Senate Judiciary on Arbitration — a Bad Bill

By September 12, 2008Briefly Legal, Health Care

The Senate Judiciary Commitee yesterday reported out S.2838, the Fairness in Nursing Home Arbitration Act, which would abrogate pre-dispute arbitration clauses in nursing home contracts.

Trial lawyers have launched a major lobbying attack against arbitration laws this Congress, working to prevent the more affordable, expeditious and balanced outcomes that can result when you stay out of court. The plaintiff’s bar put most of its effort into the nursing home bill because the anecdotal arguments for the legislation pack more emotional and political punch, and once you get that bill passed, you have a precedent in place for the other arbitration bills.

The House version of the bill, H.R. 6126, passed out of the House Judiciary Committee at the end of July. With both bills ready for floor action, we may well see legislation sent to the President this month.

The American Health Care Association issued a news release and sent a letter to the Hill relaying broad-based opposition to the bill. From the letter:

We believe S. 2838 which is being taken up by the Senate Judiciary Committee, would establish a dangerous precedent for the entire U.S. business community by eliminating the reasonable, intelligent use of arbitration agreements.

Specifically, S. 2838 would effectively eliminate the use of pre-dispute arbitration agreements by nursing facilities, assisted living communities and all housing service providers nationwide — even if the patient, resident or their family wishes to enter into such an agreement. The inherent right of every consumer to voluntarily arbitrate disputes should not be restricted.

We also believe that S. 2838 would weaken the Federal Arbitration Act (FAA), which has been in place for more than 80 years. The FAA appropriately recognizes the strong national interest in disputes being resolved in a forum other than the courts when both parties choose to do so

And on the other side of that national interest is a pecuniary one. The most recent (2Q) lobbying report for the American Association for Justice lists the following bills the group has lobbied:

  • H.R. 3010/S. 1782 (Arbitration Fairness Act; to prohibit mandatory binding arbitration agreements in consumer contracts.)
  • H.R. 1519 (American Homebuyers Protection Act; relating ot the inclusion of mandatory binding arbitration in homebuilding contracts.)
  • H.R. 3512 (Automobile Arbitration Fairness Act); relating ot the use of arbitration agreements to resolve disputes arising under motor vehicle consumer sales or lease contracts.
  • HR. 6124 (Food, Conservation and Energy Act; the Farm Bill); specific interest in lanugage in enrolled bill (now Public Law 110-246) relating to the use of arbitration to resolve controversies arising under livestock or poultry contracts; also similar language in H.R. 2419.

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