Stefanski v. The City of Chicago
28 N.E.3d 967
Ill. App. Ct.2015Background
- Nellie Stefanski, a City of Chicago employee covered by the City of Chicago Medical Care Plan, recovered $18,000 from a third‑party tortfeasor for injuries; her attorney received a one‑third contingent fee.
- The City’s self‑funded plan had paid medical benefits and asserted a subrogation lien for full reimbursement; it initially refused to reduce its lien to account for a pro rata share of plaintiff’s attorney fees under the common fund doctrine.
- Stefanski sued the City individually and as a putative class representative, seeking declaratory relief and unjust enrichment damages based on the City’s refusal to reduce its lien pursuant to the common fund doctrine.
- The trial court certified a class and granted summary judgment for the class; the City appealed the certification order under Illinois Supreme Court Rule 306(a)(8).
- The appellate majority held that Stefanski could not maintain an individual cause of action based on the common fund doctrine because the Plan’s express contract disclaimed responsibility for the participant’s attorney fees; therefore class certification was improper and the certification order was vacated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the common fund doctrine applies to an insured (plan participant) seeking to reduce a contractual subrogation lien | Stefanski: the City benefitted from her attorney’s efforts and must pay a pro rata share of attorney fees under the common fund doctrine | City: an express contract (Plan) disclaims liability for participant attorney fees, precluding an equitable quasi‑contract claim | Held: No. The common fund doctrine is a quasi‑contract remedy and is unavailable where an express contract governs the same subject and disclaims fee liability |
| Whether prior Illinois cases (Baier, Scholtens, Bishop) support an insured’s individual common‑fund claim | Stefanski: those cases recognize the doctrine for litigants and lawyers, supporting her claim | City: those cases recognize an attorney’s independent common‑fund right (or an independent action by counsel), not an insured’s direct equitable claim against its own plan | Held: Those cases protect attorneys’ independent quasi‑contract claims; they do not authorize an insured participant to bring the same equitable action against a plan governed by an express contract |
| Whether retention of the Plan’s full reimbursement is unjust enrichment given the Plan’s contract language | Stefanski: retention is unjust because the Plan benefited from the plaintiff’s counsel without contributing to fees | City: participants trade a possible fee‑sharing reduction for immediate payment of medical bills; the contract reflects that bargain | Held: No unjust enrichment as between Stefanski and the City given the contractual allocation and the settled expectation that the Plan need not pay participant attorney fees |
| Whether class certification was proper when the named representative lacks an actionable claim | Stefanski: class should be certified to represent similarly situated participants | City: class certification improper because the named plaintiff cannot state a valid claim | Held: Class certification vacated because the named plaintiff cannot maintain an individual common‑fund claim, so she cannot adequately represent the putative class |
Key Cases Cited
- Scholtens v. Schneider, 173 Ill.2d 375 (1996) (common fund doctrine is a quasi‑contractual remedy and attorneys may assert independent claims for fees recovered on behalf of a plan)
- Wendling v. S. Ill. Hosp. Servs., 242 Ill.2d 261 (2011) (summary of common fund doctrine and its equitable basis)
- Baier v. State Farm Ins. Co., 66 Ill.2d 119 (1976) (attorneys who create a fund may be compensated from the fund despite insurer subrogation clause)
- Bishop v. Burgard, 198 Ill.2d 495 (2002) (reiterating that common fund claims in subrogation contexts operate as an independent action by attorneys)
- De Bouse v. Bayer AG, 235 Ill.2d 544 (2009) (a class representative must state a valid cause of action to adequately represent the class)