Barry v. St. Mary's Hosp. Decatur

• Decision Date: 13 December 2016
• Docket Number: NO. 4-15-0961,4-15-0961
• Parties: Stephan BARRY, Individually and on Behalf of All Others Similarly Situated, Plaintiff-Appellant, v. ST. MARY'S HOSPITAL DECATUR, an Illinois Not-for-Profit Corporation, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

2016 IL App (4th) 150961

68 N.E.3d 964

Stephan BARRY, Individually and on Behalf of All Others Similarly Situated, Plaintiff-Appellant,

v.ST. MARY'S HOSPITAL DECATUR, an Illinois Not-for-Profit Corporation, Defendant-Appellee.

NO. 4-15-0961

Appellate Court of Illinois, Fourth District.

December 13, 2016

Larry D. Drury (argued), of Larry D. Drury, Ltd., of Chicago, for appellant.

Christopher M. Ellis (argued), Jon D. Robinson, and Shane M. Mendenhall, of Bolen Robinson & Ellis, LLP, of Decatur, for appellee.

OPINION

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

¶ 1 This case arises out of a September 2013 automobile accident involving plaintiff, Stephan A. Barry, and a third-party tortfeasor. Following the accident, Barry received medical treatment from defendant, St. Mary's Hospital Decatur, an Illinois not-for-profit corporation (St. Mary's). Barry has health insurance through his employer from Consociate Health Insurance (Consociate). As part of an agreement with Private Healthcare Systems (PHS), Consociate receives a discount from St. Mary's for the amount of Barry's medical bills. Two of Barry's three medical bills were submitted to Consociate for payment. The third bill was never submitted. While Consociate initially denied payment of the two bills on the grounds the injuries were caused by a third party, it later changed its position and paid those bills at the discounted rate. In the meantime, St. Mary's filed liens against Barry's then yet-to-be-determined personal injury settlement pursuant to the Health Care Services Lien Act (Lien Act) (770 ILCS 23/1 to 999 (West 2012)) for the full, i.e. , nondiscounted, amount of all three bills.

¶ 2 In May 2014, Barry filed a seven-count complaint against St. Mary's arguing, inter alia , the liens against his personal injury settlement were improper where St. Mary's was obligated to bill his health insurance company. Following a motion by St. Mary's, the trial court dismissed Barry's complaint with prejudice pursuant to section 2-615 of the Code of Civil Procedure (Procedure Code) (735 ILCS 5/2-615 (West 2014) ).

¶ 3 Barry appeals, arguing the trial court erred in dismissing his complaint where he sufficiently pleaded valid claims for (1) a violation of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 to 12 (West 2012)), (2) breach of contract, (3) "third-party beneficiary," and (4) unjust enrichment. We affirm.

¶ 4 I. BACKGROUND

¶ 5 On September 5, 2013, Barry sought treatment at St. Mary's for injuries sustained in a September 4, 2013, motor vehicle accident with a third party. The treatment resulted in three separate medical bills.

¶ 6 A. The First Bill

¶ 7 On September 16, 2013, St. Mary's sent bill No. I-694329, for $2194, to Consociate pursuant to a Preferred Facility Agreement (Facility Agreement) between St. Mary's and Consociate, which provides for a contractual discount in the amount of Barry's medical bills incurred at St. Mary's. On October 8, 2013, Consociate denied payment of the bill on the basis a third party caused the accident. On November 11, 2013, St. Mary's sent the invoice and a lien notice to State Farm, i.e. , the third-party tortfeasor's insurance company. The lien was for the total amount of services absent any discount. On June 13, 2014, after Barry filed the complaint in this case, Consociate reversed course and paid bill No. I-694329 at the discounted rate of $830.14. The parties agree St. Mary's has yet to release its lien regarding the first bill. As such, a lien for $2194 for bill No. I-694329 remains in place.

¶ 8 B. The Second Bill

¶ 9 On September 19, 2013, St. Mary's submitted a second bill, No. I-695643, for $1179, to Consociate. Consociate denied payment of the second bill on same basis it initially denied the first bill. On January 9, 2014, St. Mary's sent the invoice and corresponding lien to State Farm. The lien was for the total amount of services rendered absent any discount. On June 13, 2014, Consociate reversed its position and paid the discounted rate of $515.49. As with the first bill, St. Mary's has not yet released the lien for the full amount of the second bill.

¶ 10 C. The Third Bill

¶ 11 The third medical bill, No. I-697978, was for $10574 in services provided to Barry from September 13 to December 3, 2013. St. Mary's maintains Barry told it on September 13, 2013, to bill State Farm directly for these services. St. Mary's submitted the bill and a notice of lien to State Farm on October 7, 2013.

¶ 12 D. Barry's Complaint

¶ 13 On May 7, 2014, Barry filed a seven-count complaint on behalf of himself and those similarly situated. (We note St. Mary's in fact submitted two of the three bills to Consociate prior to filing its liens. Accordingly, Barry's claims regarding St. Mary's failure to submit his bills to Consociate pertain only to the third bill, which all agree was never submitted.)

¶ 14 Count I alleged St. Mary's violated the Consumer Fraud Act when it "fraudulently misrepresented, concealed, and/or omitted material facts to and from [Barry] as to the fact [it] would not accept [his] health insurance coverage, and/or would place a medical provider's lien for services rendered with either the patient, the patient's attorney, a third-party tortfeasor[,] or the third-party tortfeasor's liability carrier." According to Barry, his damages included a "loss from settlement of those funds claimed by St. Mary's," as well as "the diminished value of [his] health insurance policies by not receiving the benefit of insurance coverage for which [he] pay[s] a premium."

¶ 15 Count II alleged the consent form Barry signed at the time of treatment, which authorized St. Mary's to bill Consociate, was a contract breached by St. Mary's when it placed a lien on his personal injury settlement instead of billing Consociate.

¶ 16 Count III alleged St. Mary's committed the tort of outrage by failing to bill Consociate.

¶ 17 Count IV alleged St. Mary's has been unjustly enriched by placing liens on Barry's personal injury settlement.

¶ 18 Count V alleged a third-party beneficiary claim. According to Barry, St. Mary's violated its agreement with Consociate by refusing to accept his health insurance and/or by placing liens on his personal injury settlement.

¶ 19 Count VI alleged St. Mary's intentionally interfered with the contractual relationship between Barry and Consociate by refusing to honor Barry's health insurance coverage.

¶ 20 Count VII sought an injunction to restrain St. Mary's from continuing to refuse to accept his health insurance and/or from placing liens on his personal injury settlement.

¶ 21 E. St. Mary's Combined Motion

¶ 22 On July 30, 2014, St. Mary's filed a combined section 2-615 motion to dismiss (735 ILCS 5/2-615 (West 2014) ) and section 2-1005 motion for summary judgment (735 ILCS 5/2-1005 (West 2014) ) pursuant to section 2-619.1 of the Procedure Code (735 ILCS 5/2-619.1 (West 2014) ).

¶ 23 1. St. Mary's Motion To Dismiss

¶ 24 In the section 2-615 portion of its motion, St. Mary's argued Barry's complaint should be dismissed where it failed to state any valid causes of action because, according to Rogalla v. Christie Clinic, P.C. , 341 Ill.App.3d 410, 276 Ill.Dec. 489, 794 N.E.2d 384 (2003), it was entitled to assert a lien against State Farm pursuant to the Lien Act.

¶ 25 In response to St. Mary's motion to dismiss, Barry argued Rogalla was factually distinguishable where differences existed in the terms of the discount contract in that case and the Facility Agreement between PHS and St. Mary's in this case. Barry also argued Rogalla was contrary to two Second District cases (N.C. v. A.W. , 305 Ill.App.3d 773, 239 Ill.Dec. 244, 713 N.E.2d 775 (1999), and Lopez v. Morley , 352 Ill.App.3d 1174, 288 Ill.Dec. 234, 817 N.E.2d 592 (2004) ), as well as a federal district court case (Falls v. Silver Cross Hospital & Medical Centers , No. 13 C 695, 2013 WL 2112188 (N.D. Ill. May, 15, 2013) ).

¶ 26 2. St. Mary's Motion for Summary Judgment

¶ 27 In the summary judgment portion of the motion and supporting memorandum of law, St. Mary's took the position it did not have a contract directly with Consociate. Instead, it maintained it had a Facility Agreement with PHS. Under that agreement, St. Mary's provided billing discounts to those insured through Consociate.

¶ 28 St. Mary's attached a copy of the Facility Agreement to its motion. Section 7.2 of that agreement states, "[Consociate on behalf of PHS] will pay or arrange to pay [St. Mary's] for Covered Care, as full compensation, the Preferred Payment Rate." Section 7.3(b) provides St. Mary's "will not bill or collect from the Covered Individual the difference between the Preferred Payment Rate agreed to in this Agreement and [St. Mary's] regular billing rates." Section 7.5 states, "if [Consociate] is other than primary under the coordination of benefits rules, [St. Mary's] will accept from [Consociate], as payment in full, the amount which when added to amount received by [St. Mary's] from any combination of other sources, equals one hundred percent (100%) of the Preferred Payment Rate." Section 9.5 states, "nothing contained herein will be construed as, or be deemed to create, any rights or remedies in any party other than [St. Mary's or PHS]."

¶ 29 St. Mary's also attached a copy of the consent form Barry signed at the time he sought treatment at St. Mary's. Section III(C) of that form assigns to St. Mary's all of his rights under his health insurance coverage. Section III(D) of that form states, "I understand I am financially responsible for charges not covered in full or in part by [the] Authorizations in Section III(C)."

¶ 30 St. Mary's provided an affidavit from Kathy Carter, the chief financial officer of Barry's employer. Attached to that affidavit was Barry's health insurance plan. According to that plan, Barry's health insurance is intended to be excess coverage in the event Barry is injured by a third-party tortfeasor.

¶ 31 St. Mary's...