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11/26/96 SHARE HEALTH PLAN ILLINOIS v. RUTH

November 26, 1996

SHARE HEALTH PLAN OF ILLINOIS, INC., PLAINTIFF-APPELLEE AND CROSS-APPELLANT,
v.
RUTH ALDERSON, DEFENDANT-APPELLANT AND CROSS-APPELLEE.



Appeal from the Circuit Court of Cook County. The Honorable Albert Green, Judge Presiding.

Rehearing Denied November 21, 1996. Released for Publication January 15, 1997.

The Honorable Justice DiVITO delivered the opinion of the court. Hartman, P.j., and Scariano, J., concur.

The opinion of the court was delivered by: Divito

JUSTICE DiVITO delivered the opinion of the court:

Share Health Plan of Illinois (Share) brought this action for reimbursement of medical expenses that it paid on behalf of Ruth Alderson after she was injured by third parties. Alderson received from the third-party tort-feasors a general, nonitemized settlement payment, from which Share requested reimbursement of paid medical expenses. The circuit court granted Share's motion for summary judgment. On Alderson's motion for reconsideration, the court reduced the judgment award by a pro rata amount of attorney fees paid by Alderson in pursuance of her tort settlement. Alderson appeals the order of summary judgment, and Share appeals the order reducing the judgment. For the following reasons, we affirm both the grant of summary judgment and the order reducing the judgment. *fn1

Share is a health maintenance organization (HMO) that contracts with the United States Health Care Financing Administration (HCFA) to provide and administer Medicare benefits through its SeniorCare program. In 1985, Share accepted Alderson's application for membership in the SeniorCare plan and issued her a subscription certificate and a member handbook.

On July 7, 1988, Alderson suffered severe injuries when a 2,000-pound compressor detached from a truck and pinned her against a wall. She incurred expenses of $68,835.85 for "medical specials." Share paid $21,317.35 of those medical specials, $14,110 of which was in satisfaction of a $42,220.25 bill owed to Northwestern Memorial Hospital. That hospital accepted Share's partial payment in full satisfaction of Alderson's bill in compliance with federal Medicare regulations that limit charges to Medicare or HMOs providing Medicare benefits.

Alderson filed a personal injury lawsuit against the third-party tort-feasors alleging that she sustained permanent injuries causing considerable pain and suffering, in the past and to be expected in the future, and permanent disability. She also alleged the loss of earnings and wages and the payment of medical, surgical, and hospital expenses. In that action, Alderson filed a pretrial memorandum itemizing $68,835.85 of "medical specials" that she incurred. In November 1990, Alderson settled the lawsuit and received a general, nonitemized payment of $700,000.

Share subsequently sought reimbursement from Alderson for the medical expenses it had paid. The parties entered into negotiations. On November 14, 1990, Share sent Alderson a letter agreeing to accept $20,727.10 in settlement of its claim. In response, Alderson's attorney wrote that payment would be withheld until Share provided cancelled checks of its payments to medical providers. Share forwarded copies of the cancelled checks to Alderson, but received no payment.

On November 26, 1990, Alderson and her attorney filed a "settlement breakdown sheet" in the personal injury action. The sheet listed a lien to "Share HRI" for $20,727.10.

On September 12, 1991, Share filed this action, requesting $49,143.35 for the "reasonable value" of the medical expenses it paid. On October 22, 1991, Alderson filed its class action alleging that Share engaged in the improper practice of seeking reimbursement of medical expenses (1) in excess of the amounts actually paid to providers and (2) from nonitemized settlements received by its members from third-party tort-feasors. In December 1992, Share filed an amended complaint lowering its request to $20,727.10.

On October 19, 1994, the circuit court granted Share's motion for summary judgment and awarded it $20,727.10. On January 18, 1995, the court granted Alderson's motion for reconsideration and reduced the judgment to $13,824.98 to reflect Share's pro rata portion of attorney fees incurred by Alderson to obtain the $700,000 settlement.

Share contends that it is entitled to summary judgment because it has a right to reimbursement as a secondary Medicare payer. Alderson responds that Medicare regulations required Share to prove that medical expenses were contained in the settlement she received.

Orders of summary judgment are reviewed de novo to determine whether any genuine issues of material fact exist and whether the movant is entitled to judgment as a matter of law. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 ...


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