Illinois Supreme Court Determines Termination on Death Clause Voids Long-Term Care Arbitration Agreement

Long Term Facilities in Illinois should review their arbitration agreements if they want personal injury claims to be resolved through arbitration. The Illinois Supreme Court has determined that an overly broad termination-on-death clause can prevent all claims, including those that survive a decedent’s death, from being decided in arbitration. Clanton v. Oakbrook Healthcare Centre, Ltd., 2023 IL 129067.

Case Facts

In Clanton, plaintiff, Nancy Clanton, as the independent administrator of the Estate of the Decedent, Laurel Jansen, brought a claim of negligence-wrongful death against multiple defendants associated with care provided in a long-term care facility. Defendants filed a motion to compel arbitration, which would have stayed the civil suit and sent the entire case to arbitration. The trial court denied defendants’ motion to compel arbitration, and the Illinois Supreme Court affirmed this decision.

It was undisputed that Jansen, acting through her power of attorney, signed a contract with the long-term care facility. That contract forced arbitration to resolve any civil claim arising out of the services provided by the facility. The contract also included a termination clause, which noted the contract is terminated, “[i]mmediately upon the resident’s death.”

According to plaintiff’s complaint, Jansen suffered falls while a resident at Oak Brook, which led to her death. Plaintiff alleged four counts of negligence against the facility, (1) a violation of the Nursing Home Care Act (210 ILCS 45/1-101 et seq. (West 2018), (2) a common-law negligence claim, (3) a wrongful death claim, and (4) a res ipsa loquitur claim. All these claims, aside from the wrongful death claim, were brought through the Survival Act (755 ILCS 5/27-6 (West 2018)), while the wrongful death claim was brought through the Wrongful Death Act (740 ILCS 180/0.01 et seq. (West 2018)). The Survival Act allows a representative of the decedent to maintain any statutory or common law actions that accrued before decedent’s death. Wrongful death actions do not accrue until the death of an individual.

Oak Brook, along with the other defendants, filed a motion to compel arbitration of all claims brought through the Survival Act and to stay the wrongful death claim. In response, plaintiff argued defendants, including Oak Brook, waived their right to arbitrate by litigating for nearly a year, that the arbitration clause was procedurally and substantively unconscionable, and that the POA lacked the authority to execute an arbitration clause on decedent’s behalf. The trial court concluded that the defendants did not waive their right to arbitrate, nor was the contract procedurally unconscionable, as the POA could sign the arbitration agreement. However, the trial court concluded that the contract was substantively unconscionable because it waived plaintiff’s entitlement to punitive or treble damages. The trial court declined to sever the limitation on damages from the rest of the contract and determined that the entire dispute resolution provision was unconscionable.

Defendants appealed this decision, arguing that the trial court erred in its decision, and alternatively argued it erred in not severing that portion it found unconscionable. In response, plaintiff reasserted its arguments from the trial court but added the argument that the arbitration clause terminated upon decedent’s death.

Appellate Review

The First District agreed that the defendants did not waive their right to arbitrate but also ruled it was not precluded from reviewing the new issue raised by the parties – Whether the arbitration clause terminated upon decedent’s death. Taking the plain language of the contract, the Appellate Court determined the contract, therefore the arbitration provision, terminated upon decedent’s death. 

Defendants relied on the Fourth District opinion in Mason v. St. Vincent’s Home, Inc., 2022 IL App (4^th) 210458, 459 Ill. Dec. 893. In Mason, the arbitration clause was similar, and the court concluded the arbitration clause was valid because the Survival Act Claims accrued before the decedent’s death, so the arbitration provision was still valid when the cause of action accrued. 

The First District rejected the Mason analysis, citing the plain language of the contract, which stated it terminated upon the resident’s death. There was no exception which stated the Survival Act claims survived the resident’s death.

The Illinois Supreme Court decided to take this issue up for appellate review, as the Fourth and First District Opinions were in conflict. At the Illinois Supreme Court, the plaintiff argued the Mason court was incorrect because it added an exception not contained in the termination-on-death clause. Further, the plaintiff argued that if defendants had intended the arbitration clause to survive the resident’s death, the burden was on them to explicitly state that exception in the resident’s contract.

Defendants argued the arbitration agreement provision was not terminated on death, as the contract specifically provided that “all civil claims arising in any way out of this Agreement,” made it clear the arbitration agreement survived decedent’s death. Defendants argued their obligation to provide personal services to decedent was terminated upon death, but the dispute resolution provision remained. This interpretation was necessary to “harmonize” the entire contract so that the arbitration clause was not in conflict with or neutralized by the termination-on-death clause. 

The Illinois Supreme Court found the contract was unambiguous, as the plain language of the contract compelled arbitration, but only up until the resident’s death. Upon death, the entire contract ceased to exist. The Illinois Supreme Court determined Defendants could have drafted the contract differently, by allowing specific portions to remain in effect after the resident’s death, including the arbitration clause. 

Conclusion