The right to argue whether a claim is subject to arbitration is waived if the party does not object in a timely manner.

Author:Carpenter, Yulee


Prepared by students of the University of Illinois College of Law

First Health Group Corp v Ruddick, No 1-08-3236; 2009 WL 1940702 (1st Dist)

On July 6, 2009, the Illinois Appellate Court, First District, affirmed the judgment of the Circuit Court of Cook County, confirming the arbitration award for the defendant and dismissing the plaintiff's motion to vacate the award. Defendant was a retired health insurance executive who provided consulting services to plaintiff First Health Group Corporation, a health benefits company. After the plaintiff sent the defendant a termination letter, the defendant filed a demand for arbitration with the American Arbitration Association as required by their agreement. After a two-day hearing, the arbitrator ruled in the defendant's favor. The plaintiff moved to vacate the arbitration award, but the Circuit Court of Cook County denied the plaintiff's motion and confirmed the award to the defendant.

From 2000 to 2003, the plaintiff paid the defendant for his consulting services without a written agreement. Later, concerned about his health and wanting to protect his wife in case of his death, the defendant sought a written agreement with the plaintiff. The written agreement was executed in February 2004. Paragraph 7A in the agreement stated that the 2004 written agreement would automatically terminate on December 31, 2010. The agreement contained two paragraphs, both named "7B." The first 7B paragraph was entitled "Termination in the Event of the Death" and provided that the plaintiff would pay the defendant's spouse in case of the defendant's death. The second 7B paragraph stated: "If either Party materially fails to perform any of its duties or obligations under this Agreement ('Default') and Default is not cured within (30) days after written notice is given to the Defaulting Party specifying the Default, the Party not in Default may terminate this Agreement by giving written notice to the Defaulting Party." A 7C paragraph also entitled "Termination" stated: "Either party may terminate this Agreement at any time upon (30) days prior written notice."

When the plaintiff was acquired by another company, the plaintiff sought to terminate the 2004 agreement upon 30-day notice by sending a termination letter to the defendant pursuant to paragraph 7C in the agreement. In April 2006, the defendant filed an arbitration demand since the 2004 agreement required any claim to be settled by arbitration. The...

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