Mere months after the Kindred Healthcare decision enforcing an arbitration agreement between a nursing home and holders of a late resident’s power-of-attorney, the U.S. Supreme Court heard argument in another case that healthcare employers will want to watch. The Court’s decision in Epic Systems Corp. v. Lewis will determine the enforceability of arbitration agreements that provide for individual arbitration alone. The NLRB and certain employees claim that precluding joint, class, or collective claims in the courts or in arbitration violate employees’ rights to collective action under Section 7 of the National Labor Relations Act. Husch Blackwell will keep you updated on the status of the law once the decision comes down from the Court. For now, you can learn more about the concerns of the Justices and the unusual position of two U.S. government agencies in this blog on Husch Blackwell’s Labor Relations Law Insider.

The United States Supreme Court has long upheld the validity and enforceability of arbitration agreements. Thus, it was no surprise when the Court reversed a decision from the Kentucky Supreme Court that declined to recognize arbitration agreements executed by individuals pursuant to powers of attorney. In Kindred Nursing Centers LP. v. Clark, the Court held that family members with powers of attorney may enter into arbitration agreements on behalf of nursing home residents.

In Kindred Nursing Centers, two separate families admitted their elderly family members, (hereafter “the residents”) to a Nursing Home. In both cases, the family members completed admission paperwork on behalf of the residents, pursuant to powers of attorneys. The admission paperwork included an arbitration agreement, which provided that “any and all claims or controversies arising out of or in any way relating to…the Resident’s stay at the Facility” would be resolved through binding arbitration. When the residents subsequently died, their estates brought lawsuits against the Nursing Home. The Nursing Home moved to compel arbitration.

The Kentucky Supreme Court held that the arbitration agreements were invalid. In so holding, the Kentucky Supreme Court purported to create a “clear statement rule.” Under the “clear statement rule,” the Kentucky Supreme Court held that the family members could only enter into arbitration agreements on behalf of the residents, if the powers of attorney expressly gave them the right to enter into arbitration agreements. Because neither power of attorney expressly addressed arbitration agreements, the Kentucky Supreme Court found them insufficient to authorize the family member to waive the residents’ right to a jury. The United States Supreme Court reversed.

On appeal, the United States Supreme Court explained that the Federal Arbitration Act (FAA) makes arbitration agreements valid, irrevocable, and enforceable.  While arbitration agreements are subject to generally applicable contract defenses, they cannot be invalidated pursuant to rules that apply only to arbitration agreements. The Supreme Court then held that Kentucky’s “clear statement rule” ran afoul of the FAA because it required arbitration agreements to be expressly authorized by powers of attorney when other contracts did not require such express authorization. This violates the FAA because the FAA requires that arbitration agreements be on equal footing as all other contracts.

The United States Supreme Court then analyzed the specific powers of attorney at issue. The first power of attorney authorized the family member to (among other things) “institute legal proceedings” and “make contracts of every nature in relation to both real and personal property.” On remand, the United States Supreme Court instructed the Kentucky Supreme Court to evaluate whether the forgoing language encompassed the ability to execute arbitration agreements. The second power of attorney authorized the family member to “transact, handle, and dispose of all matters affecting [the resident] and/or [the resident’s] estate in any possible way” including the power to “draw, make, and sign in [the resident’s] name any and all … contracts, deeds or agreements.” The Supreme Court held that this second power of attorney was broad enough to encompass the execution of an arbitration agreement. Thus, the second resident’s arbitration agreement must be enforced.

Kindred Nursing Centers removes any doubt that nursing homes may enforce arbitration agreements executed on a resident’s behalf by their attorney-in-fact, provided that the underlying power-of-attorney provides sufficient contracting authority.

The American Health Lawyers Association (”AHLA”) noted today the following:  CMS Launches Initiative To Reduce Avoidable Hospitalizations Among Nursing Home Residents 

The Centers for Medicare & Medicaid Services (CMS) announced September 27 cooperative agreement awards to implement a new initiative aimed at reducing avoidable hospitalizations among nursing facility residents.

The awards to seven organizations—Alabama Quality Assurance Foundation (Alabama), Alegent Health (Nebraska), the Curators of the University of Missouri (Missouri), Greater New York Hospital Foundation, Inc. (New York), HealthInsight of Nevada (Nevada), Indiana University (Indiana), and UPMC Community Provider Services (Pennsylvania)—will provide funding for enhanced onsite services and supports to nursing facility residents, according to CMS’ press release.

The initiative is focused on long-stay nursing facility residents who are enrolled in the Medicare and Medicaid programs, known as dual eligibles.

CMS cited research showing roughly 45% of hospitalization among dual eligibles receiving either skilled nursing facility or nursing facility services were avoidable, representing an estimated $7 billion to $8 billion in costs.  

“We are excited about this partnership and the programs these seven organizations are putting in place to work with nursing facilities to ensure the best possible care for their residents,” said Acting CMS Administrator Marilyn Tavenner.

The selected organizations will work with 145 nursing facilities in seven states.

The organizations will have staff onsite to partner with existing nursing facility staff to provide preventive services as well as improve assessments and management of medical conditions, CMS said.

The organizations will focus on seamless beneficiary transitions of care and leveraging emerging technologies, among other efforts.

 http://www.healthlawyers.org/News/Health%20Lawyers%20Weekly/Pages/2012/September%202012/September%2028%202012/CMSLaunchesInitiativeToReduceAvoidableHospitalizationsAmongNursingHomeResidents.aspx

Each state will implement the program differently.  According to CMS, the Curators of the University of Missouri will partner with 16 nursing facilities in Missouri using advanced practice RNs (APRNs) and social workers.  The APRNs will be assigned to facilities to provide direct services to residents, and mentor, role-model, and educate the nursing staff about early symptom/illness recognition, assessment, and management of health conditions commonly affecting nursing home residents.  The social workers will work closely with each facility’s social worker, the residents’ primary care providers, nursing facility staff, and APRN to enhance consistent communication about resident’s needs and preferences.

Finally, RNs will implement INTERACT and QIPMA (Quality Improvement Program for Missouri), programs that have demonstrated positive results in the nursing facility environment.  http://innovations.cms.gov/initiatives/rahnfr/  Nebraska will partner with 15 nursing facilities, also using APRNs. They will focus on enhancing care by implementing INTERACT tools and a program to improve medication management based on the Beers Criteria for Potentially Inappropriate Medication Use in Older Adults.  Nebraska will also use a dentist and dental hygienist to improve the residents’ oral care. 

Our Insight.  Your Advantage Avoidable hospitalizations will have a significant impact on payments to hospitals and eventually SNFs.  Hospitals will be reluctant to partner with skilled nursing facilities (SNFs) with high avoidable hospitalization rates for its residents. SNFs in these seven states should take advantage of this opportunity to partner with the institutions awarded the grants.  Cooperative efforts between hospitals and SNFs can improve the quality of care for the patients/residents and increase the bottom line for all.  Husch Blackwell has attorneys with significant experience working with hospitals and skilled nursing facilities, including a number with clinical degrees and experience.  Our healthcare team can assist providers in successful partnering.