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Continuing Legal Debate Over Enforceability of Arbitration Agreements

Lawyers working with those hurt by negligence or abuse at nursing homes often warn families about the dangers of mandatory arbitration agreements. Many sign these agreements as part of the admissions process unknowingly. But their signature often has harmful effects down the road if their loved one does not receive the care to which they are entitled and are injured. That is because the agreement often limits the family’s ability to file a regular suit in the civil justice system. Instead they must go through arbitration–an alternative system that is usually far less favorable to the nursing home resident’s interests.

However, even if an arbitration agreement was signed, sometimes an attorney will try to fight the enforcement of that agreement. There remains much disagreement about when these agreements must be enforced. Across the country, including Illinois, judges are grappling with rules that force families into these agreements.

Latest Illinois Arbitration Ruling
Last week state Supreme Court Justice Mary Jane Theis issued an opinion on a case coming out of the state’s Fifth District Appellate Court. The Legal News Line reported on the decision. The ruling was mixed bag for those working on these issues, highlighting the complexity of cases involved these sorts of mandatory choice of dispute resolution agreements.

The plaintiff in the case was an administrator of the estate of a woman who died, they claim, as a result of inadequate nursing home care. The defendant-facility sought to compel the plaintiff to arbitrate the nursing home neglect and wrongful death claim pursuant to the arbitration agreement.

The trial court rejected the claim and said that the plaintiff was not bound the arbitrate the nursing home case. The court reasoned that the agreements lacked “mutuality of obligation” and were in violation of public policy. These are two separate grounds on which contracts may be deemed unenforceable by a court. An appeals court reached the same decision, noting that the state’s Nursing Home Care Act states that all agreements by a resident to waive legal rights is null and void. In 2010 the Illinois Supreme Court took up the case, reversing the appellate court, stating that the anti-arbitration legislation in the Nursing Home Care Act was not enforceable as a result of pre-emption by a federal law which allows such agreements.

After that 2010 decision, the case was sent back to the appellate court for reconsideration. Once there the court again found the arbitration agreement unenforceable. They found that it was “illusory,” because of its application only on cases over $200,000 and that it lacked mutuality of obligation–similar to the trial court’s determination the first time around.

The state Supreme Court recently reviewed the decision again, issuing a split ruling. On one hand they agreed that the wrongful death claim did not need to be arbitrated, because it was filed by the next of kin–not the plaintiff who signed the agreement. However, they disagreed that the neglect claims did not need to be arbitrated. They found that the agreement included both a burden and a benefit to both parties, sufficient to make it enforceable.

See Our Related Blog Posts:

Court Refuses to Enforce Nursing Home Binding Arbitration Agreement

The Problem with Mandatory Arbitration Clauses in Nursing Home Contracts