McGowen v. Woodsmall Ben. Services, Inc.
| Decision Date | 23 April 1990 |
| Docket Number | No. 5-88-0361,5-88-0361 |
| Citation | 197 Ill.App.3d 400,554 N.E.2d 704,143 Ill.Dec. 769 |
| Parties | , 143 Ill.Dec. 769 Jennifer McGOWEN, a minor, by her Mother and Next Friend, Anita McGowen, Plaintiff-Appellee, v. WOODSMALL BENEFIT SERVICES, INC., Defendant-Appellant. |
| Court | United States Appellate Court of Illinois |
Steven M. Aroesty, Reed, Armstrong, Gorman, Coffey, Thomson & Gilbert, Edwardsville, for defendant-appellant.
Burkart Law Offices, Hamel, for plaintiff-appellee.
Defendant, Woodsmall Benefit Services, Inc., filed this interlocutory appeal in response to findings of the circuit court of Madison County that defendant is subject to suit in Illinois. The main issue before this court is whether defendant can be sued in Illinois. This court affirms.
The facts are not disputed. Anita McGowen, the mother and next friend of plaintiff, Jennifer McGowen, a minor, filed this action. In plaintiff's complaint, she alleged that defendant committed acts of deceptive business practices under the Illinois Consumer Fraud and Deceptive Practices Act (). Defendant, a Missouri corporation, is registered under the State of Illinois Department of Insurance Regulations as a third-party administrator. Defendant is not registered as an out-of-state corporation.
Plaintiff also alleged that defendant supplied health insurance coverage to Richard Reynolds which covered his then wife and plaintiff stepdaughter McGowen. The insureds are residents of the State of Illinois and defendant has a home office in Kansas City, Missouri. The policy provided coverage for dental expenses. In September 1986, plaintiff began orthodontic treatment. Prior to the start of treatment, plaintiff received confirmation of coverage from defendant. After plaintiff began treatment, she mailed the bill for services to defendant. Defendant paid for part of the services but refused further payment.
On October 21, 1987, a summons was served on defendant at its Kansas City, Missouri, office. On November 13, 1987, defendant filed its special and limited appearance "for the sole purpose of contesting the jurisdiction of this court over defendant." On December 11, 1987, defendant filed a special appearance to object to jurisdiction. The trial court denied defendant's special appearance and found that it has jurisdiction over defendant. From this order, defendant appeals.
The issue before this court is whether an unregistered foreign corporation which provides health insurance coverage to residents of the State of Illinois is subject to suit in Illinois.
In the leading case of World-Wide Volkswagen Corp. v. Woodson (1979), 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490, the United States Supreme Court addressed the issue whether New York corporate defendants were subject to the jurisdiction of the Oklahoma courts. The Court discussed in detail the due process clause of the fourteenth amendment regarding the limits of the state courts to obtain valid personal jurisdiction over a nonresident defendant. (U.S. Const., amend. XIV.) The Court reaffirmed the established rule that "a state court may exercise personal jurisdiction over a nonresident defendant only so long as there exist 'minimum contacts' between the defendant and the forum State." (444 U.S. at 291, 100 S.Ct. at 564, 62 L.Ed.2d at 497.) The reason for the rule is to protect the nonresident defendant from the burden of litigating in a distant or an inconvenient forum. The rule also ensures "that the States through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system." (444 U.S. at 292, 100 S.Ct. at 564, 62 L.Ed.2d at 498.) Those minimum contacts must be reasonable and not offend traditional notions of fair play and substantial justice. However, the court stated that the limits of the due process clause have been relaxed to meet the "transformation in the American economy." (444 U.S. at 293, 100 S.Ct. at 565, 62 L.Ed.2d at 498.) At that point, foreseeability is critical to the analysis to the extent "that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." 444 U.S. at 297, 100 S.Ct. at 567, 62 L.Ed.2d at 501.
Following Volkswagen, the Illinois General Assembly enacted section 2-209 of the long-arm statute. (Ill.Rev.Stat.1987, ch. 110, par. 2-209.) Section 2-209 provides in part:
"(a) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this State;
* * * * * *
(b) Service of process upon any person who is subject to the jurisdiction of the courts of this State, as provided in this Section, may be made by personally serving the summons upon the defendant outside this State, as provided in this Act, with the same force and effect as though summons had been personally served within this State.
* * * * * *
(d) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him or her is based upon this Section."
Recent opinions have analyzed section 2-209 in light of the transacting business criteria. (Ill.Rev.Stat.1987, ch. 110, par. 2-209(a)(1).) In Gordon v. Tow (1986), 148 Ill.App.3d 275, 101 Ill.Dec. 394, 498 N.E.2d 718, the court detailed the purposes and procedure for section 2-209. The court stated:
(148 Ill.App.3d at 280, 101 Ill.Dec. at 397, 498 N.E.2d at 721.)
In deciding whether the nonresident defendant's acts amount to transacting business, the court held that the "ultimate test is the substance of the act rather than the quantity." (148 Ill.App.3d at 280, 101 Ill.Dec. at 397, 498 N.E.2d at 721.) The "acts" to be considered are those of the nonresident defendant.
"The determination of whether defendant sufficiently transacted business in Illinois so as to avail himself of the benefits of Illinois law requires consideration of several factors: who initiated the transaction [citation]; where the contract was entered into [citation] and where the performance of the contract was to take place [citation]. While none of these factors has been held to be controlling, each of them has been held to be significant..
[Citation.]" 148 Ill.App.3d at 280-81, 101 Ill.Dec. at 398, 498 N.E.2d at 722.
In this case, defendant is not a foreign corporation doing business in Illinois, and is not an insurance company. However, in order for defendant to adjust or settle claims from Illinois residents covered by its health insurance plan, it must register with the Department of Insurance in order to act as a third-party administrator. (Ill.Rev.Stat.1987, ch. 73, pars. 1065.58-100 through 1065.58-113 (article XXXI 1/4 of the Illinois Insurance Code), hereinafter referred to as the Third-Party Administrators Act.) Pursuant to the Third-Party Administrators Act, defendant must abide by the Illinois Insurance Code. Ill.Rev.Stat.1987, ch. 73, par. 613 et seq.
By the act of registering with the Department of Insurance, defendant has initiated the transaction of business in Illinois and has acknowledged that it will be administering and processing health insurance claims made by Illinois residents. After registering, the eventual health insurance contract between plaintiff and defendant was made in Illinois through the employer of plaintiff's stepfather. Plaintiff would not have had direct contact to make the contract...
To continue reading
Request your trial