Arbitration clauses are contained in a variety of contracts including those related to construction, employment, and nursing home care and they purport to require the parties to resolve their disputes through arbitration (outside the courtroom). Generally, courts hold the contracted parties to their agreed-upon bargain. The Supreme Court of Virginia has held that the meaning of a contract must be “gathered from all its associated parts assembled as the unitary expression of the agreement of the parties.” Hale v. Hale, 42 Va. App. 27, 31 (2003) (quoting Berry v. Klinger, 225 Va. 201, 208 (1983)). It has also held that the various provisions of a contract must be “. . . harmonized, giving effect to each when reasonably possible. . . .” Schuiling v. Harris, 286 Va. 187, 193 (2013). In addition to the existence of a plethora of common law about contract enforcement, the legislature enacted a statute aimed at the enforcement of arbitration provisions specifically. Pursuant to Virginia Code § 8.01-581.02, upon a moving party’s showing of an agreement to arbitrate and upon refusal of the opposing party to arbitrate, the court “shall order the parties to proceed with arbitration” (emphasis added).
But the enforceability of an arbitration provision within a contract is not always so simple or straightforward. One complication arises when a party tries to enforce an arbitration provision within a nursing home contract against a plaintiff making a wrongful death claim. Many states have refused to enforce arbitration in this context as against public policy, but Virginia does not have much controlling case law on the matter. Luckily, the United States Supreme Court shed light on this issue by reversing a West Virginia Court of Appeals holding in 2012. See Marmet Health Care Center, Inc. v. Clayton Brown, 565 U.S. 530 (2012). In Marmet, three separate nursing home cases were dismissed by West Virginia state courts based on arbitration clauses included in the admission agreements. In each of the three cases, a family member of a patient who had died sued the nursing home in state court, alleging that negligence caused injuries or harm resulting in death. In each case, “a family member of the patient requiring extensive nursing care had signed an agreement with a nursing home on behalf of the patient” which included a clause requiring the parties to arbitrate all disputes. Id. at 531. On appeal, and after consolidating the three cases, the West Virginia Supreme Court of Appeals reversed the dismissals, holding that the arbitration clauses were unenforceable as a matter of public policy because they were adopted “prior to an occurrence of negligence that results in personal injury or wrongful death.” Id. at 532.
The United States Supreme Court held that that “[s]tate and federal courts must enforce the Federal Arbitration Act (‘FAA’), 9 U.S.C. § 1 et seq., with respect to all arbitration agreements covered by that statute.” Id. at *530. The Court further clarified that the FAA does apply to arbitration provisions related to wrongful death suits and that “the Supreme Court of Appeals of West Virginia, by misreading and disregarding the precedents of this Court interpreting the FAA, did not follow controlling federal law implementing that basic principle (emphasis added).” Id. at 531. Quoting itself in a prior case, the Court stated that the “statute’s text includes no exception for personal-injury or wrongful-death claims. It requires courts to enforce the bargain of the parties to arbitrate.” Id. at 532-533 (citing Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 217 (1985).
Though the Marmet decision sheds light on the United States Supreme Court’s position on the matter, it is hard to tell whether and when Virginia will follow suit. In the meantime, any arbitration provision (along with the remainder of a given contract) should be reviewed with legal counsel regularly to ensure that each clause remains enforceable over time and with changes in the law.
For more information about this article, please contact Elena Patarinski at 804.932.1996 or firstname.lastname@example.org.