The opinion of the court was delivered by: Martin C. Ashman, Magistrate Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff, the Estate of Judith Cencula, by Arthur Cencula as
Independent Administrator, brought suit against Defendant, John Alden
Life Insurance Company, to recover unpaid medical benefits under the
terms of a group insurance plan. On March 28, 2000, this Court granted
Plaintiff's Motion for Summary Judgment as to liability, finding
Defendant accountable for Plaintiff's unpaid medical bills.
Two months later, on May 30, 2000, Plaintiff and Defendant negotiated a
settlement agreement. Consequently, the case was dismissed with prejudice
with the understanding that this Court retained jurisdiction for the
purpose of enforcing the settlement agreement. Now, pursuant to that
provision, Plaintiff brings a Petition to Enforce Settlement Agreement and
for Other Relief. Plaintiff contends that Defendant has acted in bad
faith by failing to carry out the terms of the settlement agreement with
a reasonable time. For the reasons that follow, Plaintiff's petition is
granted in part and denied in part.
As more fully described in Cencula v. John Alden Life Insurance Co.,
No. 98 C 0562, 2000 WL 336522 (N.D.Ill. Mar. 28, 2000), this case
commenced as a result of Defendant's refusal to pay insurance claims that
accrued as a result of Judith Cencula's fatal bout with cancer. On
October 6, 1998, one of Plaintiff's claims was dismissed pursuant to
Federal Rule of Civil Procedure 12(b)(6). But on March 28, 2000, this
Court found Defendant liable for Plaintiff's unpaid medical bills
pursuant to the terms of Defendant's group insurance plan.
With Defendant's liability determined, the parties turned their
attention to damages. During a settlement conference on May 30, 2000, the
parties reached an oral agreement and the case was dismissed with
prejudice. In exchange for a release from all claims, Defendant agreed to
reimburse plaintiff for certain out-of-pocket prescription expenses and
premium payments, to pay Plaintiff's attorney's fees, and to satisfy
numerous outstanding medical bills. Apparently, Defendant promised to
reduce the agreement to writing and to submit a copy to Plaintiff for
review within two weeks time.
However, the two weeks came and went without communication from
Defendant regarding the settlement agreement. Plaintiff telephoned
Defendant to inquire about the delay and left a voice-mail message
reminding Defendant that the written settlement agreement was overdue.
Defendant never returned the call.
To Plaintiff's satisfaction, the written settlement agreement contained
all of the orally agreed upon terms that Plaintiff anticipated. The
agreement contained provisions requiring Defendant to reimburse Plaintiff
for out-of-pocket prescription expenses and insurance premiums, to pay
Plaintiff's attorney's fees, and to satisfy all of the outstanding
medical bills that Judith Cencula incurred. The agreement also
established a time frame in which Defendant was obligated to make some of
those payments. For instance, the agreement required Defendant to
reimburse Plaintiff for the out-of-pocket prescription expenses and to
pay Plaintiff's attorney's fees immediately. But for other matters such as
Defendant's obligation to pay Plaintiff's unpaid medical bills, the
agreement contained no specific time reference.
Nonetheless, the agreement did require Defendant to "exercise all due
diligence" in carrying out the terms of the agreement. (See Pet. Enforce
Settlement & Other Relief Ex. C at 4.) Oddly, however, the agreement
contained no provision dealing with breach of the agreement.
Furthermore, the agreement contained no provision for attorney's fees in
the event one party had to come into court to enforce the settlement
The first payments under the settlement agreement came trickling in
around July 20, 2000. At that time, Defendant paid $3,257.16 to plaintiff
for out-of-pocket prescription expenses, $600 to Plaintiff for insurance
premiums, and $80,000 to Plaintiff for attorney's fees. Allegedly these
payments were seven weeks overdue. Defendant never provided plaintiff with
a reason for the delay.
But plaintiff was not the only one who was experiencing difficulty
receiving payment. On August 4, 2000, the University of Chicago Hospitals
sent a letter to Plaintiff demanding payment of a $130,310.88 bill.
Evidently, Chicago Hospitals knew of the settlement and grew tired of
waiting for its share. Another letter sent by Chicago Hospitals on
October 2, 2000, apprised Plaintiff of Chicago Hospitals's frustrated
dealings with Defendant. Purportedly, Defendant refused to agree to any
particular sum for satisfaction of the outstanding medical bill or to
provide Chicago Hospitals with an indication of when Chicago Hospitals
would receive any money at all. As a result, Chicago Hospitals threatened
to increase the amount due from $130,310.88 to $153,612.68, recanting its
willingness to discount the bill. The apparent point of contention
between Chicago Hospitals and Defendant concerned conflicting
interpretations of the Illinois Probate Act.
With no end in sight, on October 11, 2000, Plaintiff returned to
court. Plaintiff filed a Petition to Enforce Settlement Agreement and for
Other Relief asking this Court to enter judgment against Defendant in the
amount of $153,612 for payment to Chicago Hospitals, to impose upon
Defendant a $25,000 statutory penalty for Defendant's dilatory conduct,
to award Plaintiff attorney's fees for bringing the petition, and to
require Defendant to submit a monthly written report to Plaintiff
detailing Defendant's progress in settling the unpaid claims.
The petition led to additional court appearances. Then on November 30,
2000, this Court granted Plaintiff part of the relief requested by
requiring Defendant to submit monthly status reports to Plaintiff
detailing Defendant's efforts to discharge its payment obligations under
the settlement agreement. At that time, ...