Carter v. Ssc Odin Operating Co. LLC

• Decision Date: 15 April 2010
• Docket Number: No. 106511.,106511.
• Citation: 927 N.E.2d 1207,237 Ill.2d 30,340 Ill.Dec. 196
• Parties: Sue CARTER, Special Adm'r of the Estate of Joyce Gott, Deceased, Appellee (Lisa Madigan, Attorney General of the State of Illinois, Intervenor-Appellee),v.SSC ODIN OPERATING COMPANY, LLC, d/b/a Odin Healthcare Center, Appellant.
• Court: Illinois Supreme Court

237 Ill.2d 30
927 N.E.2d 1207
340 Ill.Dec. 196

Sue CARTER, Special Adm'r of the Estate of Joyce Gott, Deceased, Appellee (Lisa Madigan, Attorney General of the State of Illinois, Intervenor-Appellee),
v.
SSC ODIN OPERATING COMPANY, LLC, d/b/a Odin Healthcare Center, Appellant.

No. 106511.

Supreme Court of Illinois.

April 15, 2010.

927 N.E.2d 1208

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927 N.E.2d 1209

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W. Jeffrey Muskopf, Mark R. Feldhaus, Lashly & Baer, PC, St. Louis, MO, Malcom J. Harkins III, James F. Segroves, Prosjauer Rose, LLP, Washington, DC, for appellant.

Staci M. Yandle, Belleville (K. Glenda Cameron, of Christiansted, Virgin Islands, of counsel), for appellee.

Lisa Madigan, Attorney General, Springfield (Michael A. Scodro, Solicitor General, Brian F. Barov, Assistant Attorney General, Chicago, of counsel), for intervenor-appellee. OPINION Justice THOMAS delivered the judgment of the court, with opinion.

The narrow question presented in this case is whether the antiwaiver provisions of the Nursing Home Care Act (210 ILCS 45/3-606, 3-607 (West 2006)) are “grounds as exist at law or inequity for the revocation of any contract” within the meaning of section 2 of the Federal Arbitration Act (FAA) (9 U.S.C. § 2 (2000)). The appellate court answered this question in the affirmative, finding that the antiwaiver provisions avoid the preemptive effect of the FAA on that basis. For the reasons that follow, we reverse the judgment of the appellate court and remand the cause so that the appellate court may consider issues raised by the parties but not previously addressed.

BACKGROUND

Plaintiff, Sue Carter, is the special administrator of the estate of Joyce Gott. Defendant, SSC Odin Operating Company, LLC, is a nursing home located in Odin, Illinois, that does business as Odin Healthcare Center. Gott was a resident of defendant's nursing home from May 20, 2005, until July 29, 2005, and again from January 12, 2006, until her death on January 31, 2006. Plaintiff, acting as the legal representative of Gott, entered into a written “Health Care Arbitration Agreement” with defendant on May 20, 2005, upon Gott's initial admission. Gott herself

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signed a “Health Care Arbitration Agreement” six days after her second admission. Plaintiff's signature does not appear on this second agreement, and both agreements are comprised of the same, identical terms.

In both agreements, the parties agreed to submit to binding arbitration “all disputes with each other and their representatives arising out of or in any way related or connected to the Arbitration Agreement and all matters related thereto including matters involving the Resident's stay and care provided at the Facility.” Specifically included within the scope of the agreements were “any disputes concerning whether any statutory provisions relating to the Resident's rights under Illinois law were violated.” The agreements also stated that each party waived its right to a trial by jury, stating in all capital letters:

“YOU CANNOT BE REQUIRED TO SIGN THIS AGREEMENT IN ORDER TO RECEIVE TREATMENT, BY SIGNING THIS AGREEMENT, YOUR RIGHT TO TRIAL BY JURY OR A JUDGE IN COURT WILL BE BARRED AS TO ANY DISPUTE RELATING TO INJURIES THAT MAY RESULT FROM NEGLIGENCE DURING YOUR TREATMENT OR CARE, AND WILL BE REPLACED BY AN ARBITRATION PROCEDURE.

THIS AGREEMENT PROVIDES THAT ANY CLAIM WHICH MAY ARISE OUT OF YOUR HEALTH CARE WILL BE SUBMITTED TO A PANEL OF ARBITRATORS, RATHER THAN TO A COURT FOR DETERMINATION. THIS AGREEMENT REQUIRES ALL PARTIES SIGNING IT TO ABIDE BY THE DECISION OF THE ARBITRATION PANEL.”

The agreements further stated, however, that they do not apply to “any dispute where the amount in controversy is less than * * * $200,000.” The parties also agreed that the resident or legal representative would have a right to rescind the agreement within 30 days of signing and that the execution of the agreement was not a precondition for admission to the facility. The agreements additionally provided that defendant would pay all arbitrator fees and up to $5,000 in reasonable “attorney fees and costs for the Resident in any claims against the Facility.” Finally, the agreements noted that they were governed by the FAA and that if any portion was determined invalid or unenforceable, the remainder of the terms would continue to be binding.

Following Gott's death, plaintiff filed a two-count complaint in the circuit court of Marion County against defendant. Count I was a statutory survival claim that alleged violations of the Nursing Home Care Act (210 ILCS 45/2-107, 1-117 (West 2006)) and regulations promulgated by the Illinois Department of Public Health pursuant to that Act. Count II was a statutory action under the Wrongful Death Act (740 ILCS 180/0.01 et seq. (West 2006)). In both counts, plaintiff alleged that defendant had failed to provide adequate and properly supervised care as needed by Gott. In count I, plaintiff alleged that defendant's acts and omissions resulted in Gott suffering injuries between January 12, 2006, and January 31, 2006, during Gott's second stay at the facility. In the wrongful-death count, plaintiff alleged that defendant's acts and omissions resulted in Gott's death and therefore the loss of companionship and society for her heirs.

Defendant filed an answer to the complaint, denying the allegations therein and asserting various affirmative defenses, including that both counts of the lawsuit

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were precluded by the arbitration agreements that were signed by Gott and plaintiff. Later, defendant filed a motion to compel arbitration, relying on section 2 of the FAA, which provides in relevant part as follows:

“A written provision in * * * a contract evidencing a transaction involving commerce to settle by arbitration a

controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2 (2000).

Defendant attached to his motion a memorandum of law, a copy of each of the agreements, and the affidavit of Mary Ann Smith, defendant's chief administrator, setting forth facts that allegedly established that the arbitration agreements involved interstate commerce within the meaning of section 2 of the FAA.

Plaintiff filed a memorandum of law (and supplement) in opposition to the motion to compel arbitration, arguing, among other things, that the agreements were in violation of the public policy of this state, as expressed in sections 3-606 and 3-607 of the Nursing Home Care Act, and were therefore void. Section 3-606 of the Act provides that “[a]ny waiver by a resident or his legal representative of the right to commence an action under Sections 3-601 through 3-607, whether oral or in writing, shall be null and void, and without legal force or effect.” 210 ILCS 45/3-606 (West 2006). Section 3-607 of the Act provides that “[a]ny party to an action brought under Sections 3-601 through 3-607 shall be entitled to a trial by jury and any waiver of the right to a trial by a jury, whether oral or in writing, prior to commencement of an action, shall be null and void, and without legal force or effect.” 210 ILCS 45/3-607 (West 2006). Plaintiff contended that the public policy behind the antiwaiver provisions of sections 3-606 and 3-607 is a generally applicable defense to all contracts in Illinois and therefore that policy is a “grounds as exist at law * * * for the revocation of any contract” sufficient to negate FAA preemption. See 9 U.S.C. § 2 (2000). Plaintiff also raised three additional contentions in her effort to avoid arbitration: (1) the FAA did not apply because the arbitration agreements did not involve interstate commerce; (2) the agreements were void for a lack of a mutual obligation to arbitrate; and (3) because she did not sign the second arbitration agreement, she could not be compelled to arbitrate.

The circuit court denied the motion to compel arbitration without an evidentiary hearing. First, the court found that with respect to the wrongful-death claim, the right to proceed to recovery through arbitration is considered a “right of action.” Thus, even if Gott would have had to proceed to arbitration had she lived and wanted to recover for her injuries, she nonetheless still had a “cause of action.” According to the circuit court, although Gott was bound by the agreements for her own claims, a plaintiff bringing claims on behalf of the estate is not bound by the agreements. Second, with respect to the survival count, the court found that the claim was valid because the arbitration agreement was “unenforceable both because it is in direct violation of emphatically stated public policy and for lack of mutuality.” Finally, the circuit court seemed to be addressing whether the transaction involved “interstate commerce” within the meaning of the FAA when it made the following finding:

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“Further, the underlying contractual relationship was between an elderly Marion County resident and a Marion County care facility. The contract was for personal care within this county. The action relates to the care provided. The statute involved here is a public safety statute that affects the relationships between the contracting parties. This trial court believes that in the aggregate the economic activity does not represent general practice subject to federal control.”

The appellate court affirmed the circuit court's decision, but did so on the basis of a single question of law-whether the “public policy” expressed in the Nursing Home Care Act was an ordinary state-law contract defense applicable to all contracts, and thus beyond the preemptive effect of the FAA. ...