California Federal Court Invalidates Skilled Nursing Arbitration Restrictions in Patients’ Bill of Rights Act
On January 16, 2014, Judge Lawrence O’Neill of the U.S. District Court, Eastern District of California, ruled that the Federal Arbitration Act (FAA) preempts certain arbitration provisions in the California Patients’ Bill of Rights Act (the Act).
The case, Valley View Health Care, Inc., et al. v. California Dept. of Public Health, was brought by six skilled nursing facilities (SNFs) and the California Association of Health Facilities (CAHF) – a nonprofit group representing licensed SNFs – on behalf of its members. The plaintiffs challenged portions of the Act and subsequent DPH regulations which provide that, if a contract for admission to a SNF contains an arbitration clause, it must contain express language stating that the resident is not waiving his or her right to sue the facility in court for violations of the Act. The Act further provides that any agreement that attempts to waive this right is void as contrary to public policy. In practice, this required SNFs to “carve out” claims under the Act in their arbitration agreements with residents.