The opinion of the court was delivered by: Bua, District Judge.
Before the Court are defendants' motion to dismiss and plaintiff's
motion for summary judgment. For the reasons stated herein, defendants'
motion to dismiss is denied and plaintiff's motion for summary judgment
This is an action based on breach of contract and promissory estoppel
brought by the plaintiff United States for the Veterans Administration
(VA). The action seeks to recover certain medical expenses from the
defendants, who acted as attorneys for Howard Jones, a former patient at
two VA hospitals. From October 9, 1980 through approximately February
16, 1983, defendants' client Howard Jones received both inpatient and
outpatient treatment for a work related injury in VA facilities at Hines
and West Side hospitals in the Chicago area. Defendants filed a workers'
compensation proceeding with the Illinois Industrial Commission on Jones'
behalf, naming as respondent Jones' employer, the Chicago Housing
In order to establish their client's injuries, period and extent of
disability and medical expenses, defendants addressed a series of letters
to the VA requesting hospital and medical records, medical history,
objective and subjective complaints, objective findings, X-rays,
prognosis, diagnosis, medical opinion as to the extent and time period of
disability, if any, and relevant medical expenses.
The VA responded by informing defendants that, pursuant to 38 C.F.R.
§ 17, 48 and Section 138.8 of Chapter 48, illinois Revised Statutes,
the VA was entitled to reimbursement for medical expenses incurred by a
workers' compensation claimant treated in a VA facility. The VA also
requested defendants' cooperation in asserting the bill for VA medical
expenses and, in return, offered to furnish medical records and testimony
at no cost. In addition, the VA agreed not to intervene in the
defendants' conduct of the workers' compensation proceeding upon
defendants' assurance that the VA medical bill would be part of any
settlement or award.
In his letter of December 16, 1981, Lee A. Iverson, one of the
defendants, stated to the VA that "if the Veterans Administration will
supply me with Mr. Jones' medical records, I will agree to protect the
agency's bills for any work-related medical treatment they may have
rendered to Mr. Jones." (Exhibit 5 to Plaintiff's Complaint.) By letters
dated May 6, 1981, February 12, 1982, and June 16, 1982, plaintiff
supplied defendants with Jones' medical records and the requested billing
Plaintiff requested defendants to keep it advised as to the status of
the case on several occasions. (Exhibits 3, 6, 9, 10, 11 and 12 to the
Complaint.) However, defendants neither informed plaintiff of any
settlement offer made by the CHA, nor informed plaintiff of the approved
settlement dated February 16, 1983, until October 6, 1983, after all
monies had been disbursed. Finally, defendants obtained an indemnity
agreement as part of the settlement package by which the CHA agreed to
defend or indemnify the defendants and Jones in the event that the VA
brought an action against them to collect medical expenses which the VA
incurred relative to Jones' injury. Before the Court is just such a
In support of their motion to dismiss, defendants argue that there was
no consideration to support a contract. In support of this argument, the
defendants point out that Jones was entitled to his VA medical reports
and records so that the VA's promise to furnish them is a promise to do
something which it was already legally obligated to do and therefore was
not sufficient consideration. In the alternative, defendants contend
that, at most, they agreed to present the VA medical bill to Jones'
employer for payment and to the Industrial Commission arbitrator, if the
case went that far, which it didn't. Finally, defendants argue that, even
if they agreed to represent the VA's interest in Jones' medical bill, the
VA was entitled only to reasonable and necessary treatment causally
related to the work-related injury. The defendants contend that these
expenses were not part of the settlement award because the award
specifically stated that the CHA denied liability for any such expenses.
Plaintiff counters that the contract was supported by sufficient
consideration, i.e., the forebearance of the VA's right to intervene in
the workers' compensation proceeding. The VA further argues that the
defendants are liable for the VA medical bill under the doctrine of
promissory estoppel since they made a promise to protect the VA's
interest, the VA reasonably relied on the promise to its detriment, and
the defendants failed to fulfill their promise. In addition, the VA
contends that the defendants cannot argue that the medical expenses were
not caused by Jones' work-related injury because they requested the
medical reports, records and doctors' opinions for the purpose of making
such a causal connection.
A. Defendant's Motion to Dismiss
A complaint should be dismissed for failure to state a claim only if it
appears "beyond doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief." Car Carriers,
Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984). A complaint
must contain either direct or inferential allegations respecting all the
material elements necessary to sustain a recovery under some viable legal
theory. Sutliff Inc. v. Donovan Cos., 727 F.2d 648, 654 (7th Cir. 1984).
In addition, all well-pleaded facts and allegations in plaintiff's
complaint must be taken as true in addressing a motion to dismiss. Id.
In the present case, it is clear that plaintiff's complaint alleges
facts under which it could prove either a breach of contract action or an
action under promissory estoppel. The exhibits to the complaint contain
letters from defendant Iverson from which one could reasonably infer the
existence of an agreement, or at the very least, his promise. Other
letters from the VA which are exhibits to the complaint demonstrate the
potential for consideration, i.e., providing medical records and
testimony, and forebearance of the right to intervene. The
reasonableness, necessity and work-relatedness of the treatment and
medical expenses are all well-pled in the complaint. Therefore, the Court
finds that the ...