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May 2, 1997


Appeal from the Circuit Court of Cook County. Honorable Ian H. Levin, Judge Presiding.

Rehearing Denied June 24, 1997. Released for Publication August 5, 1997.

Presiding Justice Hartman delivered the opinion of the court. Hoffman and Hourihane, JJ., concur.

The opinion of the court was delivered by: Hartman

PRESIDING JUSTICE HARTMAN delivered the opinion of the court:

This appeal involves one of three successive and distinct Cook County Circuit Court actions. The initiating litigation by plaintiff was for medical malpractice, followed by supplementary proceedings in which she sought assets of the judgment debtor, and the last being a contract action by plaintiff as an assignee of the judgment debtor. Although only the contract action is presently being appealed, each will be explained briefly for purposes of understanding the nature of the present controversy.

Plaintiff, Danuta Ericksen, as administratrix of the estate of Bozena Bajaj (Ericksen), appeals the circuit court order in 94 L 13645, the contract action (contract action), in which her claim as assignee of her judgment debtor's, Dr. Kenneth L. Moore's (Dr. Moore) employment contract rights for indemnity against his former employer, Rush Presbyterian St. Luke's Medical Center (Rush), was dismissed.

The circuit court's basis for dismissing Ericksen's contract action was that a preceding court order in the supplementary proceedings (84 L 13737) (citation action) had ruled that a release signed by Ericksen and Rush barred Ericksen from proceeding any further in her pursuit of Dr. Moore's indemnity claim against Rush.

Ericksen sued Dr. Moore, her decedent's treating physician, and Rush, in 84 L 13737, a medical malpractice action (malpractice action), after her decedent died on January 7, 1984 in Rush's emergency room. Decedent first saw Dr. Moore in 1980, complaining of severe headaches, which Dr. Moore diagnosed as migraines. He treated decedent for her headaches during the time he worked as a resident physician for Rush, a period which extended from November 5, 1980, to June 30, 1981. Dr. Moore continued treating her thereafter as his private patient until January 5, 1984, when she was taken to Rush's emergency room. An autopsy revealed that she had suffered from hydrocephalus, a treatable brain condition.

The record reveals that when he began working for Rush, Dr. Moore entered into an understanding with Rush under a "House Staff Officer's Agreement," in which Rush promised to pay for legal obligations incurred by the doctor during the course of his Rush employment. The House Staff Officer's Agreement provided Dr. Moore with potential coverage under another document entitled, "Amended and Restated General/Professional Liability Loss Fund Trust Agreement" (Trust Fund). These documents evidenced up to $2 million in indemnification coverage per occurrence, and excess insurance of $5 million, or more, for liability resulting from malpractice claims. The Trust Fund was a private resource fund Rush established to insure itself and its employees against malpractice liability claims. Continental Illinois National Bank and Trust Company of Chicago (Continental) served as its fund trustee.

Ericksen was not apprised of the Trust Fund's existence or its potential benefit to Dr. Moore at the time of her settlement with Rush in the malpractice action in 1989, nor until after the jury's verdict against Dr. Moore and judgment on that verdict had been entered on June 12, 1991, although Ericksen previously had made inquiry of Rush as to potential malpractice coverage for Dr. Moore. Ericksen was not advised of the existence of the House Staff Officer's Agreement until Rush attached a copy of it to Rush's motion to dismiss the present contract action.

Ericksen's malpractice action against Dr. Moore was tried to a jury in 1991. At trial, Dr. Moore was represented by attorneys employed through his private malpractice insurance carrier, Medical Protective Company of Fort Wayne, Indiana (Medical Protective). Expert witnesses testified that Dr. Moore deviated from the standard of care during the entire time he treated decedent between 1980 and 1984, asserting that Dr. Moore could have diagnosed the cause of decedent's headaches correctly as early as November 1980 by running a CT scan, and could have treated her condition, which might have prevented her death. A jury returned a verdict against Dr. Moore, awarding Ericksen more than $5 million in damages.

Meanwhile, Rush had retained its own attorneys after the initial lawsuit was filed. Although Rush did not participate in Dr. Moore's malpractice trial, counsel for Dr. Moore kept Rush's attorney informed of the status of the case, without telling Ericksen's attorney about these discussions. Rush's legal department also sent written confirmation of Dr. Moore's indemnitee status to Medical Protective, acknowledging Dr. Moore's coverage by Rush for any suits arising from the time he worked at Rush.

As previously noted, in July 1989, two years before trial, Ericksen and Rush entered into a release agreement. In return for a cash settlement, Ericksen agreed to release Rush in the malpractice action, "its agents, servants, employees, officers, insurers, successors and assigns, *** from all claims and demands *** arising or growing out of an accident, casualty or event which occurred on or about the 5th day of January, 1984 ***." (Emphasis added) (E-R Release). The circuit court approved the settlement, in which Rush would pay Ericksen $36,123 and her attorney $12,000, and dismissed her claim against Rush.

In a post-trial motion before the trial judge, Dr. Moore argued for the first time that the E-R Release also released him from liability as a former Rush employee, and was given leave to file an affirmative defense based upon that release. In September 1991, the circuit court denied Dr. Moore's motion, holding among other things that Ericksen's settlement agreement with Rush did not release ...

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