Hillenbrand v. Meyer Medical Group, S.C., 1-95-3542

• Decision Date: 23 May 1997
• Docket Number: No. 1-95-3542,1-95-3542
• Citation: 682 N.E.2d 101,224 Ill.Dec. 540,288 Ill.App.3d 871
• Parties: , 224 Ill.Dec. 540 Carmen HILLENBRAND and James G. Uzzell, Plaintiffs-Appellants, v. MEYER MEDICAL GROUP, S.C., and Health Cost Controls of Illinois, Inc., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 101

682 N.E.2d 101

288 Ill.App.3d 871, 224 Ill.Dec. 540

Carmen HILLENBRAND and James G. Uzzell, Plaintiffs-Appellants, v. MEYER MEDICAL GROUP, S.C., and Health Cost Controls of

Illinois, Inc., Defendants-Appellees.

No. 1-95-3542.

Appellate Court of Illinois,

First District, Fifth Division.

May 23, 1997.

Rehearing Denied June 25, 1997.

Edelman & Comb, Chicago (Daniel A. Edelman, James O. Latturner and Tara L. Goodman, of counsel), for Plaintiffs-Appellants.

David A. Belofsky & Associates, Chicago (David Belofsky and Steven R. Shamash, of counsel), for Defendants-Appellees Health Cost Controls of Illinois, Inc.

Winston & Strawn, Chicago (Kimball R. Anderson and E. King Poor, of counsel), for Defendant-Appellee Meyer Medical Group, S.C.

Justice HOFFMAN delivered the opinion of the court:

The plaintiffs, Carmen Hillenbrand and James G. Uzzell, filed this class action against the defendants, Meyer Medical Group, S.C. (Meyer), Health Cost Controls of Illinois, Inc. (HCC), and Chicago HMO, alleging that Meyer and HCC asserted an invalid and unauthorized physician's lien against a third party recovery received by Hillenbrand. Chicago HMO was dismissed from this action and the plaintiffs have not appealed from that order. At the hearing on Meyer and HCC's motions for summary judgment, the trial court concluded that the plaintiffs' action was preempted by federal law and entered judgment in favor of Meyer and HCC. Thereafter, the trial court denied the plaintiffs leave to file an amendment to their complaint. The plaintiffs filed the instant appeal from the summary judgment entered in favor of Meyer and HCC and from the trial court's order denying leave to amend. We reverse and remand.

Hillenbrand, as a federal employee, received comprehensive health care benefits under the Federal Employees Health Benefits Act (FEHBA) (5 U.S.C. sec. 8901 et seq.). Those benefits were administered by the United States Office of Personnel Management (OPM). Pursuant to a contract between OPM and Chicago HMO, Hillenbrand's health care benefits were provided through a Chicago HMO "Prepaid Comprehensive Medical Plan" (Plan). Upon becoming a member of the Plan, Hillenbrand received a brochure from Chicago HMO which contained the following section, entitled "Third Party Actions":

"If a covered person is injured through the act or omission of another, the Plan [Chicago HMO] requires that it be reimbursed for the benefits provided, in an amount not to exceed the amount of the recovery, or that it be subrogated to the person's rights to the extent of the benefits received under this Plan, including the right to bring suit in the person's name."

Since Chicago HMO does not actually provide medical services, it contracts with certain medical groups to perform such services for Chicago HMO Plan members. Chicago HMO and Meyer entered into a medical group service agreement (hereinafter "Service Agreement") under which Meyer receives "capitation fees" from Chicago HMO instead of billing Chicago HMO's Plan members directly for medical services. Paragraph 5 of the section entitled "Duties of the Group" explains the capitation fee arrangement:

"In no event shall GROUP [Meyer] bill, charge, seek compensation or have any recourse against the Member for service provided pursuant to this Agreement. GROUP agrees to accept as full compensation for providing health services the capitation fees under this Agreement and to look only to the Plan for payment, holding all Members harmless against any monetary claims (except for such co-payments as may be authorized by the applicable Certificate of Coverage). * * * "

The Service Agreement also includes the following pertinent language in paragraph 8 under "General Provisions":

"The GROUP [Meyer] is responsible for ascertaining whether third parties are liable for health services provided to Members by the GROUP. The GROUP is also responsible for collecting any such amounts due from third parties for professional fees, such collections becoming the property of the GROUP."

In February 1991, Hillenbrand was injured in an accident. She received medical treatment from Meyer through her Chicago HMO Plan. The medical services provided by Meyer totaled $1,779.64. In April 1992, HCC, Meyer's agent, sent Hillenbrand's personal injury attorney, James Uzzell, a notice of physician's lien in the amount of $1,779.64, which stated in pertinent part:

"The health benefit plan provides that Meyer Medical Group is entitled to complete reimbursement of those benefits out of any settlement or judgment received by or on behalf of your client from any payments designed to compensate your client for medical expenses and injuries. * * * The terms and conditions of the health benefit plan further provide for a legal and equitable lien on any proceeds received by settlement, judgment or otherwise."

In July 1992, Uzzell negotiated a $6,744 settlement of Hillenbrand's tort claim arising from her accident. The settling party remitted one check in the amount of $4,964.36 payable to Hillenbrand and Uzzell, representing her settlement over medical expenses, and another check in the amount of $1,779.64 payable to Hillenbrand, Uzzell, and HCC, representing the amount claimed for reimbursement of her medical expenses. Hillenbrand and Uzzell did not endorse the latter check and, instead, instituted the instant action.

Hillenbrand filed a complaint against Chicago HMO, Meyer, and HCC, alleging that Meyer's physician's lien was invalid because Chicago HMO had already compensated Meyer through the capitation fee provision in the Service Agreement. Thereafter, Hillenbrand filed an amended and second amended complaint. Count I of the second amended complaint presented a claim for unjust enrichment, count III alleged that the defendants' conduct violated the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1994)), and count IV alleged common law fraud on the part of the defendants. Count II alleged alternatively that, even if Meyer properly sought reimbursement of the medical expenses, the common fund doctrine required that Meyer bear a proportionate share of Uzzell's fees earned in negotiating a recovery for Hillenbrand.

Meyer, HCC, and Chicago HMO each filed motions to dismiss. Chicago HMO argued that it had not filed a lien, had not sought any third party recovery or subrogation regarding Hillenbrand's claim, and, furthermore, had not assigned any rights to do so. The trial court dismissed only Chicago HMO.

Meyer and HCC filed separate motions for summary judgment which argued, among other things, that (1) the plaintiffs' claims were preempted under section 8902(m)(1) of the FEHBA (5 U.S.C. sec. 8902(m)(1)), (2) no genuine issue of material fact existed as to Meyer's right of reimbursement under the Service Agreement, and (3) the plaintiffs failed to exhaust their administrative claims. The trial judge concluded that the plaintiffs' claims were preempted under the FEHBA and, accordingly, entered summary judgment in favor of Meyer and HCC. In October 1995, the trial court denied the plaintiffs' motion for leave to file an amendment to their complaint which sought a declaratory judgment as to the validity of Meyer's physician's lien. This appeal followed.

Summary judgment is appropriate if the pleadings, depositions, and affidavits show that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Maher & Associates, Inc. v. Quality Cabinets, 267 Ill.App.3d 69, 77, 203 Ill.Dec. 850, 640 N.E.2d 1000 (1994). A triable issue of fact exists where there is a dispute as to material facts or where the material facts are undisputed but reasonable persons might draw different inferences from those facts. In re Estate of Hoover, 155 Ill.2d 402, 411, 185 Ill.Dec. 866, 615 N.E.2d 736 (1993). This court reviews a summary judgment de novo. Hoover, 155 Ill.2d at 411, 185 Ill.Dec. 866, 615 N.E.2d 736.

Our review of the record indicates that the trial court's finding that the plaintiffs' claims were preempted was premature since a question of fact remains as to whether the Service Agreement provides Meyer with a right of reimbursement. As previously noted, Chicago HMO is clearly entitled to reimbursement from third party recoveries received by its Plan members under the "Third Party Actions" provision of its Plan. Since Meyer is not a party to Chicago HMO's contract with Hillenbrand, we must determine whether Chicago HMO assigned its right of reimbursement to Meyer under the Service Agreement. Words which reflect an intent to transfer an actionable right to reimbursement for valuable consideration are sufficient to create an assignment. Dr. Charles W. Smith III, Ltd. v. Connecticut General Life Insurance Co., 122 Ill.App.3d 725, 727, 78 Ill.Dec. 485, 462 N.E.2d 604 (1984). Therefore, our determination of whether Chicago HMO assigned its right to Meyer depends on the language of the Service Agreement, specifically, paragraph 8 under "General Provisions."

Where a dispute exists between the parties as to the meaning of a contract provision, the threshold issue is whether the contract is ambiguous. U S G Interiors, Inc. v. Commercial & Architectural Products, Inc., 241 Ill.App.3d 944, 947, 182 Ill.Dec. 277, 609 N.E.2d 811 (1993). This issue presents a question of law (United Equitable Ins. Co. v. Reinsurance Co., 157 Ill.App.3d 724, 728, 109 Ill.Dec. 846, 510 N.E.2d 914 (1987)) to be decided initially by the trial court from an examination of the instrument as a whole before any extrinsic evidence is considered (Country Service & Supply Co. v. Harris Trust & Savings Bank, 103 Ill.App.3d 161, 165, 58 Ill.Dec. 599, 430 N.E.2d 631 (1981)). However, because the issue of whether a contract is ambiguous is a question of law, a reviewing court will independently determine the matter unrestrained by the trial court's judgment. In re Marriage of Arkin, 108...