Case Title: BRUNER v. TIMBERLANE MANOR LIMITED PARTNERSHIP

Citation: 

Docket Number: 103028

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2006-12-12T00:00:00Z

Document:
BRUNER v. TIMBERLANE MANOR LIMITED PARTNERSHIP  BRUNER v. TIMBERLANE MANOR LIMITED PARTNERSHIP 2006 OK 90 155 P.3d 16 Case Number: 103028 Decided: 12/12/2006 THE SUPREME COURT OF THE STATE OF OKLAHOMA DETRA L. BRUNER, as next of kin of LEOLA BRUNER (DEPP), deceased, Appellee, v. TIMBERLANE MANOR LIMITED PARTNERSHIP, and its successor in interest, TIMBERLANE MANOR LIMITED LIABILITY COMPANY, d/b/a GRACE LIVING CENTER, Appellants. APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY, OKLAHOMA, THE HONORABLE BARBARA G. SWINTON, PRESIDING ¶0 Detra L. Bruner filed suit against Grace Living Center, alleging that her mother's death was caused by the nursing home's negligent care. Grace Living Center filed a motion to dismiss or in the alternative to compel arbitration and stay the proceedings. The district court found that the nursing home care did not involve interstate commerce; the federal arbitration statutes are not applicable to the nursing home admission agreement; and, the binding arbitration provision in the nursing home admission form is unenforceable under § 1-1939(D) and (E) of the Oklahoma Nursing Home Care Act, DISTRICT COURT AFFIRMED. David K. McPhail, Steven J. Johnson, Foliart, Huff, Ottaway & Bottom, Oklahoma City, Oklahoma, for appellants. Don S. Strong, G. Stephen Martin, Strong, Martin & Associates, and John E. Barbush, Oklahoma City, Oklahoma, for appellee. Kenneth G. Cole, Mansell Engle & Cole, Oklahoma City, Oklahoma, for amicus curiae, Oklahoma Trial Lawyers Association. TAYLOR, J. ¶1 On July 5, 2005, Detra L. Bruner, as next of kin of Leola Bruner, deceased, filed suit against Timberlane Manor Limited Partnership, and its successor in interest, Timberlane Manor Limited Liability Company d/b/a Grace Living Center (nursing home). The petition alleged that the nursing home's negligent care and breach of duties caused Leola Bruner's death. The nursing home moved to dismiss the suit or in the alternative to compel arbitration and stay the proceedings as required by the federal arbitration law. The district court denied the motion. The dispositive question on appeal is whether the Federal Arbitration Act applies to the nursing home's admission contract. To answer this question we must consider the the body of federal and state law enforcing arbitration provisions and the body of federal and state law regulating nursing homes. We conclude that the Federal Arbitration Act does not apply to the nursing home admission contract at issue. We affirm the district court's order refusing to compel arbitration. We remand this case to the district court for further proceedings. I. Proceedings Below ¶2 The petition initiating this tort action alleged the following facts. Detra L. Bruner, plaintiff/appellee (plaintiff), is the daughter of Leola Bruner, deceased. On June 22, 2004, plaintiff, as her mother's attorney in fact, signed the contract for her mother to be admitted as a resident patient at Grace Living Center, defendant/appellant, a state licensed nursing care facility in Edmond, Oklahoma. When she was admitted to the nursing home, Leola Bruner was sixty-six years old and physically frail, and her decision-making abilities and mental facilities were impaired. Leola Bruner resided at the nursing home from June 22, 2004 until July 17, 2004, when she was hospitalized. Leola Bruner died on August 31, 2004. ¶3 The petition further alleged that during her residency at the nursing home, Leola Bruner was dependent upon the nursing home and its agents and employees for proper hydration and nutrition, personal care and attention, and prevention and treatment of any illness and injuries; but the nursing home failed to provide Leola Bruner with adequate and proper daily care and supervision, adequate and appropriate nourishment, and necessary and reasonable medical treatment and services. It also alleged that Leola Bruner suffered injuries and illnesses, including a fractured hip and malnutrition, caused by the nursing home's negligence and breach of duties. The petition asked for actual and punitive damages for the wrongful death of Leola Bruner, allegedly caused by the nursing home's negligence and its violation of the Patients' Bill of Rights in the Oklahoma Nursing Home Act. ¶4 In response to the petition, the nursing home appeared specially and asked the district court to dismiss the petition and enforce the binding arbitration agreement in the admission contract. The nursing home relied on the dispute resolution provisions in its admission contract which provided that all disputes "arising out of or in connection with the care rendered to the Resident by GLC [Grace Living Center] and/or arising out of or in connection with the Admission Agreement pursuant to which said care is rendered" are to be resolved by binding arbitration. ¶5 The nursing home took the position that its admission contract involved or affected interstate commerce because in its operation, the nursing home 1) receives Medicare payments that originate outside the state of Oklahoma, 2) complies with federal Medicare and Medicaid licensing rules and regulations, including routine inspections/surveys by out-of-state federal investigators/surveyors, 3) purchases medical and non-medical supplies from out-of-state vendors, and 4) uses instruments of interstate commerce such as telephone lines, internet, airlines and the federal postal service. The nursing home argued that the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1, et seq., and the Oklahoma Uniform Arbitration Act (OUAA), ¶6 The district court found that "the nursing home care at issue does not involve interstate commerce, the Federal Arbitration Act does not apply, and Sections 1-1939(D) and (E) of the Oklahoma Nursing Home Care Act, II. Standard of Review ¶7 The issues raised on appeal by the nursing home are: 1) whether the district court erred in finding that the nursing home care of Leola Bruner did not involve interstate commerce and that the FAA does not govern the nursing home's admission application; 2) whether a strong federal interest should be presumed in matters in which federal funds, such as Medicare funds, are utilized; 3) whether Oklahoma law recognizes a strong public policy favoring arbitration agreements; and 4) whether the district court erred in finding the arbitration provisions in the nursing home's admission application unenforceable under the Oklahoma Nursing Home Care Act. As to the interstate commerce issue, plaintiff urges that it is a question of fact to be reviewed for abuse of discretion, while the nursing home urges that it requires interpretation of the FAA to be reviewed by a de novo standard. Both parties urge that all other issues should be reviewed by a de novo standard. ¶8 Generally, the existence of an agreement to arbitrate is a question of law to be reviewed by a de novo standard. Rogers v. Dell Computer Corp., ¶9 Whether a transaction involves interstate commerce under the FAA is often a mixed question of fact and law. See Citizens Bank v. Alafabco, Inc., ¶10 We begin with an overview of the United States Supreme Court decisions construing the FAA, the state arbitration law, and the pertinent federal and state nursing home regulations. Against this backdrop, we consider de novo whether the FAA applies to the nursing home's admission contract. III. The Federal Arbitration Act ¶11 Pursuant to its power over admiralty and interstate commerce, Congress, in 1925, enacted the FAA to make arbitration agreements as enforceable as other contracts but not more so. Prima Paint Corp. v. Flood & Conklin Mfg. Co., ¶12 Section 2 of the FAA is the substantive section. It is a declaration of a "liberal federal policy favoring arbitration agreements," which effectively creates "a body of federal substantive law of arbitrability applicable to any arbitration agreement within the coverage of the Act." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. ¶13 The United States Supreme Court interpreted § 2 of the FAA as withdrawing from the states the power to require a judicial forum for the resolution of disputes which the contracting parties agreed to resolve by arbitration. Southland Corp. v. Keating, ¶14 The United States Supreme Court construed § 2 of the FAA as applying to every arbitration agreement into which private parties had entered within the full reach of the Commerce Clause. ¶15 Bernhardt involved an employment contract entered into in New York to be performed in Vermont. Bernhardt determined the employment contract did not involve interstate commerce because there was "no showing that petitioner while performing his duties under the employment contract was working 'in' commerce, was producing goods for commerce, or was engaging in activity that affected commerce within the meaning of our decisions." ¶16 Allied-Bruce Terminix involved a lifetime "Termite Protection Plan" purchased by a homeowner in Birmingham, Alabama, from a local office that was a franchisee of Terminix International Company. The Alabama Supreme Court had applied a contemplation-of-the-parties test and had decided that the transaction was local and not substantially interstate and that the FAA did not govern the contract. Interpreting § 2 of the FAA, the United States Supreme Court in Allied-Bruce Terminix concluded that "involving commerce" has broad meaning and is the functional equivalent of "affecting commerce." ¶17 The parties in Allied-Bruce Terminix did not contest that the transaction in fact involved interstate commerce. ¶18 In adopting the "commerce in fact" test, Allied-Bruce Terminix was mindful of the states' interest in protecting their consumers from overreaching business practices. Allied-Bruce Terminix recognized that Congress, in enacting the FAA, was well aware of consumer needs for a less expensive alternative to litigation to complain about products and relied on comparisons between arbitration and litigation to the effect that arbitration would be cheaper and faster, have more flexibility in scheduling hearings, have simpler procedural and evidentiary rules, minimize hostility and be less disruptive to ongoing and future business dealings between the parties. States may regulate contracts, including arbitration clauses, under general contract principles . . . . What states may not do is decide that a contract is fair enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce its arbitration clause. The Act makes any such state policy unlawful, for that kind of policy would place arbitration clauses on an unequal "footing," directly contrary to the Act's language and Congress' intent. 513 U.S. at 281, 115 S. Ct. at 843. ¶19 Citizens Bank involved a debt-restructuring agreement executed in Alabama between an Alabama bank and an Alabama construction company for the payment of a series of commercial loans. The Alabama Supreme Court had found the nexus between the debt-restructuring agreement and interstate commerce insufficient to trigger the FAA. In Citizens Bank, the United States Supreme Court reaffirmed that "involving commerce" in the FAA is the functional equivalent of "affecting commerce"- words of art signaling the broadest permissible exercise of the Commerce Clause power, 539 U.S. at 56, 123 S. Ct. at 2040 and aligned the FAA interstate commerce principles with those relating to other federal legislation:10 Congress' Commerce Clause power "may be exercised in individual cases without showing any specific effect upon interstate commerce" if in the aggregate the economic activity in question would represent "a general practice . . . subject to federal control." Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219 , 236, 68 S. Ct. 996, 92 L. Ed. 1328 (1948). . . . Only that general practice need bear on interstate commerce in a substantial way. Maryland v. Wirtz, 392 U.S. 183 , 195-196, n.27, 88 S. Ct. 2017, 20 L. Ed. 2d 1020 (1968); . . . .539 U.S. at 56-57, 123 S. Ct. at 2040. ¶20 Citizens Bank decided the debt-restructuring agreement satisfied the "involving commerce" test: 1) the commercial loans were the underlying economic activity which the construction company used in its business throughout the southeastern states; 2) the restructured debt was secured by an inventory of goods assembled from out-of-state parts and raw materials; and 3) commercial lending, as a general practice, has a broad impact on the national economy which Congress may regulate pursuant to its Commerce Clause power. 539 U.S. at 57-58, 123 S. Ct. at 2040-2041. Explaining Congress' Commerce Clause power over the local concern, Citizens Bank said: No elaborate explanation is needed to make evident the broad impact of commercial lending on the national economy or Congress' power to regulate that activity pursuant to the Commerce Clause. Lewis v. BT Investment Managers, Inc., 447 U.S. 27 , 38-39, 100 S. Ct. 2009, 64 L. Ed. 2d 702 (1980). ("[B]anking and related financial activities are of profound local concern. . . . Nonetheless, it does not follow that these same activities lack important interstate attributes"); Perez, supra, at 154-155, 91 S. Ct. 1357 ("Extortionate credit transactions, though purely intrastate, may in the judgment of Congress affect interstate commerce").539 U.S. at 58, 123 S. Ct. at 2041.11 ¶21 Even though the courts must enforce arbitration agreements that fall within the broad reach of § 2 of the FAA, those agreements may be overridden by their own terms. An arbitration agreement under the FAA is to be enforced according to its terms, and since parties are generally free to structure contracts as they see fit, an arbitration agreement may limit the issues that will be arbitrated and it may specify the rules under which the arbitration will be conducted. Volt Info. Sci., Inc. v. Bd. of Trustees of the Leland Stanford Junior U., Where, as here, the parties have agreed to abide by state rules of arbitration, enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA, even if the result is that arbitration is stayed where the Act would otherwise permit it to go forward. By permitting the courts to "rigorously enforce" such agreements according to their terms, see Byrd, supra, we give effect to the contractual rights and expectations of the parties, without doing violence to the policies behind by [sic] the FAA. 489 U.S. at 479, 109 S. Ct. at 1256. ¶22 Further, the FAA standing alone mandates enforcement of agreements to arbitrate statutory claims, but like any statutory directive the FAA's mandate may be overridden by a contrary congressional command. Shearson/American Express, Inc. v. McMahon, 482 U.S. at 226-227, 107 S. Ct. at 2337. The burden is on the party opposing arbitration to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue; an intention discernible from the statute's text or legislative history or "an inherent conflict between arbitration and the statute's underlying purposes." Id. IV. The State Arbitration Law ¶23 The state counterpart to § 2 of the FAA is § 1857(A) of the OUAA. It provides that arbitration agreements shall be valid, enforceable and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract. 12 O.S.Supp.2005, § 1857(A). This section is a clear expression of Oklahoma's policy favoring arbitration agreements. See, Voss v. City of Oklahoma City, 1980 OK 148, 618 P.2d 925 ; Rollings v. Termodyne Indust., Inc., 1996 OK 6, 910 P.2d 1030 . ¶24 On the other hand, § 1-1939 of the Nursing Home Care Act conflicts with the command of § 1857 of the OUAA. It provides that any waiver of the right to commence an action against the nursing home owner or licensee for any intentional or negligent act or omission shall be null and void and without legal effect. 63 O.S.2001, § 1-1939. It is a clear rejection of arbitration agreements between nursing homes and their residents. ¶25 Although the United States Supreme Court has decided that the FAA preempts and displaces a state anti-arbitration statute, we have not decided that the OUAA controls over anti-arbitration statutes such as § 1-1939 in the Nursing Home Care Act. Rather, a well established principle in this jurisdiction is that where two statutes address the same subject, one specific and one general, the specific statute will govern over the general. Trimble v. City of Moore, 1991 OK 97, 818 P.2d 889 ; Hall v. Globe Life and Accident Ins. Co. of Oklahoma, 1999 OK 89, 998 P.2d 603 . Under this principle, the specific statute in the Nursing Home Care Act addressing the right to commence an action and to have a jury trial must govern over the more general statute favoring arbitration. V. The Nursing Home Regulations ¶26 Nursing homes are regulated by a maze of state and federal regulations for the health, safety and welfare of the residents. Historically, regulation of health and safety matters are matters of local concern. Hillsborough County, Florida v. Automated Medical Lab., Inc., 471 U.S. 707 , 719, 105 S. Ct. 2371, 2378, 85 L. Ed. 2d 714 (1985). However, Congress has imposed conditions on the receipt of federal funds for medical care of the aged, disabled and needy13 and thereby regulates the health, safety and welfare of nursing home residents through its spending power.14 To receive the federal funds, the state regulations must conform to the federal regulations. Wilder v. Virginia Hosp. Assoc., 496 U.S. 498 , 502, 110 S. Ct. 2510, 2513, 110 L. Ed. 2d 455 (1990), explained: Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals. [42 U.S.C.] § 1396. Although participation in the program is voluntary, the participating States must comply with certain requirements imposed by the Act and regulations promulgated by the Secretary of Health and Human Services (Secretary). To qualify for federal assistance, a State must submit to the Secretary and have approved a "plan for medical assistance," § 1396a(a), that contains a comprehensive statement describing the nature and scope of the State's Medicaid program. 42 CFR § 430.10 (1989). ¶27 The federal regulations for long-term care facilities apply to nursing homes. 42 C.F.R. § 483.5 (defining "facility"). The regulations concern both the operation of the facility and the care for and rights of the residents.15 The most pertinent regulations require the facility to be licensed under applicable State and local law, id. § 483.75(a); to provide services in compliance with all applicable Federal, State, and local laws, regulations, and codes, and with accepted professional standards and principles that apply to professionals providing services in such a facility, id. § 483.75(b); and to provide each resident with a written statement of legal rights, including the right to file a complaint with the State survey and certification agency concerning resident abuse and neglect and the right to have the names and addresses of all pertinent state client advocacy groups such as the State survey and certification agency, the State licensure office, the State ombudsman program, the protection and advocacy network, and the medicaid fraud unit. Id. § 483.10. Consistent with the federal statute permitting the states to devise a fair mechanism for hearing appeals on transfers and discharges of residents from nursing facilities, 42 U.S.C. § 1396r(c)(2) and (f)(3), the appeal procedure regulations provide that a resident has a right to agency hearings and judicial review as allowed by law. 42 C.F.R. § 431.245.16 ¶28 Oklahoma participates in the federal Medicaid program. ¶29 The NHCA requires the State Department of Health to establish a comprehensive system of licensure and certification to protect the health, welfare and safety of the residents and assure accountability for reimbursed care. VI. The Parties' Arguments ¶30 The nursing home asserts that both the FAA and the OUAA must be applied because the existence of the arbitration agreement is not disputed. It argues that both the FAA and the OUAA strongly favor arbitration and that the FAA preempts any state law hostile to arbitration. The nursing home also asserts that its evidence ¶31 Nursing home argues that the receipt of Medicare payments indicates interstate commerce, relying on Summit Health, LTD. v. Pinhas, ¶32 Summit Health LTD addressed the question as to "whether the interstate commerce requirement of antitrust jurisdiction is satisfied by allegations that petitioners conspired to exclude respondent, a duly licensed and practicing physician and surgeon, from the market for ophthalmological services in Los Angeles because he refused to follow an unnecessarily costly surgical procedure." ¶33 BCB Anesthesia Care, LTD involved a hospital staffing dispute between nurse anesthetists and physician anesthetists. The nurses complained that the Illinois hospital restricted their practice in violation of the Sherman Act. The Seventh Circuit found that the nurses's allegations that the hospital served nonresident patients and received Medicare and Medicaid payments were sufficient to allege Sherman Act jurisdiction under Summit, but not sufficient to state a claim under the Sherman Act - a claim that the conduct would have "a not insubstantial effect upon interstate commerce." 36 F.3d at 666. In BCB Anesthesia Care, LTD, the Seventh Circuit Court explained: "Although we hesitate to say that [a staffing decision at one hospital] . . . can never state an antitrust claim, we believe it is incumbent upon the plaintiff to plead some additional facts from which it can be inferred that the case falls within the ambit of the Sherman Act." Seglin v. Esau, supra. [769 F.2d 1274 (7th Cir.1985)] Before we enlist this court in the micromanagement of the staffing arrangements at Passavant under the aegis of the antitrust laws, we need better reasons than the plaintiffs have given us. Id. ¶34 Nursing home also argues that the Medicare connection between health care and interstate commerce was extended to nursing homes in McGuffey Health and Rehab. Center v. Jackson, 864 So. 2d 1061 (Ala.2003), followed by Owens v. Coosa Valley Health Care, Inc., 890 So. 2d 983 (Ala.2004). The McGuffey court held that Medicare funds moving across state lines should be considered to establish the interstate commerce connection, relying on Summit Health, LTD., BCB Anesthesia Care, LTD, and McElhinney, M.D. Id. 864 So. 2d at 1063. For the reasons already discussed, we disagree that these cases support the McGuffey holding. Owens followed McGuffey, even though there was no proof of Medicare payments. The Owens court said that any doubt as to whether providing nursing home services involved interstate commerce is put to rest by the fact that the transaction is unquestionably economic in nature under Citizens Bank and that purely intrastate economic or commercial transactions can be within the reach of the Commerce Clause. We do not join the Alabama Supreme Court in this reading of the United States Supreme Court's Citizens Bank decision. ¶35 Nursing home also relies on Vicksburg Partners, L.P. v. Stephens, 911 So. 2d 507 (Miss.2005), which extended Citizens Bank to a nursing home admission contract. Unlike the instant case, the defendants in Vicksburg Partners included a Georgia corporation, a Tennessee corporation and a Louisiana corporation, who collectively contributed to the operation of the nursing home. Id. at 515. ¶36 Finally, nursing home relies on In re Nexion Health at Humble, Inc., 173 S.W.3d 67 (2005). Without any analysis, Nexion summarily ruled that "[b]ecause 'commerce' is broadly construed, the evidence of Medicare payments made to HHC on John's behalf is sufficient to establish interstate commerce and the FAA's application in this case." Id. at 69. On rehearing, the Texas court left for another day consideration of reverse preemption of the FAA on insurance by the McCarran-Ferguson Act, 15 U.S.C. § 1012(b). ¶37 Although Medicare funds reimburse nursing homes for care, services and supplies, the Medicare program is a significant social security insurance program for the welfare of the aged and the disabled. Similarly, federal-state-matching Medicaid funds reimburse providers for care, services and supplies, but the Medicaid program is a significant medical program carried out by the states for the welfare of the needy. Congress has not declared the Medicare or Medicaid program to be economic activity the general practice of which may be regulated under the Commerce Clause. The United States Supreme Court has not decided that Medicare or Medicaid funding is an exercise of Congress' Commerce Clause power, nor has it decided that such payments are indicative of interstate commerce. We decline to join Alabama, Mississippi and Texas in treating the federal distribution of medicare insurance funds and state distribution of federal-state-matching medicaid funds as indicia of commerce that triggers the FAA. ¶38 Plaintiff presents several arguments in supporting the district court's refusal to send this controversy to arbitration. First, plaintiff argues that the nursing home is estopped from seeking enforcement of the arbitration agreement by virtue of the license that requires the nursing home to comply with the NHCA and that the nursing home waived the right to enforce the binding arbitration provision when it applied for and received the license issued pursuant to the NHCA. Waiver and estoppel, plaintiff argues, are general contract principles which exist at law and in equity for revocation. ¶39 Plaintiff also argues that the OUAA does not mandate enforcement of the arbitration provisions. This is so, according to plaintiff, because the OUAA is general law and the NHCA is specific law that prevails over the general, citing Hall v. Globe Life, supra. We agree. ¶40 The record before us indicates that the parties selected Oklahoma law to govern the arbitration provisions. The appellate record contains only the two-page dispute resolution part of the nursing home admission contract and the signature page. The dispute resolution part (arbitration agreement) does not mention the FAA, although it acknowledges "that Oklahoma law, as well as decisions of the United States Supreme Court, favor the enforcement of valid arbitration provisions." It does, however, in at least eight different places, provide that arbitration shall be governed by Oklahoma law. ¶41 Where, as here, Oklahoma law is the choice of law set out in the arbitration agreement, enforcement of the parties' agreement under Oklahoma law is fully consistent with the goals of the FAA. This is so even if the result is that arbitration will not go forward under Oklahoma law and even though the FAA would otherwise permit it to go forward. Volt Information Sciences, Inc., ¶42 Finally, plaintiff argues that the FAA does not preempt and displace § 1-1939 of the NHCA because 1) the nursing home admission contract does not evidence a transaction involving commerce and 2) the nursing home failed to prove that nursing home care substantially affects interstate commerce. Plaintiff argues that the evidence showing the nursing home has some transactions that affect interstate commerce is insufficient, considering that the patient was an Oklahoma resident, the nursing home is an Oklahoma limited partnership with its principal place of business in Oklahoma, and the nursing home is licensed by Oklahoma. We agree. ¶43 The nursing home admission contract in this case involves a profoundly local transaction - in-state nursing home care provided to an Oklahoma individual by an Oklahoma entity licensed under Oklahoma law. Citizens Bank fashioned a three-prong test of the reach of the Commerce Clause and the FAA upon such profoundly local activity. The FAA reaches arbitration agreements in contracts evidencing a transaction that is 1) economic activity, 2) which in aggregate is a general practice subject to control under the Commerce Clause, and 3) which in aggregate has a substantial impact on interstate commerce. We acknowledge that nursing home care for a fee is economic activity. However, this case fails the test on the second prong and on the third prong. ¶44 On the second prong, the local economic activity in the aggregate must be subject to regulation by Congress' Commerce Clause power. It is true that Congress exercises control over the local activity of delivery of care and treatment to residents in nursing homes through the Medicare/Medicaid statutes. Congress enacted the Medicare/Medicaid statutes through the exercise of its Spending Clause power. See, Suter v. Artist, ¶45 On the third prong, we have already declined to treat the distribution of medicare insurance funds by a federal agency and federal-state-matching medicaid funds by a state agency as evidence of interstate commerce that triggers the FAA in this case. We recognize the federal interest in federally-funded programs; however, distribution of Medicare insurance funds by a federal agency does not evidence an effect on interstate commerce subject to federal control under the Commerce Clause and neither does the distribution of Medicaid funds by a state agency. For a large majority of the United States Supreme Court cases referenced in this opinion, we have noted the facts which the High Court found to evidence a substantial effect on interstate commerce. In comparison, the evidence of interstate commerce in this case demonstrates a de minimus impact on interstate commerce. The facts that the nursing home buys supplies from out-of-state vendors rather than in-state vendors and uses internet and long distance telephone lines do not demonstrate a substantial impact on interstate commerce and are insufficient to impress interstate commerce regulation upon the admission contract for residential care between the Oklahoma nursing home and the Oklahoma resident patient. See, Maryland v. Wirtz, ¶46 Even if the nursing home's admission contract were within the broad reach of the Commerce Clause, the FAA's mandate has been overridden by a contrary congressional command. See, Shearson/American Express, Inc. v. McMahon, VII. Conclusion ¶47 In conclusion, we determine that the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq., does not apply to the arbitration agreement in this case for at least four reasons. First, the arbitration agreement calls for Oklahoma law to govern. Second, Congress regulates nursing homes through its spending power rather than its power over interstate commerce. Third, Congress, in its nursing home regulations, left the states to devise the appropriate administrative or judicial review of nursing home residents' claims against nursing homes. Fourth, the evidence in this case is insufficient to connect the nursing home admission contract with interstate commerce under extant jurisprudence from the United States Supreme Court. We also determine that Oklahoma's Nursing Home Care Act governs over Oklahoma's Uniform Arbitration Act in this case. We hold that the district court did not err in denying the motion to compel arbitration and stay proceeding. DISTRICT COURT AFFIRMED. ALL JUSTICES CONCUR. FOOT