West Virginia Supreme Court Affirms That Unconscionability Doctrine Applies to Nursing Home Contracts With Arbitration Clauses

658255_u_s__supreme_court_washington_dc.jpgIn response to the United States Supreme Court’s decision that nursing home contracts were covered by the Federal Arbitration Act (FAA), the West Virginia Supreme Court has reversed and remanded several lawsuits concerning arbitration agreements in nursing home contracts.

Initially, in June 2010, the West Virginia Supreme Court ruled that the FAA did not apply to nursing home contracts because Congress never intended the FAA to apply to wrongful death or injury lawsuits. The U.S. Supreme Court disagreed, and issued an order for the West Virginia Supreme Court to reconsider its position using the FAA as a framework. The FAA provides that parties can agree via contract to deal with state and federal disputes through arbitration rather than litigation. Should a state law disfavor arbitration, it will be preempted by the FAA, unless the arbitration clause is found unconscionable. Arbitration, while increasingly common, has come under scrutiny because, frequently, the arbitrator is neither a judge nor a lawyer, and arbitration decisions are difficult to appeal.

Since the Supreme Court invalidated the West Virginia Supreme Court’s decision, the latter court has consolidated three cases where families had sued after their loved one’s nursing home death. The West Virginia Supreme Court’s latest ruling on these cases contained some criticism of the higher court, stating that the U.S. Supreme Court made its decision “without elucidating how and why the FAA applies to negligence actions that arise subsequently and only incidentally to a contract containing an arbitration clause.”

The latest ruling, while reversing some parts of the previous ruling due to application of the FAA framework, reaffirmed other parts. Specifically, the West Virginia Supreme Court found that the doctrine of unconscionability — where contracts are considered invalid when one party is at a far greater disadvantage than the other — was a “state, common-law, contract-law principle” that went beyond situations involving arbitration and therefore did not implicate the FAA. Because the circuit courts that previously decided the nursing home cases had not considered the question of unconscionability, the West Virginia Supreme Court sent the cases back to be reviewed along those lines.

Although the West Virginia Supreme Court complied with the U.S. Supreme Court’s order, it did not refrain from criticizing arbitration agreements in nursing home contracts, noting that these contracts were frequently signed “in a tense and bewildering setting.” Many people who signed them might not have understood then that if a loved one died due to nursing home negligence, they would not be able to file a lawsuit in court.

We at the Wolfe Law Firm think that the U.S. Supreme Court’s decision was misguided, and are pleased that the West Virginia Supreme Court found a way to prevent arbitration clauses in nursing home contracts from causing a great injustice. Time and again, the unconscionability doctrine has been a way for state courts to override clearly unjust arbitration clauses. Nothing is more unjust than to give a nursing home an advantage after its acts may very well have killed or permanently injured your loved one. Hopefully the U.S. Supreme Court will not find a way to take away the unconscionability argument, and West Virginia wrongful death attorneys will be able to put it forward in nursing home lawsuits and other cases where vulnerable lives are at stake.