In 2010, the New Jersey Superior Court, Appellate Division, issued its opinion in Ruszala v. Brookdale Living Communities, 1 A.3d 806 (N.J. Super 2010), holding that N.J.S.A. 30:13-8.1, which prohibited arbitration agreements, was pre-empted by the Federal Arbitration Act (FAA). It was groundbreaking in its scope, re-opening the path to arbitration as an instrument for the long-term care community to reduce costs and rein in the uncertainty inherent in jury verdicts. However, the Ruszala court also struck down several terms of the agreement as unconscionable. Recent opinions from the U.S. Supreme Court have reaffirmed the pre-emptive effect of the FAA, but have also raised questions about the Ruszala court’s application of the unconscionability defense.
The N.J. Appellate Division: Ruszala
On Jan. 12, 2002, the Nursing Home Responsibilities and Rights of Residents Act was amended to include N.J.S.A. 30:13-8.1. The amendment declared void any predispute arbitration agreement between a patient and a nursing home or assisted living facility. This prohibition remained undisturbed until Ruszala.
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