Legal Decision Protects Assets of Extended Care Facilities
01-01-2001
A recent Illinois Appellate Court decision in the case of Antler v. Classic Residence Management Limited Partnership, Illinois Appellate Court, First District. 315 Ill.App.3d 259, 733 N.E.2d 393, 247 Ill.Dec. 929 (2000), upheld a Circuit Court of Cook County ruling that protects "extended care facilities" from liability for interest on building entrance fees. In an opinion by Judge Francis Barth, the Appellate Court held that Classic Residence Management Limited Partnership ("Classic Residence"), an affiliate of Hyatt Corporation, and the other named defendants, were released from the provisions of the Chicago Residential Landlord Tenant Ordinance (RLTO) because the property in dispute was an exempted "extended care facility."
The Chicago-based law firm of Novack and Macey successfully represented Classic Residence and its general partner in the lower court and appellate cases.
"This decision will protect the assets of 'life care facilities' throughout the country that operate in cities where a similar Residential Landlord Tenant Ordinance is in effect," said partner Eric Macey, who represented Classic Residence along with partner Michael Weinberg. This is the first case in Illinois to challenge whether a "life care facility" is governed by the requirement of the RLTO.
In May of 1998, the plaintiff, an elderly woman who resided at the Hallmark, a 340-unit facility, filed a class action complaint against the defendants who at one time either owned, operated and managed the facility since 1990. The plaintiff alleged that the defendants violated the Chicago Residential Landlord Tenant Ordinance (RLTO) and the Illinois Consumer Fraud and Deceptive Business Practices Act by refusing to pay her hundreds of dollars in interest on her building "entrance fee" and by failing to attach a summary of the RLTO to her residency agreement.
The allegations relied upon the assumption that Hallmark residents were protected by the RLTO, that its operators and owners were thereby "landlords", and that residents' entrance fees qualified as "security deposits," for which residents were entitled to interest. The initial case was dismissed, which led to an appeal.
In presenting their defense, the defendants argued that the RLTO is not applicable to the plaintiff's entrance fee because the Hallmark is an "extended care facility" as defined by the RLTO and the residency agreement is a "life care contract" as opposed to a "rental agreement," and, thus, exempt from its provisions.
The allegations presented by the plaintiff could have impacted the life care industry. Because the term "life care facility" used by Hallmark is not specifically defined within the RLTO, the defendants were challenged to prove how the facility differs from a normal apartment complex. The Hallmark, like many other senior living facilities, provides its residents with a wide variety of special services, including escort services, medication reminder services, assistance with bathing and dressing and on-site medical consultation in addition to the regular laundry, meal, housekeeping, scheduled transportation and in-unit emergency response services automatically available to residents. As a facility operating under the Life Care Facilities Act, the Hallmark is responsible for assuring that residents' care requirements are ultimately met, either within or outside of the facility. Therefore, Hallmark residents received priority status in a nearby long term care facility. According to the Appellate Court, all of these services differentiate the "extended care" residency agreement from a traditional landlord-tenant agreement.
The life care and extended care industry is highly regulated throughout the country, a standard that comforts most Americans. According to Macey, "The constant barrage of allegation and suspicion with which most extended care facilities are met may actually hinder the caregiving process. Although the American public is quick to step forward in the defense of the elderly, it is equally important to protect the institutions that care for them."
Founded in 1984, Novack and Macey is a litigation firm that concentrates on complex commercial cases. The firm has successfully represented clients in a wide variety of business disputes, including matters involving banking, contracts, class actions, RICO, securities, real estate, partnerships and close corporations, antitrust, insurance coverage, environmental matters, business torts and employment-related issues. Novack and Macey attorneys have honed their skills in court rooms, mediations and arbitrations nationwide. Clients include corporations, institutions, investment ventures, partnerships and individuals, as well as the United States Government. For further information about Antler v. Classic Residence Management Limited Partnership, Illinois Appellate Court, First District. 315 Ill.App.3d 259, 733 N.E.2d 393, 247 Ill.Dec. 929 (2000), please contact Eric Macey, Esq., at 312-419-6900.
The Chicago-based law firm of Novack and Macey successfully represented Classic Residence and its general partner in the lower court and appellate cases.
"This decision will protect the assets of 'life care facilities' throughout the country that operate in cities where a similar Residential Landlord Tenant Ordinance is in effect," said partner Eric Macey, who represented Classic Residence along with partner Michael Weinberg. This is the first case in Illinois to challenge whether a "life care facility" is governed by the requirement of the RLTO.
In May of 1998, the plaintiff, an elderly woman who resided at the Hallmark, a 340-unit facility, filed a class action complaint against the defendants who at one time either owned, operated and managed the facility since 1990. The plaintiff alleged that the defendants violated the Chicago Residential Landlord Tenant Ordinance (RLTO) and the Illinois Consumer Fraud and Deceptive Business Practices Act by refusing to pay her hundreds of dollars in interest on her building "entrance fee" and by failing to attach a summary of the RLTO to her residency agreement.
The allegations relied upon the assumption that Hallmark residents were protected by the RLTO, that its operators and owners were thereby "landlords", and that residents' entrance fees qualified as "security deposits," for which residents were entitled to interest. The initial case was dismissed, which led to an appeal.
In presenting their defense, the defendants argued that the RLTO is not applicable to the plaintiff's entrance fee because the Hallmark is an "extended care facility" as defined by the RLTO and the residency agreement is a "life care contract" as opposed to a "rental agreement," and, thus, exempt from its provisions.
The allegations presented by the plaintiff could have impacted the life care industry. Because the term "life care facility" used by Hallmark is not specifically defined within the RLTO, the defendants were challenged to prove how the facility differs from a normal apartment complex. The Hallmark, like many other senior living facilities, provides its residents with a wide variety of special services, including escort services, medication reminder services, assistance with bathing and dressing and on-site medical consultation in addition to the regular laundry, meal, housekeeping, scheduled transportation and in-unit emergency response services automatically available to residents. As a facility operating under the Life Care Facilities Act, the Hallmark is responsible for assuring that residents' care requirements are ultimately met, either within or outside of the facility. Therefore, Hallmark residents received priority status in a nearby long term care facility. According to the Appellate Court, all of these services differentiate the "extended care" residency agreement from a traditional landlord-tenant agreement.
The life care and extended care industry is highly regulated throughout the country, a standard that comforts most Americans. According to Macey, "The constant barrage of allegation and suspicion with which most extended care facilities are met may actually hinder the caregiving process. Although the American public is quick to step forward in the defense of the elderly, it is equally important to protect the institutions that care for them."
Founded in 1984, Novack and Macey is a litigation firm that concentrates on complex commercial cases. The firm has successfully represented clients in a wide variety of business disputes, including matters involving banking, contracts, class actions, RICO, securities, real estate, partnerships and close corporations, antitrust, insurance coverage, environmental matters, business torts and employment-related issues. Novack and Macey attorneys have honed their skills in court rooms, mediations and arbitrations nationwide. Clients include corporations, institutions, investment ventures, partnerships and individuals, as well as the United States Government. For further information about Antler v. Classic Residence Management Limited Partnership, Illinois Appellate Court, First District. 315 Ill.App.3d 259, 733 N.E.2d 393, 247 Ill.Dec. 929 (2000), please contact Eric Macey, Esq., at 312-419-6900.