Supreme Court Finds that Federal Arbitration Act Preempts Kentucky Rule

Regulation | May 18, 2017 | by Cory Kalheim

The U.S. Supreme Court ruled on May 15 in a 7-1 decision that the Kentucky Supreme Court's clear-statement rule violates the Federal Arbitration Act by singling out arbitration agreements for disfavored treatment. The case, Kindred Nursing Centers Limited Partnership, et al v. Clark, involved two separate powers of attorney that signed arbitration agreements upon the admission of their relatives into a Kentucky nursing home.

As a result, the Court found that the Federal Arbitration Act preempts the application of the state regulation involved in the case.

LeadingAge is pleased that this decision reaffirmed the Supreme Court’s settled position that states may not create separate laws that impinge on the parties’ right to enter into an arbitration agreement in any case, and that nursing home contracts are not exempt from this position. 

An outright prohibition on nursing home pre-dispute arbitration provisions contained in the final revised Requirements of Participation for nursing homes is presently on nationwide hold following a legal challenge in Texas last year.