Lewis v. Lead Industries Ass'n

2020 IL 124107
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 124107)
MARY LEWIS et al., Appellees, v. LEAD INDUSTRIES ASSOCIATION et al. (Atlantic
Richfield Company et al., Appellants).
Opinion filed May 21, 2020.
JUSTICE NEVILLE delivered the judgment of the court, with opinion.
Chief Justice Anne M. Burke and Justices Garman, Karmeier, and Theis
concurred in the judgment and opinion.
Justices Kilbride and Michael J. Burke took no part in the decision.
OPINION
¶1 Plaintiffs, Mary Lewis, Tashswan Banks, and Kathleen O’Sullivan, filed a class
action in the circuit court of Cook County against defendants, Atlantic Richfield
Company; ConAgra Grocery Products, Inc.; NL Industries, Inc.; and the Sherwin-
Williams Company. Plaintiffs sought to recover the costs of blood lead screening,
which their children underwent as required by the Lead Poisoning Prevention Act
(Act) (410 ILCS 45/1 et seq. (West 2000)). The circuit court granted summary
judgment in favor of defendants. The appellate court reversed. 2018 IL App (1st)
172894. This court allowed defendants’ petition for leave to appeal (Ill. S. Ct. R.
315(a) (eff. July 1, 2018)). We hold that plaintiffs who do not suffer any economic
loss cannot maintain a tort action that is based on a claim that alleges solely an
economic injury and no physical injury or property damage. Accordingly, we
reverse the judgment of the appellate court, affirm the judgment of the circuit court,
and remand to the circuit court for further proceedings.
¶2 I. BACKGROUND
¶3 Nineteen years ago, plaintiffs Mary Lewis, Tashswan Banks, and Kathleen
O’Sullivan, on behalf of themselves and others similarly situated, filed the instant
class-action lawsuit against four defendants, each of which is a former
manufacturer of white lead pigments or the alleged corporate successor to such a
manufacturer. Relevant here, plaintiffs’ second amended class action complaint
alleged six counts that were captioned as follows: (1) intentional failure to warn,
(2) supplier liability, (3) fraud on the public, (4) unjust enrichment, (5) common-
law public nuisance, and (6) civil conspiracy. The circuit court dismissed all six
counts. The appellate court affirmed the dismissal of the first five counts, which are
not at issue here. However, the appellate court reversed the dismissal of count VI.
Lewis v. Lead Industries Ass’n, 342 Ill. App. 3d 95 (2003) (Lewis I) Subsequently,
the appellate court reversed the grant of summary judgment in favor of defendants
on count VI. Lewis v. Lead Industries Ass’n, No. 1-05-0974 (2006) (unpublished
order under Illinois Supreme Court Rule 23) (Lewis II). The sole surviving count is
count VI, which is repled in plaintiffs’ third amended complaint.
¶4 Plaintiffs sought to recover the costs of blood-lead screening, which their
children underwent as required by the Act (410 ILCS 45/1 et seq. (West 2000)).
Plaintiffs’ complaint specifically excludes any claim for recovery for physical
injury to their children. Instead, plaintiffs’ claim is solely one for economic injury
to the parents in relation to the costs incurred for the lead screening. The class was
certified in 2008, and despite attacks from both sides, the class definition has
remained essentially the same:
-2-
“the parents or legal guardians of children who, between August 18, 1995, and
February 19, 2008, were between six months and six years of age and, during
that age bracket, lived in zip codes identified by the Illinois Department of
Public Health as ‘high risk’ areas pursuant to section 6.2(a) of the Act (410
ILCS 45/6.2(a) (West 2000)) and had a venous or blood capillary test for lead
toxicity, excluding such parents and legal guardians who incurred no expense,
obligation or liability for lead toxicity testing of their children.”
¶5 On October 6, 2016, defendants filed a motion for summary judgment,
contending that none of the three named plaintiffs incurred any expense, obligation,
or liability for the lead toxicity testing of their children. Supported by the deposition
testimony of plaintiffs Lewis and Banks, defendants asserted that both were
Medicaid recipients when their children were tested and neither paid for those tests.
Defendants claimed that Lewis and Banks could not prove any economic injury that
would be essential to their claims because (1) Medicaid paid the full costs of the
screenings, (2) the two received no demands for payment from the medical
providers who performed tests or from the Illinois department responsible for
administering the Medicaid program, and (3) state and federal laws in fact prohibit
the medical providers or Medicaid itself from seeking reimbursement from them.
Thus, there is no possibility plaintiffs will incur any cost as a result of their
children’s screenings. With respect to plaintiff O’Sullivan, defendants asserted that
there was no evidence to show that she paid anything for her child’s screening or
that her plan would have required payment.
¶6 In response, plaintiffs conceded that Lewis and Banks did not pay for the tests.
But they argued that a recipient of medical services or treatment (and in the case of
a child, the recipient’s parents) incurs the expense of the services or treatment, even
where the actual cost of the expense is paid by a third-party payor. Plaintiffs argued
that, if they recovered the cost of the testing, the State, which paid the providers for
the tests, could seek reimbursement from that recovery. Plaintiffs also argued that,
under the collateral source rule, Medicaid’s payment for the tests does not negate
plaintiffs’ economic injury but instead gives them the right to be reimbursed for the
costs of the screenings even though a collateral source paid the actual costs.
¶7 The circuit court granted defendants’ motion for summary judgment. As to
plaintiffs Lewis and Banks, the court ruled that they suffered no injury. They did
-3-
not pay for the test themselves and incurred no obligation or liability for the costs
because state and federal law bar both Medicaid and the service providers from
seeking reimbursement from these plaintiffs. The court noted that, if a Medicaid
recipient recovered the costs of medical care in a tort action, the State might have
a claim to a portion of that tort recovery. But such a claim could not constitute an
injury to plaintiffs, the court held. This is because any “recoupment [the State could
obtain] comes from the judgment against the wrongdoer before the net judgment
is paid to the recipient, not from the recipient herself.” (Emphasis in original.) Thus,
plaintiffs have no “present, or even a prospective, obligation or liability to the State
with respect to the medical screening.”
¶8 The circuit court also rejected plaintiffs’ argument that the collateral source rule
allowed them to recover in the absence of an actual injury. The court held that the
collateral source rule applies only to the measurement of damages in bodily injury
cases and cannot be used to overcome plaintiffs’ lack of a present expense,
obligation, or liability arising from their children’s blood screening tests.
¶9 The circuit court also dismissed O’Sullivan’s claim but on the slightly different
ground that she had private health insurance rather than Medicaid yet was unable
to present evidence that either she or her insurer had paid anything for her children’s
lead screening tests. Thus, like the other two plaintiffs, the circuit court found that
O’Sullivan was not a member of the defined class.
¶ 10 Plaintiffs’ counsel was given time to name one or more new class
representatives, but counsel waived that opportunity and did not name a new
representative. Instead, plaintiffs moved for certification pursuant to Illinois
Supreme Court Rule 304(a) (eff. Mar. 8, 2016), permitting immediate appeal of the
order granting summary judgment on behalf of defendants. The circuit court
granted the motion for Rule 304(a) certification as to Banks and Lewis but denied
it with respect to O’Sullivan. The court explained that its summary judgment ruling
rested upon a legal analysis applicable to all Medicaid recipients so that immediate
appellate review would expedite the disposition of the entire case without risking
piecemeal appellate review but declined to certify the order dismissing O’Sullivan
because her claim rested on fact-based determinations specific to her that would
not necessarily be presented by all potential class members.
-4-
¶ 11 On appeal of the circuit court’s summary judgment order against Lewis and
Banks, the appellate court reversed. See 2018 IL App (1st) 172894. It began its
analysis by conceding that neither plaintiff paid any portion of the cost of her
child’s lead screening test and that those costs were paid entirely by Medicaid. Id.
¶ 7. It also agreed that neither plaintiff is obligated to reimburse the State for all, or
any portion, of the payment made for the testing of their children. Id. ¶ 9. But the
court nonetheless held that plaintiffs had a legally sufficient claim of injury because
they incurred an obligation for the cost of the tests. According to the appellate court,
this was because the Rights of Married Persons Act (Family Expense Act) (750
ILCS 65/15 (West 2000)) “codifies the common-law rule making parents liable for
the expenses of their minor children.” (Internal quotation marks omitted.) 2018 IL
App (1st) 172894, ¶ 10. The court also held that the collateral source rule—which
provides that benefits received by an injured party from a source wholly
independent of, and collateral to, the tortfeasor will not diminish the damages
recoverable from the tortfeasor (see Wills v. Foster, 229 Ill. 2d 393, 418 (2008))—
applied to this case “involving a purely economic injury,” and so plaintiffs’ claim
should be allowed to go forward. 2018 IL App (1st) 172894, ¶¶ 12-13. The
appellate court did not specifically address defendants’ additional, but related,
argument that plaintiffs lacked standing to bring their claim because they suffered
no injury.
¶ 12 Defendants appeal to this court. We granted the Illinois Manufacturers’
Association and the National Association of Manufacturers leave to submit an
amici curiae brief in support of defendants. Ill. S. Ct. R. 345 (eff. Sept. 20, 2010).
¶ 13 II. ANALYSIS
¶ 14 This matter is before us on the appellate court’s reversal of the circuit court’s
grant of summary judgment in favor of defendants. The purpose of summary
judgment is not to try a question of fact but, rather, to determine whether a genuine
issue of material fact exists. Williams v. Manchester, 228 Ill. 2d 404, 417 (2008);
Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd., 216
Ill. 2d 294, 305 (2005). Summary judgment is appropriate only where “the
pleadings, depositions, and admissions on file, together with the affidavits, if any,
-5-
show that there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2018).
¶ 15 In determining whether a genuine issue as to any material fact exists, a court
must construe the pleadings, depositions, admissions, and affidavits strictly against
the movant and liberally in favor of the opponent. A genuine issue of material fact
precluding summary judgment exists where the material facts are disputed or, if the
material facts are undisputed, reasonable persons might draw different inferences
from the undisputed facts. Summary judgment is a drastic means of disposing of
litigation and, therefore, should be granted only where the right of the moving party
is clear and free from doubt. Adames v. Sheahan, 233 Ill. 2d 276, 295-96 (2009);
Williams, 228 Ill. 2d at 417. If the plaintiff fails to establish any element of the
cause of action, summary judgment for the defendant is appropriate. Williams, 228
Ill. 2d at 417; Governmental Interinsurance Exchange v. Judge, 221 Ill. 2d 195,
215 (2006); Morris v. Margulis, 197 Ill. 2d 28, 35 (2001). In appeals from summary
judgment rulings, the standard of review is de novo. 1010 Lake Shore Ass’n v.
Deutsche Bank National Trust Co., 2015 IL 118372, ¶ 20; Williams, 228 Ill. 2d at
417.
¶ 16 The issues that the parties present to this court are shaped by the nature of
plaintiffs’ claim, the relief they seek, and the class exclusion of “such parents or
legal guardians who incurred no expense, obligation or liability for lead toxicity
testing of their children.” Thus, we begin our analysis by identifying the cause of
action that plaintiffs have attempted to plead in this case.
¶ 17 A. Civil Conspiracy
¶ 18 Counsel for plaintiffs had some difficulty at oral argument trying to explain the
tort theory they were proceeding upon. However, in Lewis II, No. 1-05-0974 (2006)
(unpublished order under Illinois Supreme Court Rule 23), the appellate court
distilled the underlying wrong described in this sole surviving count of plaintiffs’
complaint as follows:
“[O]nce *** defendants *** became aware of the hazards of lead-based paints
in ‘the 1920’s’ they implemented and carried out a plan ‘to conceal and mislead
the public regarding the hazards of lead paint by, among other things, agreeing
-6-
to form, fund and support [the Lead Industries Association, Inc., or LEAD].’
Through LEAD *** defendants marketed and promoted the use of lead
pigments and lead-based paints; suppressed, discouraged, and retarded
research, regulation, and public dissemination of information concerning the
dangerous properties of lead-based paints; and concealed and misled the public
about medical and scientific data indicating that lead-based paints were
dangerous to children.”
Plaintiff brings this claim under the tort theory of civil conspiracy.
¶ 19 “Illinois recognizes civil conspiracy as a distinct cause of action.” Dowd &
Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 486 (1998). Civil conspiracy is defined as
a combination of two or more persons for the purpose of accomplishing, by some
concerted action, either an unlawful purpose or a lawful purpose by unlawful
means. McClure v. Owens Corning Fiberglas Corp., 188 Ill. 2d 102, 133 (1999).
“The function of a [civil] conspiracy claim is to extend liability in tort beyond the
active wrongdoer to those who have merely planned, assisted or encouraged the
wrongdoer’s acts.” Adcock v. Brakegate, Ltd., 164 Ill. 2d 54, 62 (1994).
¶ 20 To state a claim for civil conspiracy, a plaintiff must allege an agreement and a
tortious act committed in furtherance of that agreement. McClure, 188 Ill. 2d at
133. “[T]he gist of a conspiracy claim is not the agreement itself, but the tortious
acts performed in furtherance of the agreement.” Adcock, 164 Ill. 2d at 63. Civil
conspiracy requires proof that a defendant “ ‘knowingly and voluntarily
participates in a common scheme to commit an unlawful act or a lawful act in an
unlawful manner.’ ” McClure, 188 Ill. 2d at 133 (quoting Adcock, 164 Ill. 2d at 64).
Further, “once the conspiracy is formed, all of its members are liable for injuries
caused by any unlawful acts performed pursuant to and in furtherance of the
conspiracy.” Adcock, 164 Ill. 2d at 65. In summary, to prevail on a theory of civil
conspiracy, a plaintiff must plead and prove (1) the existence of an agreement
between two or more persons (2) to participate in an unlawful act or a lawful act in
an unlawful manner, (3) that an overt act was performed by one of the parties
pursuant to and in furtherance of a common scheme, and (4) an injury caused by
the unlawful overt act. See Reuter v. MasterCard International, Inc., 397 Ill. App.
3d 915, 927 (2010); Canel & Hale, Ltd. v. Tobin, 304 Ill. App. 3d 906, 920 (1999).
-7-
¶ 21 Many cases have been filed involving situations where litigants have sought to
recover for personal injuries or property damage as a result of injury caused by
lead-based paints or other similarly unreasonably dangerous products. See, e.g.,
Abbasi v. Paraskevoulakos, 187 Ill. 2d 386, 393 (1999); Board of Education of City
of Chicago v. A, C & S, Inc., 131 Ill. 2d 428, 449 (1989). Plaintiffs here, however,
have taken a different route. Plaintiffs allege that, as a result of a conspiracy to
conceal and misrepresent the dangers of lead-based paint, particularly in housing,
the use of lead-based paint continued well after it should have otherwise ended, and
one of the results was the need for the enactment of the statute that requires their
children to be screened. Plaintiffs are not suing for personal injuries or property
damage. Rather, plaintiffs are suing only to recover the cost of the mandatory lead
screening.
¶ 22 B. Necessity of Actual Economic Loss
¶ 23 Before this court, defendants contend that this case involves an intangible
economic injury. Defendants argue that a plaintiff seeking to recover for an
intangible economic injury must show that an actual out-of-pocket loss has
occurred or is reasonably certain to occur. Plaintiffs claim that their injury was the
cost they incurred to pay for their children’s testing, even though they never
actually paid for the cost of the testing themselves.
¶ 24 Defendants observe that the common law of torts generally does not afford
recovery where the injury is merely a failed economic expectation. The prevalent
rule at common law is that a plaintiff cannot sue in tort to recover for solely
economic loss without any personal injury or property damage. In re Chicago
Flood Litigation, 176 Ill. 2d 179, 198-99 (1997); Moorman Manufacturing Co. v.
National Tank Co., 91 Ill. 2d 69, 84 (1982).
¶ 25 Plaintiffs argue that this case is not an “economic loss” case because the
damages for the cost of the screenings are not “economic losses” as defined in
Moorman—i.e.,
“ ‘damages for inadequate value, costs of repair and replacement of the
defective product, or consequent loss of profits—without any claim of personal
injury or damage to other property ***’ [citation] as well as ‘the diminution in
-8-
the value of the product because it is inferior in quality and does not work for
the general purposes for which it was manufactured and sold.’ [Citation.]”
Moorman, 91 Ill. 2d at 82.
¶ 26 We deem plaintiffs’ argument to be partially correct to the extent that they mean
that their tort claim is not automatically barred as a matter of law under the
Moorman doctrine. This is so, however, not because plaintiffs’ claim is not one for
purely economic loss. This obviously is a case involving only economic loss, as
plaintiffs do not allege any physical injury or property damage and are instead
seeking to recover only for the monetary costs of the lead tests.
¶ 27 Rather, as defendants acknowledge, plaintiffs’ claim clearly falls within the
Moorman exception for economic loss cases that allege fraud and intentional
misrepresentation. This court has recognized exceptions to the economic loss rule,
including where the plaintiff’s damages are proximately caused by a defendant’s
intentional false representation, i.e., fraud. Id. at 88-89; In re Chicago Flood
Litigation, 176 Ill. 2d at 199; In re Illinois Bell Switching Station Litigation, 161
Ill. 2d 233, 240-41 (1994). “[T]he tort of fraudulent misrepresentation has been
historically treated as purely an economic tort under which one may recover
damages for pecuniary harm.” Doe v. Dilling, 228 Ill. 2d 324, 343 (2008).
¶ 28 In the case at bar, the appellate court correctly recognized that, although count
III of plaintiffs’ second amended complaint appeared to be a claim for fraudulent
concealment, some of the allegations set forth in counts I and II, which were
incorporated in count III, might be considered as allegations of fraudulent
misrepresentation. Lewis I, 342 Ill. App. 3d at 104; see Stewart v. Thrasher, 242 Ill.
App. 3d 10, 16 (1993) (observing that “a misrepresentation may consist of the
concealment of the truth as well as the assertion of what is false”). The appellate
court recognized that count VI, the civil conspiracy count, incorporated all of the
allegations in the prior five counts. The appellate court acknowledged that counts I
through V were properly dismissed for various pleading deficiencies. However, the
court held that those counts were sufficient to support a civil conspiracy claim.
Lewis I, 342 Ill. App. 3d at 107-08. Since the conspiracy count here is grounded on
a theory of intentional misrepresentation or fraud, it falls squarely within that
exception to Moorman’s prohibition of recovering purely economic loss in tort. See
-9-
Moorman, 91 Ill. 2d at 88-89 (intentional misrepresentation allegations fall within
exception).
¶ 29 This court has repeatedly “observe[d] that, because a plaintiff can sustain a
cause of action only where he or she has suffered some injury to a legal right, harm
caused by the defendant’s conduct is an essential element of every cause of action.”
Lutkauskas v. Ricker, 2015 IL 117090, ¶ 31; see Turcios v. The DeBruler Co., 2015
IL 117962, ¶ 27 (“a right of action requires a wrongful act by the defendant and a
loss resulting from that act”); Town of Thornton v. Winterhoff, 406 Ill. 113, 119
(1950) (to establish “a right of action there must be a wrongful act done and a loss
resulting from that wrongful act”). Indeed, courts generally recognize that there
must be an actual loss to the interest of the plaintiff before a cause of action accrues.
The wrongful or negligent act of the defendant, by itself, gives no right of action to
anyone. Until the defendant’s wrongful or negligent act produces injury to the
plaintiff’s interest by way of loss or damage, no cause of action accrues.
Wolfswinkel v. Gesink, 180 N.W.2d 452, 456 (Iowa 1970); Rozenfeld v. Medical
Protective Co., 73 F.3d 154, 155 (7th Cir. 1996) (applying Illinois law) (“A tort
does not occur when the tortfeasor violates his duty of care to the victim, but when
the tortfeasor injures the victim.”).
¶ 30 Specifically in this case, plaintiffs’ civil conspiracy claim is grounded in the
underlying tortious conduct of intentional misrepresentation, i.e., fraud. In a claim
of fraudulent misrepresentation, a plaintiff must establish the following elements:
(1) a false statement of material fact (2) known or believed to be false by the person
making it, (3) an intent to induce the plaintiff to act, (4) action by the plaintiff in
justifiable reliance on the truth of the statement, and (5) damage to the plaintiff
resulting from such reliance. Doe, 228 Ill. 2d at 342-43 (collecting cases). Courts
have long considered an actual injury to be an essential element of fraud, which a
plaintiff must establish to a reasonable degree of certainty. Struve v. Tatge, 285 Ill.
103, 109 (1918); Charles Hester Enterprises, Inc. v. Illinois Founders Insurance
Co., 137 Ill. App. 3d 84, 92 (1985) (in the absence of actual damages, allegations
of fraudulent misrepresentation were insufficient to state a cause of action for
fraud); Shah v. Chicago Title & Trust Co., 119 Ill. App. 3d 658, 661 (1983) (“Proof
of actual injury resulting from the allegedly fraudulent misrepresentations is an
essential element of actionable fraud.”). Injury is measured by the harm the plaintiff
suffered rather than any benefit the defendant received. Shah, 119 Ill. App. 3d at
- 10 -
662. “[D]amages may not be predicated on mere speculation, hypothesis,
conjecture or whim.” (Internal quotation marks omitted.) Dloogatch v. Brincat, 396
Ill. App. 3d 842, 851 (2009); State Security Insurance Co. v. Frank B. Hall & Co.,
258 Ill. App. 3d 588, 592 (1994) (same). Rather, “the damages necessary to support
a cause of action for fraud must be pecuniary in nature.” Cangemi v. Advocate South
Suburban Hospital, 364 Ill. App. 3d 446, 469 (2006).
¶ 31 Accordingly, we hold that plaintiffs were required to establish actual economic
loss as an essential element of their claim of intentional misrepresentation. We next
address whether plaintiffs satisfied the essential requirement of injury.
¶ 32 C. Proof of Actual Economic Loss
¶ 33 The circuit court concluded that Lewis and Banks did not suffer, and will not
suffer, an out-of-pocket loss as a result of their children’s blood screenings. The
appellate court did not question this conclusion but nevertheless held that plaintiffs
in this case suffered an actual economic loss that satisfies the “injury” requirement
for a common-law economic tort claim. The appellate court based its holding on
(1) the Family Expense Act (750 ILCS 65/15 (West 2000)) and (2) the collateral
source rule. 2018 IL App (1st) 172894, ¶¶ 10-13. Defendants assign error to this
holding. We agree with defendants that plaintiffs cannot satisfy the injury
requirement to maintain their claim.
¶ 34 1. Family Expense Act
¶ 35 The appellate court operated under the theory that the Family Expense Act
imposed on plaintiffs Lewis and Banks the “obligation” to pay the medical
providers for the lead screenings of their children. The court reasoned that, under
the Act, “[t]he obligation to pay the medical expenses for a minor child is that of
the parent, and, therefore, the cause of action to recover for medical expenses lies
in the parent.” Id. ¶ 10 (citing In re Estate of Hammond, 141 Ill. App. 3d 963, 965
(1986)). The court then held that, under the collateral source rule, the parent’s right
of action “is not affected by the fact that a third party paid those expenses.” Id. We
disagree with the appellate court’s reasoning.
- 11 -
¶ 36 The interpretation and applicability of legislation are questions of law
appropriate for summary judgment. Our review is de novo. 1010 Lake Shore Ass’n,
2015 IL 118372, ¶ 20; Allegis Realty Investors v. Novak, 223 Ill. 2d 318, 330
(2006); County of Knox ex rel. Masterson v. The Highlands, L.L.C., 188 Ill. 2d 546,
551 (1999). The primary objective of statutory construction is to ascertain and give
effect to intent of the legislature. The most reliable indicator of legislative intent is
the statutory language, given its plain and ordinary meaning. A reasonable
construction must be given to each word, clause, and sentence of a statute, and no
term should be rendered superfluous. 1010 Lake Shore Ass’n, 2015 IL 118372,
¶ 21.
¶ 37 The Family Expense Act simply provides that “[t]he expenses of the family and
of the education of the children shall be chargeable upon the property of both
husband and wife, or of either of them, in favor of creditors therefor, and in relation
thereto may be sued jointly or separately.” 750 ILCS 65/15 (West 2018). Clearly,
the Family Expense Act obligates parents only for “expenses” owed to those
persons or entities who have obtained the status of “creditors.” The Family Expense
Act does not answer the questions of who is a “creditor” or what is an “expense.”
For those answers, we must look to other sources. The common and ordinary
definition of “creditor” is “one to whom money is due.” Webster’s Third New
International Dictionary 533 (1993); see Black’s Law Dictionary (11th ed. 2019)
(“[o]ne to whom a debt is owed”); see, e.g., Walradt v. Brown, 6 Ill. 397, 399 (1844)
(the term “creditors,” as used in the Statute of Frauds, “means all parties who have
demands, accounts, interests or causes of action for which they might recover any
debt, damages, penalty or forfeiture”).
¶ 38 Here, we find that the medical providers who screened the children of plaintiffs
Lewis and Banks were not “creditors” of those plaintiffs within the meaning of the
Family Expense Act because plaintiffs never incurred any liability or obligation to
pay the providers for their children’s tests. The Medicaid program is designed to
prevent medical providers from becoming creditors of Medicaid recipients
(including parents where the patient receiving service is a child) and to prevent
Medicaid recipients from becoming debtors by incurring any obligation to the
provider. Illinois regulations require providers to agree, as a condition of
participation in Medicaid, to accept the payment they receive from the Department
of Healthcare and Family Services as “payment in full” and not to “bill, demand or
- 12 -
otherwise seek reimbursement” from a Medicaid recipient or a relative or
representative thereof. See 89 Ill. Adm. Code 140.12(i)(1) (2014). Because
plaintiffs never became indebted to the medical providers who conducted the
screening, the appellate court erred in concluding that plaintiffs incurred a legal
obligation to pay for the screenings.
¶ 39 Plaintiffs also argue that a liability or obligation was created for the additional
reason that, even assuming that medical expenses are paid by Medicaid, the State
retains a statutory right, pursuant to section 11-22 of the Illinois Public Aid Code
(305 ILCS 5/11-22 (West 2018)) to proceed against a Medicaid recipient who
recovers for expenses paid by the State for which a third party is liable. Plaintiffs
maintain that this “liability,” even though contingent, is nevertheless a liability.
¶ 40 We disagree. Section 11-22 of the Public Aid Code does not create any such
liability, contingent or otherwise, on the part of Medicaid recipients. Section 11-22
broadly grants the Department of Healthcare and Family Services (DHFS) a
“charge upon all claims, demands and causes of action for injuries to” a public aid
applicant or recipient. Id. The State’s right of recoupment is a claim against a
wrongdoer and not against the Medicaid recipient. 305 ILCS 5/11-22 (West 2012).
Section 11-22a grants DHFS a right of subrogation by intervening or joining an
action brought by a recipient against a tortfeasor or by bringing its own action
against the tortfeasor. Id. § 11-22a. Section 11-22b grants DHFS a lien on any
recovery from an underlying tortfeasor. Id. § 11-22b(b)(1), (e).
¶ 41 No matter how the State pursues its recoupment rights, whether directly or by
way of subrogation, the pertinent provisions of the Public Aid Code only apply to,
and are only exercisable against, a judgment against the wrongdoer. Id. §§ 11-22,
11-22a, 11-22b. Either the State or the recipient can obtain such a judgment. If the
State itself does so, as an intervenor or through its own suit (see id. § 11-22a),
obviously the judgment is not against the recipient. Even if the recipient obtains the
judgment (see id. § 11-22b(b)(1), (e)), the State’s recoupment comes from the
judgment against the wrongdoer before the net judgment is paid to the recipient,
not from the recipient herself. See Boone v. Evanston Hospital, 225 Ill. App. 3d
195, 198-99 (1992) (distinguishing the State’s and the recipient’s rights against the
wrongdoer). The statutory scheme created by sections 11-22, 11-22a, and 11-22b
of the Public Aid Code complies with the federal mandate not to seek repayment
- 13 -
from the recipients themselves. See 42 U.S.C. § 1396p(b)(1) (2012). Based on this
reasoning, the circuit court correctly rejected plaintiffs’ argument.
¶ 42 Plaintiffs also rely, as did the appellate court, upon this court’s decision in Graul
v. Adrian, 32 Ill. 2d 345 (1965), to support their claim that plaintiffs became liable
for the cost of the lead screening under the Family Expense Act. However, we find
that Graul has no application here because plaintiffs have made no allegation that
their children suffered a physical injury. When a child is injured by a tortfeasor’s
wrongful act, two causes of action arise—one in favor of the child’s parents for the
child’s medical expenses (including any funeral expenses, if applicable) and
another in favor of the child (or the child’s estate) for all other categories of
damages flowing from the injury. See Restatement (Second) of Torts § 703(b)
(1977). Graul held that a father could sue for the medical and funeral expenses of
his son “incurred by the father as the result of the alleged wrongful act causing the
death of his son.” 32 Ill. 2d at 346. The father’s claim was “based upon an out-of-
pocket payment for which there was a legal liability” under the Family Expense
Act. Id. at 347-48. Where a parent asserts a claim such as that authorized in Graul
against a tortfeasor who has an injured child, the parent’s claim is “derivative in
nature, as [it] arise[s] out of the injury to another.” Cullota v. Cullota, 287 Ill. App.
3d 967, 975 (1997). In other words, the injury that gives both the child and the
parent standing to sue in such a case is the physical injury to the child.
¶ 43 In the present case, the appellate court followed its citation to Graul with the
statement: “The obligation to pay the medical expenses for a minor child is that of
the parent, and, therefore, the cause of action to recover for medical expenses lies
in the parent.” 2018 IL App (1st) 172894, ¶ 10. However, that statement assumes
that a cause of action exists and ignores the fact that a cause of action in tort does
not arise absent an injury. In a case like Graul, the cause of action arises when the
child suffers a physical injury. Again, plaintiffs here do not allege a cause of action
based on physical injury to their children. They instead claim that defendants
caused a pure economic injury personal to Lewis and Banks arising from the costs
of their children’s tests. But no such economic injury occurred in this case. We hold
that the Family Expense Act cannot be extended to create a liability or expense
where one never arose and thereby allow a parent to sue an alleged tortfeasor where
there was no underlying personal injury claim filed on behalf of the child.
- 14 -
¶ 44 2. Collateral Source Rule
¶ 45 The appellate court also held that the collateral source rule applies in a case
involving a purely economic injury. Id. ¶ 12. We reject the notion that the collateral
source rule can be used to satisfy the injury element of plaintiffs’ cause of action.
¶ 46 “ ‘ “Under the collateral source rule, benefits received by the injured party from
a source wholly independent of, and collateral to, the tortfeasor will not diminish
damages otherwise recoverable from the tortfeasor.” ’ ” Wills, 229 Ill. 2d at 399
(quoting Arthur v. Catour, 216 Ill. 2d 72, 78 (2005), quoting Wilson v. Hoffman
Group, Inc., 131 Ill. 2d 308, 320 (1989)). The justification for the rule “is that the
wrongdoer should not benefit from the expenditures made by the injured party or
take advantage of contracts or other relations that may exist between the injured
party and third persons.” Wilson, 131 Ill. 2d at 320 (citing Peterson v. Lou Bachrodt
Chevrolet Co., 76 Ill. 2d 353 (1979)). In Arthur, 216 Ill. 2d at 74-75, this court
expanded the scope of the rule by holding that a plaintiff could submit the entire
amount of billed medical expenses to the jury and was not limited to presenting the
amount actually paid to healthcare providers by the plaintiff’s insurers. In Wills,
this court further expanded the collateral source rule by adopting the reasonable-
value approach and overruling its prior decision in Peterson, which had held that a
plaintiff could not recover the value of medical services gratuitously provided
because the policies underlying the collateral source rule did not apply when the
plaintiff incurred no expense, obligation, or liability in receiving services for which
compensation is later sought. Wills, 229 Ill. 2d at 400-01, 415; see Peterson, 76 Ill.
2d at 363.
¶ 47 The problem with plaintiffs’ reliance here upon the collateral source rule is that
the rule prescribes the methodology of awarding damages but does not prescribe
rules for determining whether plaintiff has suffered an injury. See Wills, 229 Ill. 2d
at 399-400. We note that the rule has evidentiary and substantive components. Id.
at 400. As a rule of evidence, it prevents the jury from learning about collateral
income. Id. And as a substantive rule of damages, it bars a defendant from reducing
a plaintiff’s compensatory award by the amount the plaintiff received from the
collateral source. Id. Again, the rule has nothing to do with whether a plaintiff has
an actionable injury in the first place.
- 15 -
¶ 48 We further note that none of the underlying rationales for the collateral source
rule applies when a plaintiff has suffered no injury. Preventing a plaintiff who has
not been injured from recovering money does not confer a “windfall” on the
defendant. Nor does a defendant “benefit” from avoiding compensating the plaintiff
for a noninjury. In that regard, this case is fundamentally different from our
collateral source jurisprudence. Wills, for example, involved a personal injury case
stemming from an automobile accident. There, we concluded that an “injured
plaintiff” is entitled to recover in damages the reasonable value of medical services
rendered, even if Medicaid paid for those services. Id. at 412-15. In Arthur, 216 Ill.
2d at 75, the plaintiff stepped in a hole on the defendant’s land and sued the
defendant for her personal injuries. And in Peterson, 76 Ill. 2d at 356-57, the
plaintiff brought a negligence action against the defendant after an allegedly
defective braking system in a car sold by the defendant caused an accident that
killed his daughter and seriously injured his son, causing the son’s leg to be
amputated.
¶ 49 The appellate court in the present case framed the issue before it as whether the
collateral source rule applies in a case involving a purely economic injury. 2018 IL
App (1st) 172894, ¶ 11. But that inquiry put the cart before the horse, as the relevant
threshold question was whether plaintiffs could establish an injury at all. The
appellate court cited no authority standing for the proposition that the collateral
source rule may be invoked to excuse a plaintiff that is asserting an economic tort
claim from establishing an injury, and we are not aware of any such authority.
¶ 50 Applying the collateral source rule to pure economic-loss tort cases like the one
before us would obscure the very nature of the cause of action. It would allow
plaintiffs who have themselves suffered no injury, economic loss, or damages to
sue anyway. We observe that such a result cannot be squared with the basic
principle of standing that requires “some injury in fact to a legally cognizable
interest.” See Greer v. Illinois Housing Development Authority, 122 Ill. 2d 462,
492-93 (1988) (also noting that “economic injuries,” whether actual or threatened,
have long been recognized as sufficient to lay the basis for standing).
¶ 51 Not only have Illinois decisions applied the collateral source rule only where
the plaintiffs had established actionable injuries, but decisions in other states have
rejected the notion that the collateral source rule may be invoked to establish an
- 16 -
injury. For example, in Roberts v. BJC Health System, 391 S.W.3d 433 (Mo. 2013)
(en banc), a group of patients sued medical providers for fraudulently overbilling
them even though the insurers footed the bill. The Missouri Supreme Court held
that the collateral source rule was irrelevant in the absence of an injury at all. Id. at
439. A federal court addressing the same question agreed, ruling that it found “no
authority for the proposition that the [collateral source] rule may operate to confer
standing on parties who have suffered no injury in fact.” Roberts v. BJC Health
System, No. 4:04-cv-1556-JCH, slip op. at *9 n.11 (E.D. Mo. Mar. 11, 2005).
¶ 52 Similarly, in In re Trasylol Products Liability Litigation, No. 08-MD-01928,
2010 WL 6098571 (S.D. Fla. Mar. 16, 2010), a couple sued a drug manufacturer
for unfair and deceptive trade practices, a claim that required a showing of financial
loss. The manufacturer moved for summary judgment, arguing that, because the
plaintiffs’ health insurance covered the cost of the drug, plaintiffs could not prove
an essential element of their claim and lacked standing. Id. at *15. The district court
agreed, holding that the collateral source rule was inapplicable and granting
summary judgment for the manufacturer. Id. In like fashion, the court in Gillespie
v. Travelscape LLC, No. C13-0622 RSM, 2014 WL 4243706 (W.D. Wash. Aug.
26, 2014), dismissed a putative class action suit brought by a plaintiff who alleged
that a travel company overcharged her for her rooms. The court held the plaintiff
lacked standing because her employer reimbursed her for her overcharges. Id. at
*2-3. In so holding, the court rejected the notion that the collateral source rule saved
the plaintiff’s claims, finding that the rule was inapplicable where the plaintiff has
not suffered any economic loss and thus has no standing. Id. at *2. We find this
authority persuasive.
¶ 53 In the case at bar, plaintiffs’ claim of intentional misrepresentation is a tort
involving a pure economic-related loss. As we earlier discussed, in economic tort
cases, dollars are not just damages, they are the claim itself. See Cangemi, 364 Ill.
App. 3d at 469; Charles Hester Enterprises, 137 Ill. App. 3d at 92; Shah, 119 Ill.
App. 3d at 661. If plaintiffs cannot prove economic injury, that is, if plaintiffs have
incurred no economic loss due to defendants’ conduct, they have no claim at all.
¶ 54 A cause of action for civil conspiracy exists only if one of the parties to the
agreement commits a tort in furtherance of the agreement. Adcock, 164 Ill. 2d at
63. Therefore, in the case at bar, because plaintiffs failed to prove the existence of
- 17 -
the underlying tort action, they cannot prove the existence of a conspiracy to
commit that tort. See, e.g., Davis v. Times Mirror Magazines, Inc., 297 Ill. App. 3d
488, 499 (1998); Langer v. Becker, 176 Ill. App. 3d 745, 754-55 (1988); Illinois
Traffic Court Driver Improvement Educational Foundation v. Peoria Journal Star,
Inc., 144 Ill. App. 3d 555, 563 (1986). Since “parents or legal guardians who
incurred no expense, obligation or liability for lead toxicity testing of their children”
are expressly excluded from the class, plaintiffs also lack standing.
¶ 55 III. CONCLUSION
¶ 56 In sum, we hold as follows. Plaintiffs did not incur any liability and did not
suffer any actual economic loss in this case. Accordingly, plaintiffs did not suffer
any injury that would satisfy the essential element of injury in their underlying
economic tort claim of intentional misrepresentation. Consequently, plaintiffs
cannot prove the existence of a conspiracy to commit that tort. Thus, the circuit
court properly granted summary judgment in favor of defendants. Therefore, we
reverse the judgment of the appellate court, which reversed the circuit court’s order
granting summary judgment for defendants, and we remand the cause to the circuit
court of Cook County for further proceedings consistent with this opinion.
¶ 57 Appellate court judgment reversed.
¶ 58 Circuit court judgment affirmed.
¶ 59 Cause remanded.
¶ 60 JUSTICES KILBRIDE and MICHAEL J. BURKE took no part in the
consideration or decision of this case.
- 18 -