Palos Community Hospital v. Humana Insurance Co., Inc. , 2021 IL 126008 ( 2021 )

2021 IL 126008IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 126008)
PALOS COMMUNITY HOSPITAL, Appellant, v. HUMANA
INSURANCE COMPANY, INC., Appellee.
Opinion filed May 20, 2021.
JUSTICE THEIS delivered the judgment of the court, with opinion.
Chief Justice Anne M. Burke and Justices Garman, Michael J. Burke,
Overstreet, and Carter concurred in the judgment and opinion.
Justice Neville took no part in the decision.
OPINION
¶1 At issue is whether the “test the waters” doctrine constitutes a valid basis on
which to deny a party’s motion for substitution of judge as of right under section 2-
1001(a)(2) of the Code of Civil Procedure (Code) (735 ILCS 5/2-1001(a)(2) (West
2016)). We conclude that the doctrine conflicts with the plain language of the
statute. Therefore, we reverse the appellate court’s judgment.
¶2 BACKGROUND
¶3 Palos Community Hospital (Palos) is a not-for-profit community hospital
located in Palos Heights, Illinois. Humana Insurance Company, Inc. 1 (Humana),
insures and administers health insurance plans for millions of people located
throughout the United States, including the greater Chicagoland area. In June 2013,
Palos filed its initial complaint in Cook County circuit court for fraud, breach of
contract, and other relief against Humana and other entities. In December 2013,
Palos filed an amended complaint for fraud, breach of contract, and other relief
against Humana and two other defendants. The other defendants ultimately settled
with Palos before trial.
¶4 According to Palos, Humana underpaid for medical services that Palos provided
to members of its health insurance plans, including its preferred provider
organization (PPO) plan. Palos alleged that, to induce it to provide discounted PPO
rates, Humana represented that its members would seek services from Palos in
sufficient numbers to justify the discounted rates. Palos alleged that Humana made
these representations in bad faith and instead reimbursed it at materially lower rates
than agreed to by the parties. As a direct result of Humana’s conduct, Palos alleged
that it sustained roughly $20 million in damages. In January 2014, Humana moved
to dismiss the amended complaint under section 2-619.1 of the Code (id § 2-619).
Humana argued that Palos failed to state a claim for either common-law or
constructive fraud because its complaint did not satisfy the strict requirements for
pleading fraud. It further contended that Palos’s breach of contract claim was time-
barred.
¶5 Judge Sanjay Tailor initially presided over the action. In April 2014, the trial
court granted Humana’s motion to dismiss the complaint with prejudice. Palos
moved the court to reconsider its dismissal of the claims against Humana. In early
1
In the trial court, Palos filed suit against Humana, Inc.; Humana Insurance Company, Inc.; and
Humana Health Plan. However, Palos appealed only regarding the claim against Humana Insurance
Company, Inc.
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July 2014, the trial court partially granted Palos’s motion to reconsider. As relevant
here, the court reinstated Palos’s claim for breach of contract.
¶6 Over the next two years, the parties filed numerous motions to compel and other
“emergency” discovery motions. Accordingly, on his own motion, in October 2016
Judge Tailor entered an order appointing retired judge James Sullivan to serve as a
discovery master. The trial court ordered the parties to confer with Judge Sullivan
on all pending discovery disputes. The court asked Judge Sullivan to attempt to
mediate the disputes. If the parties ultimately were unable to resolve them, the court
ordered Judge Sullivan to prepare and submit a report and recommendation on the
outstanding discovery issues, with a copy to the parties. The trial court permitted
the parties to file objections within seven days of receiving the report and
recommendation.
¶7 On March 20, 2017, Judge Sullivan sent a letter with certain recommendations
to Judge Tailor. He recommended that “the court order Palos to produce the
documents and data that reflect the rates that Palos expected to be paid by Humana,”
including “the rate sheets from 1989 through 2004 and other related documents and
data from 1989 through 2010.” Judge Sullivan sent a copy of his letter to all counsel
of record. At a status hearing the next day, Judge Diane Shelley began presiding
over the case. Palos clarified that Humana was the main defendant and that a single
count for breach of contract remained against the company.
¶8 Palos also explained that Judge Tailor had ordered the parties to engage in
mediation with Judge Sullivan and that his recommendation letter is what they
intended to address at the hearing. Noting that Judge Tailor had established a
procedure for the parties to object to the report and recommendation, Palos
requested leave of court to file an objection. Additionally, Palos contended that the
trial court lacked authority to appoint a special master or mediator to oversee
discovery. Judge Shelley granted Palos’s request to submit the filings, noting that
she would keep “a very open mind.” At the same time, the trial court saw no “need
to deviate from the procedure that Judge Tailor had already established in the case”
and would likely “continue to follow it,” unless the parties presented “something
new” to the court.
¶9 In early April 2017, Palos filed a memorandum in support of its motion to strike
the discovery master. It also filed an objection to the content of Judge Sullivan’s
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report. On April 13, 2017, the trial court conducted a hearing on Palos’s motion to
strike. Palos noted that its motion to strike was “intimately tied in with Palos’s
objection to his report that he submitted to the court.” In its view, there was “a
fundamental jurisdictional issue with the appointment of Judge Sullivan.” Palos
also observed that, if the trial court agreed with its analysis, “the merits of the other
briefing [did not] need to be addressed.”
¶ 10 The trial court noted that the prior judge “made a determination that he needed
the assistance of Judge Sullivan in trying to resolve the discovery issues in this
case.” And though the court would not “mak[e] an announcement at this juncture,”
it observed that there was “precedent for a judicial officer to seek assistance in
matters of this nature.” In response, Palos noted that it had “spent a lot of time
researching this issue” and opined that it had “found all the pertinent authority out
there.” After pledging to review the cases cited in its motion, the trial court
concluded the hearing.
¶ 11 On April 20, 2017, citing section 2-1001(a)(2) of the Code, Palos moved for
substitution of judge as a matter of right. Under that section, “[w]hen a party timely
exercises his or her right to a substitution without cause as provided in this
paragraph (2),” “[e]ach party shall be entitled to one substitution of judge without
cause as a matter of right.” 735 ILCS 5/2-1001(a)(2)(i) (West 2016). In relevant
part, the statute further provides that “[a]n application for substitution of judge as
of right shall be made by motion and shall be granted if it is presented before trial
or hearing begins and before the judge to whom it is presented has ruled on any
substantial issue in the case.” Id. § 2/1001(a)(2)(ii). Palos observed that the trial
court had not made any substantial ruling and that neither a trial nor hearing had
been conducted in the action. Therefore, Palos asked the court to grant its motion.
¶ 12 On May 4, 2017, the trial court conducted a hearing on Palos’s motion for
substitution of judge. The court observed that “these motions are usually liberally
granted, except when the parties have had an opportunity to test the waters.” The
court noted that, at both prior hearings, it affirmed that precedent existed for the
appointment of a discovery master. Palos’s motion for substitution of judge
followed shortly thereafter. Noting that counsel had an obligation to advocate for
and strategize on behalf of their clients, the trial court assured Palos that it did not
take offense at the substitution motion. Nonetheless, the court found that testing the
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waters “remain[ed] an exception to the substitution of judge motion in the First
District.”
¶ 13 In a written order entered the same day, the trial court denied Palos’s motion
for substitution of judge as a matter of right. The trial court noted that a “substitution
of judge may be had when a party timely exercises the right to a substitution.”
However, the trial court asserted that such a motion “is considered untimely when
the party moving for a substitution of judge has discussed issues with the judge,
who has indicated a position on a particular point.” Even if no actual ruling was
issued, the trial court stated that a substitution motion can be denied when the party
“had an opportunity to test the waters and form an opinion as to the court’s
disposition of an issue.” The court found that testing the waters was an exception
to motions for substitution of judge as of right, and it concluded that this was
“clearly a case where the movant tested the waters and determined that the court
may be reluctant to strike the discovery master and his report which recommended
that certain contentious documents be produced.” Thus, the court ruled that Palos’s
motion was untimely.
¶ 14 On May 16, 2017, Palos moved the trial court to reconsider its denial of the
motion for substitution of judge. Alternatively, it asked the court to certify the issue
for immediate appeal under Illinois Supreme Court Rule 308 (Ill. S. Ct. R. 308 (eff.
Jan. 1, 2016)). Palos noted that, if there was no immediate appeal and a reviewing
court later determined that the motion should have been granted, all proceedings
after the erroneous denial would be void. The trial court denied Palos’s motion for
reconsideration and its request for an immediate appeal.
¶ 15 Discovery proceeded. In January 2018, Humana moved for discovery sanctions
on the ground that Palos had spoiled evidence. According to Humana, during the
pendency of the litigation—and after Humana had already served its discovery
requests—Palos intentionally concealed material evidence from Humana,
intentionally deleted highly relevant evidence critical to the issues in the case, and
then intentionally concealed that it had deleted the evidence while under a clear
duty to preserve it. In part, Humana asked the trial court to issue an adverse
inference against Palos, finding that the materials Palos destroyed would have
shown that Palos instructed a third-party auditor to measure reimbursement
payments under the initial contract. Humana also asked the court to sanction Palos
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and its attorneys, requiring them to reimburse Humana for the fees and costs
incurred while attempting to recover the deleted evidence. In response, Palos
claimed that the destroyed materials were merely duplicates of material that it had
already produced.
¶ 16 The trial court entered its order on the motions for discovery sanctions and
spoliation in April 2018. The court noted that, despite Humana’s request that such
entities be identified, Palos did not disclose the existence of its consulting contract
with the third-party auditor, the nature of its services, or its request that the
consultant destroy records. The court emphasized that at no time did Palos reveal
that it was directing an undisclosed consultant to destroy data during the pendency
of motions to compel the production of information. In accordance with Illinois
Supreme Court Rule 219(c) (Ill. S. Ct. R. 219(c) (eff. July 1, 2002)), the trial court
found that Humana was entitled to compensation for the time it spent uncovering
the wrongdoing and evaluating the nature and extent of the loss of such data. Thus,
the court granted Humana’s motions for discovery sanctions and spoliation against
Palos.
¶ 17 In early June 2018, on the parties’ cross-motions for summary judgment, the
trial court determined that the relevant contractual language was ambiguous and
that the claims and defenses could not be resolved as a matter of law. Therefore,
the court denied the motions. At the close of trial, on June 18, 2018, the jury found
in favor of Humana and against Palos.
¶ 18 Among other posttrial motions, Palos filed a motion challenging the court’s
denial of its request for substitution of judge. The trial court observed that at the
hearings on March 21, 2017, and April 13, 2017, “substantive discovery issues were
discussed at length along with the discovery master’s recommendations.” The court
reiterated its conclusion that Palos had tested the waters. It therefore denied the
posttrial motion. On March 28, 2019, Palos filed a notice of appeal. In relevant part,
it sought reversal of the trial court’s order of May 4, 2017, denying its motion for
substitution of judge as of right.
¶ 19 The appellate court affirmed the trial court’s rulings. The court observed that,
when a motion for substitution of judge as of right is “properly made, the right is
absolute, and the trial court has no discretion to deny” it. 2020 IL App (1st) 190633,
¶ 22. “However, to discourage ‘judge shopping,’ ” the appellate court asserted that
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“a motion for substitution of judge must be filed at the earliest practical moment
before commencement of trial or hearing and before the trial judge considering the
motion rules upon a substantial issue in the case.” (Internal quotation marks
omitted.) Id. ¶ 23. “Even if the judge did not rule on a substantive issue,” the
appellate court determined that “the substitution motion may be denied if the party
has tested the waters and formed an opinion as to the judge’s reaction to his or her
claim.” Id.
¶ 20 Here, the appellate court found that the trial court properly denied Palos’s
motion for substitution of judge. Id. ¶ 29. In response to Palos’s arguments on the
requests to strike the discovery master at the March 21 and April 13 hearings, Judge
Shelley stated that she believed there was precedent for such an appointment. Id.
The appellate court concluded that the trial court’s reluctance to strike the discovery
master implied that the court would accept his report, which “ ‘recommended that
certain contentious documents be produced.’ ” Id. Thus, the appellate court found
that “Palos had tested the waters because it could discern Judge Shelley’s position
on the production of documents at the heart of this controversy.” (Internal quotation
marks omitted). Id.
¶ 21 We allowed Palos’s petition for leave to appeal. Ill. S. Ct. R. 315(a) (eff. Oct.
1, 2019).
¶ 22 ANALYSIS
¶ 23 The question before this court is whether the test the waters doctrine is a valid
basis on which to deny a motion for substitution of judge as a matter of right, given
the language of section 2-1001(a)(2) of the Code.
¶ 24 Statutory construction presents a question of law that we review de novo. In re
Appointment of Special Prosecutor, 2019 IL 122949, ¶ 22. A court’s primary
objective when construing a statute is to ascertain and give effect to the legislature’s
intent. Oswald v. Hamer, 2018 IL 122203, ¶ 10. All other rules of statutory
construction are subordinate to this cardinal principle. Id. The most reliable
indicator of legislative intent is the language of the statute, given its plain and
ordinary meaning. Special Prosecutor, 2019 IL 122949, ¶ 23. When the language
is clear and unambiguous, we must give effect to the statute as written without
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resort to further aids of statutory construction. Alvarez v. Pappas, 229 Ill. 2d 217,
228 (2008).
¶ 25 Under section 2-1001(a)(2), a party’s motion for substitution as a matter of right
in a civil action “shall be granted if it is presented before trial or hearing begins and
before the judge to whom it is presented has ruled on any substantial issue in the
case, or if it is presented by consent of the parties.” (Emphasis added.) 735 ILCS
5/2-1001(a)(2)(ii) (West 2016). When a party timely exercises his or her right to a
substitution without cause “as provided in this paragraph (2)”—for instance, when
the motion is filed before trial begins and before the judge has ruled on any
substantial issue—the party “shall be entitled to one substitution of judge without
cause as a matter of right.” Id. § 2-1001(a)(2)(i). When properly made, a motion for
substitution of judge as of right is absolute; the trial court has no discretion to deny
it. Bowman v. Ottney, 2015 IL 119000, ¶ 17.
¶ 26 As this court observed in Bowman, “[t]he version of section 2-1001 that is
currently in effect was adopted in 1993, when the General Assembly rewrote the
statute.” Id. ¶ 14. With the 1993 amendment, the General Assembly eliminated the
requirement that a party seeking substitution must allege bias or prejudice on the
part of the judge. Id. ¶ 16. “Under the new provision, a litigant is entitled to one
substitution without cause as a matter of right, as long as the request for substitution
is presented before trial or hearing begins and before the judge to whom it is
presented has ruled on any substantial issue in the case.” (Internal quotation marks
omitted.) Id.
¶ 27 In Bowman, we mentioned the appellate court’s reliance on the test the waters
doctrine, which “permits the denial of an initial motion for substitution of judge
before substantial rulings have been made, if the party presenting the motion has
been able to form an opinion as to the court’s disposition toward his or her case.”
Id. ¶ 5. However, in that case, the trial court had ruled on substantial issues before
the defendant moved for substitution as of right. The test the waters doctrine was
therefore inapplicable, and this court did not need to address its validity. Id. ¶ 27.
¶ 28 We do so now, and we hold that the test the waters doctrine is incompatible
with the plain language of section 2-1001(a)(2). As the statutory text makes clear,
so long as a party files its substitution motion before certain, specified occurrences,
the party is “entitled to one substitution of judge without cause as a matter of right.”
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735 ILCS 5/2-1001(a)(2)(i) (West 2016). In part, the statute provides that a motion
for substitution of judge as of right shall be granted if the motion is presented both
before the trial or hearing begins and before the judge to whom the motion is
presented has ruled on any substantial issue in the case. Id. § 2-1001(a)(2)(ii). A
party having “been able to form an opinion as to the court’s disposition toward his
or her case” is not among the criteria listed in the statute. Thus, the test the waters
doctrine is an improper basis on which to deny a motion for substitution of judge
as of right.
¶ 29 Here, Palos moved for substitution of judge as a matter of right before trial or
hearing 2 began and before Judge Shelley had ruled on any substantial issue in the
case. Palos’s motion followed the requirements set forth in section 2-1001(a)(2).
Therefore, the trial court erred in denying it. See Bowman, 2015 IL 119000, ¶ 17.
¶ 30 Relying on cases that this court decided long before the statute was amended in
1993, Humana argues that a motion for substitution of judge must be “timely” filed,
which, it believes, means that the motion must be filed before a party has tested the
waters. See, e.g., People v. Lawrence, 29 Ill. 2d 426, 427-28 (1963) (“[P]etitions
delayed until after the trial judge has by his rulings passed upon substantive issues,
and indicated his views on the merits of the cause, come too late.”); Commissioners
of Drainage District No. 1 v. Goembel, 383 Ill. 323, 328 (1943) (“It would be highly
improper to permit an attorney *** to try out the attitude of the trial judge on a
hearing as to part of the questions presented and, if his judgment on such questions
was not in harmony with counsel’s view, to then permit counsel to assert that the
court was prejudiced and that a change of venue must be allowed.”). Yet, the only
timeliness requirements in the currently operative version of the statute are those
contained “in this paragraph (2),” namely, that the motion “shall be granted if it is
presented before trial or hearing begins and before the judge to whom it is presented
has ruled on any substantial issue in the case.” 735 ILCS 5/2-1001(a)(2)(ii) (West
2016). If, as here, a motion for substitution of judge as of right is filed before trial
or hearing begins and before the judge has ruled on a substantial issue in the case,
it is timely. Given the language of the operative provisions for substitution of judge
2
Humana did not argue that the April 13, 2017, hearing on Palos’s motion to strike the discovery
master should be considered a disqualifying hearing for purposes of section 2-1001(a)(2)(ii).
Accordingly, we decline to address the issue.
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as of right, older decisions such as Lawrence and Goembel that allude to the test
the waters doctrine should no longer be relied upon on as to that issue.
¶ 31 Humana urges this court to uphold the test the waters doctrine, claiming that it
furthers the statute’s purposes. However, as we have repeatedly observed, “[c]ourts
are not at liberty to depart from the plain language and meaning of a statute by
reading into it exceptions, limitations, or conditions the legislature did not express.”
In re Hernandez, 2020 IL 124661, ¶ 18. The General Assembly did not include the
test the waters doctrine in the language of the statute when it amended section 2-
1001(a)(2), and we are not free to read it in.
¶ 32 Humana also draws our attention to “protective measures” that other states have
implemented to “constrain testing the waters” by litigants. For instance, Humana
notes that in New Mexico a party seeking to disqualify a judge must file an
“affidavit of disqualification *** within ten days after the cause is at issue or within
ten days after the time for filing a demand for jury trial has expired, or within ten
days after the judge sought to be disqualified is assigned to the case, whichever is
the later.” N.M. Stat. Ann. § 38-3-10 (2016). Humana further observes that in
Minnesota a party cannot request the removal of a judge “who has presided at a
motion or any other proceeding of which the party had notice.” Minn. R. Civ. P.
63.03 (eff. July 1, 2018). These provisions from other states only accentuate the
fact that the General Assembly chose not to include similar measures in section 2-
1001(a)(2).
¶ 33 Indeed, the General Assembly made a different choice regarding the criminal
substitution of judge statute, which, in part, provides: “Within 10 days after a cause
involving only one defendant has been placed on the trial call of a judge the
defendant may move the court in writing for a substitution of that judge ***.” 725
ILCS 5/114-5(a) (West 2016). The legislature knows how to include explicit timing
requirements into a statute when that is its intent. The General Assembly’s decision
not to include such language in section 2-1001(a)(2) demonstrates that it did not
intend for the statute to contain that type of “protective measure.” See Whitaker v.
Wedbush Securities, 2020 IL 124792, ¶ 16 (“The most reliable indicator of
legislative intent is the statutory language ***.”).
¶ 34 As to what follows when a trial court improperly denies a motion for
substitution of judge as of right, under the preamendment version of the statute, we
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observed that when a motion for substitution of judge “is timely filed and in proper
form, it must be granted and any order entered after its presentation is a nullity.”
In re Dominique F., 145 Ill. 2d 311, 324 (1991); see also Chavis v. Woodworker’s
Shop, Inc., 2018 IL App (3d) 170729, ¶ 15 (“Any order entered subsequent to the
time that a motion for substitution of judge should have been granted becomes a
nullity.”). We reasoned that a trial judge should not be allowed “to circumvent rules
of law by postponing a decision on a [motion for substitution of judge] until after
he has ruled on the substantive issues in the case.” In re Dominique F., 145 Ill. 2d
at 324. Moreover, because the legislature has established a statutory right to
substitution of judge without cause so long as certain criteria are met, courts are
obligated to uphold that right. See, e.g., Williams v. Leonard, 2017 IL App (1st)
172045, ¶ 9 (“[W]hen properly made, a motion for substitution of judge as a matter
of right is absolute, and the circuit court has no discretion to deny the motion.”
(Internal quotation marks omitted.)). We therefore hold that every order entered by
the trial court after April 20, 2017, when Palos filed its substitution motion, must
be vacated.
¶ 35 We acknowledge that a primary concern underlying the test the waters doctrine
is that litigants would strategically time the filing of their motions for substitution
of judge as of right as a form of gamesmanship. See, e.g., Bowman, 2015 IL
119000, ¶ 18 (“[T]his court has long recognized that courts may take into
consideration the circumstances surrounding a motion for substitution of judge and
may deny the motion if it is apparent that the request has been made as a delay
tactic.”); see id. ¶ 25 (observing that section 2-1001 is designed to prevent
“procedural maneuvering”). However, the test the waters doctrine is far from the
only tool available to the trial judge to protect the integrity of the court. Settled law
recognizes that trial courts possess “inherent powers that are ‘governed not by rule
or statute but by the control necessarily vested in courts to manage their own affairs
so as to achieve the orderly and expeditious disposition of cases.’ ” Dietz v. Bouldin,
579 U.S. ___, ___, 136 S. Ct. 1885, 1891 (2016) (quoting Link v. Wabash R.R. Co.,
370 U.S. 626, 630-31 (1962)). Even without the test the waters doctrine, the trial
court may rely on its inherent authority to enter any orders necessary to prevent
abuse or manipulation of the system. See, e.g., Sander v. Dow Chemical Co., 166
Ill. 2d 48, 66 (1995) (“The recognition of the court’s inherent authority is necessary
to prevent undue delays in the disposition of cases caused by abuses of procedural
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rules, and also to empower courts to control their dockets.”).
¶ 36 CONCLUSION
¶ 37 In sum, we hold that the test the waters doctrine is incompatible with the text
of section 2-1001(a)(2). We further hold that the trial court erred in denying Palos’s
motion for substitution of judge as of right because its motion satisfied the statutory
criteria. Accordingly, we reverse the appellate court’s decision. This action is
remanded to the trial court with directions to vacate all orders entered by the court
after April 20, 2017, and for further proceedings consistent with this opinion.
¶ 38 Judgments reversed.
¶ 39 Cause remanded with directions.
¶ 40 JUSTICE NEVILLE took no part in the consideration or decision of this case.
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