State Prohibitions on Arbitrations Are Preempted By Federal Arbitration Act, U.S. Supreme Court Holds

    On February 21, 2012, the United States Supreme Court issued a per curiam opinion in Marmet Health Care Center, Inc. v. Brown, 565 U.S. ____ (2012). This opinion expressly overruled the opinion of the Supreme Court of Appeals of West Virginia in Brown v. Genesis Healthcare Corp., No. 35494, 2011 WL 2611327 (W.Va. 2011), which held that, as a matter of public policy, no arbitration agreements in a nursing home admission agreement may bind a plaintiff that suffered a personal injury or wrongful death. The United States Supreme Court held that the Federal Arbitration Act expressly preempted any state law that prohibited arbitration. Although this holding was actually quite narrow—based on federal preemption grounds—and the case was remanded to West Virginia to determine if the agreement was unconscionable, it represents the willingness of the Supreme Court to overrule state courts that make it difficult or impossible to enforce arbitration agreements. Of particular note to New Mexico businesses seeking to enforce arbitration agreements, the West Virginia case was cited extensively in Strausberg v. Laurel Healthcare Providers, LLC, 2012-NMCA-006, and the Marmet decision certainly impacts how courts should view the Strausberg case in the future.

For more information please contact Spencer Edelman at sle@modrall.com or, Kevin Pierce at kdp@modrall.com.