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Seminary Manor v. McVietty

March 31, 2000

IN RE ESTATE OF EVELYN G. MCVIETY, F/K/A EVELYN G. ZUIDEMA, DECEASED (SEMINARY MANOR AND ROSEWOOD CARE CENTER OF GALESBURG, PLAINTIFFS-APPELLEES,
V.
ESTATE OF EVELYN G. MCVIETTY, DECEASED, DEFENDANT-APPELLANT).



Appeal from the Circuit Court of the 14th Judicial Circuit Henry County, Illinois No. 95--P--216 Honorable Clarke C. Barnes Judge, Presiding

The opinion of the court was delivered by: Justice Breslin

Defendant, the executor of the estate of Evelyn McVietty (estate), appeal from the trial court's decision in favor of plaintiffs Seminary Manor and Rosewood Care Center of Galesburg (plaintiffs). The trial court found that the probate claims filed by the plaintiffs were entitled to super priority and should be paid in full. In accord with the following discussion, we reverse and hold that, when an estate is insolvent, probate claimants of that estate are not entitled to direct reimbursement from health insurance proceeds paid to the estate for health services provided by the claimants to the decedent. The claims of such claimants are seventh-class claims under the Probate Act of 1975 (the Act) (755 ILCS 5/1 et seq. (West 1998)) and must be treated as such.

FACTS

The plaintiffs furnished Evelyn G. McVietty with nursing home care and, upon her death, each filed a contract claim against the estate for services rendered. Seminary Manor sought $1,790 and Rosewood sought $2,774.

At McVietty's death, her estate was reimbursed for the nursing home services through an insurance policy. The policy paid the full $1,790 for the Seminary Manor services and paid $805 for the Rosewood services. McVietty had not assigned her rights to the insurance proceeds to the nursing homes. The sums were paid directly to the estate, which treated the proceeds as assets of the estate. The estate was insolvent, however. Eight contract claims totaling approximately $16,868 were filed against it while its total reported assets were approximately $11,140.

At a hearing on the claims, the parties stipulated to the amounts owed to the plaintiffs. The estate argued that the insurance proceeds were part of the estate and that the plaintiffs' claims should not be given priority. The nursing homes argued that the insurance resulted from services rendered by them and should be held by the estate in a constructive trust for their benefit.

The trial court found in favor of the plaintiffs, holding that Seminary Manor's claims were to be paid in full and that $805 of the Rosewood claim was to be paid, with the balance of $1,369 to be treated as a seventh-class claim under the Act. In other words, the court directed the estate to pay the exact amounts of the insurance reimbursement to the nursing homes. The court stated that to treat the claims in any other fashion would be an unjust enrichment to the estate. The estate now appeals.

ANALYSIS

The estate argues that the insurance proceeds are part of the estate assets and, under the Act, the plaintiffs' claims should not have been given priority to those assets. We agree.

Section 18-10 of the Act provides that all claims against the estate of a decedent are divided into classes in the following manner:

"1st:Funeral and burial expenses ***.

2nd: The surviving spouse's or child's award.

3rd: Debts due the United States.

4th: Money due the employees of the decedent *** and expenses ...


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