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August 01, 2019

Provider Beware: Arbitration Agreements in Digital Health Mobile Apps

Zuzana S. Ikels, King & Spalding, San Francisco, CA


The potential for health information technology (Digital Health) to transform health and healthcare is enormous and the market is booming. Smartphones and wearable devices – through thousands of available mobile applications (apps) – allow near continuous monitoring from general health, such as fitness and weight loss, to medical treatment and diagnoses, such as diabetes and medication. One of many interesting legal questions is the enforceability of consumer arbitration agreements in Digital Health apps. 

The answer is not straightforward, as it requires harmonizing complex and myriad healthcare laws with the far less regulated area of technology. Although there are no laws specifically addressing arbitration related to Digital Health, there are state laws that impose restrictions on arbitration agreements related to medical care and healthcare services. There is also a federal rule (albeit enjoined) and a revised, final federal rule (just enacted) imposing special conditions on arbitration agreements as to Long Term Care Facilities (LTCFs) and Skilled Nursing Facilities (SNFs).

Judicial scrutiny of a Digital Health app’s consumer arbitration agreement, therefore, may vary depending on whether the app provides healthcare or health services, and the relationship of the app, if any, to a healthcare provider or insurer. Although a determination of whether an app involves healthcare or health is fact-specific and unsettled, in light of the web of laws regulating the healthcare industry, determining the enforceability of an arbitration clause will likely differ between, on the one hand, Mobile Health Apps (defined as: apps that provide general health and well-being services), and, on the other hand, Mobile Healthcare Apps (defined as: apps that provide medical and/or healthcare services and that involve a regulated healthcare provider or medical practitioner).1

The Federal Arbitration Act

There is a strong public policy favoring arbitration, but an accompanying foundational precept that claims should be arbitrated only to the extent the parties have agreed.         State legislatures and courts have historically been skeptical of consumer arbitration agreements. The Federal Arbitration Act (FAA) was enacted in response, stating a “written provision” in a contract “evidencing a transaction involving interstate commerce to settle by arbitration” of “a controversy. . .arising out of” that “contract. . .shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”2

The U.S. Supreme Court has recently taken an expansive view of the FAA and the preemption doctrine. In AT&T Mobility LLC v. Concepcion, the court held that a California precedent, which barred arbitration and class action waivers, was invalid under the FAA.3 Since Concepcion, lower federal courts and state courts have struggled with defining the limitations of the preemption doctrine under the FAA and the FAA’s savings clause that state contract law applies.4

E-Commerce Arbitration Clauses Are Routinely Enforced

There is no legal barrier to consumer arbitration provisions related to Internet-based agreements, or in electronic format. “Courts around the country have recognized that [an] electronic ‘click’ can suffice to signify the acceptance of a contract,” and that “[t]here is nothing automatically offensive about such agreements, as long as the layout and language of the site gives the user reasonable notice that a click will manifest assent to an agreement.”5

E-commerce agreements are divided into five types: scrollwraps, clickwraps, sign-in wraps, browserwraps and shrinkwraps.6 Terms of Use agreements presented as scrollwraps or clickwraps have had a high success rate of enforcement.7 By contrast, browserwraps or shrinkwraps have faced a higher degree of skepticism.8

The Second Circuit Court of Appeals issued the first appellate decision enforcing a mobile app arbitration agreement two years ago.9 In Meyer, the Second Circuit upheld Uber’s mobile app sign-up process because the “Terms of Use” agreement was hyperlinked next to the e-signature and the arbitration provisions were clear. Likewise, a Mobile Health App’s arbitration agreement was recently enforced.10

Healthcare Law Imposes Special Conditions on Arbitration

There is no federal or state statute or regulation that restricts or prohibits consumer arbitration agreements as to Digital Health, but there are many state laws and federal regulations restricting arbitration agreements related to healthcare and medical services.

1.      The CMS Rule Restricting Nursing Home Arbitration Agreements

In October 2016, during the last year of the Obama administration, the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) issued a final rule (2016 Rule) effective November 28, 2016, prohibiting Medicare and Medicaid-participating  LTCFs and SNFs from entering "into predispute binding arbitration agreements with their residents or their representatives."11 The 2016 Rule also imposed a number of restrictions on post-dispute arbitration contracts, including that such a contract must be entered into by the resident voluntarily, that the parties must agree on the selection of a neutral arbitrator, and that the arbitral venue must be convenient to both parties.

The Northern District of Mississippi entered a preliminary injunction barring the 2016 Rule, pursuant to the FAA in Am. Health Care Ass'n v. Burwell.12 The government appealed the decision, but the new administration published a proposed revision to the 2016 Rule, and dismissed its appeal.13

Under the new administration, CMS proposed a revised rule in 2017, which was adopted in July 2019.14 The 2017 Final Revised Rule removes the requirements precluding facilities from entering into pre-dispute agreements and dictating the terms of the agreement. It retains many of the other aspects of the 2016 Rule, including prohibiting nursing homes from requiring residents to sign binding arbitration agreements as a condition for receiving care, and will require nursing homes to inform residents or their representatives that they are not required to sign a binding arbitration agreement. It also prohibits a provider from barring a patient from communicating with government agencies, and requires the terms be in “plain language” and posted in the facility.

2.      State Laws Governing Healthcare Arbitration Agreements

A multitude of states restrict arbitration agreements arising from medical care and/or healthcare services. Usually, the states impose specific drafting requirements, such as: (1) the option to revoke the agreement within a certain amount of time; (2) specific language, in specific font size; and (3) precluding waivers as a condition of treatment. As an example, under California Code of Civil Procedure Section 1295 and California Health & Safety Code Section 1363.1, an arbitration agreement involving medical services or healthcare insurance must include specific, statutory language in 10-point bold red type on the first page, and a patient’s right to rescind the agreement up to 30 days after signing.15

While the Supreme Court has held that the FAA preempts state laws that prohibit arbitration because they conflict with the FAA objectives, two questions remain. First, does the FAA preempt a CMS federal regulation? Second, are state laws that do not ban arbitration agreements, but impose requirements or restrictions, preempted by the FAA? The state of the law – as to the FAA, preemption and statutes and regulations imposing restrictions on arbitration agreements – is less than clear.

3.   The Preemption Doctrine: Battle of the Feds

The FAA does not apply where there is a contrary federal, congressional command that overrides the FAA.16 In Am. Health Care Ass'n, the court addressed the scope of preemption as to CMS, finding that in order to prove that a statute contains such authority, the party opposing arbitration must show intent from the statute's text, history, or purposes. The court concluded there should be either: (i) “an express statutory mandate,” or (ii) for agencies with “generalized statutory mandates,” there must be a record establishing the need for the restrictions. The Am. Health Care Ass'n court found that CMS had generalized authority, but had not sufficiently developed a record, with evidence, to support the limitations on arbitration agreements in the 2016 Rule in the face of the FAA.17

Given the 2017 Final Revised Rule was just recently adopted, when and if the rule is challenged, it is unknown whether a court will find that CMS has developed the requisite record to satisfy the Am. Health Care Ass'n. test, or whether other courts will adopt the same standard in determining the enforceability of a CMS Rule vis-à-vis the FAA.

4.   The FAA Preempts State Laws Prohibiting Arbitration and Imposing Any Special Conditions as to Healthcare Arbitration Provisions

The second question is: whether a state statute escapes FAA preemption because it places restrictions on arbitration agreements, but does not ban them outright.18 The U.S. Supreme Court appeared to answer in the negative in Doctor's Associates, Inc. v. Casarotto, holding that the FAA preempted a Montana law mandating special notice requirements, which barred laws that “condition[ed] the enforceability of arbitration agreements on compliance with a special…requirement not applicable to contracts generally.”19

Many states, in particular California, continued to invalidate arbitration agreements in the healthcare arena despite Doctor's Associates. The courts cited to the FAA Section 2's saving clause, which authorizes a court to invalidate an arbitration agreement under generally applicable contract defenses, such as fraud, duress, or unconscionability, under state law, emphasizing the state’s public policy concerns as to healthcare and healthcare insurance.20

Recent Supreme Court decisions, however, have rejected lower courts and state supreme courts’ reliance upon public policy concerns. The High Court’s critical decision in Kindred Nursing Ctrs. Ltd P’ship v. Clark held that the FAA preempted a Kentucky state law that prohibited arbitration agreements signed by agents related to medical care to the elderly:21

The FAA. . .preempts any state rule discriminating on its face against arbitration—for example, a ‘law prohibit[ing] outright the arbitration of a particular type of claim.’ And not only that: The Act also displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.22

In April 2019, the Supreme Court held that an ambiguity in an agreement could not be construed against the drafter or inferred to assume the parties agreed to class arbitration.23 Even California state courts have now held the FAA preempts state statutes and public policy concerns regarding arbitration agreements in healthcare.24


In drafting the e-commerce agreement, one should carefully consider applicable healthcare laws when the app is a Mobile Healthcare App, in particular, as the number of challenges to arbitration agreements has yet to decline. The current jurisprudence reflects there is no specific legal impediment to healthcare or health apps, assuming they comply with state contract law, except as to mobile apps related to LTCFs or SNFs. Given the uncertainty of the preemption doctrine as between the FAA and CMS, Digital Healthcare Apps involving LTCFs or SNFs should consider the 2017 Revised Final Rule.

In drafting the arbitration agreement, attorneys should ensure that the contract meets the requisite notice and consent requirements of contract law under the applicable state law and may want to:

  1. Determine whether the app is a Mobile Health App or a Mobile Healthcare App.
  2. Ascertain the involvement, if any, of a healthcare or medical provider or healthcare insurer in the app and, where a LTCF or SNF is involved, consider the 2017 Revised Final Rule.
  3. Use a clickwrap or scrollwrap agreement.
  5. Incorporate a delegation clause as to arbitrability. Example: “Whether a dispute is arbitrable shall be determined by the arbitrator.”
  6. Consider whether an opt-out provision is appropriate or technologically available.


  1. Although the categorization of Digital Health devices and the agencies that regulate them are unsettled, the degree of regulation and legal scrutiny, generally, differ between healthcare and medical providers and/or care. Both federal and state laws distinguish between health, on the one hand, and medical and healthcare services as well as medical and healthcare providers, on the other hand. For example, the Food and Drug Administration (FDA) has delineated its regulatory authority between healthcare and health mobile devices, declining to regulate health devices that provide general well-being services, such as weight loss, fitness and sleep, because they are “low risk.” In contrast, the FDA has issued a series of guidelines and regulations regarding healthcare devices, which provide medical diagnosis or treatment, such as diabetes treatment and monitoring. General Wellness: Policy for Low Risk Devices Guidance for Industry and Food and Drug Administration Staff, (July 29, 2016). Under the 2016 21st Century Cures Act, Congress removed the FDA’s authority to regulate electronic health information and certain software devices. See Section 3060 of the Cures Act, amending section 520(c) of The Food, Drugs and Cosmetics Act (FDCA). Likewise, the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act, which regulate healthcare related information, define personal protected health information (“PHI”) as a person’s medical and/or healthcare conditions and treatment provided by a “Covered Entity” and “Business Associates.”
  2. 9 U.S.C. § 2.
  3. 131 S. Ct. 1740, 1742-47 (2011).
  4. State law governs the formation of contracts. DIRECTV v. Imburgia, 577 U.S. __,136 S.Ct. 463, 468 (2015). See, e.g. Chavarria v. Ralphs Grocery Co., 733 F.3d 916, 927 (9th Cir. 2013) (holding Concepcion “cannot be read to immunize all arbitration agreements from invalidation no matter how unconscionable they may be”); In re Checking Account Overdraft Litig. MDL No. 2036, 685 F.3d 1269, 1279 (11th Cir. 2012) (holding the FAA does not preempt South Carolina’s unconscionability doctrine and severing the unconscionable portion of the contract from the arbitration provision).
  5. Sgouros v. TransUnion Corp., 817 F.3d 1029, 1033–34 (7th Cir. 2016).
  6. Scrollwrap or clickwrap agreements require a consumer to click on an “I agree” button that references the terms and conditions. A scrollwrap usually appears in a pop-up window and requires the user to scroll to the bottom. A clickwrap hyperlinks to the terms and conditions. Sign-in wraps, which are relatively new, are part of the sign-up or log-in process of activating an account or device. Browserwraps and shrinkwraps are posted on an internet page or delivered with the product, usually as part of a manual, which do not require a consumer’s review and approval.
  7. See, e.g., Selden v. Airbnb, Inc., No. 16-cv-00933 (CRC), 2016 WL 6476934, at *1, 5 (D.D.C. 2016) (upholding Airbnb mobile account with sign-in wrap agreement hyperlinked to the arbitration provision); In re Facebook Biometric Info., Privacy Litig., 185 F.Supp 3d 1155, 1158 (N.D. Cal 2016) (enforcing clickwrap arbitration agreement, where consumers “had to click a box separately affirming that they had read and agreed to the Terms of Use”).
  8. See, e.g., Applebaum v. Lyft, Inc., No. 16-CV-07062(JGK), 2017 WL 2774153, at *8 (S.D.N.Y. June 26, 2017) (hyperlink to agreement was not obvious and the language was vague); Specht v. Netscape Comms., Corp., 306 F.3d 17, 31-32 (2d Cir. 2002) (finding browserwrap agreement to terms and conditions was not clear and “submerged” arbitration clause); Nyguen v. Barnes & Noble, Inc., 763 F.3d 1171, 1176 (9th Cir. 2014) (hyperlink Terms of Use on the bottom of webpage was unenforceable browserwrap agreement); Noble v. Samsung Elecs. Am., Inc., No. CV 15-3713, 2016 WL 1029790, at *1, 3-4 (D.N.J. Mar. 15, 2016), aff'd sub nom. Noble v. Samsung Elecs. Am., Inc, 682 F. App'x 113 (3d Cir. 2017) (absence of actual and constructive notice, where arbitration clause was included in the guide booklet, which the plaintiff received in the smartwatch box, which the court noted was 135 pages, and contained no reference to arbitration in the table of contents); Norcia v. Samsung Telecomms. Am., LLC, No. 14-00582, 2014 WL 4652332 (N.D. Cal. Sept. 18, 2014); but see Dang v. Samsung Elecs. Co., Ltd. No. 14-00530, 2015 WL 4735520, *1–2 (N.D. Cal. Aug. 10, 2015).
  9. See Meyer v. Uber Techs., Inc. 868 F.3d 66 (2nd Cir. 2017).
  10. See McLellan v. Fitbit, Inc., No. 3:16-cv-00036-JD, 2017 U.S. Dist. LEXIS 168370 (N.D.Cal. 2018) (granting motion to compel arbitration as to arbitrability regarding Fitbit). The author refers to Fitbit devices as Mobile Health Apps because they are defined as mobile, wearable activity trackers and apps for health and fitness. The McLellan lawsuit alleged that the Fitbit app – that monitored a user’s heart rate with the fitness tracker – was defective.
  11. 81 Fed. Reg., 68800 (October 4, 2016) (to be codified at 42 C.F.R. § 483.70(n)).
  12. 217 F. Supp. 3d 921 (N.D. Miss. 2016).
  13. See Am. Health Care Ass'n v. Price, appeal docketed sub nom. Am.Health Care Ass'n v. Burwell, No. 17-60005 (5th Cir. Jan. 6, 2017); 82 Fed. Reg. 26649 (June 8, 2017) (the new, proposed rule), and dismissal of appeal at Am. Health Ass'n v. Price, No. 17-60005 (5th Cir. Jun. 2, 2017). In December 2016, CMS issued a nationwide instruction to State Survey Agency Directors, directing them not to enforce the 2016 Rule's prohibition of pre-dispute arbitration provisions during the period that the court-ordered injunction remained in effect.
  14. 84 Fed. Reg. 34718, 42 C.F.R. § 483.70(n)(1)-(2) (Jul. 18, 2019),
  15. Examples of other state laws include: (1) Ala. Code § 6-5-485 (allowing post-care arbitration agreements for services provided by a “physician, dentist, medical institution, or other health care provider,” but barring pre-dispute arbitration agreements and imposing procedures and requirements); (2) Alaska Stat. § 09.55.535 (allowing pre and post-care arbitration agreements but the agreement must state that the person receiving healthcare can revoke within 30 days of execution and pre-dispute agreements cannot be a prerequisite to care, and waiver must be in bold print on the face of the agreement); (3) Colo. Rev. Stat. § 13-64-403 (allowing for arbitration between a healthcare provider and patient, but outlining specific language that must be above the signature line in ten-point bold type); (4) Fla. Stat. § 766.207 (allowing post-care arbitration for medical negligence claims and outlining the arbitration procedure for such claims); (5) 710 Ill. Com. Stat. 15/1–15/14 (Illinois’ Health Care Arbitration Act prohibits the agreement from being a prerequisite to treatment, bars waiver of certain substantive and procedural rights and specifically outlines the language that must be included in a separate agreement); (6) La. Rev. Stat. Ann. § 9:4230–4236 (allowing pre-care arbitration and providing an example of valid language for such agreements, including that a patient has a right to an equal number of arbitrators, there is no restriction on who the patient can appoint, the contract is voidable for 30 days, and the contract expires no later than five years from inception); (7) Mich. Comp. Laws § 600.2912g (only allowing for post-dispute arbitration agreements when the amount of damages claimed are less than $75,000); (8) N.Y. Pub. Health Law § 4407-a (allowing pre-dispute arbitration agreements in health maintenance organization enrollment contracts but requiring specific language that notes arbitration is a waiver of right to jury trial and that the enrollee will have the opportunity to cancel the agreement but the agreement will govern if a dispute arises before cancelation); N.Y. C.P.L.R. § 3045 (a defendant in a medical malpractice action may demand the plaintiff to arbitrate damages if the defendant concedes liability); (9) Ohio Rev. Code Ann. §§ 2711.21–23 (allowing post-dispute arbitration and outlining the procedure for such); (10) S.D. Codified Laws § 21-25B (an entire act surrounding arbitration of healthcare claims between hospitals/physicians and patients, which allows pre-dispute agreements subject to termination and providing in 12-point boldface font above the signature line a statement that the agreement is not a prerequisite to treatment and the agreement waives right to jury or court trial); (11) Utah Code Ann. § 78B-3-421 (allowing pre-dispute arbitration if roughly 20 requirements are met); (12) Va. Code Ann. § 8.01-581.12 (allowing pre-dispute arbitration subject to certain limitations); (13) Vt. Stat. Ann. tit. 12, § 7002 (allowing post-dispute arbitration).
  16. Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2309 (2013); CompuCredit Corp. v. Greenwood, 565 U.S. 95, 98 (2012) (explaining that a “contrary congressional command” in another federal statute may override the FAA).
  17. Am. Health Care Ass'n, 2016 U.S. Dist. LEXIS 154110, at *5 (Contrasting CMS’s generalized authority with the Dodd-Frank Wall Street Reform and Consumer Protection Act and Securities laws, which expressly delegated authority to a federal agency to address arbitration agreements), citing 12 U.S.C. § 5518(b) (the Consumer Financial Protection Bureau "may prohibit or impose conditions or limitations on the use of an agreement between a covered person and a consumer for a consumer financial product or service providing for arbitration of any future dispute between the parties."); and 15 U.S.C. § 78o(r) (authorizing the Securities and Exchange Commission to "prohibit, or impose conditions or limitations on the use of, agreements that require customers or clients of any broker, dealer, or municipal securities dealer to arbitrate….").
  18. As an initial matter, in order for the FAA to apply to the arbitration agreement, the Healthcare or Health Mobile App must meet the threshold showing that interstate commerce is involved under Section 2 of the FAA. The bar for finding interstate commerce exists is very low. See Toledo v. Kaiser Permanente Med. Grp., 987 F.Supp. 1174, 1180 (N.D. Cal. 1997) (“Interstate commerce” is broadly construed and applied to an insurance contract that included healthcare and emergency coverage when the participant is in another region or other state, physicians providing services had been recruited from other states, and healthcare supplies and medications were shipped from out of state).
  19. Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, (1996).
  20. See, e.g., Malek v. Blue Cross of California, 121 Cal. App. 4th 44, 64 (2004) (holding the FAA does not preempt restrictions imposed on healthcare insurance arbitration agreements); Imbler v. PacifiCare of Cal., Inc., 103 Cal. App. 4th 567, 570 (2002) (invalidating arbitration agreement in HMO enrollment form, holding no preemption under the FAA because California is authorized to oversee healthcare insurance providers and plans).
  21.  Lamps Plus v. Varela, 137 S.Ct. 1421, 1426 (2017).
  22. Id. (internal citations omitted) (emphasis added); see also Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 534 (2012) (FAA preempted West Virginia’s ban on arbitration clauses to nursing homes, remanded for findings as to “whether unenforceable under state common law principles that are not specific to arbitration and pre-empted by the FAA.”)
  23. 139 S. Ct. 1407 (U.S. Apr. 24, 2019).
  24. See, e.g., Saheli v. White Memorial Medical Center, 21 Cal. App. 5th 308, 320-321 (2018) (enforcing arbitration agreement, finding requirements specific to arbitration healthcare agreements were discriminatory and therefore preempted by the FAA); Scott v. Yoho, 248 Cal.App.4th 392 (2016) (FAA preempts Cal. C.C.P. § 1295's 30-day cancellation period for arbitration agreements related to medical disputes).  

About the Author

Zuzana Ikels is a litigation partner at King & Spalding. She has successfully defended clients against dozens of consumer class actions involving federal and state consumer-protection statutes and privacy laws. She also is deeply versed in "whistleblower" lawsuits alleging violations of the False Claims Act and Insurance Fraud Prevention Act and other complex business disputes. She has in-depth knowledge of IT, Big Data systems and e-discovery.  Ms. Ikels frequently counsels, presents on, and writes about privacy, interoperability, transparency and consumer consent, as well as other cutting-edge issues important to healthcare providers and healthcare technology companies.  She may be reached at [email protected]