In the Courts: Arbitration Agreement Naming Defunct Arbitrator Found Unenforceable

December 4, 2015 | Aging Services Risk Management


​Finding that a provision referring to a specific arbitration services provider that has ceased to handle consumer arbitration cases could not be severed from an arbitration agreement, the Supreme Court of Pennsylvania, middle district, has declined to compel arbitration against a nursing home.

On the resident's admission, her daughter signed an arbitration agreement that read, in relevant part, that all disputes would be "resolved exclusively by binding arbitration . . . in accordance with the National Arbitration Forum NAF Code of Procedure." The arbitration agreement contained a severability clause that indicated that if any part of the agreement were found unenforceable, the rest of the agreement would remain effective. The arbitration service, which had held itself out to the public as independent, had previously reached a settlement with the state of Minnesota amid allegations that it hid from the public its affiliation with a business that owned a debt collection enterprise that generated significant business for the arbitration service. In accordance with a consent decree, the...

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