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Appellate Institutional Liability

DBMS Successfully Enforces Arbitration Agreement with Skilled Nursing Facility

03/31/2022
Client:

Skilled Nursing Facility

Outcome:

Appellate court affirmed order dismissing and compelling arbitration of negligence claims

Synopsis:

In November 2019, the estate of the deceased brought negligence claims against the defendant skilled nursing facility under the Illinois Nursing Home Care Act and the Illinois Survival Act. The trial court granted the motion of the skilled nursing facility to dismiss the plaintiff’s claims and compel arbitration pursuant to an arbitration agreement signed by the decedent and his son, acting as his father’s health care power of attorney, before the decedent moved into the facility.

On appeal, the plaintiff challenged the trial court’s order on two bases: (1) the decedent lacked the capacity to sign the paperwork for admission to the skilled nursing facility, including the health care power of attorney appointing his son as his health care agent; and (2) the arbitration agreement was both substantively and procedurally unconscionable. The Fourth District affirmed the trial court in all respects.

As to the decedent’s capacity to sign the admissions paperwork, the Fourth District first noted that an individual is presumed competent; incompetence may not be inferred from old age, physical illness or defective memory. Thus, the party seeking to set aside a transaction bears the burden of proving mental incompetence, a burden the plaintiff failed to carry in opposing the skilled nursing facility’s motion to dismiss. According to the appellate court, although the decedent could not read or write, nothing in the record suggested that he did not comprehend the nature and effect of his signing a health care power of attorney with the assistance of the admissions director of the skilled nursing facility. The Fourth District further observed that the decedent’s son signed multiple admissions documents as his father’s health care power of attorney, which suggested that the decedent’s son was aware he had the authority to bind his father as his father’s designated health care agent.

The Fourth District rejected the plaintiff’s contention that the arbitration agreement was procedurally unconscionable. Observing that nothing about the transaction involving the arbitration agreement suggested coercion or deception, the Fourth District found no procedural unconscionability. The arbitration provisions were explicitly set fourth in a separate document, not hidden in fine print or set forth in technical jargon or legalese. Given that the plaintiff and the decedent’s son both testified that they would have brought their father to a different facility had they known that signing the arbitration agreement was mandatory for admission, the appellate court rejected the plaintiff’s contention that the parties to the agreement had unequal bargaining power.

The Fourth District also held that provisions eliminating jury trials and awarding fees and costs to the prevailing party did not make the arbitration agreement substantively unconscionable. The appellate court noted that, inherent in arbitration is a waiver of the right to trial by jury, and, further, the provision requiring a bench trial in the event of in-court litigation was explicit and plainly worded; therefore, neither provision was substantively unconscionable. Finally, the Fourth District held that the provision awarding fees and costs to the prevailing party was not so one-sided to be oppressive. Because nothing in the arbitration agreement made it more likely that one party would prevail over the other, the Fourth District concluded that each party shouldered the same risk under the agreement.