May 01, 2009

A Nursing Home Patient Barred from Pursuing Injury Claim Because of Federal Preemption Based on the

May 01, 2009

Fosler vs. Midwest Care Center II, Inc. No. 2-08-1005

Marie Fosler alleged wrongful injuries suffered during her stay at Fair Oaks Long-Term Care Facility. As part of the admission to Fair Oaks, Fosler, through her daughter Janice Saxton, entered into a written agreement which contained a provision stating that any dispute arising from Fosler’s stay, would be resolved through arbitration as governed by the Federal Arbitration Act (FAA).  Fosler argued that the provisions of the Nursing Home Care Act nullified a resident’s waiver of the right to commence such an action in the circuit court and to a trial by jury.  The appellate court agreed with the nursing home that Section 2 of the FAA preempted the provisions of the Nursing Home Care Act.

On the date of admission, Saxton, acting as her mother’s authorized representative, executed the Admission Agreement, which contained the contractual terms for Fosler’s stay.  The Agreement states that “any dispute between you and us and any dispute relating to services rendered for any condition, and any dispute arising out of the diagnosis, treatment, or care of the Resident … shall be resolved by binding arbitration by the National Arbitration Forum under the Code of Procedure then in effect … This agreement shall be governed by and interpreted under the Federal Arbitration Act.”  The arbitration section also states in bold text that a “Resident understands that the result of this arbitration agreement is that claims, including malpractice claims that Resident may have against the facility or its employees, cannot be brought as a lawsuit in court before a judge or jury, and agrees that all such claims will be resolved as described in this section.”  Fosler contended that the Nursing Home Care Act nullified the arbitration provisions of the admission agreement, in which she purportedly waived her right to institute an action in circuit court and to have her claims heard by a jury.  The defendant noted that in 1925, Congress enacted the FAA “to reverse the long-standing judicial hostility under arbitration agreements that had existed at English common law and had been adopted by American courts … and to place arbitration agreements upon the same footing as other contracts.  The court noted that by enacting Section 2 “Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.”

In conclusion, the court stated:

We hold that plaintiff’s claims are subject to arbitration under the FAA.  The Supreme Court has declared “only two limitations on the enforceability of arbitration provisions governed by the Federal Arbitration Act:  they must be part of a written maritime contract or a contract ‘evidencing a transaction involving commerce’ and such clauses may be revoked upon ‘grounds as exist at law or in equity for the revocation of any contract.’  We see nothing in the Act indicating that the broad principle of enforceability is subject to any additional limitations under State law.”  First, plaintiff has forfeited the issue of whether the nursing home admission agreement is a contract evidencing a transaction involving commerce.  Second, we hold that the judicial forum provisions of sections 3–606 and 3–607 of the Nursing Home Care Act are not grounds as exist at law or in equity for the revocation of any contract.  For these reasons, the order of the circuit court of Winnebago County is reversed and the cause is remanded for proceedings consistent with this opinion.

Editor’s Note:

This appellate court decision will undoubtedly be appealed to the state supreme court.  In addition, the impact of this case may be eliminated by recent congressional legislation purporting to eliminate the right of the federal judiciary from preempting state statutes.  But, for the moment, the federal statute prohibits the patient from proceeding with a malpractice claim against the nursing home based on the arbitration agreement, which purports to resolve all disputes between the parties.

Fosler v. Midwest Care Center II, Inc., et alNo. 2-08-1005, decided May 8, 2009

Frank J. Wiedner, Editor Wiedner & McAuliffe, Ltd One North Franklin, 19th Floor Chicago, IL 60606 (312) 855-1105