The Texas Supreme Court has recently ruled that patient arbitration agreements in Texas generally do not require a signature from the patient’s lawyer. The Court ruled that a Texas statute requiring a signature by the patient’s lawyer as well as conspicuous “warning” language accompanying an arbitration clause does not apply to most providers’ arbitration agreements. Consequently, hospitals, nursing homes, clinics and physicians in Texas who prefer that disputes with their patients be determined in arbitration, not in a jury trial, may ask patients to sign an arbitration clause, and generally they do not have to comply with the hurdles in the Texas statute.
In Fredericksburg Care Co., L.P. v. Perez, No. 13-0573, the Court ruled that Texas statutory requirements for a patient to be bound to arbitrate do not prevail over the lesser requirements of the Federal Arbitration Act. The federal law requirements for an enforceable arbitration agreement are flexible. For example, the federal law does not require a signature by a patient’s lawyer.
Over the past decade, several intermediate Texas appellate courts have ruled in the context of Texas medical providers that the Texas statute prevails over the federal statute, under a doctrine called “reverse preemption.” See, e.g., “Enforceability of Patient Arbitration Agreements,” Health Care Legal Update – Spring 2006, from Locke Liddell & Sapp LLP. As a result, if a medical provider’s form did not comply with the Texas statute, the agreement was invalid and a court would not order arbitration. Moreover, a provider could face statutory penalties for not complying with the Texas statute.
However, the Texas Supreme Court found, in short, that “reverse preemption” did not apply to patient arbitration agreements if the medical provider was found to operate in interstate commerce. In Fredericksburg Care Co., the nexus to interstate commerce was found in the provider’s acceptance of Medicare payments. The Texas Supreme Court’s decision is now the controlling authority in Texas. Some authority outside Texas has favored “reverse preemption” in the context of patient-provider arbitration agreements where a state has enacted separate requirements for such an arbitration agreement.
The dispute in Fredericksburg Care Co. involved the death of a nursing home patient. The arbitration clause was included in a pre-admission form signed by the patient before she was admitted into the nursing home. The claims for wrongful death and negligent treatment will now have to go forward in arbitration, instead of in a jury trial.
Several requests have been made that the Texas Supreme Court reconsider its decision, including a request by an association including defense lawyers. From the defense standpoint, a concern is that medical providers who agree to arbitration might lose the benefits of Texas tort reform laws if those laws are misapplied by an arbitrator.