Plaintiffs filed suit for negligence and wrongful death. The nursing home appeared specially and moved to dismiss or in the alternative to compel arbitration. The trial court denied the motion to compel arbitration. The nursing home argued that the Federal Arbitration Act applied because it received Medicare payments originating out of state, complied with Medicare and Medicare rules and regulations, purchased supplies from out of state and used instruments of interstate commerce such as telephones and the postal service. On appeal, the court found that the Federal Arbitration Act did not apply to the contract at issue and affirmed the trial court. The court declined to find that Congress intended funding under the Medicare and Medicaid programs to be indicative of interstate commerce. Instead, the transaction was found to be a “profoundly local transaction – in state nursing home care provided to an Oklahoma individual by an Oklahoma entity licensed under Oklahoma law.” Further, the agreement itself stated that it would be governed by Oklahoma law. The court then held that Oklahoma’s Nursing Home Care Act (a specific statute) governed over Oklahoma’s Uniform Arbitration Act (a general statute) in this case and upheld the decision below. Decided 12/12/2006.

Note: The court cites the CMS letter dated January 9, 2003, from the Director of Survey and Certification Group to Survey and Certification Group Regional Office Management. That letter, at http://www.cms.hhs.gov/SurveyCertificationGenInfo/downloads/SCLetter03-10.pdf, states that if a nursing home discharges or retaliates against an existing resident for failure to sign or comply with an arbitration agreement, then the State and Region may initiate an enforcement action based on a violation of the program rules governing discharge and transfer. Failure to execute a binding arbitration agreement is not a permitted reason for discharge or transfer. Further, the appeal procedures at 42 C.F.R. § 431.200 et seq. apply to discharges or disputes of eligibility between the resident and the State Medicaid Agency and are not affected by a binding arbitration agreement. This seemed to provide further support for the proposition that specific nursing home legislation and regulations override a general arbitration statute.