Mulligan v. Loft Rehab. & Nursing of Canton

236 N.E.3d 1084

2023 IL App (4th) 230187

Sandy MULLIGAN, Plaintiff-Appellee,

v.The LOFT REHABILITATION AND NURSING OF CANTON, LLC, d/b/a Loft Rehabilitation & Nursing of Canton, Defendant-Appellant.

NO. 4-23-0187

Appellate Court of Illinois, Fourth District.

Filed August 15, 2023

Appeal from the Circuit Court of Fulton County, No. 21LL04, Honorable Thomas B. Ewing, Judge Presiding.

Donna J. Fudge, of Fudge Broadwater, P.A., of St. Petersburg, Florida, for appellant.

Patricia L. Gifford and William Steinman, of Law Offices of Steven J. Malman & Associates P.C., of Champaign, and Leslie J. Rosen, of Leslie J. Rosen Attorney at Law, P.C., of Chicago, for appellee.

OPINION

JUSTICE TURNER delivered the judgment of the court, with opinion.

¶ 1 On September 9, 2020, plaintiff, Sandy Mulligan, was admitted to a long-term care nursing care facility owned by defendant, the Loft Rehabilitation and Nursing of Canton, LLC (Loft). That same day, plaintiff fell and sustained injuries, including a hip fracture, which required hospitalization. Upon her admission to the Loft, plaintiff had executed the admissions paperwork, including a contract between her and the facility (Contract). The executed paperwork also included an arbitration and limitation of liability rider to the Contract (Arbitration Rider). In April 2021, plaintiff filed a complaint against the Loft for the injuries she suffered while under the Loft’s care. In June 2022, the Loft filed a motion to stay and compel arbitration pursuant to the terms of the Arbitration Rider. After an August 2022 hearing, the Fulton County circuit court entered a written order granting the Loft's motion to compel arbitration. Plaintiff filed a motion to reconsider asserting the Arbitration Rider was substantively unconscionable. On February 3, 2023, the court entered a written order agreeing with plaintiff, granting her motion to reconsider, and denying the Loft's motion to compel arbitration.

¶ 2 Pursuant to Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017), the Loft appeals the circuit court’s February 3, 2023, order granting plaintiff's motion to reconsider and denying its motion to compel arbitration. The Loft contends the court erred by (1) failing to enforce the delegation clause of the Arbitration Rider and, in the alternative, (2) finding the Arbitration Rider was substantively uncon- scionable. We reverse and remand with directions.

¶ 3 I. BACKGROUND

¶ 4 Since 2018, the Loft’s admission paperwork was electronic, and residents who completed the paperwork themselves did so on an iPad. Plaintiff had completed her own admissions paperwork. The appellate record contains both a printed version of the Arbitration Rider and a version that is a printout of screenshots from an iPad. The two versions are similar but not identical. The differences in the two versions are noted when necessary for the disposition of this case.

¶ 5 The Arbitration Rider referred to the Contract as the "Agreement" and the Arbitration Rider as the "Rider." The screenshot of the Arbitration Rider shows plaintiff could accept or decline it. On the printout version, plaintiff’s signature is affixed to the Arbitration Rider. Paragraph two of the Arbitration Rider expressly provided the resident and the facility shall submit to arbitration the following disputes:

"(a) all claims or controversies arising out of or in any way relating to the Agreement***;

(b) the Resident's stay at the Facility

***;

(c) the services rendered for any condition, and any dispute arising out of the diagnosis, treatment, or care of the Resident;

(d) disputes involving amounts in controversy greater than $150,000; or

(e) disputes regarding interpretation of this Rider[.]"

Moreover, the Arbitration Rider stated it would be governed by and interpreted under the United States Arbitration Act (9 U.S.C. § 1 et. seq. (2018)). As to fees and costs, the Arbitration Rider provided the following:

"7. Facility will be responsible for payment of the arbitrator’s fees and costs associated with the arbitration.

8. Facility will pay up to $5,000 of the Resident’s attorneys’ fees and/or costs associated with the arbitration.

9. Facility will bear its own attorneys’ fees and costs associated with the arbitration."

Additionally, if arbitration is not allowed by law and the dispute is brought in court, the Arbitration Rider provided, "Facility will be responsible for the Resident and/or Responsible Party’s court costs and up to $5,000 of the Resident and/or Responsible Party’s attorneys’ fees. Facility will bear its own costs and attorneys’ fees." Last, the Arbitration Rider had a severability clause, which stated the following: "In the event a court having jurisdiction finds any portion of this Rider unenforceable, that portion shall not be effective and the remainder of the Rider shall remain effective."

¶ 6 In April 2021, plaintiff filed a complaint against the Loft seeking to recover damages for her alleged injuries from the fall and asserting the Loft breached its duty of care in 18 different ways, including violating federal regulations and the Nursing Home Care Act (Care Act) (210 ILCS 45/1-101 et seq. (West 2020)).

¶ 7 in June 2022, the Loft filed a motion to stay and compel arbitration pursuant to the terms of the Arbitration Rider. The Loft attached a copy of the printed Contract and the Arbitration Rider. It also included a supporting affidavit by Tim Wiley, the Loft’s regional director of operations. With the motion, the Loft also filed a supporting memorandum.

¶ 8 The deposition of Mary Andrews, the Loft’s social services director, was taken on August 31, 2021. Andrews’s relevant testimony is discussed in the analysis section.

¶ 9 Plaintiff filed a response to the Loft’s motion to compel arbitration asserting the motion should be denied because (1) the Loft violated federal nursing home regulations (42 C.F.R. § 483.70(n) (2019)), (2) plaintiff lacked the mental capacity to sign the Arbitration Rider, (3) the Arbitration Rider is procedurally unconscionable, and (4) the Arbitration Rider is substantively unconscionable. Plaintiff attached her own affidavit noting the prescribed medication she had taken the morning of September 9, 2020. She also attached the transcript of Andrews’s deposition and the affidavit of Dr. David Seignious, who averred it was unlikely plaintiff had sufficient ability or capacity to understand and agree to the Contract and Arbitration Rider.

¶ 10 The Loft filed a reply, which attached, inter alia, the affidavit of Dr. Steven Selznick. Based on his review of the materials provided, Dr. Selznick opined to a reasonable degree of medical probability plaintiff was not mentally incapacitated. He stated she had the mental capacity to understand the admissions process; understand the terms of the consents, authorizations, and agreements presented to her; and enter into contracts on her own behalf on September 9, 2020. The Loft also attached to the reply screenshots of the admission documents from an iPad.

¶ 11 On August 4, 2022, the circuit court held a hearing on the Loft’s motion to compel arbitration. On September 7, 2022, the court entered its written order granting the Loft’s motion to stay and compel arbitration. The court found plaintiff failed to demonstrate her mental incapacity, compliance with the federal regulations did not determine whether the Arbitration Rider was enforceable or not, and the unconscionability claims should be determined by the arbitrator pursuant to the Arbitration Rider’s delegation clause.

¶ 12 On October 3, 2022, plaintiff filed a motion to reconsider, citing Calusinski v. Alden-Poplar Creek Rehabilitation & Health Care Center, Inc., 2022 IL App (1st) 220508, ¶¶ 10, 16, — Ill.Dec. —, — N.E.3d —, in which the reviewing court found the arbitration agreement was substantively unconscionable and thus unenforceable because it waived the plaintiffs right to attorney fees under the Care Act without adequate consideration from the nursing home defendants. The Loft filed a response, distinguishing the agreement in Calusinski and attaching the arbitration agreement that was at issue in Carter v. SSC Odin Operating Co., 2012 IL 113204, ¶ 27, 364 Ill.Dec. 66, 976 N.E.2d 344, where the supreme court concluded the nursing home resident’s promise to arbitrate, even if not met with a reciprocal promise to arbitrate by the defendant, was supported by consideration. Plaintiff filed a reply addressing the caselaw cited by the Loft. Last, the Loft filed as persuasive authority this court’s unpublished decision in Long v. Loft Rehabilitation & Nursing of Canton, LLC, 2022 IL App (4th) 220649-U, 2022 WL 18011945. There, we found defendant could enforce the arbitration agreement and then concluded "all remaining issues relating to the validity, enforceability, and scope of the agreement, including unconscionability, are subject to arbitration" pursuant to the delegation clause. Long, 2022 IL App (4th) 220649-U, ¶¶ 37, 47.

¶ 13 In January 2023, the circuit court held a hearing on plaintiff’s motion to reconsider. On February 3, 2023, the court entered a written order granting plaintiff’s motion to reconsider and denying the Loft’s motion to compel arbitration. The court found the Arbitration Rider was substantively unconscionable. It noted the Arbitration Rider limited the payment of plaintiff’s attorney fees and/or costs to $5000 in contravention of section 3-602 of the Care Act (210 ILCS 45/3-602 (West 2020)). The court further found the Loft’s obligation to pay plaintiff’s attorney fees and/or costs up to $5000 was not sufficient consideration for plaintiff’s waiver of costs and attorney fees because plaintiff could easily incur much more than that amount in attorney fees alone.

¶ 14 As to the other issues, the circuit court found it need not address procedural unconscionability, except to note the following. With its original order, the court had been persuaded by defendant’s argument the presumption of...