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LUTHERAN GEN. HOSP., INC. v. PRINTING INDUS.

September 22, 1998

LUTHERAN GENERAL HOSPITAL, INC. an Illinois corporation, n/k/a Advocate Health and Hospital Corporation, Plaintiff,
v.
PRINTING INDUSTRY OF ILLINOIS/INDIANA EMPLOYEE BENEFIT TRUST, HEALTH DIRECT, INC., an Illinois corporation, THOMAS J. HOCHLEUTNER, and AMANDA HOCHLEUTNER, Defendants.



The opinion of the court was delivered by: MAROVICH

MEMORANDUM OPINION AND ORDER

 Plaintiff Lutheran General Hospital, Inc., an Illinois not-for-profit corporation, n/k/a Advocate Health and Hospital Corporation ("LGH"), filed an action against Defendants Printing Industry of Illinois/Indiana Employee Benefit Trust ("PII") and Health Direct Insurance, Inc. ("Health Direct"), alleging violation of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. 1001, et seq. (Counts I & II) *fn1" and against Thomas J. Hochleutner and Amanda Hochleutner ("the Hochleutners"), alleging breach of contract (Count III). PII now moves to dismiss Count I, and the Hochleutners move to dismiss Count III. For the reasons set forth below, Defendants' respective motions are denied.

 BACKGROUND

 On July 12, 1996, Amanda Hochleutner gave birth prematurely to twins, Mark and Kaitlyn, at LGH. Since the birth of the twins was premature, they required extended hospitalization and neonatal intensive care. During Mark's hospitalization at LGH from July 12, 1996 through September 18, 1996, he incurred medical bills totaling $ 220,776.05. Kaitlyn was hospitalized from July 12, 1996 through October 9, 1996 and incurred medical bills totaling $ 271,621.65.

 At the time of the twins' birth, their father, Thomas Hochleutner was a participating member in a medical care benefit plan established by PII for various participating employers, employees and eligible dependents ("Plan"). PII is a multi-employer welfare benefit plan existing and operating under the provisions of ERISA. As Thomas Hochleutner's wife, Amanda Hochleutner was eligible for benefits under the Plan. Both twins were also covered by the Plan. The Plan was administered by Health Direct as a third-party administrator.

 While at the hospital, Thomas signed a Consent and Authorizations form ("Consent"). Among other provisions, the Consent stated:

 
3. Authorization For Payment Of Hospital Services - I hereby authorize my insurance company or other third party payor to pay the Hospital for all services rendered to me. I will be fully responsible for payment of any and all charges not covered by third party payors. If I have not paid my outstanding balance after receiving notice from the Hospital, I understand that the Hospital will send my bill to a collection service. I agree to pay the Hospital all costs of such collection service, including reasonable attorney's fees and court costs.

 (Am. Compl., Ex. A.) By signing the Consent, LGH maintains that Thomas Hochleutner assigned his benefits due under the Plan in favor of LGH.

 On July 15, 1993, Lutheran General Health Practice Organization, Inc. ("HPO") *fn2" entered into a Hospital Services Agreement ("Services Agreement") with Health Direct to provide hospital services to Health Direct insurance members. (Hochleutners' Mot. to Dismiss at 2.) *fn3" Section 2.6 of the Agreement states:

 
HPO agrees that in no event . . . shall HPO or its assignees of subcontractors have a right to seek any type of payment . . . or have any recourse against the Member, persons acting on the Member's behalf . . ., the Group, or Group Service Agreement contract holder for authorized Covered Services provided pursuant to this Agreement except for the payment of applicable Coinsurance and Copayments for authorized Covered Services or fees for non-Covered Services rendered with the informed consent of the Member.

 The Service Agreement was in effect at all relevant times.

 Although partial payments have been received by LGH in regards to the twins' hospital care and medical services bills, LGH alleges that it is still owed money. As for Mark's bill, LGH received payments totaling $ 154,376.10 and is allegedly owed a balance of $ 66,399.95. (Am. Compl. P 10.) As for Kaitlyn's bill, LGH received a total of $ 151,024.33 and a $ 120,597.52 balance allegedly remains. (Id. P 11.)

 On July 14, 1997, LGH filed a Verified Complaint in the Circuit Court of Cook County. On August 22, 1997, PII removed the action to this Court pursuant to 28 U.S.C. § 1441 and 1446 and LGH later amended the Complaint. In Count I, LGH alleges that PII violated ERISA by failing and refusing to pay the remaining balance of the twins' hospital bill. In Count III, LGH alleges that the Hochleutners were obligated to pay the balance due to LGH for all services rendered and not paid for by the third-party payor and that they are in breach of contract for failing to do so.

 Both PII and the Hochleutners have filed motions to dismiss the counts against them. PII alleges that Count I should be dismissed because as a health care service provider, rather than a "participant" or "beneficiary" of PII's employee benefits Plan, LGH lacks standing to maintain this action. The Hochleutners allege that Count III should be dismissed because the Service ...


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