Court rejects arbitration clause in wrongful death case against nursing home

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The decedent, Joyce Gott suffered a nursing home injury and subsequently died. She was admitted to Odin Healthcare Center, a nursing home in Odin, Ill., in 2005 and again in 2006. Joyce had signed an arbitration contract with the nursing home, which provided that for any amount in controversy of at least $200,000, “they shall submit to binding arbitration all disputes against each other and their representatives, affiliates, governing bodies, agents and employees arising out of or in any way related or connected to the Admission Agreement and all matters related thereto including matters involving the Resident’s stay and care provided at the Facility, including but not limited to any disputes concerning alleged personal injury to the Resident caused by improper or inadequate care including allegations of medical malpractice; any disputes concerning whether any statutory provisions relating to the Resident’s rights under Illinois law were violated; any disputes relating to the payment or non-payment for the Resident’s care and stay at the Facility; and any other dispute under state or Federal law based on contract, tort, statute (including any deceptive trade practices and consumer protection statutes), warranty or any alleged breach, default, negligence, wantonness, fraud, misrepresentation or suppression of fact or inducement.”

After Joyce’s death, Sue Carter, acting as the special administrator for the estate, filed a two-count complaint, alleging a survival action under the Nursing Home Care Act and wrongful death under the Wrongful Death Act. Deciding whether the arbitration clause is enforceable, The Illinois Supreme Court in Carter v. SSC Odin Operating Co., No. 113204 (Sept. 20, 2012) ruled that the arbitration clause is only enforceable with respect to the survival action, but not to the wrongful death action. As the estate administrator was not a party to the arbitration agreement and since the wrongful death action accrues only when the nursing home resident dies and is for the benefit of the resident’s heirs, the estate administrator cannot be compelled to arbitrate the wrongful death action.

The nursing home has argued that the Federal Arbitration Act preempts the lawsuit and that the estate administrator must arbitrate both, the survival action and the wrongful death action.
The Illinois Supreme Court noted that “an arbitration agreement may be invalidated by a state law contract defense of general applicability, such as fraud, duress, or unconscionability, without contravening the arbitration section.”

The law firm of Zneimer & Zneimer can help you if you know of someone who is suffering from elder abuse or neglect at a nursing home.

The lower court had relied on the defense of a lack of mutuality of obligation to determine that the arbitration clause was unenforceable with regard to both the survival and the wrongful death counts. According to the appellate court, “defendant’s promise to arbitrate is illusory based on the $200,000 arbitration floor, rendering the arbitration agreements unenforceable for lack of a mutual promise to arbitrate.” 2011 IL App (5th) 070392-B, ¶ 29. The Supreme Court noted that the concept of “mutuality of obligation” is tied to the concept “consideration” and found that “[a]ny act or promise which is of benefit to one party or disadvantage to the other is a sufficient consideration to support a contract.” The Court determined that the agreement was supported by consideration and that the arbitration agreement is enforceable with respect to the survival action.

With regard to the wrongful death action, however, the the Illinois Supreme Court noted that arbitration is a “creature of contract” and under basic principles of contract law, “only parties to the arbitration contract may compel arbitration or be compelled to arbitrate.” In the decedent’s case, although the arbitration agreements purported to bind not only the decedent, but also her “successors, assigns, agents, attorneys, insurers, heirs, trustees, and representatives, including the personal representative or executor of *** her estate,” the only parties to that agreement were the decedent and the nursing home, and therefore the administrator was not bound by the agreement. “[A] wrongful-death action does not accrue until death and is not brought for the benefit of the decedent’s estate, but for the next of kin who are the true parties in interest. Plaintiff, as Gott’s personal representative in the wrongful-death action, is merely a nominal party, effectively filing suit as a statutory trustee on behalf of the next of kin…. Plaintiff is not prosecuting the wrongful death claim on behalf of Gott, and thus plaintiff is not bound by Gott’s agreement to arbitrate for purposes of this cause of action….. Plaintiff here is not a party to the bargain to arbitrate.”

This is a significant case, which changes how arbitration clauses are applied to nursing homes. According to state statistics, there are over 70,000 citizens that suffer some form of elder abuse or neglect. Illinois now has laws on the books concerning elder abuse and neglect. Types of neglect or abuse include physical abuse, sexual abuse, or emotional/psychological abuse, (general) neglect, personal neglect, abandonment, and financial or material exploitation.

The law firm of Zneimer & Zneimer can help you if you know of someone who is suffering from elder abuse or neglect at a nursing home or you feel that someone is suffering due to nursing home negligence. If you or a loved one was injured in a nursing home, and you need assistance, contact our nursing home injury lawyers to ensure fair compensation.