Are Arbitration Agreements Regarding Nursing Home Disputes Binding ?
In Carter v. SSC Odin Operating Co., LLC, 381 Ill. App. 3d 717, 885 N.E.2d 1204, 319 Ill. Dec. 524 (2008), the Appellate Court, Fifth District, considered whether section 2 of the FAA preempts sections 3--606 and 3--607 of the Nursing Home Care Act.
At the time of the resident's admission to the defendant's facility, the resident's representative executed a written "'Health Care Arbitration Agreement,'" which required that all disputes related to the resident's care at the facility be submitted to binding arbitration and be governed by the FAA. Carter, 381 Ill. App. 3d at 718. the resident died, and her representative filed a complaint under the Nursing Home Care Act, alleging that the defendant had failed to provide adequate and properly supervised care that the resident needed. Carter, 381 Ill. App. 3d at 718.
The defendant answered the complaint by denying the allegations and asserting various defenses, including the defense that the lawsuit was precluded by the agreement, which required that disputes be resolved by binding arbitration. Carter, 381 Ill. App. 3d at 719.
The defendant in Carter argued that section 2 of the FAA preempted the state law contract defense of a violation of public policy, because the public policy expressed in sections 3--606 and 3--607 of the Nursing Home Care Act does not apply to all contracts but specifically targets arbitration agreements. Carter, 381 Ill. App. 3d at 721.
The Carter court rejected that notion, holding that, "because the public policy expressed in sections 3--606 and 3--607 concerns the validity, revocability, and enforceability of contracts generally and does not specifically target arbitration agreements, it presents a legitimate state law contract defense of a violation of public policy to the agreements and so voids the agreements." Carter, 381 Ill. App. 3d at 722-23.