BlogLine

Termination on death clause dooms attempt to use arbitration agreement in Illinois nursing home contract

10/11/23

By: Donald Patrick Eckler and Adelaide Bell

Does a death on termination clause in a nursing home contract terminate the entirety of the contract, including the arbitration agreement? Resolving a conflict between the districts of the Illinois Appellate Court, the Illinois Supreme Court in Clanton v. Oakbrook Healthcare Centre, Ltd., 2023 IL 129067 applied the principles of contract interpretation and their impact on arbitration agreements for a Survival Act claim.  

Nancy Clanton (“Plaintiff”), acting as the independent administrator of the estate of the deceased, Laurel Jansen (“Jansen”), brought suit against Oakbrook Healthcare Centre, Ltd. and May Flor Andora, R.N. (collectively “Defendants”), alleging negligence that led to Jansen’s death while in their nursing facility’s care. The Defendants demanded arbitration based on a contract signed upon Jansen’s admission to the facility by Jansen’s power of attorney (“POA”) for healthcare. The contract included a dispute resolution provision mandating mediation and binding arbitration for civil claims arising from the agreement. The contract stated that it terminated upon the resident’s death.  

Plaintiff’s complaint included various claims brought under the Survival Act, while others were brought under the Wrongful Death Act. Plaintiff argued that the entire contract, including the arbitration clause, terminated upon Jansen’s death, rendering arbitration unavailable. Defendants relied on the Supreme Court’s decision in Carter v. SSC Odin Operating Co., 2012 IL 113204, which held claims brought under the Survival Act are “always assets of the decedent’s estate that accrue prior to death and are subject to arbitration clauses at the time the actions giving rise to the claims occurred.” The court agreed with Plaintiff that Carter was improper because it did not involve a termination-on-death clause.  

Defendants also relied on Mason v. St. Vincent’s Home, Inc., 2022 IL App (4th) 210458, where, among other things, the court held that all claims brought under the Survival Act after the decedent’s death were subject to arbitration despite a termination on death clause. The Mason court concluded that, even with the termination on death clause, the arbitration clause was valid when the cause of action accrued. The Supreme Court affirmed the appellate court and overruled this portion of the decision in Mason, reasoning that Mason was flawed because it added language that was not part of the agreement, particularly an exception not contained in the termination-on-death clause. Thus, the Court concluded that whether Defendants had the right to arbitrate any claims under the admission contract was a matter of contract interpretation.  

The Court held that under the plain language of the contract, the parties contracted to use arbitration as the forum but only until the resident’s death. The Court affirmed the trial court’s decision that according to the express terms of the contract, the contract ceased to exist upon a resident’s death and overruled Mason only to the extent that it contradicted this holding. Thus, the arbitration clause was deemed unenforceable after Jansen’s death. The court dismissed the Defendants’ argument that the contract remained intact, noting that making such a conclusion would “require the court to read limitations or exceptions into the contract.” 

The Supreme Court of Illinois upheld the appellate court’s judgment affirming the denial of the Defendants’ motion to compel arbitration. The court emphasized that Defendants, as drafters of the contract, could have included language to preserve the arbitration provision, but they did not.  

The Illinois Supreme Court’s ruling continues the narrowing of the use of arbitration clauses in nursing home contracts since the approval of them in Carter. More generally, the decision also highlights the importance of clear and unambiguous contract language, particularly in the context of arbitration agreements and the need for parties drafting contracts to be precise in their language because they will be interpreted according to their plain and unambiguous language.  

For more information, please contact Donald Patrick Eckler at patrick.eckler@fmglaw.com or your local FMG attorney.