Midwest Neurosurgeons, LLC v. Abell ( 2022 )

NOTICE
2022 IL App (5th) 210394-UNOTICE
Decision filed 11/21/22. The
This order was filed under
text of this decision may be NO. 5-21-0394 Supreme Court Rule 23 and is
changed or corrected prior to
not precedent except in the
the filing of a Petition for
Rehearing or the disposition of
IN THE limited circumstances allowed
under Rule 23(e)(1).
the same.
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
______________________________________________________________________________
MIDWEST NEUROSURGEONS, LLC, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Williamson County.
)
v. ) No. 21-L-81
)
MARY ELLEN ABELL, ) Honorable
) Jeffrey A. Goffinet,
Defendant-Appellee. ) Judge, presiding.
______________________________________________________________________________
JUSTICE BARBERIS delivered the judgment of the court.
Justices Welch and Cates concurred in the judgment.
ORDER
¶1 Held: We affirm the circuit court’s dismissal of medical provider’s breach of contract
action, where medical provider was not a third-party beneficiary to a settlement
contract entered into by employer and employee pursuant to the Workers’
Compensation Act.
¶2 Plaintiff, Midwest Neurosurgeons, LLC (Midwest), filed a breach of contract action against
defendant, Mary Ellen Abell, seeking to recover the costs of medical services and treatment
Midwest provided to Abell’s employee, Cheryl Lyell. Midwest alleged that it was a third-party
beneficiary to a settlement contract entered into by Abell and Lyell, wherein Abell and Lyell
agreed to settle Lyell’s claim filed pursuant to the Workers’ Compensation Act (Act) (820 ILCS
305/1 et seq. (West 2020)). Abell filed a motion to dismiss pursuant to sections 2-615 and 2-619
of the Code of Civil Procedure (Code) (735 ILCS 5/2-615, 2-619 (West 2020)), arguing, inter alia,
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that the Act prohibited medical providers from maintaining private causes of action against
employers for medical services provided to employees who filed claims pursuant to the Act. The
Williamson County circuit court granted Abell’s motion and dismissed Midwest’s action for
failure to state a claim. Midwest appeals, arguing that the court erred by granting the motion to
dismiss because it pled a recognized cause of action under Illinois law. We affirm.
¶3 I. Background
¶4 On February 25, 2011, Lyell sustained work-related injuries. Lyell filed a claim against
Abell pursuant to the Act seeking benefits for her injuries. While her claim remained pending,
Lyell received medical care and treatment for her injuries at Midwest on multiple dates in 2011.
¶5 On February 14, 2013, Abell and Lyell entered into a settlement contract, wherein they
agreed to settle Lyell’s claim arising under the Act. The Illinois Workers’ Compensation
Commission (Commission) approved the settlement contract on February 15, 2013. Neither Abell
nor Lyell filed a petition for review of the Commission’s approval of the settlement contract.
¶6 On July 2, 2021, Midwest filed a breach of contract claim against Abell seeking to recover
the costs of the medical services and treatment that it provided to Lyell in 2011. Midwest alleged
that it was an intended third-party beneficiary of the settlement contract, wherein Abell agreed to
“pay, directly to the providers, the causally-related medical expenses incurred up to 9/26/12.” In
support, Midwest attached to the complaint a redacted copy of the settlement contract, which
included the following provision:
“Respondent agrees to pay, directly to the providers, the causally-related medical expenses
incurred up to 9/26/12, [redacted]. Respondent also agrees to pay, directly to the provider,
the unpaid medical expense incurred prior to the date of settlement at Neurology of Southern
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Illinois, Ltd. (Dr. Lori M. Guyton). All medical expenses will be paid pursuant to pre-
arranged cost-containment agreements or the Illinois Medical Fee Schedule.”
Midwest further alleged in the complaint that Abell breached the settlement contract by failing to
pay Lyell’s medical expenses and that, as a direct result of Abell’s breach, it incurred damages in
the amount of $67,438.97, “plus interest at the rate of 1% per month that began to accrue as set
forth in 820 ILCS 305/8.2.” Midwest alleged that the accrued interest on the unpaid medical bills
totaled $79,569.29 at the time the complaint was filed and, thus, requested that the circuit court
enter judgment against Abell for the sum of $147,053.26. In support, Midwest referenced and
attached a document that listed, inter alia, the following information: the service and billing dates
for the medical treatment Lyell received at Midwest; the total amount billed for the services; the
insurance payments Midwest received; and interest calculations.
¶7 On October 1, 2021, Abell filed a motion to dismiss pursuant to sections 2-615 and 2-619
of the Code arguing, inter alia, that the Act prohibited medical providers, such as Midwest, from
maintaining private causes of action against employers for medical services provided to employees
who filed claims pursuant to the Act. On October 12, 2021, Midwest filed a response arguing that
it adequately pled its status as an intended third-party beneficiary to the settlement contract and
that its breach of contract claim was a viable, recognized claim under Illinois law. On October 27,
2021, Abell filed a reply reiterating her argument that Midwest had no direct cause of action
against her as Lyell’s employer.
¶8 On October 29, 2021, the circuit court held a hearing on Abell’s motion to dismiss where
the parties presented arguments consistent with the previous filings. After considering the parties’
arguments, the court stated that it was unable to locate legal authority in support of Midwest’s
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position that a medical provider was allowed to maintain a direct action against an employer for
medical services provided to an employee who filed a claim under the Act. The court permitted
Midwest to submit a memorandum to provide further law on the issue.
¶9 On November 5, 2021, Midwest submitted its memorandum arguing that Illinois law
recognized third-party breach of contract claims, and that no provision of the Act expressly
prohibited medical providers from recovering from employers amounts of medical services that
employers contractually agreed to pay. Midwest further argued that the settlement contract did not
violate public policy, and that dismissal of the claim would frustrate the purpose of the Act.
¶ 10 On November 8, 2021, the circuit court granted Abell’s motion and dismissed the matter
for failure to state a cause of action. The record on appeal does not include a written order but
contains a docketing entry setting forth the court’s ruling. In the docket entry, the court indicated
that it was unable to locate legal precedent that allowed a medical provider to maintain a direct
action against an employer for medical services provided to an employee who filed a claim under
the Act. The court acknowledged, but disagreed with, Midwest’s arguments that it was a third-
party beneficiary to the settlement contract and that there was no law prohibiting such cause of
action. The court declined to create a cause of action or make law that would allow a medical
provider, who was not expressly named in a settlement contract, to bring a direct action against an
employer as a third-party beneficiary. The court acknowledged that there may be policy reasons
for allowing such cause of action but concluded that such matters were better suited to the
legislature. Midwest timely appealed.
¶ 11 II. Analysis
¶ 12 “A motion to dismiss pursuant to section 2-615 attacks the sufficiency of the complaint
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and raises the question of whether the complaint states a claim upon which relief can be granted.”
Tielke v. Auto Owners Insurance Co., 2019 IL App (1st) 181756, ¶ 22 (citing Burton v. Airborne
Express, Inc., 367 Ill. App. 3d 1026, 1029 (2006)). “A section 2-619 motion to dismiss admits the
legal sufficiency of the plaintiff’s complaint but raises defects, defenses, or other affirmative
matters that appear on the face of the complaint or that are established by external submissions
acting to defeat the complaint’s allegations.” Id. (citing Burton, 367 Ill. App. 3d at 1029).
¶ 13 The standard of review of motions to dismiss under either section 2-615 or section 2-619
is de novo. Neppl v. Murphy, 316 Ill. App. 3d 581, 583 (2000). In addition, because this court
reviews the circuit court’s judgment, not its rationale, we may affirm for any reason supported by
the record regardless of the basis cited by the circuit court. D’Attomo v. Baumbeck, 2015 IL App
(2d) 140865, ¶ 30.
¶ 14 “To establish a breach of contract, a plaintiff must show the existence of a valid and
enforceable contract, performance of the contract by the plaintiff, breach of the contract by the
defendant, and resulting injury to the plaintiff.” Barry v. St. Mary’s Hospital Decatur, 2016 IL
App (4th) 150961, ¶ 78 (citing Sherman v. Ryan, 392 Ill. App. 3d 712, 732 (2009)). An individual
not a party to a contract may only enforce the contract’s rights when the contract’s original parties
intentionally entered into the contract for the direct benefit of the individual. Swavely v. Freeway
Ford Truck Sales, Inc., 298 Ill. App. 3d 969, 973 (1998). There is a strong presumption that the
parties to a contract intend that the contract’s provisions apply only to them, and not to third parties.
Barney v. Unity Paving, Inc., 266 Ill. App. 3d 13, 19 (1994). That the contracting parties know,
expect, or even intend that others will benefit from their agreement is not enough to overcome the
presumption that the contract was intended for the direct benefit of the parties. Id.5
¶ 15 Whether someone is a third-party beneficiary depends on the intent of the contracting
parties, as evidenced by the contract language. F.H. Paschen/S.N. Nielsen, Inc. v. Burnham Station,
L.L.C., 372 Ill. App. 3d 89, 96 (2007). It must appear from the language of the contract that the
contract was made for the direct, not merely incidental, benefit of the third person. Gallagher
Corp. v. Russ, 309 Ill. App. 3d 192, 200 (1999). Such an intention must be shown by an express
provision in the contract identifying the third-party beneficiary by name or by description of a
class to which the third party belongs. Holmes v. Federal Insurance Co., 353 Ill. App. 3d 1062,
1066 (2004).
¶ 16 Here, the settlement contract specifically referenced the medical bills incurred by Lyell for
treatment she received at Neurology of Southern Illinois, Ltd., but the contract did not specifically
reference the medical bills incurred by Lyell at Midwest. As such, Midwest was not specifically
identified in the contract by name as an intended beneficiary.
¶ 17 Midwest alleged in the complaint that it was an intended third-party beneficiary of the
settlement contract because Abell agreed to “pay, directly to the providers, the causally-related
medical expenses incurred up to 9/26/12.” Midwest further alleged that it provided medical
treatment to Lyell for her work-related injuries on multiple dates in 2011. Thus, at first glance, it
appears the allegations in Midwest’s complaint, taken as true, demonstrated that the settlement
contract identified Midwest by description of a class to which Midwest belongs—a medical
provider that provided treatment to Lyell prior to September 26, 2012.
¶ 18 We note, however, that Abell and Lyell entered into the contract at issue to settle Lyell’s
claim arising under the Act. See Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 180-81 (1978) (the
fundamental purpose of the Act is “to afford protection to employees by providing them with
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prompt and equitable compensation for their injuries”). The contractual provision providing for
payment of medical expenses directly to Lyell’s medical providers merely restates a provision of
the Act. Specifically, section 8.2(d) of the Act provides that “[t]he employer or its designee shall
make payment for treatment in accordance with the provisions of this Section directly to the
provider, except that, if a provider has designated a third-party billing entity to bill on its behalf,
payment shall be made directly to the billing entity.” 820 ILCS 305/8.2(d) (West 2020). The direct
payment obligation set forth in section 8.2(d) simply serves to further the fundamental purpose of
the Act and ensure that injured employees receive prompt payment of benefits owed to them for
work-related injuries. See Marque Medicos Farnsworth, LLC v. Liberty Mutual Insurance Co.,
2018 IL App (1st) 163351, ¶ 14 (citing Marque Medicos Fullerton, LLC v. Zurich American
Insurance Co., 2017 IL App (1st) 160756, ¶ 52). Thus, despite the inclusion of the general direct
payment language, we conclude that the contract at issue was made for the direct benefit of Lyell
and that any benefit to Midwest was incidental. Our interpretation of the contract is supported by
the fact that Abell specifically agreed to pay the medical expenses incurred at Neurology of
Southern Illinois, Ltd. without reference to the medical expenses incurred at Midwest.
¶ 19 This interpretation of the settlement contract is also consistent with other provisions of the
Act pertaining to the nonpayment of medical expenses. Section 8.2(e-20) of the Act provides as
follows:
“Upon a final award or judgment by an Arbitrator or the Commission, or a settlement agreed
to by the employer and the employee, a provider may resume any and all efforts to collect
payment from the employee for the services rendered to the employee and the employee shall
be responsible for payment of any outstanding bills for a procedure, treatment, or service
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rendered by a provider as well as the interest awarded under subsection (d) of this Section.”
(Emphasis added.) 820 ILCS 305/8.2(e-20) (West 2020).
Our supreme court considered section 8.2(e-20) under slightly different circumstances in In re
Hernandez, 2020 IL 124661, ¶ 23. In doing so, our supreme court noted that section 8.2(e-20)
permits “health care providers to seek payment directly from an injured employee for outstanding
bills plus interest *** after a settlement agreement is reached between the employer and the
employee.” Id. Our supreme court noted, however, that “nothing in section 8.2(e-20) permits
health care providers to look to the workers’ compensation award, judgment, or settlement itself
as a source of payment.” Id.¶ 20 Accordingly, section 8.2(e-20) allowed Midwest to resume efforts to collect payment from
Lyell for unpaid medical expenses following the settlement agreement. As Abell correctly notes,
Lyell could, in turn, file an action to enforce the settlement agreement pursuant to section 19(g) of
the Act (820 ILCS 305/19(g) (West 2020)). See Millennium Knickerbocker Hotel v. Illinois
Workers’ Compensation Comm’n, 2017 IL App (1st) 161027WC, ¶ 21 (noting that “the only
method to enforce a final award of the Commission is in the circuit court pursuant to section 19(g)
of the Act”); see also Ahlers v. Sears, Roebuck Co., 73 Ill. 2d 259, 265 (1978) (holding that
“Commission approval of a settlement agreement constitutes a decision of the Commission and is,
in legal effect, the equivalent of an award within the meaning of section 19(g)”). As our colleagues
in the First District recognized, the methods of enforcing an employer’s obligation to pay
outstanding medical bills are “somewhat circuitous”; however, the commonality to the available
courses of action “is that they must be undertaken by the employee for whose benefit these
provisions were enacted.” Marque Medicos Farnsworth, LLC, 2018 IL App (1st) 163351, ¶¶ 28-
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32. Our colleagues in the First District suggested that counsel insist that any settlement agreement
contain specified dollar amounts for outstanding medical bills to provide a “less circuitous means
of avoiding this problem in the future.” Id. ¶ 32. Thus, the Act permits a medical provider to collect
unpaid medical expenses from an employee, not an employer, and sets forth various methods by
which an employee may enforce an employer’s obligation to pay such medical expenses.
¶ 21 Lastly, we note that Midwest’s complaint sought to recover “interest at the rate of 1% per
month that began to accrue as set forth in 820 ILCS 305/8.2.” Section 8.2(d)(3) of the Act requires
an employer who fails to pay a medical provider within 30 days of receipt of a bill containing
substantially all necessary requirements to pay interest in the amount of 1% per month to the
provider. 820 ILCS 305/8.2(d)(3) (West 2020). As Abell correctly notes, the Illinois legislature
amended the Act in 2018 to include section 8.2(d)(4), which provides as follows:
“If the employer or its insurer fails to pay interest within 30 days after payment of the bill
as required pursuant to paragraph (3), the provider may bring an action in circuit court for
the sole purpose of seeking payment of interest pursuant to paragraph (3) against the
employer or its insurer responsible for insuring the employer’s liability pursuant to item
(3) of subsection (a) of Section 4. The circuit court’s jurisdiction shall be limited to
enforcing payment of interest pursuant to paragraph (3). Interest under paragraph (3) is
only payable to the provider. An employee is not responsible for the payment of interest
under this Section. The right to interest under paragraph (3) shall not delay, diminish,
restrict, or alter in any way the benefits to which the employee or his or her dependents are
entitled under this Act.” Id. § 8.2(d)(4).
The legislature further provided that “[t]he changes made to this subsection (d) by this amendatory
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Act of the 100th General Assembly apply to procedures, treatments, and services rendered on and
after the effective date of this amendatory Act of the 100th General Assembly.” Id.
¶ 22 Here, Midwest’s complaint sought to recover interest for services and treatment provided
to Lyell in 2011—well after the effective date of the amendatory Act. Thus, Midwest’s request to
recover interest in a breach of contract action directly conflicts with the express language of the
Act and the intent of the legislature.
¶ 23 In sum, Midwest failed to plead sufficient facts to show it was an intended third-party
beneficiary to the settlement contract, and its request for interest was not permissible under the
Act. Therefore, we conclude that the circuit court properly dismissed Midwest’s complaint against
Abell.
¶ 24 III. Conclusion
¶ 25 For the foregoing reasons, we affirm the judgment of the circuit court of Williamson
County dismissing the complaint.
¶ 26 Affirmed.
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