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                                                            Federal Arbitration Act loses
                          John Durso, Esq.
                          Ungaretti & Harris LLP
                                                            strength under federal ruling
                                                            By Brett Bakshis                                                                            tration Act should overrule any
        What will be the impact of the                      By refusing to review an                                                                    state law governing arbitration
        federal “Red Flags Rules” on                        Illinois appellate court rul-                                                               agreements, especially in light
        long-term care facilities?                          ing, the U.S. Supreme Court                                                                 of the fact that the NHCA
                                                            has tacitly agreed that a state                                                             applies to nursing home con-
        To combat identity theft, the Federal               law nullifying nursing home                                                                 tracts in a broad and more
        Trade Commission has implemented                    arbitration agreements super-                                                               generalized way, rather than
        the “Red Flags Rules.” These rules                  sedes the Federal Arbitration                                                               specifically singling out arbitra-




                                                                                                                                   Photo: iStockphoto
        require certain covered entities to                 Act, which favors arbitration                                                               tion agreements. The Appellate
        create a program to defend against                  agreements.                                                                                 Court of Illinois, however, shot
        potential identity theft.                              In the case of SSC Odin                                                                  down that argument in April
           The Red Flags Rules apply to a credi-            Operating Co. v. Carter, Sue       The Supreme Court let stand a                            2008, saying instead that it is
        tor’s covered accounts. The FTC uses                Carter originally sued SSC         state law that nullifies arbitra-                         because the NHCA applies so
                                                                                               tion agreements.
        a broad definition of creditor, which                Odin Operating Co. over the                                                                 generally to all nursing home
        includes any party that allows the right            alleged wrongful death of                                                                   contracts that it can be applied
        to purchase services and defer pay-                 Joyce Gott, a former resident      provisions apply to all con-                             in this case.
        ment for those services. All long-term              of Odin Healthcare Center          tracts involving nursing home                                The Illinois Supreme Court
        care facilities that use deferred pay-              in Odin, IL. According to a        residents, not just arbitration                          refused to review the decision
        ment or billing systems are considered              state appellate court ruling,      clauses. Therefore, they can                             in October of last year. With
        creditors. Covered accounts include                 two provisions of the Illinois     be applied to the arbitration                            its June 1 rejection of the case,
        any account either designed to permit               Nursing Home Care Act pro-         agreement signed by Gott,                                the U.S. Supreme Court has let
        multiple payments or where there is a               hibit the facility from enforc-    the Appellate Court of Illinois                          the lower court’s ruling stand,
        reasonably foreseeable risk of identity             ing an arbitration agreement       ruled, according to a Bureau                             thereby setting a precedent
        theft to the customer. Any resident                 signed by Gott at the time of      of National Affairs report.                              under which other states’ laws
        billing account will constitute a covered           her admission.              
				
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