United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
GARY FEINERMAN, District Judge.
In April 2014, Concert Health Plan Insurance Company sued James Killian in state court, alleging that he violated the Illinois insurance fraud statute, and Killian removed the case under the diversity jurisdiction. Doc. 1. Concert and Killian are no strangers, having spent the last seven-plus years in this court and the Seventh Circuit litigating an ERISA suit that Killian brought against Concert for allegedly breaching its obligation to pay for medical expenses incurred by his wife. Killian v. Concert Health Plan Ins. Co., No. 07 C 4755 (N.D. Ill. filed Aug. 22, 2007) (the "2007 case"). Killian has moved to dismiss Concert's complaint under Rule 12(b)(6). Doc. 6. The motion is denied, although the portion of Concert's insurance fraud claim that is a compulsory counterclaim in the 2007 case is stayed.
In considering Killian's motion to dismiss, the court assumes the truth of the complaint's factual allegations, though not its legal conclusions. See Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir. 2012). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice, " along with additional facts set forth in Concert's brief opposing dismissal, so long as those additional facts "are consistent with the pleadings." Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). The following facts are stated as favorably to Killian as those materials allow. See Gomez v. Randle, 680 F.3d 859, 864 (7th Cir. 2012).
In 2007, Killian sued Concert under ERISA for payment of benefits, breach of fiduciary duty, and statutory penalties. See generally Killian v. Concert Health Plan, 742 F.3d 651 (7th Cir. 2013) (en banc) (describing the litigation). On July 31, 2006, about a year before bringing that suit, Killian sent Concert a letter requesting review of three insurance claims for treatment that his wife received at Rush University Medical Center. The letter stated that Killian's wife had been "referred to... Rush University Hospital through her Delnor Hospital stay and her family physician Dr. Philip Bradshaw, " and that "[i]n calling your offices we were informed that Rush University... [was] in your network." Doc. 1-1 at p. 5, ¶ 4; id. at 8. Later, in various court filings and at the Seventh Circuit oral argument in the 2007 case, Killian and his lawyer represented that Rush had "continued to bill" Killian for medical services provided to his wife. Id. at p. 5, ¶ 6. The 2007 case remains pending, though the suit has been stayed as to the claims against Concert due to its state court liquidation proceedings. Killian, 07 C 4755, Doc. 491.
In the present suit, Concert claims that Killian's representations in the July 2006 letter, as well as his representations during the 2007 case, were false and misleading. Specifically, Concert alleges that "the treatment in question was (a) not a referral from Delnor Hospital or Dr. Bra[d]shaw; (b) Concert never told Defendant James E. Killian that treatment would be covered within Susan Killian's network; and (c)... Rush University... ha[s] not continued to bill' James E. Killian." Doc. 1-1 at p. 5, ¶ 7. The complaint seeks to hold Killian liable for these alleged misrepresentations under the Illinois insurance fraud statute, 720 ILCS 5/17-10.5(e) (previously codified at 720 ILCS 5/46-5(a)). Id. at p. 6, ¶¶ 10-13.
For ease of exposition, the court first will consider Killian's statements in the July 2006 letter and then will turn to his statements during the 2007 case.
A. Statements in the July 2006 Letter
Killian argues that the statute of limitations bars the portion of Concert's insurance fraud claim arising from his July 2006 letter. Doc. 6 at 1-3. The insurance fraud statute does not specify a limitations period for civil actions, and both parties agree that Illinois's five-year "catch-all" limitations period, see 735 ILCS 5/13-205 ("all civil actions not otherwise provided for shall be commenced within 5 years next after the cause of action accrued"), applies. Doc. 6 at 1; Doc. 34 at 3. The limitations clock under Illinois law starts when the plaintiff discovers or reasonably should have discovered the fraud. See Halperin v. Halperin, 750 F.3d 668, 671 (7th Cir. 2014) ("The statute of limitations does not begin to run until the wronged person knows or reasonably should know of his injury and also knows or reasonably should know that it was wrongfully caused.") (internal quotation mark omitted); Khan v. BDO Seidman, LLP, 977 N.E.2d 1236, 1242 (Ill.App. 2012) (same). Because Concert filed this suit on April 22, 2014, Doc. 1-1 at 4, its claim is untimely only if it knew or should have known earlier than April 22, 2009, of the fraud allegedly contained in the July 2006 letter.
The Seventh Circuit has held that "a motion to dismiss based on failure to comply with the statute of limitations should be granted only where the allegations of the complaint itself set forth everything necessary to satisfy the affirmative defense.... In other words, the plaintiff must affirmatively plead himself out of court; the complaint must plainly reveal that the action is untimely under the governing statute of limitations." Chi. Bldg. Design, P.C. v. Mongolian House, Inc., 770 F.3d 610, 613-14 (7th Cir. 2014) (internal quotation marks and alterations omitted); see also Brooks v. Ross, 578 F.3d 574, 579 (7th Cir. 2009) (same). "Determining the point under the discovery rule at which the running of the limitations period commences is a question for the trier of fact, unless the parties do not dispute the facts and only one conclusion may be drawn from them." Kedzierski v. Kedzierski, 899 F.2d 681, 683 (7th Cir. 1990).
To show that Concert should have known before April 22, 2009 of the alleged fraud in the July 2006 letter, Killian points to a sanctions motion that Concert filed against him in the 2007 case on May 26, 2009. Doc. 6-1 (copy of the motion); see United States v. Stevens, 500 F.3d 625, 628 n.4 (7th Cir. 2007) (recognizing that orders entered and filings made in court are properly subject to judicial notice). According to the sanctions motion, Killian testified at his December 2008 deposition that "[t]he decision to see Dr. Bonomi at Rush Hospital was made by Mr. and Mrs. Killian without a referral by Delnor Hospital or Dr. Bradshaw, " and that "[n]obody from Concert ever told Mr. Killian that Dr. Bonomi and Rush Hospital were members of Susan Killian's network." Doc. 6-1 at pp. 2-3, ¶¶ 7-8. Believing that this testimony fatally undermined Killian's July 2006 letter and also Killian's claims in the 2007 case, Concert asked the court to sanction both Killian and his lawyer for "failing to perform any investigation of the facts of this incident before filing suit." Id. at p. 6, ¶ 18.
Killian maintains that the sanctions motion shows that his December 2008 deposition gave Concert all the evidence it needed to allege that his July 2006 letter was fraudulent. Doc. 6 at 3. Concert concedes that Killian's December 2008 deposition testimony "certainly did raise concern, " but says that it needed to "pursue additional documentation to determine the veracity of [Killian's] various representations" in order to be sure that fraud actually had occurred. Doc. 34 at 3-4. According to Concert, its fraud claim did not ripen until "as late as July of 2009, " when it received additional "sworn testimony and subpoenaed records" that corroborated its suspicions. Id. at 4.
The July 2009 date is tough to swallow, as Concert believed it had enough facts at its disposal as of May 26, 2009 to move for sanctions. But even so, the court cannot tell on the pleadings at what point between December 2008 and May 26, 2009 Concert had grounds to believe that Killian's July 2006 letter was actionably fraudulent-in other words, to believe that the July 2006 letter was false and the December 2008 deposition testimony was true. And because a discovery date between April 22 and May 26, 2009 would make timely Concert's ...