Hickory Heights Health and Rehab, LLC; Central Arkansas Nursing Centers, Inc.; Nursing Consultants, Inc.; And Michael Morton v. Yashika Watson, as Guardian of the Person and Estate of Zeola Ellis III

2025 Ark. 111, 711 S.W.3d 793

• Court: Supreme Court of Arkansas
• Decided: June 5, 2025
• Status: Published

Opinion

Cite as 2025 Ark. 111 SUPREME COURT OF ARKANSAS No. CV-23-404

Opinion Delivered: June 5, 2025 HICKORY HEIGHTS HEALTH AND REHAB, LLC; CENTRAL ARKANSAS DISSENTING OPINION FROM NURSING CENTERS, INC.; DENIAL OF PETITION FOR NURSING CONSULTANTS, INC.; REVIEW. AND MICHAEL MORTON APPELLANTS

V.

YASHIKA WATSON, AS GUARDIAN OF THE PERSON AND ESTATE OF ZEOLA ELLIS III APPELLEE

NICHOLAS J. BRONNI, ASSOCIATE JUSTICE

Arkansas law “strongly favor[s]” arbitration because it is “a less expensive and more

expeditious means of settling litigation and relieving docket congestion.” Courtyard Gardens

Health & Rehab., LLC v. Arnold, 2016 Ark. 62, at 6, 485 S.W.3d 669, 673. The court of

appeals’ opinion contravenes that principle and invalidates countless arbitration agreements.

Worse, it badly misapplies federal law and creates a circuit split that, absent this court’s

correction, is likely to be resolved by the United States Supreme Court. I’d grant the

petition; vacate the court of appeals’ decision; and uphold the underlying arbitration

agreement.

1 The court of appeals erroneously concluded that the arbitration agreement here

violated a federal regulation. That conclusion rests on a fundamental misunderstanding of

the regulation at issue and, more importantly, basic administrative law principles.

Begin with the regulation. It provides, in relevant part, that long-term care facilities

shall not require residents or their representatives “to sign an agreement for binding

arbitration as a condition of admission.” 42 C.F.R. § 483.70(m)(1). Undisputably, Hickory

Heights conditioned admission to its facility on signing a binding arbitration agreement.

And absent any additional context, one might reasonably believe that provision invalidated

the arbitration agreement here.

But context matters. The relevant provision isn’t a generally applicable rule

governing the relationship between long-term care facilities and residents; it’s a spending

provision that outlines the requirements that long-term care facilities must follow “to

participate in the Medicare and Medicaid programs.” Revision of Requirements for Long-

Term Care Facilities: Arbitration Agreements, 84 Fed. Reg. 34,718, 34,718 (July 18, 2019).

Thus, by definition, it “does not purport to regulate” or invalidate “any arbitration

agreement” between the resident and the facility. Id. Indeed, underscoring that fact, the

Center for Medicare and Medicaid Services has explained that its power to enforce the

relevant provision “does not [include] . . . the power to annul valid contracts.” Id. at 34,729.

Instead, CMS may only enforce that provision via its general power to penalize long-term

care facilities. See 42 C.F.R. § 488.406 (CMS may, among other remedies, impose civil

penalties, cut off payments, or shut down noncompliant facilities.). So the court of appeals

badly erred when it held the relevant provision invalidated the arbitration agreement here.

2 That’s bad enough. But there’s a bigger problem. The court of appeals’ opinion is

not just bad law; it also creates a clear split with the Eighth Circuit. In Northport Health

Services of Arkansas, LLC v. U.S. Department of Health & Human Services, 14 F.4th 856 (8th

Cir. 2021), that court held that the Federal Arbitration Act doesn’t invalidate the regulation

at issue because the regulation only governs the relationship between CMS and long-term

care facilities. Hence, as relevant here, the Eighth Circuit held—as I would—that the

regulation “does not invalidate or render unenforceable any arbitration agreement” but

simply “establishes the conditions for receipt of federal funding through the Medicare and

Medicaid programs.” Id. at 868 (“CMS would simply enforce the regulation through a

combination of administrative remedies, including denial of payment and civil monetary

penalties.”); see also Does v. Gillespie, 867 F.3d 1034, 1041 (8th Cir. 2017) (explaining that

federal statutes that create conditions for the receipt of federal funding generally don’t confer

a private right of action, especially when expressed remedies are provided). The court of

appeals’ decision belies that central holding.

Indeed, the court of appeals can’t avoid that clear split by invoking the general

proposition, repeated in Northpoint, that valid arbitration agreements under federal law could

still be invalid under state law. See Hickory Heights Health & Rehab, LLC v. Watson, 2025

Ark. App. 133, at 10, 707 S.W.3d 499, 506; see also Northport, 14 F.4th at 868 (explaining

that under the FAA “generally applicable contract defenses, such as fraud, duress, or

unconscionability” still apply). On the contrary, the court of appeals’ invocation of that

general rule to buttress its erroneous reading of the regulation simply highlights that it has

interpreted that regulation as a per se rule against arbitration agreements. That erroneous

3 reading contradicts Northport’s holding and represents nothing more than “judicial hostility

to arbitration agreements,” something the FAA sought to prevent exactly a century ago.

See AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). Moreover, its reliance

on CMS’s historical account—that these agreements have “long been considered a predatory

practice that takes advantage of the elderly population”—shows that even its purported

state-law unconscionability analysis was really just an erroneous federal analysis.

The court of appeals’ analysis of federal law is wrong and creates a clear circuit split.

We have a duty to correct that analysis and end the resulting split. It’s unfortunate that the

majority disagrees, leaving it to the United States Supreme Court to rectify that clear error.

WOOD, J., joins.