Marion Hosp. Corp. v. Sterling Emergency

• Decision Date: 23 July 2009
• Docket Number: No. 5-07-0703.,5-07-0703.
• Citation: 913 N.E.2d 140,392 Ill. App. 3d 1113
• Parties: MARION HOSPITAL CORPORATION, d/b/a Heartland Regional Medical Center, Plaintiff-Appellant, v. STERLING EMERGENCY SERVICES OF ILLINOIS, INC., d/b/a Sterling Healthcare, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

913 N.E.2d 140

392 Ill. App. 3d 1113

MARION HOSPITAL CORPORATION, d/b/a Heartland Regional Medical Center, Plaintiff-Appellant, v. STERLING EMERGENCY SERVICES OF ILLINOIS, INC., d/b/a Sterling Healthcare, Defendant-Appellee.

No. 5-07-0703.

Appellate Court of Illinois, Fifth District.

July 23, 2009.

Rehearing Denied August 21, 2009.

Richard J. Behr, Timothy J. Reichardt, Behr, McCarter & Potter, P.C., St. Louis, MO, for Appellant.

Daniel W. Farroll, Christian Willenborg, Hepler, Broom, MacDonald, Hebrank, True & Noce, LLC, Edwardsville, IL, Charles H. Cole, Richard J. Juarez, Schuyler Roche, P.C., Chicago, IL, for Appellee.

Justice GOLDENHERSH delivered the opinion of the court:

The plaintiff filed a complaint against the defendant in the circuit court of Madison County requesting reimbursement for sums paid in the settlement of a separate suit filed in the circuit court of Williamson County. On the motion of the defendant, the circuit court dismissed the complaint. On appeal, the issue is whether the plaintiff's claim is barred by the Joint Tortfeasor Contribution Act (Contribution Act) (740 ILCS 100/0.01 et seq. (West 2006)). We reverse and remand.

FACTS

On March 1, 1999, Marion Memorial Hospital and ECS of Illinois, Inc. (ECS), entered into an "Emergency Services Agreement" (Agreement). Under the Agreement, ECS became the sole and exclusive provider of emergency medical services through independent contractor physicians at Marion Memorial Hospital. The Agreement contained the following relevant provisions:

"SECTION 9. INDEPENDENT CONTRACTOR

Contractor and its Physician Associates, contractors, or agents perform the services and duties required hereunder as independent contractors and not as employees, agents, [or] partners of or joint venturers with Hospital. ECS shall provide each of its Physician Associates with a name badge identifying their affiliation with ECS.

SECTION 10. INSURANCE AND INDEMNIFICATION

Contractor and Physician Associates will maintain medical malpractice insurance in the minimum amount of $1,000,000 for each medical claim and $3,000,000 annually for the aggregate of all claims. Upon request, Contractor will provide the Hospital with a Certificate(s) of Insurance as evidence that this coverage has been obtained. In addition, such policy will provide for at least fifteen (15) days' written notice to Hospital before any material alteration, cancellation[,] or nonrenewal is to take effect.

In the event Contractor fails to obtain or maintain the insurance required hereunder, Hospital[,] at its option, may immediately terminate this Agreement. The ninety (90) day written notice will be waived in such an event.

Contractor hereby indemnifies and hold [sic] Hospital harmless from and against any and all liability, losses, damages, claims[,] or causes or [sic] action and expenses connected therewith (including reasonable attorneys' fees) caused, or asserted to have been caused, directly or indirectly, by or as a result of negligent acts during the performance of Contractor's duties hereunder or those of its agents, employees, servants, officers[,] or assigns.

Nothing in this Section shall relieve the Hospital from liability proximately caused by the employees of the Hospital in the normal course of their duties. Upon termination of this Agreement for any reason whatsoever, Contractor agrees that it will purchase an extended reporting endorsement ('tail') coverage for a period of not less than three (3) years from the final dates of service hereunder."

On July 26, 2002, the parties amended the contractual terms for termination with cause.

Marion Memorial Hospital later became known as Marion Hospital Corp., doing business as Heartland Regional Medical Center. Marion Hospital Corp. alleges that Sterling Emergency Services of Illinois, Inc., doing business as Sterling Healthcare (Sterling), purchased the assets of ECS pursuant to bankruptcy proceedings in February 2004.

In June 2003, Tony Maze filed suit in the circuit court of Williamson County. Maze named as defendants Jenice Clark, a licensed physician assistant, and Heartland Regional Medical Center, a subsidiary of Marion Hospital Corp. of Brentwood, Tennessee (Marion Hospital).

Counts IV and V were directed against Marion Hospital. In count IV, Maze alleged that on February 13, 2003, the decedent went to Marion Hospital's emergency room complaining of shortness of breath. In the emergency room, the decedent was treated by Clark. After his discharge, the decedent collapsed at home and died. Maze alleged that Clark negligently failed to properly test or diagnose the decedent or consult with the attending emergency room physician. Count IV alleged that Clark was an apparent employee or agent of Marion Hospital and that the decedent acted in a manner of trust and reliance on Clark's apparent status as an agent of Marion Hospital.

Count V alleged direct negligence on the part of Marion Hospital, stating that Marion Hospital failed to note vital signs, failed to communicate accurate discharge vital signs, and failed to orient Clark to proper protocol.

On April 18, 2006, Maze and Marion Hospital submitted a "Full and Final Release of Marion Hospital Corporation d/b/a Heartland Regional Medical Center." The release addressed Marion Hospital's "liability as a result of its own direct negligence and as a result of vicarious liability as principal of the apparent agent, Jenice Clark, PA-C." The release stated that $180,000 had been offered to Maze in full and final settlement of any and all claims against Marion Hospital for alleged direct negligence and alleged vicarious liability, but it specifically acknowledged that the release did not operate as a settlement of Maze's direct negligence claim against Clark. The release stated as follows:

"The undersigned and Releasees specifically agree and acknowledge that one-half (½) of the above-referenced settlement amount or Ninety Thousand Dollars ($90,000.00) is attributable to and paid in settlement of [Maze's] direct negligence claim against [Marion Hospital] and one-half (½) of the above-referenced settlement amount or Ninety Thousand Dollars ($90,000.00) is attributable to and paid in settlement of [Maze's] vicarious liability/agency claim against [Marion Hospital]. The undersigned and [Marion Hospital] further agree and acknowledge that [Marion Hospital's] payment of the Ninety Thousand Dollars ($90,000.00) attributable to the vicarious liability/agency claim arose as a result of the alleged negligent acts or omissions of Jenice Clark, PA-C[,] as agent and employee of ECS of Illinois, Inc.

The undersigned and Releasees do hereby declare that the terms of this settlement are a result of bargaining at arms length in good faith and that this settlement was entered into pursuant to and in satisfaction of Illinois' [sic] 'Contribution Among Joint Tortfeasors Act [sic].'"

On May 8, 2006, the circuit court held a hearing on the joint motion for a finding of a good-faith settlement, and it approved the settlement as being in good faith pursuant to the Contribution Act.

On July 6, 2006, Maze entered into an agreement to release and discharge Clark, Emergency Care Specialists, PhyAmerica Physicians Groups, Inc., and Western Litigation Specialists, Inc., for the sum of $120,000.

On January 31, 2007, Marion Hospital filed suit against Sterling in the circuit court of Madison County. On May 11, 2007, Marion Hospital filed its second amended complaint requesting indemnification from Sterling in the amount of $90,000, alleging a breach of contract.

On July 20, 2007, the court granted Sterling's motion to dismiss the second amended complaint. The court found as follows:

"Case called for hearing on the [m]otion to [d]ismiss of [d]efendant, [Sterling]. After being duly advised in the premises, the court hereby finds that the claim alleged by [Marion Hospital] is actually a claim seeking contribution even though [Marion Hospital] has chosen to label the claim `express indemnity.' Because [Marion Hospital's] claim as alleged is seeking recovery for only the portion of the total settlement that is attributed by the settling parties to the alleged fault of [Sterling], it is to be considered as a claim for contribution. Illinois law does not allow a claim for contribution as is alleged here. The motion to dismiss is hereby granted. [Marion Hospital] is given leave to file an amended complaint within 30 days."

On August 16, 2007, Marion Hospital filed a third amended complaint. Sterling moved to dismiss. On November 16, 2007, the court dismissed the cause with prejudice "on the basis that [Marion Hospital] is seeking contribution and/or partial indemnity." The court stated that the order was final and appealable. Marion Hospital appeals.

ANALYSIS

The Contribution Act provides as follows:

"(c) When a release or covenant not to sue or not to enforce judgment is given in good faith to one or more persons liable in tort arising out of the same injury or the same wrongful death, it does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide but it reduces the recovery on any claim against the others to the extent of any amount stated in the release or the covenant, or in the amount of the consideration actually paid for it, whichever is greater.

(d) The tortfeasor who settles with a claimant pursuant to paragraph (c) is discharged from all liability for any contribution to any other tortfeasor.

(e) A tortfeasor who settles with a claimant pursuant to paragraph (c) is not entitled to recover contribution from another tortfeasor whose liability is not extinguished by the settlement.

(f) Anyone who, by payment, has discharged in full or in part the liability of a tortfeasor and has thereby discharged in full his obligation to the tortfeasor[] is subrogated to the tortfeasor's right of contribution. This provision does not affect any...