Rogalla v. Christie Clinic, PC

• Decision Date: 20 June 2003
• Docket Number: No. 4-02-0879.,4-02-0879.
• Citation: 794 N.E.2d 384,341 Ill. App.3d 410,276 Ill.Dec. 489
• Parties: Valerie ROGALLA, Individually and on Behalf of all Others Similarly Situated, Plaintiffs-Appellants, v. CHRISTIE CLINIC, P.C.; Personal Care Health Management, Inc., a Corporation; and Healthcare Recoveries, Inc., a Corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

794 N.E.2d 384

341 Ill. App.3d 410

276 Ill.Dec. 489

Valerie ROGALLA, Individually and on Behalf of all Others Similarly Situated, Plaintiffs-Appellants, v. CHRISTIE CLINIC, P.C.; Personal Care Health Management, Inc., a Corporation; and Healthcare Recoveries, Inc., a Corporation, Defendants-Appellees.

No. 4-02-0879.

Appellate Court of Illinois, Fourth District.

Argued April 23, 2003.

Decided June 20, 2003.

Gary D. Forrester, Joseph W. Phebus (argued), Phebus & Koester, Urbana, for Valerie Rogalla.

Richard T. West (argued), Meyer Capel, A Professional Corporation, Champaign, for Christie Clinic, P.C.

Karen L. Kendall, Heyl, Royster, Voelker & Allen, Peoria, Edward M. Wagner, Heyl, Royster, Voelker & Allen, Urbana, Ralph A. Weber, Amelia L. McCarthy, Reinhart Boerner Van Deuren S.C., Milwaukee, WI, for Healthcare Recoveries.

William J. Brinkmann, Michael R. Cornyn, Thomas, Mamer & Haughey, Champaign, for Personal Care Health Management, Inc.

Justice KNECHT delivered the opinion of the court:

Plaintiff, Valerie Rogalla, appeals the order dismissing with prejudice her second-amended class-action complaint (complaint) pursuant to sections 2-615 and 2-619(a)(9) of the Code of Civil Procedure. 735 ILCS 5/2-615, 2-619(a)(9) (West 2000). Plaintiff argues the circuit court erred in dismissing her complaint. We affirm.

I. BACKGROUND

On April 5, 2002, plaintiff filed her complaint against defendants, Christie Clinic, P.C. (Christie Clinic), PersonalCare Health Management, Inc. (PersonalCare), and Trover Solutions, Inc., f/k/a Healthcare Recoveries, Inc. (Trover). In her complaint, plaintiff alleges the following.

PersonalCare is a corporation that operates a health maintenance organization (HMO), of which plaintiff was a member. PersonalCare and Christie Clinic had entered a medical services agreement (Agreement), under which Christie Clinic agreed to provide services to Personal-Care's HMO members. According to the Agreement, Christie Clinic would seek no payment from PersonalCare HMO members other than copayments and deductibles.

On December 5, 1994, plaintiff suffered severe injuries when her vehicle collided with a truck driven by Rodney Lippolt. Plaintiff received treatment for her injuries from Christie Clinic, and she paid all relevant copayments and deductibles.

Because the Agreement was a "capitation" contract, PersonalCare made no payments to Christie Clinic for the medical services provided to plaintiff following the accident other than the capitation fee. In addition to the services it provided plaintiff, Christie Clinic was obligated to pay, and did pay, third-party health-care providers for services rendered to plaintiff.

On February 23, 1995, plaintiff and her husband filed suit against Emery Air Freight Corporation and Lippolt in the circuit court of Champaign County (case No. 95-L-266). These parties later settled.

Later, PersonalCare asserted a lien in the amount of $149,865 against plaintiff's settlement recovery. PersonalCare, in its lien, stated the amount was for "medical expenses paid." On August 12, 1999, Trover represented by letter PersonalCare paid $132,659.42 on behalf of plaintiff and PersonalCare was owed that amount. According to plaintiff, these amounts include charges from Christie Clinic and third-party medical providers that PersonalCare had no obligation to pay and either did not pay or paid at a discounted rate.

On September 21, 1999, plaintiff paid Trover $79,289.84 in reliance on the representations from Trover and PersonalCare.

On July 22, 1999, Christie Clinic also claimed a lien against plaintiff's settlement. Christie Clinic asserted a lien of $28,750.50, which included charges accounted for in PersonalCare's lien.

Each defendant, alleging pleading deficiencies, moved to dismiss the second-amended complaint. At oral argument on the motions, the trial court granted the section 2-619 motions to dismiss. Later, by docket entry, the circuit court granted all motions to dismiss. Plaintiff appeals.

II. ANALYSIS

Defendants separately moved to dismiss the counts against them. Defendants argued the counts were insufficient under sections 2-615 and 2-619 (735 ILCS 5/2-615, 2-619 (West 2000)). We review de novo appeals from section 2-615 and 2-619 dismissals and consider whether a dismissal was proper as a matter of law. See Glisson v. City of Marion, 188 Ill.2d 211, 221, 242 Ill.Dec. 79, 720 N.E.2d 1034, 1039 (1999); Thomas v. Hileman, 333 Ill.App.3d 132, 136, 266 Ill.Dec. 669, 775 N.E.2d 231, 234 (2002).

We turn to the individual claims.

A. Claims Against Christie Clinic

Plaintiff asserts two claims against Christie Clinic: a third-party beneficiary, breach-of-contract claim and a fraud claim. Christie Clinic moved to dismiss these claims under both section 2-615, for failure to state a claim, and section 2-619. We first consider Christie Clinic's section 2-615 motion to dismiss.

For a section 2-615 motion to dismiss, we accept the allegations in the complaint as true. Ziemba v. Mierzwa, 142 Ill.2d 42, 47, 153 Ill.Dec. 259, 566 N.E.2d 1365, 1366 (1991). The complaint includes not only the complaint itself, but also exhibits attached to it. Mars, Inc. v. Heritage Builders of Effingham, Inc., 327 Ill.App.3d 346, 355, 261 Ill.Dec. 458, 763 N.E.2d 428, 437 (2002). If allegations in the complaint conflict with the exhibit, the exhibit controls. Mars, 327 Ill.App.3d at 355, 261 Ill.Dec. 458, 763 N.E.2d at 437. We examine the complaint to "determine whether the allegations * * * [,] construed in a light most favorable to the plaintiff, are sufficient to establish a cause of action upon which relief may be granted." Stroger v. Regional Transportation Authority, 201 Ill.2d 508, 516, 268 Ill.Dec. 417, 778 N.E.2d 683, 688 (2002).

1. Third-Party Beneficiary

Count I asserts a third-party beneficiary, breach-of-contract claim against Christie Clinic. Plaintiff contends the Agreement between Christie Clinic and PersonalCare gave her third-party beneficiary rights, because it was created with the intent to confer a direct benefit upon plaintiff and other class members. Count I further alleges Christie Clinic breached the Agreement by violating the hold-harmless provision, which, she contends, prohibits Christie Clinic from seeking payments other than deductibles and copayments from HMO members, including plaintiff. Plaintiff alleges Christie Clinic breached the Agreement by (1) collecting or attempting to collect from plaintiff and other class members charges for services covered by the Agreement; and (2) improperly claiming liens against funds belonging to plaintiff and other class members. Plaintiff states "$28,750.50 [has] been tied up since August 6, 1999."

To recover as a third-party beneficiary, plaintiff must plead facts that would establish the contract was breached. See Segall v. Berkson, 139 Ill.App.3d 325, 332, 93 Ill.Dec. 927, 487 N.E.2d 752, 757 (1985). Christie Clinic disputes plaintiff's argument and states the Physicians Lien Act (770 ILCS 80/1 (West 2000)) authorizes the lien and the lien did not breach the Agreement. The Physicians Lien Act allows physicians to attach liens upon settlements and judgments for the reasonable charges for the treatment provided:

"Every licensed physician practicing in this State who renders services by way of treatment to injured persons, except services rendered under the provisions of the Workers' Compensation Act or the Workers' Occupational Diseases Act, shall have a lien upon all claims and causes of action for the amount of his reasonable charges up to the date of payment of such damages." 770 ILCS 80/1 (West 2000).

Christie Clinic maintains the Agreement, when read as a whole, preserves its rights under the Physicians Lien Act. Christie Clinic points to article III, section W, the subrogation clause, and maintains this clause reserves its right "to seek to recover charges incurred as a result of providing Medical/Hospital Services which are the liability of a third party." Christie Clinic further states the hold-harmless provision is not violated by the lien because the lien is an action against the settlement fund, not an action against plaintiff.

Plaintiff maintains, however, the Physicians Lien Act does not apply. According to plaintiff, the hold-harmless clause renders plaintiff liable for no amount of the medical services provided by Christie Clinic other than copayments and deductibles, which plaintiff allegedly paid. The hold-harmless clause states the following:

"Christie will look solely to PersonalCare for compensation for Covered Services provided to Members, except for copayments authorized by PersonalCare under the applicable Member Certificate relating to Medical Services set forth in Attachment B. * * * Neither Christie, Christie Members, nor any authorized Health Services Contractor of Christie shall * * * assert any claim for compensation against Members in excess of the copayments authorized by PersonalCare's HMO."

Plaintiff continues there is no debt because it has been forgiven by contract. Because there is no debt, plaintiff asserts, there can be no lien. In support of her argument, plaintiff relies primarily on two cases from the Second District: N.C. v. A.W., 305 Ill.App.3d 773, 239 Ill.Dec. 244, 713 N.E.2d 775 (1999), and Richmond v. Caban, 324 Ill.App.3d 48, 257 Ill.Dec. 879, 754 N.E.2d 871 (2001).

Both N.C. and Richmond considered whether physicians' liens were appropriate when an insured was injured by a third party. In N.C., the plaintiff was injured in an automobile accident by the defendant and treated by Northern Illinois Medical Center (NIMC). Plaintiff's hospital bill totaled over $22,000, but plaintiff's insurer paid NIMC $4,200, "in full payment * * * pursuant to NIMC's contract with [the insurer]." The plaintiff sued the defendant for damages. N.C., 305 Ill.App.3d at 774, 239 Ill.Dec. 244, 713 N.E.2d at 775-76. NIMC filed a physician's lien for the difference between the bill...