Federal law trumps state in use of nursing home arbitration agreements, Illinois high court rules

The Federal Arbitration Act (FAA) preempts a provision in the Illinois Nursing Home Care Act (NHCA) that prohibits the use of arbitration agreements in cases against nursing homes, the Illinois Supreme Court ruled Thursday.

In the case of Carter v. SSC Odin Operating Co., a state appellate court ruled in 2008 that the nursing home provider could not require arbitration because the use of arbitration agreements violated the anti-waiver portion of the NHCA. Odin argued that the NHCA applies to nursing home contracts in a broad and generalized way, and does not specifically prohibit arbitration agreements. The court ruled that it is precisely because the NHCA applies so generally to nursing home contracts that it can be used to nullify an arbitration agreement. The U.S. Supreme Court declined to review the case in 2009, letting the ruling stand. (McKnight's, 6/4/09)

After the U.S. Supreme Court declined the case, the Illinois Supreme Court picked it up for review and focused on the language found in the federal law. The FAA says that any arbitration agreement shall be enforced “save upon such grounds as exist at law or in equity for the revocation of any contract,” the Bureau of National Affairs reported. Since the NHCA provisions apply only to nursing home contracts, not “any contract,” the Illinois Supreme Court ruled that the FAA preempts the state law, BNA reported.