(c) is preempted by the FAA.

"The
economic activities of these nursing home facilities have a significant
impact on general practices subject to federal control, such as
interstate commerce and transportation. Hence, the FAA applies to our
examination of this case," Justice Menis Ketchum wrote for the Court.

The
Court said it believes that Section 15(c) conflicts with the FAA’s
"intended purpose" of putting arbitration clauses on "equal footing"
with other commercial clauses.

"By adopting Section 15(c), the
West Virginia Legislature clearly intended for the right of a nursing
home resident to pursue a civil action in court to be unwaivable, a
right that the resident (or the resident’s representative) could not be
compelled to relinquish as a condition of admission to a nursing home,"
it wrote.

The Court said although arbitration may be an
expeditious way of resolving some disputes, it is also a way for the
nursing home industry to resolve FAA violations out of the public’s eye.

Also
in its decision, the Court concluded that, in two of the cases on
appeal, the arbitration agreements at issue are "unconscionable and
unenforceable" as a matter of law. In the third case, the issue of
unconscionability was not considered by the trial court, but may be
raised by the parties on remand, it said.

By definition, the
doctrine of unconscionability means that, because of an overall and
gross imbalance, one-sidedness or lop-sidedness in a contract, a court
may be justified in refusing to enforce the contract as written.

"Congress
did not intend for arbitration agreements, adopted prior to an
occurrence of negligence that results in a personal injury or wrongful
death, and which require questions about the negligence be submitted to
arbitration, to be governed by the Federal Arbitration Act," the Court
wrote.

"We therefore hold 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."

The Court remanded the cases back to Kanawha Circuit Court.

"The
admission agreements in this case contain arbitration clauses that
eliminate a fundamental constitutional right: the right of the parties
to have a jury trial in the West Virginia circuit court system on the
plaintiffs’ personal injury claims against the defendant nursing homes,"
it concluded.

The West Virginia Association of Justice, which
represents more than 500 trial lawyers in private practice and public
service in the state and surrounding states, was pleased with the
Court’s ruling.

Most consumers, the WVAJ says, are unaware that
they have signed mandatory, binding arbitration agreements because they
are buried in the contracts’ small print.

"The right to a jury
trial is in our constitution right next to the right to bear arms. The
West Virginia Supreme Court listened to the arguments on both sides and
ruled that no small print can take away our constitutional rights.
Democracy works," Paul T. Farrell Jr., WVAJ president, said in a
statement Wednesday.

Justice Robin Davis, deeming herself
disqualified, did not participate in the ruling. Justice Brent Benjamin,
deeming himself disqualified, also did not participate.

Judge Phillip D. Gaujot sat by temporary assignment.
 

Author: WV Supreme CT from West Virginia Supreme Court

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