The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Plaintiff Rush Presbyterian-St.
Luke's Medical Center's ("Rush") motion for summary judgment and on
Defendant The Prudential Insurance Company of America's ("Prudential")
motion for summary judgment. For the reasons stated below we grant Rush's
motion for summary judgment on Count I and grant Prudential's motion for
summary judgment on Count II.
Plaintiff Rush is a non-for-profit corporation. Defendant Prudential is
insurance company. In August of 1993, Rush and Rush Prudential
Health Plans, Rush Prudential HMO, Inc., and Rush Prudential Insurance
Company (collectively "Unicare Group") entered into a Medical Service
Agreement ("MSA"). The MSA included attachment B which established the
rates at which Rush was to be reimbursed by the Unicare Group for various
services Rush provides to patients. Attachment B to the MSA underwent
several revisions, the last revision occurring on February 1, 1998, was
incorporated into the MSA pursuant to the Sixth Amendment to the MSA. In
December of 1999, Wellpoint Health Networks, Inc. acquired the Unicare
Group from Rush, Rush affiliates and Prudential, and in connection with
the acquisition, assumed all liabilities for certain disputed claims
related to any breach of the MSA by the Unicare Group.
Prudential, Rush and Wellpoint entered into a Settlement Agreement on
November 20, 2001. On November 21, 2001, the agreement was amended
whereby Prudential agreed to assume any and all liabilities for certain
disputed claims and pay Rush 50% of the amounts of the disputed claims
upon entry of a final, non-appealable judgment which specifies the
amounts of the disputed claims payable under the MSA. The parties agree
that amounts have been paid on each of the claims in question, but
disagree on whether Rush is entitled to any further payments. The dispute
in each count of Rush's complaint is purely a matter of contract
In Count I, the issue is whether the $110,000 case rate specified by
for a bone marrow transplant reimburses Rush only for inpatient
services related to the transplant, as asserted by Rush, or whether the
case rate reimburses Rush for both inpatient and outpatient services
relating to the transplant, as asserted by Prudential. Attachment B,
Section A to the MSA consists of four separate subsections: (1)
Transplantation; (2) All Other Inpatient Services; (3) Outpatient
Services and (4) Skilled Nursing Facility. Rush contends that the
organizational structure of the MSA shows that the transplant case rate
covers inpatient services only. Prudential relies on the language
"Covered Hospital Services" within Section A to Attachment B, which the
MSA defined in part as "inpatient and outpatient services . . . not
including long term care services" to support its contention that the
case rate covers both inpatient and outpatient services.
In Count II, the primary issue is which section of the fee schedule
applies to those patients who were treated at the J.R. Bowman Center
("JRB") for extended care inpatient services. Rush asserts that because
the inpatient services provided to JRB patients were a continuation of
the services that they were receiving at Rush, they should be reimbursed
according to the MSA provision that covers "inpatient services" (i.e.,
the stop loss provision). Under the stop loss provision, Rush claims that
Prudential is obligated to reimburse Rush 66% of the charges it incurred
providing inpatient services to JRB patients. Alternatively, Prudential
asserts that JRB is a skilled nursing facility which therefore entitles
Rush to reimbursement pursuant to a $450 per diem rate. The parties both
contest the status of JRB, Rush
claiming that it is a post-acute care facility which provides
post-hospital inpatient recovery and rehabilitation services and
Prudential claiming that it is a skilled nursing facility.
Rush has brought a breach of contract claim based on an alleged breach
of a Medical Service Agreement ("MSA") for failure to reimburse Rush for
various services provided to insured patients. In Count I, Rush seeks to
recover from Prudential $65,783.83 on charges submitted for services
provided to 9 patients (John Does I-IX) who underwent bone marrow
transplants at Rush Presbyterian-St. Luke's Medical Center under Section
A.3 of the MSA. In Count II, Rush seeks to recover $370,324.89 on charges
submitted for "extended care services" provided to 12 patients (John Does
X-XXI) at Rush's' J.R. Bowman Center under Paragraph 2(A) of Attachment
B of the MSA.
The parties are before the court based upon diversity jurisdiction.
28 U.S.C. § 1332(a)(1). Rush claims that it is a non-for-profit
corporation organized pursuant to the laws of Illinois and is located in
Chicago, Illinois. Prudential claims that it is a New Jersey company with
its principal place of business in Newark, New Jersey.
Summary judgment is appropriate when the record reveals that there is
no genuine issue as to any material fact and the moving party is entitled
to judgment as a matter of law. Fed.R.Civ.P. 56(c). In seeking a grant
of summary judgment the
moving party must identify "those portions of the pleadings,
depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any,' which it believes demonstrate the absence
of a genuine issue of material fact." Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56(c)). This initial
burden may be satisfied by presenting specific evidence on a particular
issue or by pointing out "an absence of evidence to support the
non-moving party's case." Id. at 325. Once the movant has met
this burden, the non-moving party cannot simply rest on the allegations
or denials in the pleadings, but, "by affidavits or as otherwise provided
for in [Rule 56], must set forth specific facts showing that there is a
genuine issue for trial." Fed.R.Civ.P. 56(e). A "genuine issue" in the
context of a motion for summary judgment is not simply a "metaphysical
doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, 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);
Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir.
2000). The court must consider the record as a whole, in a light most
favorable to the non-moving party, and draw all reasonable inferences
that favor the non-moving party. Anderson, 477 U.S. at 255;
Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir.
The parties' dispute regarding both claims in this case is purely a
matter of contract interpretation. Summary judgment is particularly
appropriate in cases involving the interpretation of contractual
documents. Metalex Corp. v. Uniden Corp. of America, 863 F.2d 1331,
1333 (7th Cir. 1988). Where a contract is unambiguous, a court must
determine its meaning as a matter of law, and where the contract is
ambiguous the contract's meaning becomes a factual question and the
interpretation of the contract and resolution of the ambiguity is left to
the trier of fact. Id.; Illinois Conference of Teamsters and
Employers Welfare Fund v. Mrowicki, 44 F.3d 451, 459 (7th Cir. 1994)
The lack of ambiguity within the express terms of a contract "forecloses
any genuine issue of material fact." Ryan v. Chromalloy American
Corp., 877 F.2d 598, 602 (7th Cir. 1989). If the court determines
that the relevant provisions of the contract are unambiguous, the court
"need not consider extrinsic evidence" and should declare the meaning of
the provisions. Id.
The language within a contract must be "interpreted according to its
plain, ordinary, and popular meaning." Bourke v. Dun & Bradstreet
Corp., 159 F.3d 1032, 1038 (7th Cir. 1998)(quoting O'Rourke v.
Access Health, Inc., 668 N.E.2d 214, 220 (Ill.App. Ct. 1996));
See also International Business Lists, Ltd. V. American Tel. &
Tel. Co., 878 F. Supp. 102, 106 (N.D. Ill. 1994)(stating that
"[c]ourt's interpreting contracts must give effect to the parties'
intent, and that intent is best determined by
reference to the plain meaning of the words the parties used.").
The court must presume that "contracting parties intend[ed] all portions
of their contract to carry meaning and no portion was meant to be mere
surplusage." Shelten v. Schmidt Implement Co., 647 N.E.2d 1071,
1074 (Ill.App. Ct. 1995). Another rule of contract interpretation is
"that a document should be read to give effect to all its provisions and
to render them consistent with each other." Mastrobuono v. Shear son
Lehman Hutton, Inc., 514 U.S. ...