ADR Update |
Several Texas court rulings may impact the use of arbitration clauses in health care agreements in Georgia, and may have implications for the enforceability of certain provisions of the Georgia Arbitration Code. In In Re Nexion Health at Humble, Inc. (Texas Sup. Ct. No. 04-0360, May 27, 2005) the plaintiff sued a nursing home under Texas’ wrongful death and survival statutes after her husband’s death, and the nursing home moved to compel arbitration. The plaintiff claimed that the arbitration agreement signed when her husband entered the nursing home was invalid because the Texas Arbitration Act (TAA) required the signature of a party’s counsel on arbitration agreements in personal injury cases. The Court held that the Federal Arbitration Act (FAA) applied, because Medicare payments made on behalf of the deceased patient were sufficient to establish interstate commerce. The Texas Supreme Court also said that the TAA interferes with the enforceability of the arbitration agreement by adding an additional requirement, the signature of a party’s counsel, to arbitration agreements in personal injury cases, and, therefore, was pre-empted by the FAA. The court ordered the parties to arbitrate under the FAA.
A Texas Court of Appeals decision, In Re Marguerite Kepka (Texas Court of Appeals, First District, No. 01-05-00115-CV), issued July 28, 2005, reached a different result. In the Kepka case, which involved negligence claims against a nursing home, the Court declined to enforce the arbitration clause because the patient’s counsel did not sign it, even though it stated the FAA was to apply. The Court found that the federal McCarran Ferguson Act (MFA) gives states the authority to regulate insurance, and that the Texas medical liability law requiring an agreement to arbitrate be in bold faced type and signed by the person’s attorney, was a statute intended to reform the medical liability insurance system. The court then determined that the MFA “reverse pre-empts” the FAA, preventing the FAA from pre-empting the Texas law. An appeal to the Texas Supreme Court is likely, and the result will be of interest nationwide.
As these cases indicate, arbitration clauses, once used only in commercial contracts, are now being used in a wide variety of areas, including health care. The cases may affect enforcement of some provisions of the Georgia Arbitration Code (GAC). For example, section 9-9-2 (10) of the GAC exempts from enforcement any “agreement to arbitrate future claims arising out of personal bodily injury or wrongful death based on tort.” Furthermore, the GAC requires that arbitration clauses in residential real estate and employment contracts be separately initialed. These provisions may be challenged in cases where interstate commerce can be established and the FAA invoked.
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