Illinois Court Finds Against Arbitration in Nursing Home Contract

Dan Frith

Contributor

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As our readers have heard me say before, arbitration agreements in nursing home admission contracts are unfair and unreasonable.  These agreements, often hidden in the small print, prevent the resident or family members from holding the facility legally accountable for abuse and neglect but preserve the facility's ability to sue the resident for failing to pay for services.  See why I say these provisions are terribly unfair!

There is good news to report.  The Illinois Appellate Court recently ruled that Illinois public policy prevented enforcement of a nursing facility’s arbitration agreement and that the Federal Arbitration Act did not preempt the state’s policy. The case is Carter v. SSC Odin Operating Co., __ N.E.2d __, 2008 WL 943746, 2008 Ill. App. LEXIS 305 (Ill. Ct. App. 2008).

The resident's daughter filed a wrongful death claim against the facility on behalf of her mother's estate.  In response, the facility sought arbitration based on two agreements that the resident’s legal representative had signed on her behalf. Both agreements, entitled “Health Care Arbitration Agreement,” required arbitration for disputes involving more than $200,000. The agreements stated that disputes would be governed by the Federal Arbitration Act.  The trial court refused to compel arbitration. The court reasoned that although the resident was bound by the agreement in regard to her own claims, the estate’s wrongful death claim was not. The judge also concluded that in relation to the survival action, the agreements were not enforceable because they directly violated public policy.

This is an excellent decision and will go a long way toward protecting the legal rights of nursing home residents.