Wednesday, January 20, 2016

US Supreme Court Refuses to Hear TX Arbitration Case

Dianne De La Mare

AHCA/NCAL applauds the US Supreme Court’s refusal to review a Texas Supreme Court case decision that holds that the Federal Arbitration Act (FAA) preempts the arbitration enforcement provisions in the Texas Medical Liability Act (TMLA)(Perez v Fredericksburg Care Co.). This is a significant win for providers who understand that the use of arbitration agreements is a viable and effective option for ensuring that families are provided adequate remedies for alleged wrongdoings.

In Perez v Fredericksburg Co., the survivors of a nursing center resident brought a suit against the facility, alleging that the resident’s death was the direct outcome of poor care. Previously, the resident had signed an arbitration agreement at admission, and the facility asked the court to compel arbitration. The resident’s family argued that the arbitration agreement was void because it did not comply with a provision of the TMLA, which requires arbitration agreements to contain certain language in boldface type. Both the trial court and the appeals court found in favor of the resident’s family, stating that the McCarran-Ferguson Act prohibits state arbitration agreements to be preempted by the federal law.

In 2013, AHCA/NCAL filed an amicus brief with the Supreme Court of Texas, urging the court to review the incorrect lower court rulings. Subsequently, the Texas Supreme Court overturned the lower court decisions, holding that the FAA does preempt the arbitration enforcement provisions in the TMLA, and the McCarran-Ferguson Act only applies to regulations on insurance business and not to restrictions on arbitration claims by patients and providers.

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