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03/09/89 Loyola University Medical v. Med Care Hmo

March 9, 1989

LOYOLA UNIVERSITY MEDICAL CENTER, PLAINTIFF-APPELLEE

v.

MED CARE HMO, DEFENDANT-APPELLANT



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

535 N.E.2d 1125, 180 Ill. App. 3d 471, 129 Ill. Dec. 360 1989.IL.301

Appeal from the Circuit Court of Cook County; the Hon. Dean J. Sodaro, Judge, presiding.

APPELLATE Judges:

JUSTICE LINN delivered the opinion of the court. JIGANTI, P.J., and JOHNSON, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LINN

This is a permissive interlocutory appeal pursuant to Supreme Court Rule 308 (107 Ill. 2d R. 308). Loyola University Medical Center (Loyola) brought suit to recover from Med Care HMO the amounts it expended for providing medical services to the child of a Med Care enrollee. Counts I and II of Loyola's complaint seek compensatory damages for its usual and customary charges for services rendered. Count III asserts a claim for attorney fees and exemplary damages pursuant to section 155 of the Illinois Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 767).

Med Care moved for dismissal of count III on the ground that Loyola had no standing to raise a section 155 claim because only an insured can make such claim. The trial court denied the motion but certified certain issues pertinent to this question. This court has granted review of the certified issues.

Background

Loyola is a not-for-profit, Illinois corporation which owns and operates Foster G. McGaw Hospital. Shonta Hicks' infant daughter was treated there from birth on October 27, 1986, through February 18, 1987. During oral argument, Loyola's attorney represented that the baby girl was born prematurely and, accordingly, transferred to McGaw because of that hospital's neonatal facilities, which the health care providers in Med Care's pool did not have available. *fn1

During the course of Baby Girl Hicks' admission, Shonta Hicks executed a form entitled "Admitting Authorization Record." One of the provisions of the form states as follows:

"Payment Guarantee/Assignment Of Insurance Benefits For and in consideration of hospital care to the above patient, I/we agree to pay the established rates of Foster G. McGaw Hospital and its physicians for all services, facilities, and supplies rendered hereunder."

"I hereby authorize insurance payment(s) to be made directly to the physician or physician of the Loyola Medical Center involved in the patient's care and to the hospital for services rendered, but the hospital payment shall not exceed the hospital's regular charge for this period of hospitalization. I understand that I am financially responsible for all hospital and physician charges not covered by my insurance plan."

According to Loyola's complaint, Med Care confirmed Baby Girl Hicks' eligibility for coverage and quoted the benefits to which the infant was entitled under Med Care's subscription certificate. The hospital treated the premature infant and participated in certain quality review procedures required by law.

Loyola produced monthly interim billings, which it sent to Med Care, and produced a final summation of itemized charges of $121,486.55. Med Care paid only $27,384,53. Med Care refused to pay the balance, which is the subject of counts I and II of the complaint. Count I alleges breach of contract based on the assignment and count II alleges detrimental reliance/estoppel. Count III seeks statutory damages for Med Care's allegedly vexatious and unreasonable refusal to reimburse Loyola for its services.

Med Care moved to dismiss count III on the ground that Loyola lacked standing as a noninsured and that, to the extent Loyola claimed to be an assignee of Hicks', the assignment was void because Med Care's general policy required advance written approval before policy benefits could be assigned.

In denying the motion to dismiss, the trial court certified these questions for review:

"a. Whether the language contained in LOYOLA's 'Payment Guarantee/Assignment of Insurance Benefits' is sufficiently unambiguous, as a matter of law, to constitute a valid assignment of all contractual rights to reimbursement for those services rendered by LOYOLA UNIVERSITY MEDICAL CENTER to Baby Girl Hicks during the entire course of Baby Girl Hicks' ...


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