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Rockford Memorial Hospital v. Havrilesko

October 20, 2006

ROCKFORD MEMORIAL HOSPITAL, PLAINTIFF AND COUNTERDEFENDANT-APPELLEE,
v.
MICHAEL HAVRILESKO AND KATHY HAVRILESKO, ON BEHALF OF ALL THOSE SIMILARLY SITUATED, DEFENDANTS AND COUNTERPLAINTIFFS-APPELLANTS.



Appeal from the Circuit Court of Winnebago County. No. 04-AR-915, Honorable Timothy R. Gill, Judge, Presiding.

The opinion of the court was delivered by: Justice Callum

Published opinion

Defendants, Michael and Kathy Havrilesko, on behalf of themselves and those similarly situated, appeal the dismissal of their second amended countercomplaint seeking relief under the Illinois Consumer Fraud and Deceptive Business Practices Act (the Act) (815 ILCS 505/1 et seq. (West 2004)). The Havrileskos alleged that plaintiff, Rockford Memorial Hospital (RMH), violated the Act by concealing rates in excess of reasonable customary charges and concealing that they would be required to pay amounts not covered by insurance. They also alleged that a letter sent by RMH misrepresented facts about a secondary carrier and that they were billed for services they did not receive. The trial court determined that the Havrileskos failed to state a cause of action, and it dismissed the claim and granted the Havrileskos' motion to allow an interlocutory appeal. For the following reasons, we affirm.

I. BACKGROUND

RMH filed a complaint seeking payment for medical treatment provided to one of the Havrileskos' children, Kayla Havrilesko. The Havrileskos filed a countercomplaint alleging damages under the Act on behalf of themselves and those similarly situated and amended it twice after RMH successfully moved to dismiss or strike. The second amended countercomplaint alleged the following.

During 2003, the Havrileskos' four children received medical services from RMH. On February 4, 2004, their insurance carrier tendered checks in the amount of $38,091.07 in payment of the reasonable charges for the services. On February 8, the Havrileskos sent a letter to the chief financial officer at RMH, disputing the charges and denying that they owed any amount in excess of the reasonable value of services rendered. RMH returned the checks with a letter stating that if the checks were reissued with a "payment in full" endorsement removed, it would accept them and bill a secondary carrier for any remaining balance.

A copy of the RMH letter was attached to the complaint and contained the following statement:

"We reviewed each account in question and must remain steadfast in our position regarding usual and customary reimbursements. Identical charges would be posted to any individual receiving matching services within our facility regardless of the insurance coverage. Our charges are found to be reasonable and customary. ***

We believe all patients should receive equal medical treatment as well as equal billing. We operate according to Government regulations and our current Managed Care Contracts. We do not openly offer single case discounts, negotiate rates, or adhere to usual and customary charges."

According to the Havrileskos, the letter contained material misrepresentations of fact because there was no secondary carrier for Kayla and because it falsely claimed that the charges were reasonable and customary. They also alleged that RMH intended that they rely on the misstatements.

The Havrileskos next alleged that RMH concealed or omitted the following facts: (1) the established rates for the services; (2) that it would not accept payment in the amount of usual and customary charges in the industry; (3) that it would require the Havrileskos to pay the difference between what their insurance carrier would pay and the amount charged; and (4) that the charges were far in excess of the reasonable and customary charges for comparable services in the Rockford community. They stated that had they been aware of the concealed facts, they would have refused the services. The complaint also contained a statement that "upon information and belief," RMH billed the Havrileskos for services that were not performed. According to the Havrileskos, RMH's actions were deceptive business practices that resulted in charges five times the cost of the services rendered as determined by the standards set out in the Medicare Ambulatory Procedure Classification Codes and by Medicare Payment Advisory Commission data.

The Havrileskos alleged damages and made general allegations seeking to establish the class. They then asserted separate personal and class action claims for both consumer fraud and deceptive business practices. They sought injunctive relief, compensatory and punitive damages, measures to protect their credit rating, and attorney fees.

RMH moved to dismiss under the Code of Civil Procedure for failure to state a cause of action. 735 ILCS 5/2--615 (West 2004). The trial court dismissed and the Havrileskos moved to reconsider, or in the alternative to allow an interlocutory appeal, contending that the court failed to consider the countercomplaint in its entirety and required more facts than the law dictates. They did not seek leave to amend. The record does not contain a trial brief from the Havrileskos on the motion or a transcript of the hearing.

The trial court granted the Havrileskos' motion for an interlocutory appeal under Supreme Court Rule 308 (155 Ill. 2d R. 308). It later amended the order on request to allow the appeal under Supreme Court Rule 304 (Official Reports Advance Sheet No. 22 (October 26, 2005), R. 304, eff. January 1, 2006). The court stated that the issues for appeal were whether it erred in dismissing the countercomplaint in its entirety or whether the Havrileskos stated a cause of action for: (1) a class action based on consumer fraud; (2) a consumer fraud action as to the Havrileskos; (3) a consumer fraud action as to class members; (4) a deceptive business practices action as to the Havrileskos; (5) a deceptive business practices claim as to class members; and (6) injunctive relief.

II. ANALYSIS

The Havrileskos contend that they stated a cause of action because they alleged that RMH engaged in deceptive practices when it concealed information about its charges and billing practices. RMH argues that it did not have a duty to disclose its charges and that a claim based on unconscionably high prices cannot be supported. It also argues that in some circumstances, the Havrileskos alleged only conclusions of law. RMH ...


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