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A Double Limit on Forced Arbitration in Nursing Home Case

On Behalf of | Aug 3, 2022 | Firm News |

Most everyone is familiar with liability contracts. Whether you’ve been asked to sign one before participating in a sporting or merely as a requirement to use a swimming pool or gym, contracts regularly ask us to give up legal rights in order to utilize a service. But what happens when that liability waiver is from a nursing home? This was the case in Clanton v. Clanton v. Oakbrook Healthcare Ctr., Ltd., decided this month by the Illinois First District Appellate Court. Clanton v. Oakbrook Healthcare Ctr., Ltd., 2022 IL App (1st) 210984.

The facts of the case are tragically common—Nancy Clanton alleges that her mother, Laurel Jansen, suffered a series of falls while in the care of skilled nursing facility operated by Oakbrook Healthcare Centre and Lancaster LTD, ultimately leading to Laurel’s death. After approximately a year of litigation, the companies produced a contract, signed by Ms. Clanton’s Power of Attorney, that contained a clause that mandated mediation and binding arbitration, and which also contained language that prevented the injured party from collecting punitive damages above the actual damages. The defendants then moved to compel arbitration.

The Plaintiffs protested the move on several grounds, including that the Defendants hadn’t brought up the contract soon enough and that the Power of Attorney didn’t have the authority to agree to binding arbitration, but the point that actually convinced the trial court was that the contract was substantively unconscionable. Notwithstanding the clear terms of a contract, a court may choose not to enforce terms of a contract that are unreasonably harsh or unjust. The Plaintiff’s Complaint brought several counts under the Illinois Nursing Home Care Act, 210 ILCS 45/3-602. As part of the Act, prevailing parties can collect attorney’s fees, something generally not available in standard negligence cases. The trial court found that the contract clause limiting the recovery to actual damages and disallowing punitive damages might prevent the Plaintiff from collecting these fees, which would defeat the whole legislative purpose of the fee-shifting part of the Nursing Home Care Act. The Defendant’s obviously not liking this outcome, appealed the ruling.

On appeal, the Defendant’s request to force arbitration was still denied, but this time on completely different grounds than the trial court used. The First Appellate District Court instead pointed to a completely different part of the contract, this time a clause which stated that “If the resident is compelled by a change in physical or mental health to leave the facility, this Contract shall terminate on 7 days’ notice or immediately upon the resident’s death.” The Appellate court found that this terminated the entire contract when the patient died, including the mandatory arbitration clause. While contracts normally survive the death of the parties, in this case the plain language of the contract says otherwise. Was this the intention of Defendant’s with this contract language? Almost certainly not—they pretty clearly intended that the death of the resident only terminate their nursing care responsibilities, not every single part of the contractual agreement. But that nuance isn’t what they actually wrote in the contract.

Interestingly, this sets up a split between the Illinois appellate circuits on this issue. A case with almost identical facts in the Fourth Circuit, Mason v. St. Vincent’s Home, Inc., came to the opposite conclusion only earlier this year (in that case, the clause said that “In the event of Resident’s death, this Contract terminates automatically”). Mason v. St. Vincent’s Home, Inc., 2022 IL App (4th) 210458. This makes it very, very likely that Oakbrook and Lancaster are going to appeal to the Illinois Supreme Court with this case. There are clearly a number of nursing homes using rather similar language in their contracts, and it would be a problem of justice to have someone’s right to a trial merely based on what part of the state that one is located in, so there’s a decent chance that we will be hearing more about this issue from a higher court relatively soon.