Primax Recoveries, Inc. v. Atherton

• Decision Date: 04 May 2006
• Docket Number: No. 5-04-0561.,5-04-0561.
• Citation: 851 N.E.2d 639
• Parties: PRIMAX RECOVERIES, INC., Plaintiff-Appellant, v. Tracy ATHERTON, Brooke Atherton, and Phil Atherton, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 639

851 N.E.2d 639

PRIMAX RECOVERIES, INC., Plaintiff-Appellant, v. Tracy ATHERTON, Brooke Atherton, and Phil Atherton, Defendants-Appellees.

No. 5-04-0561.

Appellate Court of Illinois, Fifth District.

May 4, 2006.

David A. Belofsky, Douglas M. Belofsky, Lance R. Minor, Belofsky & Belofsky, P.C., Chicago, for Appellant.

Mark E. Goodman, Capes, Sokol, Goodman & Sarachan, P.C., St. Louis, MO; Jerome E. McDonald, Campbell, Black, Carnine, Hedin, Ballard & McDonald, Mt. Vernon, for Appellees.

Justice CHAPMAN delivered the opinion of the court:

This appeal involves the right of a health insurance company to recover from the proceeds of a settlement involving a minor child with catastrophic injuries stemming from negligent medical care. The child's complaint in the underlying medical malpractice action alleged, among other things, that she had incurred medical expenses in the past; however, it is impossible to determine what, if any, portion of the proceeds received pursuant to the settlement were intended to compensate her or her parents for past medical expenses. The medical malpractice suit was filed in Missouri, where the child had the right to sue for medical bills in her own name, jointly with her parents. See Boley v. Knowles, 905 S.W.2d 86, 90 (Mo.1995). The plaintiff, Primax Recoveries, Inc. (Primax), appeals an order of the trial court dismissing its complaint for a declaratory judgment. Primax argues that the trial court erred in finding that the "minor's doctrine" prevented it from seeking reimbursement. We affirm.

Brooke Atherton was born in July 1993. She suffered from respiratory distress within the first day of her life. In treating Brooke for this problem, physicians at St. Louis Children's Hospital attempted to place subclavian lines in her. In performing the procedure, they ruptured Brooke's subclavian artery, causing an infarction to the temporal lobe of her brain. This in turn caused severe and permanent brain damage that has left Brooke severely mentally and physically disabled and in need of ongoing medical care.

At the time Brooke was born, her mother, Tracy Atherton, was an employee of the State of Illinois. Both Tracy and Brooke were covered under the State of Illinois Quality Care Health Plan. The plan provided, in relevant part:

"1. In the event of any payment under this Plan, the Plan shall be subrogated to all of the covered person's rights of recovery * * *. * * *

2. The Plan is also granted a right of reimbursement from the proceeds of any settlement, judgment[,] or other payment obtained by or on behalf of the covered person. * * *

* * *

5. No adult covered person hereunder may assign any rights that such person may have to recover medical expenses from any tort[ ]feasor * * * to any minor child or children of the adult covered person * * *."

On February 17, 2000, Phil Atherton, as the father and next friend of Brooke, filed a medical malpractice action in Missouri against St. Louis Children's Hospital and two physicians. The complaint alleged that, as a result of the negligent treatment she received, Brooke had sustained permanent brain damage, would be unable ever to engage in employment, and would require specialized care, education, and therapy. The complaint further alleged that Brooke had incurred medical expenses in the past and would continue to incur approximately $10,000 per month in medical expenses on an ongoing basis. The complaint requested compensation for Brooke's actual damages, without specifying an amount sought.

The Quality Care Health Plan assigned its contractual right to reimbursement to Primax, and Primax filed the instant declaratory judgment action in Illinois on January 11, 2002. Primax's complaint sought a declaratory judgment establishing its right to reimbursement from the Athertons. On August 8, 2003, Primax filed an amended complaint in which it alleged that there had been a jury trial in the Athertons' medical malpractice suit in May 2002 but that the Athertons had settled the case before the jury rendered a verdict. On February 17, 2004, Primax filed a second amended complaint, in which it alleged that (1) Brooke's original complaint in the medical malpractice action included an allegation that she had incurred medical expenses in the past, (2) Brooke and her parents had settled their claims for an amount "greatly exceeding $1,000,000," and (3) the Athertons had "concealed" the terms of the settlement agreement from Primax.

Each time a complaint or amended complaint was filed, the Athertons filed a motion to dismiss pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2000)). In each, they argued that the minor's doctrine, which precludes reimbursement from the estate of a minor (see Klem v. Mann, 279 Ill.App.3d 735, 738, 216 Ill.Dec. 454, 665 N.E.2d 514, 517 (1996); Estate of Woodring v. Liberty Mutual Fire Insurance Co., 71 Ill.App.3d 158, 160, 27 Ill.Dec. 399, 389 N.E.2d 211, 212 (1979)), is applicable and that Primax failed to allege any facts that would demonstrate that it was entitled to relief from the Athertons. Primax argued in response that the facts of the instant case fell within an exception to the minor's doctrine found by a division of the First District Appellate Court in Sosin v. Hayes, 258 Ill.App.3d 949, 196 Ill.Dec. 804, 630 N.E.2d 969 (1994). On August 9, 2005, the trial court granted the Athertons' motion to dismiss, holding that the case before it was distinguishable from Sosin and controlled by Klem. Primax filed the instant appeal on August 26, 2005.

Primax argues that its complaint stated facts which would entitle it to reimbursement either from Brooke's estate or from Phil and Tracy Atherton. Its argument that it is entitled to reimbursement from Brooke's estate is essentially an argument that, because a complaint filed in her own name included a claim for medical expenses that had been paid by the health plan, she became a third-party beneficiary of the plan, obliged to reimburse the plan or protect its subrogation rights pursuant to the contractual language quoted above.

We note at the outset that the instant case differs from the precedents cited by both parties in one significant respect — it comes to us after a ruling on a motion to dismiss the complaint. Thus, we must treat all well-pled facts in Primax's complaint as true. Well-pled facts are specific allegations of fact that bring a complaint within a recognized cause of action; mere conclusory allegations unsupported by specific facts will not suffice. County of Cook v. City of Chicago, 229 Ill.App.3d 173, 175-76, 171 Ill.Dec. 108, 593 N.E.2d 928, 930 (1992). In the cases cited by both parties, trial courts made factual findings regarding whether the minors involved were made third-party beneficiaries of their parents' insurance contracts, findings that appellate courts review to determine whether they are against the manifest weight of the evidence. See Sosin, 258 Ill.App.3d at 952, 196 Ill.Dec. 804, 630 N.E.2d at 971 (finding that the trial court's determination that the minor child was made a third-party beneficiary of his father's health insurance plan was not contrary to the manifest weight of the evidence); In re Estate of Hammond, 141 Ill.App.3d 963, 965, 96 Ill.Dec. 270, 491 N.E.2d 84, 85 (1986) (noting that the trial court found that the minor child was not a third-party beneficiary of his parents' insurance plan). Here, by contrast, our review is de novo. See Crusius v. Illinois Gaming Board, 216 Ill.2d 315, 324, 297 Ill.Dec. 308, 837 N.E.2d 88, 94 (2005). For the reasons that follow, however, we agree with the conclusion of the court below that Primax cannot prove that it is entitled to the relief it seeks, even under this less deferential standard. See Klem, 279 Ill. App.3d at 739, 216 Ill.Dec. 454, 665 N.E.2d at 518 (noting that "the trial judge declined to decide whether [the minor child] was a third-party beneficiary of his father's insurance policy" and finding such a determination unnecessary where there was no evidence that the father had assigned to the child his claim for medical expenses for the child's injury).

In Illinois, a health insurer or medical care provider has no claim for subrogation or reimbursement against funds received by the estate of a minor from a tortfeasor pursuant to a judgment or settlement. Estate of Woodring, 71 Ill.App.3d at 160, 27 Ill.Dec. 399, 389 N.E.2d at 212. This is because the parents, rather than the minor, are responsible for paying the minor's medical bills. See 750 ILCS 65/15(a)(1) (West 2002). Thus, Illinois courts have found that payments made by a medical insurance plan for the treatment of a minor benefit the parents (who are responsible for the child's medical bills), not the child (who bears no financial responsibility). Because the payments benefit the parent rather than the child, the child is not a third-party beneficiary under the insurance contract and is thus not bound by contractual provisions such as the subrogation and reimbursement clauses here at issue. Estate of Woodring, 71 Ill.App.3d at 160, 27 Ill.Dec. 399, 389 N.E.2d at 212. Further, any claim for medical expenses incurred in treating a minor for injuries sustained due to a tortfeasor's negligence belongs to the parents, rather than the child. Kennedy v. Kiss, 89 Ill.App.3d 890, 894, 45 Ill.Dec. 273, 412 N.E.2d 624, 628 (1980). The minor's doctrine is premised on both the rule that a minor child cannot be a third-party beneficiary of an insurance contract and the related rule that only the parents can recover for the child's medical expenses. See In re Estate of Hammond, 141 Ill. App.3d at 967, 96 Ill.Dec. 270, 491 N.E.2d at 87.

As previously noted, Missouri takes a different approach to minors' claims for personal injuries that include claims for medical expenses. The Missouri Supreme Court found that the primary purpose behind the rule that a cause of action for a minor's...