Lead Opinion
delivered the opinion of the court:
Thе plaintiff, Antonio Galvan, brought a class action lawsuit against the defendant, Northwestern Memorial Hospital, and other similarly situated not-for-profit hospitals in Illinois to challenge their practices of charging uninsured patients more for services than they charged insured patients. Following a motion by the defendant, the trial court dismissed the plaintiffs complaint with prejudice pursuant to section 2—615 of the Code of Civil Procedure (Code) (735 ILCS 5/2 — 615 (West 2004)). The plaintiff appeals, arguing he sufficiently pleaded a cause of action under the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2004)) and for unjust enrichment.
BACKGROUND
On August 27, 2003, the plaintiff was involved in an automobile accident and suffered serious injuries. He was taken to the emergency room at Northwestern where he underwent surgery. The plaintiff remained at Northwestern for 15 days. After he was released, Northwestern billed the plaintiff $87,033.99 for the health care services it provided. At the time of his hospitalization, the plaintiff was uninsured.
In an action to recover for his injuries, the plaintiff was awarded $240,000 in a settlement agreement with the tortfeasor. Northwestern asserted a lien on the proceeds of the settlement in the amount of $87,033.99.
On January 27, 2005, the plaintiff, individually and on behalf of “all uninsured persons who were treated at or were admitted tо Northwestern Memorial Hospital and similar not-for-profit hospitals throughout the state of Illinois from 2001 to the present and who have been billed list or gross hospital charges by Northwestern Memorial Hospital and similar not-for-profit hospitals,” filed a two-count complaint against Northwestern “and similarly situated not-for-profit hospitals operating in the state of Illinois that have charged or are charging their uninsured patients gross or list hospital charges.” Count I alleged violations of the Consumer Fraud Act. Specifically, it alleged Northwestern’s practice of billing uninsured patients gross or list hospital charges, which was more than 50% what it charged insured patients, was unfair and deceptive. In count II, the plaintiff alleged Northwestern was unjustly enriched by its imposition of the lien on the plaintiff’s settlement.
The Illinois Hospital Association, in its amicus brief, explained the federal government mandates, through Medicare regulations, all hospitals maintain a charge master list, which outlines customary charges for each of a hospital’s services and supplies. The plaintiff alleged when Northwestern billed him for his health care expenses, he was billed based on this list. He maintains this violated the Consumer Fraud Act because insured patients are generally charged significantly lower rates for the same services. The Hospital Association explained that, in general, insured patients are billed less than the price set in the charge master list because their insurance companies have contracted with the hospital.
In May 2005, Northwestern moved to dismiss the plaintiff’s complaint, arguing the plaintiff failed to state a claim upon which relief could be granted. On November 11, 2005, the trial court granted Northwestern’s motion. The court held because the plaintiff was taken to Northwestern in an emergency, he could not allege any damages proximately caused by a deceptive act. Further, the plaintiff could not allege unfairness because Northwеstern’s policy did not violate public policy, the plaintiff was free to challenge the amount he was charged, and the imposition of the lien was a benign act. The court also held the plaintiff failed to state a claim for unjust enrichment because he did not pay any money to Northwestern and thus could not allege Northwestern retained a benefit to his detriment.
The November 11, 2005, order contained the wrong case number. On December 12, 2005, the trial court granted the plaintiffs motion for the entry of an order bearing the correct case number. This appeal followed.
AMICI BRIEFS
The Service Employees International Union (SEIU) was granted leavе to file an amicus brief in support of the plaintiff. The Illinois Hospital Association submitted an amicus brief in support of Northwestern. These briefs outline hospital billing procedures and policies and the effect of these policies on workers. The amici briefs also disclose challenges to hospital billing practices raised in different lawsuits in Illinois and throughout the country.
ANALYSIS
The plaintiff argues the trial court erred when it granted Northwestern’s section 2 — 615 motion to dismiss because he sufficiently stated a cause of action for violations of the Consumer Fraud Act and unjust enrichment. In the alternative, the plaintiff argues in his reply brief he should have been grantеd leave to amend his complaint.
In order to state a claim, a plaintiff must allege facts sufficient to bring a claim within a legally cognizable cause of action. City of Chicago v. Beretta U.S.A. Corp.,
A. Consumer Fraud Act
The plaintiff maintains he adequately pleaded Northwestern’s practice of billing uninsured patients at its list or gross rate, which was more than 50% what it charged insured patients, was unfair and deceptive. “The Consumer Fraud Act is a regulatory and remedial statute intended to protect consumers, borrowers, and business persons against fraud, unfair methods of competition, and other unfair and deceptive business practices.” Robinson v. Toyota Motor Credit Corp.,
“Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omissiоn of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, *** in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby.” 815 ILCS 505/2 (West 2004).
Thus, under the Act, a plaintiff must plead three elements: (1) an unfair or deceptive act or practice by the defendant; (2) the defendant’s intent that the plaintiff rely on the unfair or deceptive practice; and (3) the unfair or deceptive practice occurred in the course of conduct involving trade or commerce. Robinson,
1. Unfairness
The plaintiff alleges Northwestern’s practice of charging uninsured patients “artificially inflated” gross or list rates for services was unfair because if Northwestern collected the gross or list rates from uninsured patients, the hospital would receive an unconscionable 50% profit. The plaintiff also argued it was unfair that Northwestern gave patients with insurance significant discounts that uninsured patients did not get. Northwestern argues the plaintiffs unfairness claim fails for three reasons: (1) the plaintiff did not plead actual profits; (2) Northwestern’s practice of сharging uninsured patients higher prices, by itself, was insufficient to establish unfairness; and (3) Northwestern had legitimate reasons for charging uninsured patients more than it charges insured patients.
To the extent the plaintiffs unfairness claim is based on Northwestern making a substantial profit from uninsured patient care, the claim must fail because the plaintiff did not allege Northwestern actually profited from charging these rates, much less that it received an unconscionable profit. The plaintiffs complaint, instead, was couched in the language of potential profit:
“19. According to a report published by the Service Employees International Union (‘SEIU’), Illinois hospitals routinely charge the uninsured list or gross charges for medical services that are up to double the actual cost of providing health care and Northwestern charges the uninsured over double the net price that an insured patient would be charged.
20. The uninsured have become a profit center for Northwestern. According to the SEIU Hospital Accountability Project, Northwestern had a potential profit of 50% per uninsured discharge in 2001.
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28. Northwestern and the Defendant Class through their deceptive and unjust assessment of the gross overcharges to the uninsured reaps thousands of dollars each year from the uninsured residing in Illinois, including Plaintiff and the putative plaintiff class, by willfully and surreptitiously assessing their grossly overstated list charges on the self-pay or uninsured patients.” (Emphasis added.)
The plaintiff also argued the practice of charging uninsured patients rates of more than 50% of that charged to insured patients was unfair under the Consumer Fraud Act. When measuring unfairness, courts consider three factors: “(1) whether the practice offends public policy; (2) whether it is immoral, unethical, oppressive, or unscrupulous; [and] (3) whether it causes substantial injury to consumers.” Robinson,
Charging an unconscionably high price, by itself, is generally insufficient to establish a claim for unfairness. Instead, the “defendant’s conduct must [also] violate public policy, be so oppressive as to leave the consumer with little alternative except to submit to it, and injure the consumer.” Robinson,
In this case, the plaintiff argues Northwestern’s practice violates public policy because by charging the uninsured gross or list rates, knowing most of these patients cannot pay that amount, hospitals can justify collecting higher rates from private insurers and the government, and hospitals can exaggerate the value of the charity care they provide. The SEIU maintains this practice violates public policy because Northwestern and other not-for-profit hospitals are exempt from taxation based on being institutions of public charity. As such, the hospitals have a legal duty to provide free and reduced-price care to those unable to pay. Charging uninsured patients more than other patients offends this policy.
The plaintiff maintains this practice is oppressive because, as an emergency room patient, he had no choice but to accept the medical services provided to him at the inflated rates. He points out he was taken to Northwestern’s emergency room following an automobile accident, he needed immediate medical attention, and he had no meaningful choice as to which hospital he was taken to. He argues he was harmed by Northwestern’s collection efforts, which included a lien on one-third of his settlement funds.
The plaintiff points to an order by Circuit Court Judge Stuart A. Nudelman, denying Our Lady of the Resurrection Medical Center’s motion to dismiss a similar claim in Servedio v. Our Lady of the Resurrection Medical Center, No. 04L3381 (Cir. Ct. Cook Co., January 6, 2006). In that case, the plaintiffs sued Resurrеction for violations of the Consumer Fraud Act, breach of contract, violations of the Illinois revenue code, and unconscionable conduct. The plaintiffs were all uninsured patients who presented at the emergency room at Resurrection. After services were rendered, none of the plaintiffs were able to pay their hospital bills. To collect for its services, Resurrection sued Servedio and sent collection notices to the other plaintiffs. The plaintiffs then sued Resurrection.
According to the trial court’s order, the plaintiffs specifically alleged the rates Resurrection charged to insured patients werе the de facto rates for services and uninsured patients were charged rates significantly higher than those de facto rates. In fact, the plaintiffs alleged they were charged double and triple the amounts charged to insured patients. The plaintiffs argued this practice was unfair under the Consumer Fraud Act because it violated Illinois’s public policy that hospitals should provide health care to low income individuals, it was oppressive because the plaintiffs were in a position in which they had no reasonable alternative but to accept medical services and agree to pay, and it was injurious because if the plaintiffs and other low income uninsured patients were charged exorbitantly high fees for medical services, they would likely forgo medical attention when it was needed. Based on these allegations, the trial court found the plaintiffs sufficiently pleaded a cause of action under the Consumer Fraud Act. See also Cristiani v. Advocate Health Systems Care Network, Inc., No. 03L14635 (Cir. Ct. Cook Co., January 27, 2006) (in a similar motion to dismiss, Circuit Court Judge Barbara J. Disko denied Advocate’s motion to dismiss a claim under the Consumer Fraud Act, finding a 50% cost reduction for uninsured patients “could constitute a violation of the Consumer Fraud Act”); but compare with Schmitt v. St. Elizabeth’s Hospital Sisters of the Third Order оf St. Francis, No. 05L0186 (Cir. Ct. St. Clair Co., December 16, 2005) (similar complaint dismissed because “Plaintiff has failed to allege that he has paid any amount to St. Elizabeth’s, or even offered to pay any amount, or that St. Elizabeth’s has undertaken any collection activities against him, he has no actual damages, and thus cannot state a claim under the [Consumer Fraud Act]”).
Northwestern maintains the only “clear-cut” circumstance in which a high price would violate the Consumer Fraud Act is where the seller violates public policy by giving little or no services for the price paid. Northwestern cites two cases as authority: People ex rel. Hartigan v. Knecht Services, Inc.,
Northwestern also argues it has a legitimate reason for charging uninsured patients more than it charges insured patients. Specifically, with insured patients, Northwestern knows it will be paid promptly for the services it provided; thus, it has assurance it will be paid. Further, by contracting with insurance companies for discounted rates, Northwestern can legitimately expect insured members to use its services. In support of this argument, Northwestern cites Laughlin v. Evanston Hospital,
In Laughlin, the plaintiffs were third-party payors who indemnified or insured patients for the cost of hospital services. Every plaintiff was charged the same amount for services provided by the defendant hospitals. However, one payor, Illinois Blue Cross Plan, had a contract with the hospitals whereby any amount that Blue Cross paid that exceeded 105% of a hospital’s actual cost would be returned to Blue Cross at the end of the year. In 1982, that amount was $50 million. Laughlin,
The plaintiffs sued these hospitals for violations of the Antitrust Act (740 ILCS 10/1 et seq. (West 2004)) and the Consumer Fraud Act. The hospitals moved to dismiss the complaint. The court dismissed the Antitrust Act count, holding: “Price discrimination of the character complained of by the plaintiffs, that is, discrimination which is not predatory, which is not the result of a concerted refusal to deal or a conspiracy and the basis of which is simply that the plaintiff did not obtain services at a lesser price bargained for by a competing buyer, is, in and of itself, not sufficient to state a cause of action under [the Antitrust Act].” Laughlin,
Concerning the unfairness claim under the Consumer Fraud Act, the сourt held the reach of the Consumer Fraud Act is “limited to conduct that defrauds or deceives consumers or others.” Laughlin,
While the holding in Laughlin is informative, the plaintiff raises public policy arguments and allegations of oppressiveness that were not relevant in that case. Northwestern argues the public policy favoring charity care is not relevant in this case (nor was it raised by the plaintiff) because the plaintiff made no allegations he qualified for charity care. Further, Northwestern argues the plaintiffs oppressiveness argument is unpersuasive because the plaintiff did not and cannot allege he was required to pay anything as a condition of Northwestern treating him. Further, the lien imposed in the settlement agreement was not oppressive where Northwestern performed services and the plaintiff failed to pay for those services.
The plaintiffs claim of unfairness is founded on the oppressiveness of the medical charges by Northwestern and his lack of meaningful choice “but to pay [Northwestern]’s exorbitant rates.” The plaintiff cites Central Standard Life Insurance Co. v. Davis,
Underlying the plaintiffs claim that charging uninsured patients a higher price amounts to oppressive pricing is a suggestion that the insured and uninsured patients are similarly situated. They are not. The plaintiff ignores the obvious difference between an insured patient and one uninsured. An insured patient by definition has medical insurance either paid by him directly or by his employer as a benefit. In return for the insurance premiums, his insurance company contracts with a hospital for medical services at a reduced rate. Thе contract benefits the hospital because payment is guaranteed. There is no such guarantee from uninsured patients. The reality is an insured patient comes into the hospital with expenses already incurred for medical coverage. That his insurance company has been able to negotiate a reduced rate for medical services from the hospital is simply a product of doing business. There is no suggestion the billing contract negotiated between Northwestern and a particular insurance company is negotiated at anything other than at arm’s length. That an uninsured patient is charged a higher rate for medical services is the flip side of the revenue-stream coin. Those that have incurred the expense of medical insurance guaranteeing payment to a medical services provider receive reduced billing rates; those that have incurred no expense to guarantee payment to a medical services provider must bear the full cost for those services. While the plaintiff contends the rate he was charged was “exorbitant” and unrelated to the actual costs of providing the medical services received, as a court of law we find no basis to address such arguments for “unfairness” as it would require we examine the billing practiсes in their entirety for both insured and uninsured patients, for each is a part of the revenue stream; we cannot ignore one and examine only the other. As the amicus Illinois Hospital Association correctly contends, the contentions of the plaintiff should be directed to the deliberative process of the legislature.
We agree with the trial court; the plaintiff has failed to make out a case for unfairness in Northwestern’s billing practices.
2. Deception
The plaintiff also argues his complaint adequately set out a deception claim under the Consumer Fraud Act because Northwestern concealed material facts from him and other uninsured patients. Specifically, the plaintiff argues Northwestern failed to disclose it charged uninsured patients at least double what it charged insured patients. The trial court held because of the emergency nature of the plaintiff’s admission to Northwestern, he could not allege any damages proximately caused by the concealment or omission of any facts.
As outlined above, to state a cause of action under the Act, a plaintiff must plead four elements: (1) a deceptive act or practice by the defendant; (2) an intent by the defendant that the plaintiff rely on the practice; (3) the deceptive practiсe occurred in the course of conduct involving trade or commerce; and (4) the practice proximately caused the plaintiffs injury. Robinson,
An omission or concealment of a material fact in the conduct of trade or commerce constitutes consumer fraud. 815 ILCS 505/2 (West 2004); Connick,
In a cause of action for fraudulent misrepresentation, a plaintiff must plead he was actually deceived by the misrepresentation in order to establish proximate causation. Pappas,
In this case, the plaintiff pleaded:
“15. Northwestern and the Defendant Class do not disclose the disparate cost treatment to the uninsured in any of its promotional materials while touting its provision of services to charities and the poor.
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27. There is no meaningful disclosure of these disсrepancies in charges to the uninsured. Northwestern and the Defendant Class are instead deceptively and unlawfully embedding these gross charges set forth in the billing statement sent to the uninsured in a manner that was deliberately calculated by Northwestern and the Defendant Class to conceal its gross overcharges from the uninsured.
28. Northwestern and the Defendant Class through their deceptive and unjust assessment of the gross overcharges to the uninsured reaps thousands of dollars each year from the uninsured residing in Illinois, including Plaintiff and the putative plaintiff class, by willfully and surreptitiously assessing their grossly overstated list charges on the self-pay or uninsured patients.
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35. The uninsured have little choice as to which hospital they enter, particularly in an emergency. They cannot ‘shop around’ for the best prices. In Cook County in 2001, the emergency room was the referral source for a higher proportion of self-pay patients (67%) than for patients with health insurance (45%). A higher proportion of self-pay patient admissions (69%) were deemed to be emergencies than were insured patient admissions (50%). See the Hospital Accountability Project of the Service Employees Union report entitled: Why the Working Poor Pay More: A Report on Discriminatory Pricing of Health Care.
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62. Defendant’s actions as alleged herein are unfair and deceptive, and constitute fraud, misrepresentation and the concealment, suppression and omission of material facts with the intent that Plaintiff and the Plaintiff Class would rely upon the fraudulent misrepresentation, concealment, suppression and omission of such material facts, all in violation of the Illinois Consumer Fraud Act.
63. By reason of the premises, and as a proximate cause thereof, Plaintiff and the Plaintiff Class have been injured and are thus entitled to damages from Northwestern, for its own fraudulent billing practices and for its conduct with respect to the uninsured, and all other relief prayed for in this Class Action Complaint.”
The plaintiff adequately pleaded that Northwestern concealed information about its rates and billing practice from him. However, he did not plead that he suffered any damages from the concealment or that any alleged damages were proximately caused by the concealment. As Northwestern points out, the plaintiff never alleged he would have been charged a different rate had he been “informed of the existence of discounted rates for certain insured patients” or he would have sought care elsewhere if Northwestern had disclosed this information to him. In fact, he pleaded the existence of the prаctice at Northwestern and other not-for-profit hospitals of charging uninsured patients more. Further, the plaintiff never paid anything for the medical services he received, nor did he plead Northwestern instituted any collection action other than asserting a lien on his settlement agreement. Finally, because the plaintiff was taken to Northwestern in an emergency situation so that care would have been provided before any discussions of rates or payments were had, the plaintiff makes no claim of reliance on Northwestern’s rates and billing practice for the medical services he received.
The trial court properly dismissed count I of the plaintiff’s complaint.
B. Unjust Enrichment
In count II of his complaint, the plaintiff alleged Northwestern was unjustly enriched when it asserted a lien against the plaintiff’s personal injury settlement. Although the trial court found the plaintiff suffered a detriment, it dismissed this count, holding the plaintiff never pleaded that Northwestern retained a benefit.
To state a cause of action for unjust enrichment, a plaintiff must allege the defendant unjustly retained a benefit to the plaintiff’s detriment, and the defendant’s retention violated the fundamental principles of justice, equity, and good conscience. HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc.,
The plaintiff arguеs Northwestern’s lien on his settlement award was a property interest and, thus, Northwestern retained a benefit. Northwestern argues the lien was unadjudicated and so long as it remains unadjudicated, it has retained no benefit.
Section 10 of the Health Care Services Lien Act (Lien Act) (770 ILCS 23/10(a) (West 2004)), provides:
“Every health care professional and health care provider that renders any service in the treatment, care, or maintenance of an injured person *** shall have a lien upon all claims and causes of action of the injured person for the amount of the health care professional’s or health care provider’s reasonable charges ***.”
Once a health care provider asserts a lien, a trial court will adjudicate the rights of the interested parties and enforce the lien after petitioned by either the injured party or the health care provider. 770 ILCS 23/30 (West 2004).
A lien is a “legal claim upon the property recovered as security for payment of [a] debt.” In re Estate of Cooper,
The trial court, therefore, properly dismissed count II as well.
CONCLUSION
For the reasons stated above, the decision of the circuit court of Cook County is affirmed.
Affirmed.
WOLFSON, J., concurs.
Notes
There is no need to address this contention, as issues not raised in the main brief are waived. See Stephens v. Industrial Comm’n,
The plaintiff did not raise the charity-care argument in his complaint or his brief. The plaintiff never alleged he was unable to pay for his services or he was entitled to charity care.
The Hospital Lien Act was repеaled and replaced by the Lien Act in 2003.
Concurrence Opinion
specially concurring.
I agree with the majority that the trial court properly dismissed plaintiffs complaint with prejudice pursuant to section 2 — 615 of the Code of Civil Procedure (735 ILCS 5/2 — 615 (West 2004)).
In order for a hospital to collect a bill for services rendered, it must show that the bill is the fair, usual and customary charge for the services received at area hospitals at the time of the charge. Victory Memorial Hospital v. Rice,