Illinois Nursing Home Mandatory Arbitration Clauses Reviewed by Illinois Supreme Court

Recently the Illinois Supreme Court reversed a ruling by the Illinois Appellate Court Fifth District regarding the enforcement of a nursing home operator’s arbitration agreement. In <a href="Carter v. SSC Odin Operating Co., LLC, No. 106511 (4/15/10), the Special Administrator of the Estate of Joyce Gott brought a nursing home and wrongful death claim against the nursing home operator.

Many nursing homes in Illinois and nationwide have initiated the practice of including mandatory arbitration clauses in their admission documents in an attempt to force patients and their families to arbitrate a potential Illinois nursing home abuse case rather than bringing an Illinois nursing home malpractice lawsuit. However, other states, such as the Missouri Supreme Court’s decision in Lawrence v. Beverly Manor, 2009 WL 77897 (Mo. Jan 13, 2009), have ruled that these mandatory arbitration agreements are not enforceable and that nursing home residents and their families can bring a lawsuit even if an arbitration agreement was signed.

Prior to the current case of Carter v. SSC Odin Operating Co., LLC, Illinois courts had not yet ruled on the whether or not nursing homes were allowed to enforce these arbitration agreements. Therefore, this case has special significance for the future of Illinois nursing abuse lawsuits.

In Carter, the plaintiff-decedent Gott was an Illinois nursing home resident in both 2005 and 2006. Prior to her initial admission to the nursing home in 2005, the plaintiff, Sue Carter, acting on Gott’s behalf, signed a Health-Care Arbitration Agreement. The decedent Gott then signed an additional Health-Care Arbitration Agreement during her second admission to the Illinois nursing home.

Both agreements included language wherein Carter and Gott agreed to binding arbitration in order to settle any disputes that developed between them and the nursing home. These Health-Care Arbitration Agreements specifically stated that “any disputes concerning whether any statutory provisions relating to the resident’s rights under Illinois law were violated.” Furthermore, the agreements stated that if a resident did sign the arbitration agreement that any dispute would not be resolved by a judge or jury.

However, after Gott’s death, Carter filed an Illinois nursing home malpractice claim alleging violations of the Illinois Nursing Home Care Act and additional violations of Department of Public Health regulations. The complaint included a statutory survival claim and an Illinois wrongful death claim under the Illinois Wrongful Death Act.

The defendant nursing home responded by claiming that both counts of Carter’s lawsuit were precluded under the Health-Care Arbitration Agreements signed by Gott and Carter. According to the agreements the dispute would be settled by arbitration and not a judge or jury trial. Therefore, in response to the Illinois malpractice complaint, the defendant nursing home filed a motion to compel arbitration. However, the plaintiff argued that the arbitration agreements violated the Illinois Nursing Home Care Act which specifically states that “any waiver by a resident or his legal representative of the right to commence an action . . . shall be null and void.”

The Illinois trial court denied the defendant’s motion to compel arbitration, reasoning that even though plaintiff-decedent might have been bound to mandatory arbitration under the signed agreement, that plaintiff and the surviving estate was not bound by the agreements. Furthermore, the trial court ruled that plaintiff’s survival claim was valid because the nursing home’s arbitration agreement could not be enforced since “it is in direct violation of emphatically stated public policy and for lack of mutuality.”
The nursing home appealed the trial court’s decision to the Fifth District Appellate Court, which affirmed the trial court’s decision. The Appellate Court’s reasoning hinged on a single point of law, specifically whether the public policy laid out in the Illinois Nursing Home Care Act was applicable to all contracts. The court held that the Act’s language was meant to apply to ordinary state-law contracts and therefore the Illinois Nursing Home Care Act was not preempted by the Federal Arbitration Act since it did not specifically target arbitration.

However, the case was eventually brought to the Illinois Supreme Court because of the a conflict between the Second and Fifth District Courts. The Illinois Supreme Court found that the Appellate Court had erroneously ruled that the Federal Arbitration Act did not apply. According to the higher court, the relevant provisions in the Illinois Nursing Home Act are in direct conflict with similar provisions in the Federal Arbitration Act.

According to the U.S. Constitution’s Supremacy Clause (Article IV), whenever there is a conflict between a state law and a federal law, the federal law always preempts the state law. Unlike the Illinois Nursing Home Care Act, which would render the arbitration agreements as null and void, the Federal Arbitration Act provisions uphold a party’s agreements to arbitrate. Following this line of reasoning, the Illinois Supreme Court reversed the Appellate Court’s ruling and remanded the case back to the appellate court for it to decide on the remaining issues not yet ruled on regarding defendant’s Motion to Compel.

Kreisman Law Offices has been handling Illinois nursing home abuse lawsuits for over 30 years, serving those areas in and around Cook County, including Chicago, Naperville, Blue Island, and Park Ridge.