Arbitration Agreements – Gott v. SSC Odin Operation Co.
December 4, 2008
The Illinois Nursing Home Care Act prohibits a long term care facility resident from waiving her right to a jury trial before the commencement of any action. What this means is LTC residents cannot enter contracts that have a waiver of the right to trial. If they enter into these types of contracts, the clause waiving the right to trial (and/or jury trial) will be null and void.
Many LTC facilities seek to arbitrate disputes instead of litigating them. This protects the facilities from expensive litigation and it protects residents and families because the attendant costs of settling a dispute are much lower.
The rule (sections 3-606 and 3-607 of the Illinois Nusing Home Care Act) conflicts with this desire to arbitrate becasue arbitration agreements generally ask residents to waiver their right to trial in exchange for the facility paying for and committing to arbitration.
A recent Illinois 5th Appellate District Case confronts this conflict head-on. Gott v. SSC Odin Operating Co. involved a wrongful death action brought by the representative of a deceased LTC resident against the owner corporation. The corporation tried to enforce an arbitration agreement the resident signed on admission. It argued the Illinois rule is preempted (basically overruled) by a Federal law, the Federal Arbitration Act, which promotes arbitration clauses in service and health care industry contracts. The court found for the resident’s family, concluding the Federal Arbitration Act did not preempt the generally applicable state contract law and defense. The Gott family was able to go on with their lawsuit against SSC Odin Operating Co.
The consequences of the Odin decision are not that far-reaching (after the IL Supreme Court refused to review the decision, it only has effect in the IL 5th Appellate District), but they do highlight a ongoing struggle in LTC: protecting the right to sue vs. reducing the costs of disputes (for both facililities and residents).
I was honestly surprised at the Odin decision. Surprised it came down the way it did (similar cases have found Federal preemption more often than preserving state defenses) and surprised the IL Supreme Court punted rather than review the case to give statewide guidance. This is a much larger issue than I plan to write in this post, but perhaps a lengthier analysis is in order soon in the future. Until that time, please see other posts on this issue here and here and at the Wall Street Journal.