Estate of Castro, In re

• Decision Date: 10 July 1997
• Docket Number: No. 2-96-1235,2-96-1235
• Citation: 225 Ill.Dec. 592,289 Ill.App.3d 1071,683 N.E.2d 1255
• Parties: , 225 Ill.Dec. 592 In re ESTATE OF Lena CASTRO, Deceased (The Department of Public Aid, Petitioner-Appellant, v. David Castro, Adm'r of the Estate of Lena Castro, Deceased, Respondent-Appellee).
• Court: United States Appellate Court of Illinois

Page 1255

683 N.E.2d 1255

289 Ill.App.3d 1071, 225 Ill.Dec. 592

In re ESTATE OF Lena CASTRO, Deceased (The Department of Public Aid, Petitioner-Appellant, v. David Castro Adm'r of the Estate of Lena Castro Deceased, Respondent-Appellee).

No. 2-96-1235.

Appellate Court of Illinois Second District.

July 10, 1997.

James E. Ryan, Attorney General, Chicago, Janella L. Barbrow, Schmidt & Barbrow, Wheaton, for Department of Public Aid.

Robert F. Stringini, Law Offices of Robert F. Stringini, Ltd., Addison, Anthony J. Trotto, Addison, for Estate of Lena Castro.

Justice THOMAS delivered the opinion of the court:

The petitioner, the Illinois Department of Public Aid (the Department), filed this claim against the estate of Lena Castro (the estate) to recover for medical benefits paid for by the Department while the decedent resided in a nursing home. The trial court denied the claim, finding that settlement proceeds paid by the nursing home to the estate in connection with an injury sustained by the decedent in the nursing home were exempt under section 3-605 of the Nursing Home Care Act (Act) (210 ILCS 45/3-605 (West 1994)). The trial court further found that the Department's claim was barred because it had accepted full settlement of all claims. The Department appeals.

The record reveals that Lena Castro was born on November 17, 1909, and died on April 5, 1994, at the age of 84. During the six years prior to her death, the decedent was an inpatient in a nursing home. During that time, the Department made direct medical payments of $105,273 for her care. Following Lena's death, her estate received funds from the nursing home where Lena was a resident as settlement for an injury that she sustained in the nursing home.

On July 28, 1994, the Department wrote a letter to the attorney for the estate advising him that the Department had paid $208.68 of "medical and/or financial assistance" on the decedent's behalf "from August 10, 1993 through August 10, 1993." The letter further advised that because of payment delays with the State of Illinois, the amount listed might not be the total amount expended on behalf of the client and that the attorney should contact the Department at the time of settlement for an updated amount.

On October 21, 1994, the attorney for the estate sent the Department a letter with a check enclosed in the amount of $208.68. The check did not contain a restrictive endorsement, but the accompanying letter referenced the Department's case number and stated that the check was being tendered in "full and final payment of the lien from Medicaid in this matter."

On October 19, 1994, the estate was opened and Lena's son, David Castro, was named independent administrator. On December 16, 1994, the Department filed a claim against the estate for $105,273.02 for medical payments made for the benefit of Lena. By agreement of the parties, the claim of the Department was allowed as a sixth-class claim. Thereafter, the case was assigned to a different judge. The estate eventually moved to vacate the order allowing the claim, arguing that it had affirmative defenses to the claim and that it had mistakenly thought the previous order meant the claim could be filed, not that it was allowed. The estate's motion to vacate was granted.

Following a hearing on the validity of the Department's claim, the trial court disallowed the claim. In so doing, the court found that (1) the "proceeds/damages received by the estate are exempt" under section 3-605 of the Nursing Home Care Act; and (2) the Department had accepted $208.68 in full settlement of all claims.

On appeal, the Department first argues that the exemption in section 3-605 of the Act does not apply.

Section 3-605 of the Act provides:

"The amount of damages recovered by a resident in an action brought under Sections 3-601 through 3-607 shall be exempt for purposes of determining initial or continuing eligibility for medical assistance * * * and shall neither be taken into consideration nor required to be applied toward the payment or partial payment of the cost of medical care or services available under 'The Illinois Public Aid Code'." 210 ILCS 45/3-605 (West 1994).

The Department contends that the above-quoted exemption does not apply because (1) damages were not recovered by a "resident," in particular the decedent, but rather by her estate, since she was deceased at the time of settlement; and (2) no "action" was ever brought under the Nursing Home Care Act.

The cardinal rule of statutory construction, to which all other canons and rules are subordinate, is to ascertain and give effect to the true intent and meaning of the legislature. Hernon v. E.W. Corrigan Construction Co., 149 Ill.2d 190, 194, 172 Ill.Dec. 200, 595 N.E.2d 561 (1992). In determining legislative intent, courts should consider first the statutory language. Hernon, 149 Ill.2d at 194, 172 Ill.Dec. 200, 595 N.E.2d 561. It is of course true that the words used in a statute should be given their plain and commonly accepted meaning but where the spirit and intent of the General Assembly in enacting a statutory provision are clearly expressed and its objects and purposes are clearly set forth, courts are not bound by the literal language of a particular clause which would defeat the obvious intent of the legislature. People v. McCoy, 63 Ill.2d 40, 45, 344 N.E.2d 436 (1976). In construing a statute, courts will presume the legislature did not intend an absurdity, inconvenience, or injustice. Menoski v. Shih, 242 Ill.App.3d 117, 122, 183 Ill.Dec. 907, 612 N.E.2d 834 (1993).

Applying the above-mentioned principles, we find that the trial court properly found that the settlement proceeds paid to the estate were exempt from the Department's claim against the estate. To allow an exemption for settlement funds paid to a nursing home resident only if she survives the date of settlement would be an unjust if not an absurd result. We find that the legislature clearly intended for the exemption to apply in situations such as the present one where the resident does not survive the date of the settlement and the proceeds are paid to the estate. The Department argues that the heirs of the estate should not enjoy the benefit of not having to make medical payments on behalf of the decedent and also keep settlement proceeds exempt from the Department's claim. The Department's argument ignores the fact that the same argument could be made that the recipient of aid should reimburse the Department. However, the legislature has determined that such funds are exempt. The result urged by the Department would defeat the purpose of the Nursing Home Care Act because elderly residents might forego vindicating their claims if the Department could apply funds obtained from a settlement which ended up in their estates following their deaths.

Likewise, we find that the statute does not require the formality of the filing of a lawsuit. As the trial court noted, it would be "extremely perfunctory" to require the filing of a lawsuit to take advantage of the exemption as opposed to settling the claim. We find that such a result would be unjust and would violate the public policy of this state favoring the peaceful out-of-court compromise and settlement of claims. See Bowers v. Murphy & Miller, Inc., 272 Ill.App.3d 606, 609, 208 Ill.Dec. 914, 650 N.E.2d 608 (1995).

The Department contends that the record does not indicate that any claim the decedent might have had against the nursing home could have been brought under the Nursing Home Care Act. We disagree.

The Department essentially conceded at the hearing that the decedent was injured in a nursing home, that the nursing home paid a settlement for those injuries, and that the decedent could have recovered under a common-law negligence theory. Sections 3-601 and 3-602 of the Act provide that a nursing home is liable to a resident to pay triple damages for any negligent act or omission of its agents or employees that injures the resident. 210 ILCS 45/3-601, 3-602 (West 1994). Given that a claim can be brought under the Act for injuries negligently caused by a nursing home, we find no merit to the Department's argument.

The petitioner next argues that, assuming arguendo the exemption applies, the trial court erred in disallowing the Department's claim because section 3-605 provides only that the proceeds from the settlement cannot be applied to the Department's claim, not that the Department cannot make a claim. In other words, the Department argues, it should be allowed to assert its claim against the estate if there are any other assets in the estate aside from the settlement proceeds.

Section 5-13 of the Illinois Public Aid Code provides in relevant part that the amount expended by the Department for medical assistance to a person who is an inpatient in a nursing facility shall be a claim against the estate. 305 ILCS 5/5-13 (West 1994). The term "estate" means all real and personal property and other assets included within a...