News

April 23, 2010 NHRMA Mutual, MPIC News and Updates

Illinois Supreme Court Rules Federal Law Trumps State in use of Arbitration Agreements

On April 15, 2010, the Illinois Supreme Court filed its opinion in Carter v. SSC Odin Operating Company (Docket No. 106511), holding that the anti-waiver provisions of the Illinois Nursing Home Care Act (NHCA) are preempted by the Federal Arbitration Act (FAA).   

As previously reported, Joyce Gott died in the defendant nursing home while in her second stay there.  Prior to her second admission, Ms. Gott signed an arbitration agreement which provided in part that it was governed by the FAA.  Sue Carter, as Ms. Gott’s representative, signed an identical arbitration agreement while Ms. Gott was alive.   Following the death of Ms. Gott, Ms. Carter, as special administrator of Ms. Gott’s estate, filed suit in the Marion County Circuit Court against Odin for alleged maltreatment of Ms. Gott and for violations of the NHCA.  Odin answered that the suit was precluded by the arbitration agreements and later filed a motion to compel arbitration and to stay any proceedings in the circuit court.

The NHCA includes “antiwaiver” provisions stating that rights under that enactment cannot be waived and that an aggrieved party is entitled to a trial by jury.   The FAA provides for the validity of arbitration agreements except for “such grounds as exist at law or in equity for the revocation of any contract.” 

Ms. Carter claimed the agreements to arbitrate were invalid because the NHCA protects the right to sue as a matter of public policy; Odin argued the FAA was preemptive.  The circuit court denied the motion to compel arbitration without an evidentiary hearing.  

Odin appealed to the Fifth District Illinois Appellate Court which affirmed the circuit court ruling, finding that the NHCA prevailed and that the plaintiff was entitled to a jury trial.  In its April 15 decision, the Illinois Supreme Court held that the appellate court had been incorrect and that the federal provisions at issue are preemptive. 

Ms. Carter had sought to avoid arbitration on additional grounds not addressed in the earlier lower court rulings so the Illinois Supreme Court remanded the case to the appellate court for consideration of those issues.  The question of use of arbitration agreements under the FAA by Illinois nursing homes and residents, however, has been resolved.