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Falls v. Silver Cross Hospital and Medical Centers

Court of Appeals of Illinois, Third District

November 30, 2016

BRIAN FALLS, Individually and on Behalf of All Others Similarly Situated, Plaintiff-Appellant,
v.
SILVER CROSS HOSPITAL AND MEDICAL CENTERS, an Illinois Not For Profit Corporation, Individually and d/b/a Silver Cross Hospital, Defendant-Appellee.

         Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois, Circuit No. 13-CH-2683 Honorable John Anderson, Judge, Presiding.

          WRIGHT JUSTICE delivered the judgment of the court, with opinion. Justice Holdridge concurred in the judgment and opinion.

          OPINION

          WRIGHT JUSTICE.

         ¶ 1 In August 2013, plaintiff filed an action in the circuit court of Will County seeking damages for Silver Cross Hospital's billing and lien practices. The lawsuit alleged Silver Cross Hospital's practices violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2010)). In addition, plaintiff sought damages in separate counts of the class action complaint seeking damages for breach of contract. Silver Cross Hospital resisted the class action by filing a motion to dismiss the pending lawsuit pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2010)).

         ¶ 2 The trial court granted Silver Cross Hospital's motion and dismissed plaintiff's second amended complaint based on section 2-615 grounds. We affirm in part and reverse in part.

         ¶ 3 BACKGROUND

         ¶ 4 On December 1, 2010, Silver Cross Hospital (Silver Cross) entered into a Facility Participation Agreement (FPA) with United Healthcare Insurance (United Healthcare). In the FPA, United Healthcare granted Silver Cross PPO status for United Healthcare customers.

         ¶ 5 In exchange for PPO status provided by the terms of the FPA, Silver Cross agreed to allow United Healthcare to pay for the medical services provided to United Healthcare's insureds at a reduced PPO rate for certain medical services. As part of the FPA, Silver Cross also agreed to treat all reduced PPO rates paid by United Healthcare as payment in full for all qualified services. The FPA provided that United Healthcare would determine the qualified services eligible for PPO discounts based on each customer's benefit plan with the company.

         ¶ 6 In addition, the FPA strictly prohibited Silver Cross from engaging in balance billing practices to collect more than the reduced PPO rate for qualified services from patients insured by United Healthcare. Plaintiff's brief asserts that the language in this section of the contract between United Healthcare and Silver Cross states those two entities "are the only entities with rights and remedies under the [FPA]."

         ¶ 7 It is undisputed that United Healthcare was the medical insurance provider for plaintiff, Brian Falls. On March 6, 2011, plaintiff received emergency care and was admitted into Silver Cross for medical treatment resulting from an automobile accident involving a driver insured by State Farm. Silver Cross released plaintiff from inpatient care on March 8, 2011. For purposes of this appeal, the parties agree the full value of hospital services plaintiff received from Silver Cross totaled $18, 129.50. It also appears from the record that all medical services plaintiff received from Silver Cross constituted qualified services according to plaintiff's benefit plan with United Healthcare.

         ¶ 8 It is also undisputed for purposes of this appeal that plaintiff agreed to be responsible to "reimburse" Silver Cross for billed services that were not paid by his medical insurance provider. As part of this agreement, plaintiff also consented to allow Silver Cross to provide notice of a hospital lien for the "full value" of hospital services to help secure payment for services rendered. The full language of the consent form is included in the appendix to this decision.

         ¶ 9 On March 29, 2011, Silver Cross issued the required notice, as allowed by the consent form, informing plaintiff and others that Silver Cross was asserting a hospital lien in the amount of $18, 129.50. The lien notice stated that Silver Cross "claims a lien on any money due or owing on any claim or causes of action for compensation, damages, contributions, settlements or judgment from ANY PERSON OR INSURANCE COMPANY LIABLE who is alleged to have caused the injuries and to be liable therefore."

         ¶ 10 Thereafter, the record indicates Silver Cross and United Healthcare adjusted the charges to reflect the PPO discount United Healthcare would be obligated to pay on behalf of its customer, plaintiff, pursuant to the terms of the FPA. On April 20, 2011, United Healthcare paid Silver Cross a total of $5957.15[1] for plaintiff's emergency and inpatient treatment. Silver Cross received and accepted United Healthcare's payment of $5957.15 on May 18, 2011, leaving a balance due of $1264.23 that United Healthcare did not pay. The July 13, 2011, statement Silver Cross sent to plaintiff also documents that Silver Cross received a payment of $126.87 directly from State Farm, which was applied to plaintiff's account.

         ¶ 11 After receiving payments in 2011 from both United Healthcare and State Farm, Silver Cross did not immediately reduce the hospital lien from the full amount of $18, 129.50 to reflect those payments. However, on March 1, 2013, Silver Cross issued a revised notice of lien reducing the hospital lien to the unpaid balance of $1264.23.

         ¶ 12 Meanwhile, plaintiff settled the personal injury claim with the third-party tortfeasor for $85, 000 in May 2012. The settlement draft was jointly issued to both plaintiff and Silver Cross.

         ¶ 13 On June 20, 2012, plaintiff's attorney wrote to Silver Cross and formally demanded Silver Cross "endorse [plaintiff's] Settlement Draft as his debt to [Silver Cross's] facility has been paid." To date, Silver Cross has not endorsed plaintiff's settlement check and plaintiff has not paid the balance of $1264.23 to Silver Cross.

         ¶ 14 On January 29, 2013, plaintiff filed a federal lawsuit in the Northern District of Illinois. The federal lawsuit alleged the 2011 lien in the amount of $18, 129.50 exceeded the amount Silver Cross could collect directly from the patient in violation of the FPA between Silver Cross and plaintiff's insurance company, United Healthcare. Plaintiff claimed the hospital was engaged in billing practices that were unfair to the consumer. While the federal lawsuit was pending, Silver Cross issued a revised notice of hospital lien.

         ¶ 15 On May 15, 2013, the federal judge issued a memorandum opinion and order denying Silver Cross's motion to dismiss plaintiff's complaint. However, the federal court expressed concerns regarding the federal court's jurisdiction because the automobile accident, Silver Cross's incorporation, and plaintiff's residence all tied back to the State of Illinois. Following the court's ruling expressing these concerns, plaintiff voluntarily dismissed the federal court action on July 8, 2013.

         ¶ 16 Plaintiff filed the instant case in the circuit court of Will County on August 19, 2013. On August 20, 2014, plaintiff filed a second amended class action complaint (second amended complaint). In the factual allegations common to all counts, plaintiff alleged Silver Cross asserted an $18, 129.50 lien, representing the full amount of charges "without any discounts and in violation of the terms and conditions of the 'FPA.' " Plaintiff alleged Silver Cross had the intent to violate the FPA by filing the inflated lien and "allowing [Silver Cross] to receive $18, 129[.]50, the full amount of all of its invoices for medical treatment rendered to plaintiff at SILVER CROSS." On August 23, 2013, plaintiff moved for class action certification.

         ¶ 17 Plaintiff challenges the court's ruling concerning counts I, II, III, and V of the second amended complaint. For purposes of this opinion, we will recite the allegations relevant to those counts alone before discussing the court's respective findings on each count relevant to this appeal.

         ¶ 18 Count I of the second amended complaint alleged that Silver Cross "fraudulently misrepresented, concealed, and otherwise fraudulently misled" plaintiff for the purpose of placing a hospital lien against their patient and other third parties. Count I of the second amended complaint also alleged Silver Cross fraudulently concealed that Silver Cross had previously "promised and agreed that the total payment received from United Healthcare, other than deductibles and co-payments, would be treated as payment in full for all services rendered." Further, count I of the second amended complaint claims that plaintiff "reasonably relied upon the truth of SILVER CROSS' representations in the [consent form]." Finally, plaintiff claimed damages in count I of the second amended complaint that included loss of settlement funds and diminished value of plaintiff's health insurance policy.

         ¶ 19 In counts II and V of the second amended complaint, plaintiff requested damages arising out of Silver Cross's intentional breach of the terms of the written FPA. Count III of the second amended complaint also alleged Silver Cross intentionally breached the written consent form between plaintiff and Silver Cross.

         ¶ 20 On September 16, 2014, Silver Cross filed a combined motion to dismiss all counts of the second amended complaint pursuant to section 2-619.1 of the Code of Civil Procedure (735 ILCS 5/2-619.1 (West 2012)). On January 13, 2015, the trial court heard arguments on the defendant's combined section ...


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