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The Illinois Supreme Court recently held that a nursing home could not use a resident contract to compel an arbitration after a resident’s death. Clanton v. Oakbrook Healthcare Centre, Ltd., et al., 2023 IL 129067. The nursing home attempted to enforce its arbitration clause in response to a lawsuit filed by the former resident’s daughter pursuant to Illinois’ Survival Act. Ultimately, the Court held that the resident’s contract with the nursing home contained a provision that terminated the entire agreement upon the resident’s death, thus making the contract, including the arbitration provision, unenforceable.
In Clanton, plaintiff’s complaint alleged that the decedent was a resident of defendant’s skilled nursing facility, Oak Brook Care from July 19, 2019 through September 17, 2019. On August 9, 2019, plaintiff’s power of attorney for healthcare entered into a contract on behalf of the decedent resident with Oakbrook Healthcare for the decedent’s admission to the nursing facility. Section F(1) of the resident contract had a termination provision that provided the contract would terminate immediately upon the resident’s death.
Plaintiff’s complaint alleges that the decedent suffered numerous falls while she was a resident at Oak Brook Care that ultimately caused or contributed to her death. Plaintiff’s complaint has numerous counts against multiple defendants. Of importance are the counts brought pursuant to the Illinois Survival Act alleging violations of the Nursing Home Care Act and negligence.
Defendants filed a motion to compel arbitration on the counts brought pursuant to the Illinois Survival Act and to stay all remaining counts pled in the lawsuit. Among other things, plaintiff argued that the arbitration clause was procedurally and substantively unconscionable. The trial court denied defendant’s motion holding that the entire dispute resolution provision of the contract was unenforceable because it waived plaintiff’s rights to punitive or treble damages.
Defendants filed an interlocutory appeal arguing that the trial court erred in holding that the contract was substantively unconscionable, and if a portion of the contract was unconscionable the trial court should have severed that portion. On appeal, plaintiff made numerous arguments as to why defendant’s motion should be denied, including one arguing that the arbitration clause specifically terminated upon the decedent’s death due to the termination-on-death provision in the contract. The appellate court ultimately accepted this argument holding that the arbitration clause was no longer enforceable by the nursing home.
In upholding the appellate court and trial court rulings, the Illinois Supreme Court held that the contract’s termination-on-death clause unambiguously means that every provision within it ceased to exist following the resident’s death. The Court addressed arguments by both sides regarding one prior Illinois Supreme Court case, Carter v. SSC Odin Operating Co., and an Illinois Fourth District Appellate Court case, Mason v. St. Vincent’s Home Inc., and stated the following “[w]e agree with Plaintiff that Carter is not definitive regarding the current issue before this court…To the extent that Mason holds that all claims brought pursuant to the Survival Act, but brought after the decedent’s death, are subject to arbitration despite a termination-on-death clause, it is overruled.” The Court held that the real question is “whether defendants have a right to arbitrate any claims under the terms of the admission contract is essentially a straightforward question of contract interpretation.”
In reaching this conclusion, the Court rejected defendants’ contention that because the Survival Act claims accrued when the contract was still in effect (prior to the deceased resident’s death), the arbitration provision was still in effect because the termination-on-death provision had not yet been triggered. Defendants’ argument is based on the Carter and Mason cases. Defendants attempted to use Carter for the reasoning that because the Survival Act claims accrued at the time when the contract was still in effect that means the arbitration clause should be enforced. However, as stated by the Court in Clanton, the Court in “Carter did not address the application of a termination-on-death clause.” Defendants argue that in Mason, the contract at issue also had a termination-on-death clause and the court concluded that despite the termination-on-death clause, the arbitration clause was valid when the cause of action accrued (before the resident’s death). The facts in Mason are extremely similar to the issues in this case; however, the Court in Clanton declined to follow the Fourth District Appellate Court seemingly agreeing with plaintiff’s contention that the Mason court’s analysis was erroneous because it added language, or rather an exception to the termination-on-death clause, not contained in the agreement.
The Court went on to analyze the claims based on contract interpretation, ultimately holding that “[p]ursuant to the plain language of the contract, the parties contracted to use arbitration as the forum but only up until the point of the resident’s death.” The Court justified its conclusion based on the contract not being ambiguous reasoning that if the nursing home wanted to exclude the arbitration clause from the termination-on-death clause, they could have (should have) written it that way.
This Decision makes it clear that courts in Illinois should not enforce an arbitration clause in an action brought pursuant to the Illinois Survival Act when there is language terminating the contract upon the death of the resident. Based on this ruling, it is imperative to review and prepare your resident contracts taking into consideration the effect of any terminating language for any ongoing or future claims involving the Survival Act.