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Riggs v. Woman to Woman Obstetrics and Gynecology

July 8, 2004

MARY T. RIGGS, PLAINTIFF AND COUNTER-DEFENDANT-APPELLEE,
v.
WOMAN TO WOMAN, OBSTETRICS AND GYNECOLOGY, P.C., DEFENDANT AND COUNTER-PLAINTIFF-APPELLANT.



Appeal from the Circuit Court of McHenry County. No. 02-MR-266. Honorable Maureen P. McIntyre, Judge, Presiding.

The opinion of the court was delivered by: Justice Byrne

PUBLISHED

DRAFT

This matter comes before the court as an interlocutory appeal brought pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308). Plaintiff, Dr. Mary T. Riggs, filed the underlying action seeking, inter alia, a declaration that she was not required to abide by a contractual obligation, including a covenant not to compete, contained in her physician agreement with defendant, Woman to Woman Obstetrics and Gynecology, P.C. Plaintiff claimed that defendant's failure to register as a professional corporation with the Illinois Department of Professional Regulation (IDPR) pursuant to section 12 of the Professional Service Corporation Act (the Act) (805 ILCS 10/12 (West 2002)) rendered the agreement void ab initio. Defendant counterclaimed, seeking enforcement of plaintiff's covenant. The trial court granted plaintiff's motion for summary judgment on count I of her complaint and dismissed defendant's counterclaim. The court found: (1) as a matter of law, the Act was intended to be regulatory for the protection of the public health and safety in the practice of medicine; (2) defendant explicitly represented, untruthfully, that it was licensed as a professional corporation under the Act; and (3) as a result, defendant was not authorized to engage in the practice of medicine under the Act. Accordingly, the court held that the agreement between the parties was void ab initio. Finding that there was substantial ground for difference of opinion regarding its legal conclusion and that an immediate appeal could materially advance the ultimate termination of the litigation, the trial court granted plaintiff's motion for certification pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308).

The trial court certified the following questions for our review:

"(1) Whether the Act's licensing requirements for medical corporations is intended to protect the public's health, safety, or welfare[.]

(2) Whether defendant's failure to comply with the Act's certificate of registration requirement rendered the employment agreement void ab initio[.]"

We answer both in the negative.

BACKGROUND

Plaintiff filed the instant lawsuit after she discovered that defendant allegedly had engaged in a fraudulent accounting scheme designed to reduce plaintiff's compensation by expensing monies, which defendant received from Centegra Health Systems, directly to her. Plaintiff also learned that defendant was not a licensed professional corporation, even though it had given plaintiff prior assurances that it was properly registered. According to plaintiff, to induce her to join its medical practice, defendant expressly represented in writing that the "Corporation [was] registered to practice medicine in the State of Illinois." Based on this and other oral and written representations made by defendant to plaintiff, plaintiff entered into an employment agreement with defendant on September 22, 2000. She commenced working for defendant's practice on October 23, 2000.

Plaintiff resigned from defendant's employ on December 20, 2002. On that same date, she filed this suit against defendant, based on various breaches and misrepresentations allegedly made by defendant. Relevant to this appeal is count I of plaintiff's complaint, in which she sought a declaratory judgment that the employment agreement was void ab initio because defendant failed to register for a certificate with the IDPR, pursuant to the Act, to practice as a professional corporation. Defendant counterclaimed to enforce the agreement.

The facts pertaining to defendant's lack of a certificate of registration from the IDPR are undisputed. Defendant was originally formed as a professional corporation in July 1999. At that time, defendant's legal counsel requested that the IDPR issue a certificate of registration for the corporation. Although defendant did not realize it at the time, the IDPR followed up on defendant's application by requesting that some minor, technical changes be made in the application. However, defendant never received the letter from the IDPR with respect to those defects because IDPR sent the letter to the wrong address. Around November 2002, the IDPR again sent a letter to defendant to the wrong address. This time, however, the letter was forwarded to defendant's office. In that notice, dated November 12, 2002, the IDPR explained that defendant's application for a certificate of registration had expired and, therefore, was denied. Defendant later determined that its original application for registration was defective because the IDPR required that a suite number be added to the address and that the statement of purpose for the corporation be modified to remove the phrase "rendering the profession of obstetrics and gynecology."

As soon as defendant discovered the circumstances relating to its original application, it promptly proceeded to file a new application and pay the necessary $50 fee for registering with the IDPR. Ultimately, a certificate of registration was issued to defendant by the IDPR, effective January 14, 2003, after the suit was filed. The IDPR has not fined defendant, conducted any investigation, or otherwise taken any action, except to issue the new certificate of registration to defendant as a result of the inadvertent expiration of defendant's initial application. At all times, every physician-employee of defendant has been duly licensed by the IDPR to practice medicine in the State of Illinois.

On May 16, 2003, plaintiff filed three motions to dismiss defendant's counterclaim. She also filed a motion for summary judgment with respect to her claim for declaratory relief in count I of her complaint. Among the contentions asserted by plaintiff in support of her motions was that defendant's failure to possess a certificate of registration from the IDPR, contrary to the ...


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