Carter v. SSC Odin Operating Co., LLC
955 N.E.2d 1233
Ill. App. Ct.2011Background
- Joyce Gott was a resident at Odin Healthcare Center on two periods: May–July 2005 and January 2006 until her death on January 31, 2006.
- Sue Carter, as Joyce's special administrator, signed a May 20, 2005 Health Care Arbitration Agreement; Joyce signed a second identical agreement on January 18, 2006, but Carter's signature did not appear on the second.
- The arbitration agreements provide that disputes under $200,000 are not subject to arbitration, include mutual arbitration language, and specify cost-shifting and that FAA governs the agreement.
- Joyce died during the second stay; Carter, as special administrator, filed a November 22, 2006 two-count complaint: a survival action under the Nursing Home Care Act and Probate Act, and a wrongful death action under the Wrongful Death Act.
- The circuit court denied arbitration, ruling the agreements violated public policy and lacked mutuality; it also held the wrongful death claim not bound by the agreements, while the survival claim could be arbitrated.
- The appellate court initially affirmed the denial, the supreme court reversed to apply FAA preemption, and remanded for consideration of mutuality and wrongful death applicability; this opinion resolves those issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do the arbitration agreements evidence interstate commerce? | Carter argues the agreements involve interstate commerce through Medicare/Medicaid payments and out-of-state suppliers. | Odin contends the agreements are valid under FAA as they pertain to interstate commerce-enabled activities. | Yes, the agreements evidence a transaction involving interstate commerce. |
| Are the arbitration agreements enforceable mutual agreements? | Mutuality is lacking because the $200,000 exception creates an illusory promise to arbitrate by Joyce only. | The agreements provide reciprocal arbitration obligations when amount in controversy exceeds $200,000, satisfying mutuality. | No, the agreements lack mutuality; they are illusory and unenforceable. |
| Do the arbitration agreements apply to the wrongful death claim? | The plaintiff, as Joyce's legal representative, argues the wrongful death claim is separate and not bound by Joyce's arbitration agreements. | Defendant contends the agreements bind all related disputes to arbitration. | The plaintiff's wrongful death claim is not bound by the agreements. |
| What is the effect of FAA preemption on these agreements? | Nursing Home Care Act provisions are preempted by FAA, so the agreements should be enforceable under FAA. | FAA preemption governs the agreements and allows arbitration where interstate commerce is evidenced. | FAA applies to the arbitration agreements; however, due to lack of mutuality, they are not enforceable as to the survival claim and wrongful death claim. |
Key Cases Cited
- Fosler v. Midwest Care Center II, Inc., 398 Ill.App.3d 563 (2009) (interstate commerce evidence supports FAA applicability in nursing home arbitration.)
- Vassilkovska v. Woodfield Nissan, Inc., 358 Ill.App.3d 20 (2005) (separate arbitration agreement requires mutual consideration; illusory where one side bears all obligations.)
- Gonzalez v. West Suburban Imports, Inc., 411 F.Supp.2d 970 (2006) (mutuality requirement for arbitration contracts; lack of reciprocal agreement undermines enforcement.)
- Curto v. Illini Manors, Inc., 405 Ill.App.3d 888 (2010) (signature by legal representative does not bind wrongful death claims to arbitration.)
- Ward v. National Healthcare Corp., 275 S.W.3d 236 (Mo.2009) (factors affecting arbitration enforceability in healthcare settings.)
- Keefe v. Allied Home Mortgage Corp., 393 Ill.App.3d 226 (2009) (contractual mutuality may be found despite unequal rights if consideration exists.)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983) (Section 2 of FAA expresses a federal policy favoring arbitration.)
- Perry v. Thomas, 482 U.S. 483 (1987) (statements on commerce involvement for FAA applicability.)
- Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (2003) (aggregate activity can fall under interstate commerce for FAA applicability.)
- Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219 (1948) (federal commerce power considerations in arbitration contexts.)