Arbitration and Long-Term Care in Georgia

Federal courts have long been in favor of enforcing arbitration agreements, including in the context of nursing home residents.   In Marmet Health Care Center v. Brown, 565 U.S. 530 (2012), the Supreme Court ruled that the Federal Arbitration Act, 9 U.S.C. § 1-16, (“FAA”) overrules any state law providing  that arbitration agreements in nursing home contracts are not enforceable. More recently, the Supreme Court favored arbitration agreements in general by ruling that if a court denies a request to compel arbitration, it must pause proceedings while the decision is appealed. Coinbase, Inc. v. Bielski, 143 S. Ct. 1915 (2023).


Georgia trial courts and courts of appeal have sometimes been more hostile to the use of arbitration agreements in healthcare.  For example, the Georgia Court of Appeals ruled in 2021 that a hospital may not enforce an indefinite arbitration agreement that a patient signed in connection with a previous unrelated admission.  Emory Healthcare, Inc. v. Farrell, 359 Ga. App. 621, 859 S.E.2d 576 (2021). There are many other examples.  See e.g., C.R. of Thomasville, LLC v. Hannaford, 363 Ga. App. 581, 871 S.E.2d 649 (2022).


In contrast, the Georgia Supreme Court has looked upon arbitration agreements in healthcare more favorably.  In 2021, the Georgia  Supreme Court reversed a lower court’s ruling that a guardian lacked authority to enter into an arbitration agreement with a nursing home. CL SNF, LLC v. Fountain, 312 Ga. 416, 863 S.E.2d 116 (2021). See also United Health Services of Georgia, Inc. v  Norton, 300 Ga. 736 , 797 S.E.2d 825 (2017)(enforcing an arbitration agreement signed by an individual holding the resident’s General Power of Attorney).


Healthcare is heavily regulated.  Where is the government in all of this? In 2016, the Centers for Medicare & Medicaid Services (“CMS”) banned the use of arbitration agreements in long-term care facilities.  The American Health Care Association and several nursing homes filed a complaint to prohibit enforcement of the rule.  CMS issued a new proposed rule, finalized in 2019, that, among other things, prohibits signing an arbitration agreement as a condition of admission, requires the nursing home to notify the resident of his or her right not to sign, and gives residents thirty (30) days to rescind the agreement.  In addition, the arbitrator must be a neutral chosen by both parties and the venue must be convenient to both parties.  The nursing home must also take steps to ensure that the resident understands the agreement, and it cannot contain any language that dissuades residents from communicating with federal or state officials. Copies of arbitration agreements and decisions must be retained for five (5) years. (Please note that most independent and assisted living facilities do not participate in Medicare or Medicaid, and the new rules therefore would not apply to those facilities.)


Given these various perspectives, what are the benefits and drawbacks to the use of arbitration agreements in healthcare? Those in favor argue that it’s a more cost-effective way to resolve disputes, emphasizing that arbitration cases are generally resolved more quickly than going to trial and that decisions are private, a benefit to all parties. Those opposed to arbitration in healthcare argue that arbitration agreements are often buried in admission documents, that arbitration agreements are frequently signed during times of extreme stress, and that pre-dispute arbitration agreements amount to requiring patients to waive their constitutional right to a jury trial.  Opponents also argue that requiring arbitration typically favors healthcare facilities by keeping awards lower and allowing healthcare facilities to avoid public scrutiny,  a charge arbitration proponents challenge.


Whether or not you’re in favor of arbitration of healthcare disputes, it’s important to understand whether the FAA or the Georgia Arbitration Code, O.C.G.A. § 9-9-1 (“GAC”) will apply.  When a transaction involves “commerce” within the meaning of the FAA,  Georgia law will likely be pre-empted by federal law.  Does it make a difference? GAC and the FAA differ on the enforceability of pre-dispute arbitration agreements in medical malpractice cases. Under Georgia law, the parties may only arbitrate medical malpractice disputes if the agreement is signed post-dispute and the claimant is represented by an attorney when the agreement is signed.  O.C.G.A. § 9-9-62.  The FAA has no such restriction.


Which law applies is also relevant in other areas. Discovery against third parties is available under the GAC (O.C.G.A  § 9-9-9), but the FAA does not permit third party discovery to the same extent.  See Managed Care Advisory Group, LLC v. CIGNA   Healthcare, Inc., 939 F.3d 1145 (11th Cir. 2019).  In addition, GAC allows the parties to consolidate different arbitration claims under certain circumstances while the FAA generally does not. See Georgia Cas. & Sur. Co. v. Excalibur Reinsurance Corp., 4 F. Supp. 3rd 1362 (N.D. Ga. 2014). There is also a difference in the availability of certain challenges to arbitration awards.  “Manifest Disregard of the Law” is an available challenge to an arbitration award under GAC but not under the FAA. See Gulfstream Aerospace Corp. v. OCELTIP, 31 F.4th 1323 (11th Cir. 2022).


While not a difference between the GAC and the FAA, it’s important to note that the arbitration rules adopted by the parties may also significantly impact the conduct of the arbitration.  Typically, the courts decide threshold issues of arbitrability unless the parties clearly state the contrary in the arbitration agreement. However, if the arbitration agreement or the parties agree that AAA or JAM (or other) rules apply, threshold issues of arbitrability are decided instead by the arbitrator. See U.S. Nutraceuticals, LLC v. Cyanotech Corp., 769 F.3d 1308 (11th Cir. 2014).


Arbitration in healthcare cases raises multi-faceted issues, but the arbitrator selected to arbitrate healthcare cases should also understand healthcare law. Familiarity with federal and state regulation and reimbursement of healthcare facilities helps your arbitrator ask the right questions. Once you get to the merits of the case, it’s also important for your arbitrator to understand  how healthcare facilities operate.  For example, care-related complaints frequently revolve around two concepts:  the number and quality of staff and the applicable standard of care. A deep familiarity with both areas is critical  to achieving a fair and impartial decision for all parties.  Finally, the ability to listen to both sides of an issue – while not a healthcare skill – is an important quality in an arbitrator.