Anyone who has tried to enforce an arbitration clause in a resident admission agreement in Virginia courts knows that they frequently allow residents to avoid arbitration. In addition, the Virginia Medical Malpractice Act allows plaintiffs in cases involving skilled nursing facilities to opt out of arbitration clauses.
However, in a landmark decision earlier this year from the Wythe County Circuit Court, the tide changed in favor of skilled nursing facility operators. The court held that the opt-out right granted by Virginia statute cannot be upheld because it is in violation of the Federal Arbitration Act (FAA). Prior to being raised by Nancy Reynolds of LeClairRyan in Carleen D. Harmon vs. Birdmont Health Care, that argument has not been asserted in any reported case in Virginia. The court, ruling in Reynolds' favor, held that the FAA preempts the opt-out statute. Specifically, the court stated that when a state law prohibits outright arbitration of a particular type of claim, it is preempted by the FAA. Thus, plaintiffs cannot opt out of an arbitration clause in a resident admission agreement using Sec. 8.01-581.12 of the Virginia Code.
The Wythe County Circuit Court, ruling in the favor of the skilled nursing facility, also upheld the arbitration clause because the resident signed the agreement and he was not suffering from any debilitating mental conditions. Traditionally, resident admission agreements contain signature lines for the resident and a responsible party. The Supreme Court of Virginia has held that no party to a dispute can be compelled to arbitrate without its agreement.
Virginia trial courts have used that holding to nullify arbitration clauses in resident admission agreements by focusing on who signs the agreements. If a "responsible party" signs, but is not appointed by a court as a responsible party or is not made an attorney-in-fact by a power of attorney executed when the resident was lucid, the arbitration clause has not been upheld. Further, if the "responsible party" signs the agreement on the responsible party line and not on the resident line as well, then he has only signed for himself as the responsible party and not for the resident, making the resident's negligence claims not subject to the arbitration clause.
In the Wythe County case, there was no "responsible party" issue. The resident, who signed the agreement, had no evidence of mental incapacity. The court held that the plaintiff's claim -- a survivor's wrongful death claim -- is subject to the arbitration clause in the resident admission agreement signed by the deceased resident. As a result, the plaintiff's claim had to be resolved by arbitration, not by the courts.