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08/09/94 AMERICAN HEALTH CARE PROVIDERS v. COUNTY

August 9, 1994

AMERICAN HEALTH CARE PROVIDERS, INC., AN ILLINOIS CORPORATION, D/B/A AMERICAN HMO, PLAINTIFF-APPELLANT,
v.
THE COUNTY OF COOK; RICHARD J. PHELAN, PRESIDENT OF THE BOARD OF COMMISSIONERS OF COOK COUNTY; PATRICK MCFADDEN, COOK COUNTY PURCHASING AGENT; JOHN F. CHAMBERS, COOK COUNTY COMPTROLLER; PATRICIA CONNOLLY, COOK COUNTY DIRECTOR OF INSURANCE; WILLIAM S. SINGER, INDIVIDUALLY AND AS CONSULTANT TO COOK COUNTY; HEALTH CARE SERVICE CORPORATION, D/B/A BLUE CROSS/BLUE SHIELD OF ILLINOIS; BCI HMO, INC., A/K/A HMO ILLINOIS, INC.; HUMANA HEALTH PLAN, INC., A/K/A HUMANA HEALTH CARE PLANS-MICHAEL REESE; HUMANA INSURANCE COMPANY; CHICAGO HMO LTD.; CHICAGO HEALTH MULTI OPTION INSURANCE LTD.; RUSH-ANCHOR HMO; AND ARTHUR ANDERSEN & COMPANY, AS CONSULTANT TO COOK COUNTY; *FN1 DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County. Honorable David K. Slocum, Judge Presiding.

Hartman, DiVITO, McCORMICK

The opinion of the court was delivered by: Hartman

JUSTICE HARTMAN delivered the opinion of the court:

Plaintiff, American Health Care Providers, Inc., doing business as American HMO (American HMO), appeals from an order granting defendants' motions to dismiss counts I through IV of its second amended complaint (complaint), raising as issues whether (1) count I states a cause of action for a violation of the Cook County Minority Business Enterprises Ordinance § 10-43.1 et seq. (1990) (MBEO); (2) Cook County (County) must procure its contracts for employee health care programs through certain competitive bidding procedures; (3) count III sufficiently states a cause of action for misappropriation of public funds; and (4) count IV sufficiently states a cause of action for equitable relief. For reasons that follow, we affirm.

Defendant County, a home rule unit of government, sought to obtain health care coverage for its employees at a reduced cost while providing a high level of benefits. The County hired defendant William S. Singer as a consultant, who, acting for the County, delivered a request for proposals (RFP) to American HMO and 25 other companies. The RFP generally requested price quotations on several different types of health care plans, advised the bidders that the County had "the right to accept or reject any or all proposals or any portion thereof," and contained a provision which stated that "the contract or contracts will be awarded by the County Board in its discretion." Without questioning these conditions, American HMO submitted its proposal to Singer in July 1991, as did several defendants. Singer elected to conduct negotiations with parties other than American HMO to develop the health care contracts eventually entered into by the County. The final contracts were awarded to defendants Chicago HMO Ltd. and Chicago Health Multi Option Insurance Ltd. (jointly Chicago HMO); and Humana Health Plan, Inc. and Humana Insurance Company (jointly Humana). The procurement process used by the County in securing the new contracts indisputably did not constitute competitive bidding. Significantly, American HMO had been providing health care benefits to the County for over seven years and had enrolled some 500 County employees in its plan under contracts with the County which had been negotiated in essentially the same manner as the present contracts, without protest. American HMO is a minority-owned business (MBE) as defined by the County's MBEO; Chicago HMO and Humana are not. *fn2

American HMO's complaint contains six counts, only the firstfour of which are at issue in this appeal. Count I alleges that the County violated the MBEO in several ways. Count II alleges that the County failed to bid competitively the new contracts. Count III alleges that the County misappropriated public funds by failing to bid competitively the new contracts. Count IV, entitled "Equity," repeats the other allegations.

In its various prayers for relief, American HMO requested the circuit court to void the new contracts; order the County to reaward the contracts in accordance with the MBEO or through competitive bidding; enjoin Chicago HMO, Humana, and the other defendant health care companies from receiving future contracts from the County; and award American HMO 25% of the County's health care contracts. Alternatively, American HMO sought $8 million in compensatory damages and $40 million in punitive damages.

The several defendants each filed a motion to dismiss counts I through IV pursuant to sections 2-615 or 2-619 of the Civil Practice Act (735 ILCS 5/2-615, 5/2-619 (West 1992) (section 2-615 or section 2-619)), all of which were granted. As to those counts, the circuit court also denied American HMO leave to amend and found no just reason to delay appeal of the claims made therein.

To overcome a motion to dismiss, facts must be asserted which establish a duty, a breach of that duty, and resulting injury. ( Bell v. Village of Midlothian (1980), 90 Ill. App. 3d 967, 969, 414 N.E.2d 104, 46 Ill. Dec. 382.) The standard of review on appeal from a section 2-615 motion to dismiss is whether the complaint sufficiently states a cause of action. ( McCormick v. Kruk (1991), 220 Ill. App. 3d 449, 451, 581 N.E.2d 73, 163 Ill. Dec. 122.) Generally, a section 2-619 motion is properly allowed only when it raises affirmative matter which negates plaintiff's cause of action completely or when it refutes crucial Conclusions of law or Conclusions of material fact that are unsupported by allegations of specific facts. Health Employees Labor Program of Metropolitan Chicago v. County of Cook (1992), 236 Ill. App. 3d 93, 97, 603 N.E.2d 591, 177 Ill. Dec. 521.

Both section 2-615 and section 2-619 motions based on affirmative matter admit as true, for purposes of the motions, all well-pleaded facts and reasonable inferences that could be drawn from those facts ( Duncan v. Rzonca (1985), 133 Ill. App. 3d 184, 190, 478 N.E.2d 603, 88 Ill. Dec. 288 (section 2-615); Faerber Electrical Co. v. International Telephone & Telegraph Corp. (1984), 123 Ill. App. 3d 704, 707, 463 N.E.2d 820, 79 Ill. Dec. 266 (section 2-619)), but not Conclusions of law or Conclusions of fact unsupported by specific facts ( Groenings v. City of St. Charles (1991), 215 Ill. App. 3d 295, 299, 574 N.E.2d 1316, 158 Ill. Dec. 923 (section 2-615); Bell Fuels, Inc. v. Lockheed Electronics Co. (1985), 130 Ill. App. 3d 940, 943, 474 N.E.2d 1312, 86 Ill. Dec. 115 (section 2-619)). Additionally, in ruling ona section 2-619 motion, the circuit court may consider pleadings, discovery documents and affidavits submitted by the parties. ( Gaudynski v. Corbett (1980), 81 Ill. App. 3d 910, 914-15, 401 N.E.2d 1218, 37 Ill. Dec. 125.) Disputed questions of law are reviewed de novo. In re Marriage of Skinner (1986), 149 Ill. App. 3d 788, 791, 501 N.E.2d 311, 103 Ill. Dec. 290.

I.

American HMO initially contends the circuit court erred in ruling that its complaint states no cause of action against the County for a violation of the MBEO.

The MBEO's general provisions declare it the public policy of Cook County to promote the economic development of MBEs and female-owned businesses (WBEs), to have those businesses participate in the County's procurement process, and to provide those businesses increased opportunities for access to the County's procurement process. (MBEO, § 10-43.1.) A contract compliance administrator (CCA) shall implement a program called the Cook County Affirmative Action/Procurement Program. (MBEO, §§ 10-43.3(1) to (3).) The CCA's "duties shall include * * *: participating in all purchasing, bidding, and awards processes[;] * * * and participating in all pre-contract conferences." (MBEO, §§ 10-43.3(3)(f) & (g).) The MBEO states as "Programs Goals" that "the total percentage of contracts awarded for protected class business shall be a goal of 30%"; and "not less than 25% of the total dollar amount of County contracts, will be established as a goal to be awarded to minority owned business." MBEO, §§ 10-43.5(A) & (B).

American HMO maintains that the County has violated the MBEO in the following respects: it did not award 25% of its contracts to MBEs; it did not exercise its best efforts to comply with the MBEO guidelines; it prepared a misleading RFP which failed to disclose that the County would disregard all proposals for products not fully-insured; it failed to comply with the notice requirements; it failed to deal with American HMO, the only qualified minority-owned HMO, on the subject contracts; it improperly delegated its best efforts duty to other contracting parties; and the CCA assertedly failed to participate in all "purchasing, bidding and awards processes" and "all pre-contract conferences" as required by the MBEO.

American HMO's allegations boil down to the proposition that since it is the only MBE responding to the County's RFP, and the County chose not to award it any part of the health care contracts, ipso facto, the County has violated the MBEO. If American HMO's position were to be deemed correct, it would automatically be entitled to 25% of the County's health care contracts solely by virtue of its MBE status. The MBEO does not require the Cook County Board toaward American HMO the contracts at issue simply because it is a qualified MBE, especially where the Board determined, in an exercise of its discretion and home rule authority, that the County's interests would be better served by contracting with other parties.

The MBEO does not confer substantive rights, but merely sets forth the County's general goals and policies regarding minority participation in its contracts. The MBEO's plain language always refers only to "goals" of minority participation, not requirements. Webster's dictionary defines "goal" as "the end towards which effort or ambition is directed"; "aim, purpose"; and "a condition or state to be brought about through a course of action." (Webster's Third New International Dictionary 972 (1981).) To construe the MBEO otherwise could cause it to violate the equal protection clause. See City of Richmond v. J. A. Croson Co. (1989), 488 U.S. 469, 102 L. Ed. 2d 854, 109 S. Ct. 706.

American HMO nevertheless avers that the circuit court improperly disregarded its well-pleaded allegation that the County failed to use its best efforts to obtain MBE participation in the health care contracts. Three MBEO sections mention the words "best effort"--sections 43.6(A)(i)(6), 43.6(A)(i)(8)(a), and 43.8--but they do not prescribe a best efforts duty upon the County. The MBEO refers to "procurement 'best effort' guidelines. " (Emphasis added.) Although these are standards which the procurement personnel should use in an overall effort to make purchases from MBEs and WBEs, they create no best efforts duty. Assuming, arguendo, there was a best efforts duty, American HMO's count I fails to state a cause of action for ...


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