HARRISBURG - The state Supreme Court has ruled arbitration clauses involving the now-defunct National Arbitration Forum do not have to be enforced.
In Wert v. Manorcare of Carlisle, the court refused 3-2 to enforce an arbitration agreement, because the NAF no longer exists.
Back in 2009, the Minnesota Attorney General’s Office reached a consent decree with NAF stating that the organization could no longer accept consumer cases. Since then, attorneys of many companies that used NAF agreements have worked to roll out new arbitration agreements. Others – like Manorcare, however – did not.
Attorney Liz Kramer, partner at Stinson Leonard Street in Minneapolis, studies cases involving arbitration clauses and the NAF and told the Pennsylvania Record Manorcare wasn't being careful about its clause.
“An interesting thing about this decision is they’re kind of saying that Manorcare deserves that, in this instance, because they kept using the NAF clause even after it was no longer accepted in consumer cases, even after that consent decree,” Kramer told the Pennsylvania Record.
“It just shows they weren’t being very careful about monitoring their contracts and making sure that their arbitration clause was effective.”
In the wrongful death claim, the parties argued whether the arbitration clause in the nursing home’s admission paperwork was enforceable.
According to Kramer, the court found the intent of the plaintiff, who admitted she didn’t read the agreement, immaterial. Instead, the court ruled because the NAF doesn’t exist anymore, the agreement couldn’t be enforced.
In its decision, Kramer said the state Supreme Court sided with an earlier opinion of the American Bar Association, creating what could become the new norm in nursing home admission paperwork.
“The ABA had put a resolution in 2009 saying they didn’t think nursing homes and long term care facilities should try to force arbitration as part of their admission agreement, and the Centers for Medicaid and Medicare Services is looking for that too, so that is kind of a larger trend in the nursing home context,” Kramer told the Record.
Kramer said state supreme courts across the country have been hesitant to enforce arbitration clauses in the nursing home context.