Progressive Universal Insurance v. Taylor

Citations: 874 N.E.2d 910; 375 Ill. App. 3d 495Docket: 4-06-1003, 4-06-1004 cons.

Court: Appellate Court of Illinois; August 15, 2007; Illinois; State Appellate Court

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In the case 874 N.E.2d 910 (2007), the Appellate Court of Illinois addressed the appeal of counterdefendants Kahende M. Jake and Daniel G. Joyce concerning a summary judgment that required them to endorse medical payments received from Progressive Universal Insurance Company of Illinois to Carle Foundation Hospital and Carle Clinic Association. After sustaining injuries in a single-vehicle accident while passengers in a car insured by Progressive, Jake and Joyce each received $5,000 under the policy's medical-payments coverage. Carle, having treated their injuries, sought to collect on the medical debts owed by Jake and Joyce. 

The court consolidated their appeals and modified the summary judgment to mandate that only 40% of the medical payments (i.e., $4,000 combined) be turned over to Carle, based on the Health Care Services Lien Act, which limits the lien to that percentage. The court affirmed this judgment as modified. The background includes details of the accident, the insurance coverage, and the allocation of a $50,000 liability settlement among the injured parties, with Joyce already having paid Carle a portion of his settlement. The judgment clarified that medical payments are intended for medical bills and should, therefore, be directed to Carle for the debts owed by the injured parties.

Jake and Joyce, represented by their attorneys, have not provided the medical payments coverage proceeds, which they are obligated to turn over. Their attorneys incorrectly assert entitlement to one-third of these funds as fees. Carle seeks a judgment to compel the turnover of these proceeds for application against medical bills. In response, Jake and Joyce claim they offered Carle 40% of the $5,000 checks, citing the Health Care Services Lien Act (770 ILCS 23/10(a), West 2004), but Carle rejected this offer, insisting on full payment of the checks. They argue that Carle's lien should not exceed 40%. On June 19, 2006, Carle moved for summary judgment on its counterclaim. Part II of Debbie's insurance policy outlines that medical payments coverage applies to reasonable expenses for injuries sustained in a motor vehicle accident, providing $5,000 per person. Jake's attorney submitted an affidavit reiterating the 40% offer, while Joyce's attorney did the same. On September 20, 2006, the trial court ruled in favor of Carle, determining that the medical payments proceeds were contractually required to be paid to Jake and Joyce, the common fund doctrine did not apply, and the attorneys' liens did not attach to these proceeds. The court ordered Jake, Joyce, and their attorneys to endorse and turn over the $5,000 checks to Carle. Progressive issued checks jointly to Jake, his attorney, and Carle, as well as to Joyce, her attorney, and Carle. The court found no reason to delay the enforcement or appeal of this judgment under Supreme Court Rule 304(a), leading to subsequent appeals. The Health Care Services Lien Act stipulates that health care providers have a lien on claims for their reasonable charges, but total liens cannot exceed 40% of any recovery secured by the injured party.

The lien must include a written notice with the injured person's name and address, date of injury, health care provider's name and address, and the liable party's name. This notice must be served to both the injured person and the liable party via registered or certified mail or in person. Payments related to the lien are to be made directly to health care providers. In the case at hand, Jake and Joyce's attorneys submitted affidavits confirming they received notice of Carle's lien, establishing that Carle complied with the notice requirements. Jake and Joyce assert that Carle has a valid lien for 40% of their $5,000 checks, amounting to $2,000 each, arguing that the checks represent a settlement under the Health Care Services Lien Act, which attaches to any settlement secured by the injured person. 

Despite Jake and Joyce's claims, Carle disputes its lien status under the Act but acknowledges having filed notices pursuant to the Act. Section 10(a) states that any health care provider has a lien on claims for their reasonable charges. Though the term 'claim' is not specifically defined in the statute, it encompasses a right to something, which applies to Jake and Joyce's contractual right to receive the checks from Progressive. It is agreed that Carle provided medical services to them, resulting in an unpaid balance exceeding $5,000, thus establishing a lien on the checks for 40%. 

Carle clarifies that while section 10(a) limits the lien to 40% of the settlement, it retains the right to pursue the remaining unpaid balance from Jake and Joyce through other means, as stipulated in section 45, which allows health care providers to collect any unpaid reasonable charges despite the lien provision.

Carle's request for turnover of medical payments proceeds aligns with the intent of medical payments coverage, aimed at reimbursing providers for services to injured parties in auto accidents. However, the court's reasoning is flawed; while Progressive owed Jake and Joyce $5,000 each to cover medical expenses, Carle does not have ownership of the funds beyond a 40% lien. Jake and Joyce's contract with Carle does not specify that they must pay medical bills from the insurance proceeds, allowing them the option to use other funds. If they fail to pay, Carle could pursue breach of contract claims, but generally lacks a claim to specific proceeds without a lien.

Carle, as a joint payee of the $5,000 checks, holds a presumed equal ownership interest, but this can be rebutted. Evidence shows Carle has a 40% lien under the Health Care Services Lien Act, limiting their claim to that amount. Regarding attorneys' liens, Carle argues that Jake's and Joyce's attorneys failed to meet statutory requirements, as there is no evidence of proper notice to Progressive, which is necessary for establishing lien rights. As such, no genuine issue exists regarding the attorneys’ lien on the checks.

Jake claims the proceeds are subject to the common fund doctrine due to his attorney's actions, but fails to provide legal authority or explanation for this assertion, resulting in forfeiture of the argument on appeal. The court modifies the trial judgment, ordering that only 40% of the proceeds be delivered to Carle, affirming the rest of the judgment.