arbitration agreement

An Illinois nursing home can avoid a court battle over a personal injury claim, thanks to an appellate court’s finding that its contract “clearly” gave its arbitrator the right to decide which cases went to arbitration.

The plaintiff claimed that a residency contract and an arbitration agreement were “insufficient in both form and substance” in detailing which cases would be arbitrated, and when a court could get involved. The former resident of Parkview Manor’s “Bounce Back” unit sued at age 81, claiming she sustained personal injuries while there for rehabilitation. She wanted her case heard in court. 

The woman’s attorneys argued that neither the residency or arbitration contracts demonstrated the nursing home’s intent to arbitrate claims related to her specific cause of action. But in its Feb. 22 ruling, the Fifth District Appellate Court of Illinois found that the nursing home’s inclusion of a delegation provision referring to American Arbitration Association rules clearly gave the nursing home’s arbitrator a right to decide “arbitrability.”

“Federal courts have long held that incorporation of specific arbitration rules, like AAA’s rules, into an arbitration agreement is sufficient to find ‘clear and unmistakable’ evidence that the parties intended to delegate the question of arbitrability to an arbitrator,” two of three judges on an appellate panel agreed.

Their decision represented a reversal for Parkview, owned by Unlimited Development. A trial court had previously denied the nursing home owner’s motion to compel arbitration and stop court proceedings.

‘Vague reference’ to rules not enough?

Justice Judy Cates offered a dissenting opinion.

“While arbitration is a favored method of dispute resolution, courts have consistently cautioned that an agreement to arbitrate is a matter of contract, and that arbitration is a matter of consent, not coercion,” she wrote.

That type of language is reflective of updated nursing home requirements, which since last October, have prohibited nursing homes from requiring an arbitration agreement as a condition of admission.

But at the time of plaintiff Edith Rotan’s nursing home stay in 2019, Cates said the woman’s understanding of the agreement and its existence as a separate document were key issues in her consent to arbitration. She said the majority opinion relied, erroneously, on an interpretation that the AAA rules included in the agreement were its commercial rules. In fact, the arbitration agreement was not specific and could have referred to any of the association’s “dozens” of rule sets.

“The majority’s decision to fill in and rely upon the AAA Commercial Rules of Arbitration as evidence of an intent to arbitrate arbitrability runs afoul of long-standing principles of contract law,” Cates wrote. “I do not agree that a vague reference to the rules of the AAA constitutes clear and unmistakable evidence of an intent to delegate questions.”

Cates also said the arbitration agreement should have been presented as an addendum to the residency contract, and because it was not, the original court should have been allowed to consider the case for trial.