Falls v. Silver Cross Hospital and Medical Centers
2016 IL App (3d) 150319
| Ill. App. Ct. | 2017Background
- Brian Falls (United Healthcare insured) received emergency and inpatient care at Silver Cross in March 2011; billed charges totaled $18,129.50. United Healthcare paid $5,957.15 (PPO discounted amount); remaining balance attributable to patient was $1,264.23.
- Falls signed a hospital consent form that (1) authorized Silver Cross to file a hospital lien for the full amount of services and (2) contained language about reimbursing PPO discounts and allowing the hospital to be reimbursed from third-party recoveries.
- Silver Cross initially filed a lien for the full $18,129.50 and did not timely reduce the lien to reflect the United Healthcare payment; it later revised the lien to the unpaid balance in March 2013.
- Falls settled his third-party personal-injury claim for $85,000; the settlement check was jointly issued to him and Silver Cross, but Silver Cross did not endorse the check; Falls sued asserting consumer-fraud and contract claims and sought class certification.
- The trial court dismissed Falls’s second amended complaint under section 2-615 (failure to state a claim) as to Counts I (Consumer Fraud Act), II and V (breach of the Facility Participation Agreement between Silver Cross and United Healthcare), and III (breach of the consent form). Falls appealed.
- The appellate court reversed as to Count I (Consumer Fraud Act) and affirmed dismissal of Counts II, III, and V; the case was remanded for further proceedings on Count I.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Count I: Did Silver Cross violate the Consumer Fraud Act by concealing material facts and filing/maintaining an excessive hospital lien? | Falls: Consent form and lien practices concealed that Silver Cross had agreed with United Healthcare to accept PPO rates as payment-in-full; Silver Cross intended consumers to rely on the omission and suffered damages (loss of settlement funds, loss of use). | Silver Cross: No intent to defraud; no actionable concealment; no actual injury pleaded. | Reversed dismissal — pleadings sufficiently alleged concealment with intent to induce reliance and resulting damages; Count I proceeds. |
| Count II & V: Does Falls have standing to enforce the Facility Participation Agreement (FPA) as a third‑party beneficiary? | Falls: He is a United Healthcare “customer” protected by FPA provisions (hold harmless); specific provisions should control over a general no-third-party-beneficiary clause; HMO Act supports status. | Silver Cross: Falls is not a signatory and the FPA explicitly disclaims third‑party beneficiaries; United Healthcare is not an HMO under the HMO Act. | Affirmed dismissal — plaintiff lacks standing as third‑party beneficiary; HMO Act inapplicable. |
| Count III: Did Silver Cross breach the consent form by placing a lien on plaintiff’s third‑party recovery in violation of the contract? | Falls: Consent form (when read as a whole) prohibits placing a lien on proceeds of a personal‑injury recovery; initial lien breached the contract, relieving Falls of further obligations. | Silver Cross: Consent form does not waive statutory right to lien; plaintiff still owes unpaid balance; no contractual breach that excuses nonpayment. | Affirmed dismissal — consent form does not waive statutory lien rights; plaintiff’s failure to pay unpaid balance defeats breach claim. |
| Damages from lien encumbrance (related to Count I) | Falls: Loss of use and encumbrance of settlement funds beyond the unpaid balance caused measurable damages. | Silver Cross: Disputes injury and causation. | Court held the complaint alleged loss of use and measurable injury sufficient to survive a 2-615 dismissal on Count I. |
Key Cases Cited
- Behrens v. Harrah's Illinois Corp., 366 Ill. App. 3d 1154 (discussing standard for 2-615 dismissal)
- Ostendorf v. International Harvester Co., 89 Ill. 2d 273 (pleading standards)
- Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403 (factors for unfairness under the Consumer Fraud Act)
- White v. DaimlerChrysler Corp., 368 Ill. App. 3d 278 (omission or concealment as consumer fraud)
- Warren v. LeMay, 142 Ill. App. 3d 550 (circumstantial evidence may prove intent to induce reliance)
- Lopez v. Morley, 352 Ill. App. 3d 1174 (hospitals may negotiate liens/agreements with patients)
- Evanston Hosp. v. Hauck, 1 F.3d 540 (discussing lien practices and insurer relationships)