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TRAVELERS INDEM. CO. OF ILLINOIS v. MOORE

United States District Court, Central District of Illinois, Springfield Division


September 5, 1986

THE TRAVELERS INDEMNITY COMPANY OF ILLINOIS, PLAINTIFF,
v.
ROY MOORE, INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF GREGORY MOORE; SHIRLEY MOORE; ERIC MOORE; ALLEN TOMLINSON; NANCY TOMLINSON; CRITIC MILLS, INC.; WASHINGTON HOSPITAL CENTER; BURLINGTON NORTHERN RAILROAD; THE ROYAL INSURANCE COMPANY OF AMERICA; AETNA CASUALTY AND SURETY OF ILLINOIS; ILLINOIS DEPARTMENT OF PUBLIC AID; EMPLOYERS OF WAUSAU INSURANCE; FIRST STATE INSURANCE, DEFENDANTS.

The opinion of the court was delivered by: Mills, District Judge:

OPINION AND ORDER

We apply here the concept of "depecage".

On April 1, 1982, an explosion occurred at a welding shop in Cass County, Illinois, resulting in serious injury to three persons named as Defendants in this lawsuit. Sometime after the explosion, the insurance carrier for the shop, the Travelers Indemnity Company of Illinois (Travelers), filed this statutory interpleader action pursuant to 28 U.S.C. § 1335 against Roy Moore (administrator of the estate of Gregory Moore, who was killed in the explosion), the Washington Hospital Center of Washington, D.C. (which treated Gregory Moore), and a variety of other parties.

The action seeks a declaratory judgment as to how the proceeds of the insurance policy covering the shop, currently deposited in escrow by Travelers, should be distributed. Presently before the Court are cross motions for summary judgment on Counts I and II of Washington Hospital's cross-claim against Moore, which seeks a declaration that as a result of services it provided to Gregory Moore, the hospital has a valid and enforceable lien against (1) the estate of Gregory Moore, and (2) the proceeds of any wrongful death claim Moore may have against any negligent party. Also before the Court are motions for summary judgment filed by other parties asserting claims to the proceeds of the insurance policy.*fn1 These parties move for summary judgment on their cross-claims against Washington Hospital for declaratory relief to the effect that the hospital has no lien or claim to those proceeds.

Summary Judgment Standard

Summary judgment is proper only when "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In determining whether an issue of material fact exists, the Court must construe the facts alleged in the light most favorable to the party opposing the motion for summary judgment. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Stumph v. Thomas & Skinner, Inc., 770 F.2d 93, 97 (7th Cir. 1985). Cross motions for summary judgment require no less careful scrutiny of the factual allegations. LacCourte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th Cir. 1983). In determining whether such undisputed facts entitle one of the parties to judgment in their favor, the Court's inquiry "unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the [moving party] is entitled to a verdict — `whether there is [evidence] upon which a jury can properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed.'" Anderson v. Liberty Lobby, Inc., ___ U.S. ___, ___, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (quoting Improvement Co. v. Munson, 14 Wall. 442, 448, 81 U.S. 442, 20 L.Ed. 867 (1872) (emphasis in original)).

The parties are essentially in agreement as to the facts that are necessary to resolve the issues presented by the motions now before the Court. The entry of summary judgment is therefore appropriate. Before turning to the issues presented by these motions, a brief review of the facts of this case is necessary.

Background

On April 1, 1982, Steve Edwards and Gregory Moore went to the premises owned by Critic Mills, Inc. (Critic Mills) in Cass County, Illinois, to do repairs to the facilities. While Edwards was using an electric welder, the explosion and fire occurred. Gregory Moore and Allen Tomlinson, an employee of Critic Mills, were present at the place where Steve Edwards was doing the welding. All three parties suffered burns, with Allen Tomlinson and Gregory Moore receiving the worst burns. Allen Tomlinson was treated for his burns at Memorial Hospital in Springfield, Illinois. Gregory Moore was also initially treated there but was later transferred to the burn unit of the Washington Hospital Center in the District of Columbia. Gregory Moore remained in that hospital until he died on May 27, 1982, as a result of the burns received in the explosion.

On May 30, 1982, Washington Hospital sent a statement for the treatment of Gregory Moore to 704 Railroad Street, Beardstown, Illinois, the address contained under patient identification in the hospital's records and the same address that Roy Moore wrote on the Washington Hospital's return envelope as his own address. On June 28, 1982, Roy Moore was appointed Administrator of the Estate of Gregory Moore, Deceased, by the Circuit Court of Cass County, Illinois. Letters of office were issued on that date. In a letter dated July 6, 1982, William Allison notified the hospital that he was the attorney for the estate of Gregory Moore and requested a copy of the itemized hospital charges. On July 12, 1982, the hospital submitted to William Allison its itemized statement of hospital charges for treatment provided to Gregory Moore.

Washington Hospital sent additional statements for hospital charges to Roy Moore. In response, Roy Moore wrote a letter to the hospital dated September 18, 1982, informing the hospital that a lawsuit was pending and that all bills for Gregory Moore were to be sent to the Illinois Department of Public Aid. There is no written contract between Moore and the hospital.

On July 17, 1982, Washington Hospital filed a hospital lien for medical services rendered to the decedent pursuant to the District of Columbia Code, §§ 38-301 et seq. (1981)*fn2, in the amount of $237,081.60 and notice of said lien was served upon Travelers, Aetna*fn3, Critic Mills, Edwards, the State of Illinois, Attorney William Allison, and Roy Moore, prior to the payment of any money to the injured person, his attorney or his legal representative.

On September 21, 1984, Travelers Indemnity Company of Illinois (Travelers), the insurance carrier for Steve Edwards, Robert J. Edwards, and Edwards Welding Shop (Edwards), filed the underlying interpleader action, pursuant to 28 U.S.C. § 1335, naming Washington Hospital and the Moores among others as Defendants. Pursuant to this Court's order of September 25, 1984, Travelers deposited $300,000 in an escrow account as full satisfaction of its liability under its insurance policy issued to Edwards and on April 11, 1985, the Court entertained Travelers' motion for summary judgment. Finding that Travelers was a disinterested stakeholder faced with conflicting claims and demands far in excess of the insurance policy limits, this Court granted Travelers' motion for summary judgment and ordered the following relief, pursuant to 28 U.S.C. § 2361:

  1. That all parties hereto are restrained and
  enjoined permanently from instituting or
  prosecuting any action against Travelers
  Indemnity Company of Illinois or their insureds
  for the recovery of any amount therefrom arising
  out of the occurrence and policy at issue here;

  2. That all parties with potential claims, liens,
  or demands are required to make known their
  intentions and join this action on or before May
  16, 1985.

The summary judgment motions now pending ask the Court to decide essentially two issues: (1) whether Count I of the hospital's claim against the estate of Gregory Moore is barred by its alleged failure to comply with Ill.Rev.Stat., ch. 110 1/2, § 18-12, requiring that all claims against the estate be filed with the administrator or the Court; and (2) whether this federal court, sitting in Illinois in an interpleader action, should enforce the hospital's lien (which arises under District of Columbia law) against the proceeds of an Illinois wrongful death claim. The Court addresses each of these issues in turn in light of the principles applicable to the entry of summary judgment.

I

The Moores' first contention is that Count I of Washington Hospital's claim — that the hospital has a valid lien against the estate of Gregory Moore — is barred by Illinois law which requires timely notification of a claim against an estate. Section 18-12, chap. 110 1/2, of the Illinois Revised Statutes states that "[a]ll claims against the estate of a decedent . . . not filed with the representative or the court within six months after the entry of the original order directing issuance of letters of office are barred as to all of the decedent's estate." Ill.Rev.Stat., ch. 110 1/2, § 18-12 (1983 and Supp., 1984-1985) (emphasis added). Furthermore, every claim "must be filed in writing and state sufficient information to notify the representative of the nature of the claim or other relief sought." Ill.Rev.Stat., ch. 110 1/2, § 18-2 (1983 and Supp., 1984-85). The claim, however, need not be filed with the court, but "may be filed with a representative or the court or both." Ill.Rev.Stat., ch. 110 1/2, § 18-1 (1983 and Supp., 1984-85) (emphasis added).

With respect to the sufficiency of notice under the Illinois Probate Act, the following facts are undisputed:

  1. The hospital submitted itemized statements of
  hospital charges incurred for the treatment of
  Gregory Moore to Roy L. Moore, the father of the
  decedent Gregory Moore and administrator of the
  estate of Gregory Moore, deceased, by mail to 704
  Railroad Street, Beardstown, Illinois, the
  address of record for Roy L. Moore.

  2. Roy L. Moore acknowledged receipt of the
  hospital's itemized statements by letter to the
  hospital dated September 18, 1982, in which Roy
  Moore directed the

  hospital to send all bills for Gregory Moore to
  the Illinois Department of Public Aid.

  3. That Roy L. Moore also acknowledged receipt of
  the hospital charges in a conversation with Gary
  Short, collection representative for the
  hospital.

  4. In a letter dated July 6, 1982, William A.
  Allison, Esq., notified the hospital that he was
  the attorney for the estate of Gregory Moore,
  deceased, and requested a copy of the hospital's
  statement of charges incurred in the treatment of
  Gregory Moore.

  5. On July 12, 1982, the hospital mailed a copy
  of the hospital's itemized statement of charges
  for the treatment of Gregory Moore to William A.
  Allison, Esq.

  6. On July 17, 1982, the hospital filed a
  hospital lien pursuant to the laws of the
  District of Columbia in the amount of $237,081.60
  for the charges incurred in the treatment of
  Gregory Moore, and perfected its lien by
  complying with all statutory requirements.

  7. The hospital filed notice of its lien against
  the estate of Gregory Moore, deceased, by
  submitting a copy of the hospital's lien setting
  forth the amount of the hospital charges incurred
  in the treatment of Gregory Moore to William A.
  Allison, Esq., attorney for the estate of Gregory
  Moore, deceased, by certified mail delivered to
  him on July 1, 1982.

The evidence summarized above, which is contained in uncontested affidavits filed on behalf of Washington Hospital, clearly indicates that the administrator of the estate had sufficient notice of the nature of the hospital's claim as required by § 18-2 of the Probate Act. Under Illinois law, technical legal form is not required in the presentation of claims, and proceedings in probate court for the allowance of claims are not governed by the technical rules which apply to a formal suit at law. Sheetz v. Morgan, 98 Ill. App.3d 794, 54 Ill.Dec. 117, 424 N.E.2d 867 (1981); In re Estate of Piper, 59 Ill. App.3d 325, 327, 16 Ill.Dec. 604, 375 N.E.2d 477 (1978). Rather, all the Probate Act requires is that the claim "be in writing and state sufficient information to notify the representative of the nature of the claim or other relief sought." Ill.Rev.Stat., ch. 110 1/2, § 18-2; see also Hobin v. O'Donnell, 115 Ill. App.3d 940, 71 Ill.Dec. 542, 451 N.E.2d 30 (1983).

The hospital's claim involved herein satisfies these requirements. It was set forth to the administrator in writing, and gave the estate notice of the nature of the claim. Thus, the hospital has met the requirements of § 18-2, thereby entitling its lien to consideration as a claim against the estate.*fn4

Ergo, in light of the foregoing discussion, the Court finds that Washington Hospital is entitled to judgment in their favor on the issue of liability in Count I of their cross-claim against the estate of Gregory Moore.*fn5

II

The second issue presented by the parties is whether an out-of-state lien can be enforced against the proceeds of an Illinois wrongful death claim. The Moores, and the parties aligned with them, have expended considerable effort to convince the Court that under the appropriate conflict of law rules, an Illinois court would refuse to enforce the hospital's lien, perfected under the laws of the District of Columbia, against the proceeds of a wrongful death claim. They have argued that an Illinois court would not enforce such a lien because to do so would contravene Illinois public policy as embodied by the Illinois wrongful death statute; and, alternatively, that the District of Columbia Hospital Lien Statute was never intended to have extraterritorial effect. Resolution of these issues requires a threshold determination of the law that is applicable to the question of the enforceability of an out-of-state lien against an Illinois wrongful death claim.

As jurisdiction in this case is based upon diversity of citizenship, this Court must apply the law of the forum state, including its conflict of laws rules, to determine the rights of the parties. Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Federal statutory interpleader actions, premised upon the diversity of citizenship of the claimants, are no different in this regard from actions brought under the Court's general grant of diversity jurisdiction. Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481 (1941). This Court, therefore, must apply Illinois' conflict of laws rules to the facts of this case.

Illinois courts rely on the "most significant contacts" test to determine the applicable law. Champagnie v. W.E. O'Neil Construction Co., 77 Ill. App.3d 136, 32 Ill.Dec. 609, 395 N.E.2d 990 (1979); Ingersoll v. Klein, 46 Ill.2d 42, 262 N.E.2d 593 (1970). This so-called "test" is really a list of relevant factors meant to illuminate which state has the most significant interest in the application of its own substantive law to the merits of the issue involved. In this regard, the Seventh Circuit has approved the concept of "depecage": the process of applying rules of different states to the various issues involved in the lawsuit. In re Air Crash Disaster Near Chicago, Illinois, on May 25, 1979, 644 F.2d 594, 611 (7th Cir. 1981). This means that the choice of the applicable law should depend on the issue involved. As explained by the Court in Air Crash:

    The application of choice-of-law rules is not a
  mechanical process of cranking various factors
  through a formula. Critical to conflicts analysis
  is the notion that we must examine the
  choice-of-law rules not with regard to various
  states' interests in general, but precisely, with
  regard to each state's interest in the specific
  question of punitive damages. Thus, we approve
  the concept of "depecage": the process of
  applying rules of different states on the basis
  of the precise issue involved.

644 F.2d at 610-11.

Thus, the search is not for the state whose law will be applied to govern all the issues in the case; rather, it is for the rule of law that can most approximately be applied to govern the particular issue. See Reese, Depecage: A Common Phenomenon Choice of Law, 73 Colum.L.Rev. 58, 59-60 (1973).

Applying the concept of depecage is particularly useful in the context of interpleader actions where, as here, the forum state does not have the most significant relationship to all the underlying transactions and parties. Thus, although Illinois law may apply to the issue of liability vis-a-vis Moore and Edwards and Critic Mills, this Court, applying depecage, is free to apply the substantive law of the District of Columbia to the issue of liability vis-a-vis Moore and Washington Hospital if it is determined that the District of Columbia has the most significant relationship to that issue. The Court now proceeds to an examination of the precise issue before the Court as it relates to the conflicts of laws rules applied by Illinois courts. In this regard, this Court will utilize Restatement 2d Conflict of Laws, § 188(1) and (2), concerning conflict of laws in contract actions, as relied upon by the Court in Champagnie.

Section 188(2) of the Restatement sets up the following relevant factors: (a) the place of the contracting; (b) the place of negotiation of the contract; (c) the place of performance; (d) the location of the subject matter of the contract; and (e) the domicile, residence, nationality, place of incorporation, and place of business of the parties. Restatement 2d, Conflicts of Law, § 188(2) (1981). In addition to these factors, section 188 directs the reader to section 6 of the Restatement for further consideration. Section 6 lists: (a) the needs of the interstate and international systems; (b) the relevant policies of the forum; (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue; (d) protection of justified expectations; (e) the basic policies underlying the particular field of law; (f) certainty, predictability, and uniformity of results; and (g) ease in which the determination and application of the law is to be applied. Restatement 2d, Conflicts of Law, § 6 (1971).

In analyzing these factors, Illinois requires more than a mere counting of contacts to determine which state has the "most significant relationship" to the transaction. Rather, what is required is a "consideration of the interests and public policies of potentially concerned states and a regard as to the manner and extent of such policies as they relate to the transaction in issue." Mitchell v. United Asbestos Corp., supra, 100 Ill. App.3d 485 at 493-94, 55 Ill.Dec. 375 at 380-81, 426 N.E.2d 350 at 355-56 (citing Johnson v. Spider Staging Corp., 87 Wn.2d 577, 582, 555 P.2d 997, 1001 (1976)). This approach is based on the principle that "[c]ontacts obtain significance only to the extent they relate to the policies and purposes sought to be vindicated by the conflicting laws." Id.

Applying § 188 of the Restatement, Factors (a) through (d) weigh in favor of the application of District of Columbia law to the question of the enforceability of the lien, since the lien arose from an implied contract that was performed in the District. Factor (e), the domicile and place of business of the parties, points to both Illinois and the District of Columbia. The issue at this juncture is the importance of these contacts in light of the principles espoused by § 6 of the Restatement.

In analyzing the principles enunciated by this section, the parties have focused on the question of the relevant policies of the interested states, which is essentially Factors (b), (c), and (e) of § 6. The Moores contend that D.C. law should not be applied because the District of Columbia would enforce the lien against the proceeds of a wrongful death claim, which is something an Illinois court would not do.*fn6 Therefore, the Moores argue, the strong interest Illinois has in insuring that liens are not satisfied through the proceeds of an Illinois wrongful death claim mandates the application of Illinois law to protect this interest.

The Moores' argument is without merit because it mistakenly assumes that the District of Columbia would — in contrast to Illinois — satisfy a lien with the proceeds of a wrongful death claim.

Chapter 27 of the District of Columbia Code § 16-2701 provides, in relevant part, as follows:

  § 16-2701. Liability; damages; prior recovery as
  precluding action.

    When, by an injury done or happening within the
  limits of the District, the death of a person is
  caused by the wrongful act . . . of a
  person . . . the damages . . . shall include the
  reasonable expenses of last illness and burial.

D.C. Code, § 16-2701 (1981).

Thus, it appears that the District of Columbia, as distinguished from the State of Illinois, allows recovery for the reasonable expenses of a decedent's last illness in a suit for the wrongful death of that person. However, the applicable District of Columbia statute which governs the distribution of damages in wrongful death actions must be read in conjunction with § 16-2701. That statute provides:

§ 16-2703. Distribution of damages.

    The damages recovered in an action pursuant to
  this chapter, except the amount specified by the
  verdict or judgment covering the reasonable
  expenses of last illness and burial, may not be
  apportioned to the payment of the debts or
  liabilities of the deceased person, but inure to
  the benefit of his or her family . . .

D.C. Code, § 16-2703 (1981).

The import of § 16-2703 is that it allows a hospital providing last illness medical care to recover its charges only to the extent specifically provided for in the judgment or verdict, no more and no less. Thus, should the judgment or verdict provide no award for medical expenses, as would always be the case in Illinois wrongful death actions, the hospital would recover nothing from that suit.*fn7 On the other hand, should the decedent's estate bring a survival action for personal injury, authorized by both jurisdictions, a hospital lien would attach to the proceeds of the survival action regardless of whether or not the proceeds are earmarked for medical expenses.

In sum, District of Columbia law provides for last illness medical care recovery within its Wrongful Death Act, in addition to authorizing survivor actions against which a hospital lien might attach. See generally, Rustin v. District of Columbia, 491 A.2d 496 (D.C.App. 1985), cert. denied, ___ U.S. ___, 106 S.Ct. 343, 88 L.Ed.2d 290 (1985). Illinois law, on the other hand, provides that only pecuniary loss is recoverable in a wrongful death action but, like the District of Columbia, authorizes survivor actions against which a hospital lien might attach. Graul v. Adrian, 32 Ill.2d 345, 205 N.E.2d 444 (1985). To find a conflict in the policies of the two states on the mere fact that Illinois requires a two count complaint in order to recover for wrongful death and last illness medical expenses while the District of Columbia requires only one is to exhault form over substance. Given this distinction, it cannot even be concluded that the differences between the District of Columbia's Wrongful Death Act and that of Illinois' pose an actual conflict of law.

Hospital lien statutes are remedial, having been enacted for the very humane purpose of encouraging hospitals to extend their services and facilities to indigent and uninsured persons. This purpose is effectuated by the provisions of the statute which assure that hospitals are compensated for the use of their facilities and the service rendered. The legislatures of both Illinois and the District of Columbia do so by providing that when a patient's injury is paid under a judgment, compromise, or settlement agreement, the hospital is entitled to be paid first from the proceeds if the hospitals comply with the statutory requirements of the forum. While there are some differences between the Illinois and the District of Columbia hospital lien statutes, both Illinois and the District of Columbia have indicated a legislative intendment to protect the interests of certain hospitals within their boundaries that provide hospital and medical services without receiving payment. Perfection of a lien under the District of Columbia's hospital lien statute simply does not conflict with any of the policies underlying Illinois law.

Consequently, because the statutory framework of both states is similar and the results under each statute are precisely identical, the policy arguments raised by the parties do no more than weigh equally in favor of application of either state's law. It is this Court's view that the other factors articulated by § 188 and § 6 weigh in favor of applying D.C. law to the issue of the enforcement of the hospital's lien.

As explained previously, the District of Columbia would not enforce its hospital lien against the proceeds of any wrongful death claim. Therefore, summary judgment in favor of the Moores is appropriate on the central issue raised by the motions: whether the hospital's lien may be enforced against the proceeds of the Moores' wrongful death claim. The Court holds that it may not, and enters partial summary judgment on this issue.*fn8 However, should the Moores recover medical expenses or damages in a cause of action separate from their wrongful death claim, there would apparently be no policy prohibiting enforcement of the hospital's lien against such proceeds.*fn9

Ergo, it is ordered that the motions for summary judgment filed by the Moores and the parties aligned with them are ALLOWED to the extent Washington Hospital claims an interest in the proceeds of the Moores' wrongful death claim. The remaining motions for summary judgment are DENIED.


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