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Richmond v. Caban

August 21, 2001


Appeal from the Circuit Court of Kane County. No. 98-L-660 Honorable Gene L. Nottolini, Judge, Presiding

The opinion of the court was delivered by: Justice Byrne


Petitioners, Scott Richmond and Kristine Richmond, as the parents and next friends of their minor daughter, Blythe Richmond, appeal the trial court's judgment enforcing the hospital lien filed by respondent Copley Memorial Hospital for medical expenses Blythe incurred. On appeal, petitioners argue that the lien is void because (1) the "Hospital Agreement" between Copley and petitioner's insurance policy administrator, respondent Dreyer Medical Center (Dreyer), required Copley to file a claim with Dreyer before seeking reimbursement from Blythe's estate, (2) section 2--8(a) of the Health Maintenance Organization Act (HMO Act) (215 ILCS 125/2--8(a) (West 1998)) prohibits Copley from enforcing the lien, and (3) Copley's allegedly arbitrary filing of a lien against Blythe's estate contravenes public policy. We agree with petitioners' second argument, and we reverse and remand the cause with directions.


Most of the facts of the case are undisputed. On September 16, 1998, Scott Richmond was driving his car in which his 12-year-old daughter, Blythe, rode as a passenger. Another car, driven by defendant, Delores Caban, struck Richmond's vehicle. Blythe and her father sustained personal injuries, and Blythe was treated at Copley, where she incurred $24,238 in medical expenses. At the time of the accident, Blythe was covered by her parents' Blue Cross/HMO Illinois health insurance policy, and petitioners had timely paid all premiums due. The policy, which was administered by Dreyer, designated Copley as petitioners' "provider hospital." The parties dispute whether petitioners' policy covered the medical services Copley rendered, and the record does not reveal whether the trial court decided the issue.

At the time of the accident, Dreyer directed petitioners and other policyholders to use Copley's medical services, and, in exchange, Copley charged Dreyer reduced rates for the services. The Hospital Agreement set forth the procedure under which Copley would seek reimbursement for covered medical expenses when the policyholder was negligently injured by a third party. The contract provides in relevant part:

"[Copley] and [Dreyer] mutually agree to cooperate in the effective implementation of those provisions of [Dreyer's] contracts with Managed Care Organizations relating to coordination of benefits and other third party claims. With regard to Covered Services for which [Dreyer] is not the party with primary liability, [Copley] shall seek payment for such services from the party with primary liability. For Covered Services for which [Dreyer] has secondary liability pursuant to the coordination of benefits provisions, it is understood that [Dreyer's] secondary liability is limited to the amount of payment it would have made to [Copley] had [Dreyer] been primary, less payment made by the primary insurer and any co-payment payable by member.

For covered services for which a Third-Party has primary responsibility, [Dreyer] and [Copley] agree to pursue claims first with Third-Party insurer and hold patient harmless until settlement of the liability. [Dreyer] agrees to then reimbursement [sic] [Copley] the difference between the amount [Copley] has independently recovered and the amount owed under this agreement, if any."

Petitioners sued Caban and the owner of the vehicle that she drove, and the complaint purportedly assigned to Blythe petitioners' right to collect and recover damages for her medical expenses. The parties voluntarily dismissed the owner of the car, and Caban's automobile insurer settled Blythe's claim for $50,000, which was the limit of Caban's policy.

Pursuant to section 1 of the Hospital Lien Act (Lien Act) (770 ILCS 35/1 (West 1998)), Copley and Dreyer each filed a lien against the settlement proceeds. On September 16, 1999, petitioners filed a motion to adjudicate the liens, arguing that Copley's refusal to submit a claim to Dreyer for Blythe's medical expenses was a bad- faith attempt to circumvent the rule that this court had recently announced in N.C. v. A.W., 305 Ill. App. 3d 773 (1999). In N.C., this court held that a hospital may not assert lien rights in a minor's estate if the minor's insurer has already reimbursed the hospital for the medical services rendered. N.C., 305 Ill. App. 3d at 775. Petitioners alternatively argued that the rule prohibiting an insurer from filing a lien against a minor's personal injury settlement also barred Copley's hospital lien.

Copley responded that its lien rights in Blythe's estate were preserved because Dreyer had not reimbursed Copley for Blythe's medical expenses. The trial court enforced Copley's lien and awarded the hospital $16,667, representing one-third of the $50,000 settlement. The court extinguished Dreyer's lien, and Dreyer is not a party to this timely appeal.


A lien is a legal claim upon the property of another for payment or in satisfaction of a debt. A lien attaches only to a verdict, judgment, award settlement, or compromise secured by or on behalf of the injured person, and a hospital lien can be created only when a recovery is made. N.C., 305 Ill. App. 3d at 775. When an injured person settles a claim, the total amount of all hospital liens filed under the Lien Act shall not exceed one-third of the settlement. 770 ILCS 35/1 (West 1998)).

In N.C., the minor plaintiff was injured in an automobile accident, and he incurred $22,551 in medical expenses when he was treated by the hospital. Pursuant to an agreement with the hospital, the plaintiff's insurer tendered $4,200 to the hospital in full payment of the medical expenses. The plaintiff sued the defendant driver, and the hospital filed a ...

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