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CHILDREN'S MEMORIAL HOSP. v. CORRECTIONAL MEDICAL SERV'S

January 9, 2003

CHILDREN'S MEMORIAL HOSPITAL, PLAINTIFF,
v.
CORRECTIONAL MEDICAL SERVICES, INC., DEFENDANT.



The opinion of the court was delivered by: Suzanne B. Conlon, United States District Judge

MEMORANDUM OPINION AND ORDER

Children's Memorial Hospital ("Children's") filed this action against Correctional Medical Services, Inc. ("CMS") in the Circuit Court of Cook County, Illinois for breach of contract. CMS timely removed the action to this Court based on diversity jurisdiction. CMS moves for summary judgment pursuant to Federal Rule of Civil Procedure 56, claiming Children's claim is barred by the statute of limitations.

BACKGROUND

The following facts are undisputed. CMS manages health care services for prison inmates. On December 20, 1994, CMS entered into a contract with the Illinois Department of Corrections ("IDOC") to provide health care services for inmates at the Sheridan Correctional Center.

During 1996 and 1997, Walter Johnson was an inmate at the Sheridan Correctional Center. Mr. Johnson suffers from cystic fibrosis. Children's treated Mr. Johnson several times in 1996 and 1997. On December 20. 1996, Children's sent CMS a letter regarding reimbursement rates for Mr. Johnson's care. In the letter, Children's states, "[t]hese rates are effective only for the three confinements listed below and are based on timely payment of 15 days from the date the bill is received in your office." Complaint at Ex. B. The three listed confinements are dated August 30 through October 1, 1996, November 3 through November 6, 1996 and November 12 through December 11, 1996.

By January 1997, CMS and Children's were involved in a dispute over Mr. Johnson's hospitalization. CMS physicians believed Mr. Johnson could be treated at another hospital. Children's disagreed and declined to transfer him. By letter dated January 31, 1997, CMS informed Children's that it would deny any charges for services rendered to Mr. Johnson after January 31, 1997. On February 21 and May 1, 1997, CMS reconfirmed in writing that it would not pay for charges associated with Mr. Johnson's care after January 31, 1997.

In June 1997, CMS, Children's and IDOC met to discuss Mr. Johnson's case. After the meeting. IDOC medical director Dr. Harry Shuman asked CMS to pay Children's for Mr. Johnson's care through April 19, 1997. On July 23, 1997, CMS paid Children's for charges incurred by Mr. Johnson through April 19, 1997. CMS informed Children's that it would not pay for Mr. Johnson's care thereafter. CMS did not pay Children's for services rendered to Mr. Johnson from April 19 through November 30, 1997. Mr. Johnson assigned Children's his right to medical reimbursement under his "insurance policy, subscription certificate or other health benefit indemnification agreement otherwise payable" to him for services rendered by Children's. Pl. Facts at Ex. E.

DISCUSSION

I. Standard of Review

Summary judgment is appropriate when the moving papers and affidavits show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once a moving party has met its burden, the non-moving party must go beyond the pleadings and set forth specific facts showing there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Silk v. City of Chicago, 194 F.3d 788, 798 (7th Cir. 1999). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

II. Choice of Law

A federal court exercising diversity jurisdiction must apply the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Illinois courts apply Illinois statutes of limitations to claims filed in Illinois, even when Illinois choice of' law principles dictate the application of another state's law. Cox v. Kaufman, 212 Ill. App.3d 1056, 1062, 571 N.E.2d 1011, 1015 (1st Dist. 1991). The parties do not dispute that Illinois statutes of limitations apply to Children's claim.

III Statute of Limitations

Under Illinois law, contract actions may be subject to two different statutes of limitations. The limitations period for written contracts or "other evidence of indebtedness in writing" is ten years. 735 ILCS 5/13-206. "[A]ctions on unwritten contracts, expressed or implied . . . and all other civil actions not provided for shall be commenced within 5 years next after the cause of action accrued." 735 ILCS 5/13-205. CMS claims the five year statute of limitations bars Children's claim because the parties did not have a written contract. In response, Children's claims the ten year statute of limitations applies because its December 20, 1996 letter constitutes a written contract or ...


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