Michael Reese Hosp. and Medical Center v. Chicago HMO, Ltd.

• Decision Date: 04 April 1990
• Docket Number: No. 1-88-2580,1-88-2580
• Citation: 554 N.E.2d 472,196 Ill.App.3d 832
• Parties: , 143 Ill.Dec. 537 MICHAEL REESE HOSPITAL AND MEDICAL CENTER, Plaintiff-Appellant, v. CHICAGO HMO, LTD., Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 472

554 N.E.2d 472

196 Ill.App.3d 832, 143 Ill.Dec. 537

MICHAEL REESE HOSPITAL AND MEDICAL CENTER, Plaintiff-Appellant, v. CHICAGO HMO, LTD., Defendant-Appellee.

No. 1-88-2580.

Appellate Court of Illinois First District, Third Division.

April 4, 1990.

Sonnenschein Carlin Nath & Rosenthal, Chicago (Jeffrey Lennard, Jay Conison, Barney I. Cohen, Stephen J. Weiser, of counsel), for plaintiff-appellant.

Arnstein & Lehr, Chicago (Howard J. Swibel, Arthur L. Klein, Patrick F. Geary and Richard C. Gering, of counsel), for defendant-appellee.

Cassiday, Schade & Gloor, Chicago (Rudolf G. Schade, of counsel), and Mark D. Deaton, Naperville, amici curiae.

Justice WHITE delivered the opinion of the court.

Plaintiff, Michael Reese Hospital and Medical Center ("Reese"), appeals from an order of the circuit court granting defendant's motion to dismiss Reese's complaint with prejudice, pursuant to section 2-615 of the Code of Civil Procedure (Ill.Rev.Stat.1987, ch. 110, par. 2-615). Reese argues that the trial court erred in finding that the complaint failed to state a claim for restitution.

Reese filed suit in the circuit court against defendant, Chicago HMO, Ltd. ("CHMO"), seeking a declaration that CHMO was obligated to pay Reese for medical services rendered to CHMO members. In its complaint, Reese alleged that it was a not-for-profit corporation licensed to provide hospital services under the laws of Illinois; that under Illinois law, it was obligated to provide emergency medical services to any person who came to Reese in need of such services (Ill.Rev.Stat.1987, ch. 111 1/2, pars. 86, 6151); that despite its obligation to provide emergency medical services, it was not required to provide its services for free; that it had the right to reimbursement for its services from the persons to whom the services were provided as well as from any person with a duty to provide or arrange for the provision of emergency services to such persons; that when it provided emergency services to a patient it did so with the intent to charge for the services rendered; and that, unless there was a contractual arrangement to the contrary, such patients were billed at Reese's usual and customary rate for the services rendered.

Reese alleged that the Illinois Department of Public Aid ("IDPA") had a statutory responsibility to compensate providers of medical assistance to public aid recipients, and that in some instances IDPA contracted through the Illinois Competitive Access and Reimbursement Equity ("ICARE") program to reimburse hospitals directly. In other instances IDPA entered into arrangements with health maintenance organizations ("HMOs"), under which the HMOs assumed responsibility for providing or paying for medical services rendered to those public aid recipients who became members of the HMOs.

Reese further alleged that both it and CHMO had entered into contracts with the IDPA pursuant to IDPA's ICARE program. Under Reese's contract with IDPA, Reese agreed to provide emergency care to a specified number of public aid recipients and IDPA agreed to make direct payments to Reese in an amount lower than the usual and customary rate charged by Reese. The amount of these payments, called the "ICARE rate," was determined on the basis of projections by Reese of the number of public aid patients it would treat. Reese's contract with IDPA stated that the ICARE rate was to be kept confidential.

Under CHMO's contract with IDPA, IDPA provided payments to CHMO, in exchange for which CHMO agreed to provide or arrange to provide emergency medical care to public aid recipients who became CHMO members. The contract required CHMO to make payments to all hospitals that provided emergency medical services to CHMO members, whether or not CHMO had entered into contracts with those hospitals for the provision of such services.

In 1983, Reese began providing emergency medical services to public aid recipients who were members of CHMO. Reese alleged that initially it was unaware that the patients it treated were CHMO members and, therefore, it billed IDPA for the services rendered to those patients. After Reese was informed by IDPA that CHMO was responsible for reimbursing Reese, Reese submitted the bills for those patients to CHMO. However, CHMO refused to reimburse Reese on the ground that Reese had failed to notify CHMO of the treatment within 48 hours.

Reese alleged that if CHMO was permitted to avoid payment to Reese for services Reese rendered to CHMO patients because of lack of notification, CHMO would be able to retain the amounts paid to it by IDPA for the cost of such services while escaping its contractual obligation to reimburse Reese for such services. Alleging that this would result in unjust enrichment of CHMO, Reese sought a declaration that CHMO had no right to deny payment based on Reese's failure to notify CHMO within a period unilaterally fixed by CHMO.

Reese also alleged that in 1984 it began notifying CHMO of emergency treatment provided by Reese to CHMO members within 48 hours of such treatment; that Reese billed CHMO for the treatment at Reese's usual and customary rate; and that Reese expected payment in full for its services. Despite Reese's demands for payment in full, CHMO regularly tendered payment for services rendered to its members, not at Reese's usual and customary rate, but at the lower ICARE rate established in the contract between Reese and IDPA.

Reese alleged that it was not required by its contracts with IDPA to accept payment from HMOs at the ICARE rate. In support of this allegation, Reese attached to its complaint a letter in which IDPA stated that "at no time has [IDPA] contemplated the application of the ICARE rates for the reimbursement of hospital services to HMO recipients."

Reese further alleged that under the contract between IDPA and CHMO, the payments made by IDPA to CHMO were based on CHMO paying an amount in excess of the ICARE rate to hospitals that provided care to CHMO members. Reese contended that if CHMO was permitted to pay Reese no more than the ICARE rate, CHMO would be unjustly benefitted at the expense of Reese.

CHMO filed a motion to dismiss Reese's complaint pursuant to section 2-615. In its motion, CHMO argued that because Reese had an independent duty to provide emergency medical treatment to public aid recipients, Reese had no right to restitution from CHMO. CHMO also argued that Reese had no reasonable expectation of payment from CHMO, in light of CHMO's continued refusal to pay for the services rendered at the rate demanded by Reese.

Following a hearing the trial court granted CHMO's motion and entered an order dismissing Reese's complaint with prejudice. The trial court found that under the principles of Griffith Wrecking Co. v. Greminger (1978), 65 Ill.App.3d 962, 22 Ill.Dec. 632, 382 N.E.2d 1387, Reese was barred from seeking restitution because of its statutory obligation to provide medical services.

In this appeal, Reese argues that the trial court erred in dismissing its complaint pursuant to section 2-615. We agree.

Under section 2-615, a party may move for dismissal of an action where the pleadings fail to state a cause of action. However, a cause of action should not be dismissed on the pleadings unless it clearly appears that no set of facts can be proved which will entitle the plaintiff to recover. (Edgar County Bank (1974), 57 Ill.2d 298, 312 N.E.2d 259; Krautstrunk v. Chicago Housing Authority (1981), 95 Ill.App.3d...