US Supreme Court Invalids Mandatory Arbitration Of Nursing Home Claims In New Jersey

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Arbitration Attorney

Recently, the United States Supreme Court ruled that a state law which prohibits Mandatory Arbitration written specifically for the long term care industry violates the Federal Arbitration Act because it singles out Arbitration Agreements for disfavored treatment.

Federal Law makes an Arbitration Agreement a valid and enforceable contract.  Under state law a Court may invalidate an Arbitration Agreement only upon generally accepted contract defenses but not because there is a Mandatory Agreement to arbitrate disputes between the parties. The Federal law preempts any State rule that discriminates on its face arbitration or that covertly accomplishes the same objective by disfavoring contracts that have a mandatory Arbitration Clause.

This case was brought on appeal from the Supreme Court of the State of Kentucky which found that the Arbitration Agreement was void as against public policy because it deprived the resident of his right to a jury trial when claims against the nursing home were made. In the Admission Agreement there was a Mandatory Arbitration provision which the plaintiffs disregarded when they filed their lawsuit in State Court. Because the Kentucky Supreme Court invalidated the Arbitration Agreement exclusively on State Public Policy grounds, the U.S. Supreme Court reversed and remanded.

Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, Freehold, New Jersey believes that New Jersey laws on arbitration (which recently adopted a similar law prohibiting Mandatory Arbitration Agreements) is now void. It is his opinion that the N.J. law has been superseded by this Federal Supreme Court case.

Challenges to mandatory Arbitration clauses in contract can be made based on contract principles applicable to any other Contractual Agreement. So not is all lost. However, when plaintiffs bring a lawsuit against a nursing home, etc., he/she will have a much more difficult burden in establishing a viable challenge to an Arbitration clause based on existing New Jersey contract law.

To discuss your NJ Arbitration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.

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