HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc.

527 N.E.2d 97, 172 Ill. App. 3d 718, 122 Ill. Dec. 725, 1988 Ill. App. LEXIS 1122
CourtAppellate Court of Illinois
DecidedJuly 29, 1988
Docket5-87-0400
StatusPublished
Cited by14 cases

This text of 527 N.E.2d 97 (HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 527 N.E.2d 97, 172 Ill. App. 3d 718, 122 Ill. Dec. 725, 1988 Ill. App. LEXIS 1122 (Ill. Ct. App. 1988).

Opinions

PRESIDING JUSTICE HARRISON

delivered the opinion of the court:

Plaintiff, HPI Health Care Services, Inc. (HPI), appeals from that portion of a judgment of the circuit court of Jefferson County which dismissed counts IV, VI, VII, and VIII of its second amended complaint. The circuit court’s judgment of dismissal was entered pursuant to section 2 — 615 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2 — 615), and the question presented for our review is whether the aforementioned counts were substantially insufficient in law. For the reasons, which follow, we reverse and remand for further proceedings.

A motion to dismiss brought pursuant to section 2 — 615 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2 — 615) attacks only the legal sufficiency of the complaint. (Longust v. Peabody Coal Co. (1986), 151 Ill. App. 3d 754, 756, 502 N.E.2d 1096, 1097.) A complaint may survive a motion to dismiss if the facts alleged state a cause of action and the complaint “reasonably informs the opposite party of the nature of the claim *** which he or she is called upon to meet.” (Glazewski v. Coronet Insurance Co. (1985), 108 Ill. 2d 243, 249, 483 N.E.2d 1263, 1265-66, quoting Ill. Rev. Stat. 1983, ch. 110, par. 2 — 612(b).) In assessing the sufficiency of a complaint, the court must accept all facts well pleaded as true and draw all reasonable inferences therefrom in favor of the nonmoving party. (Prudential Insurance Co. of America v. Van Matre (1987), 158 Ill. App. 3d 298, 301, 511 N.E.2d 740, 742.) A complaint should not be dismissed under section 2 — 615 for failure to state a cause of action or for insufficiency at law unless, clearly, no set of facts could be proven under the pleadings which would entitle the plaintiff to relief. Iverson v. Scholl, Inc. (1985), 136 Ill. App. 3d 962, 965, 483 N.E.2d 893, 896.

According to plaintiff’s second amended complaint, defendant Mt. Vernon Hospital, Inc. (Mt. Vernon Hospital), entered into a lease or financing agreement with Jefferson County Health Facilities Authority, Inc. (Jefferson County), on or about July 1, 1980, pursuant to which Jefferson County agreed to lease a combined hospital-nursing home facility in Mt. Vernon, Illinois, to defendant Mt. Vernon Hospital. To finance the acquisition, renovation, and conversion of the hospital-nursing home facility by defendant Mt. Vernon Hospital, Jefferson County issued bonds. Defendant Centerre Trust Company of St. Louis (Centerre) was the trustee of those bonds under an “Indenture Mortgage and Deed of Trust” dated July 1, 1980 (the Indenture). Under the terms of the Indenture, all rental payments made by defendant Mt. Vernon Hospital pursuant to the financing agreement with Jefferson County were to be remitted directly to defendant Centerre for the account of Jefferson County, deposited in a trust fund designated “Jefferson County Health Facilities Authority, Inc. (Mt. Vernon Hospital, Inc.) Bond Fund for First Mortgage Medical Facilities Revenue Bonds” and used “to pay the principal of, premium, if any, and interest on the Bonds.”

On or about August 1, 1980, defendant Mt. Vernon Hospital entered into a contract with defendant Hospital Management Associates, Inc. (HMA). Under that contract HMA agreed to provide management services for the hospital and, among other things, to

“deposit in the Hospital’s respective bank accounts *** all receipts and monies arising from the operation of the Hospital or otherwise received by HMA for and on behalf of the Hospital *** and shall disburse and pay the same from said accounts on behalf and in the name of the Hospital *** in such amounts and at such times as the same are required. HMA shall be permitted to draw these funds only to pay the reasonably necessary expenses of the operation of the Hospital. HMA shall be responsible for the payment, from [Mt. Vernon Hospital’s] funds, before the payment of any other obligation of the Hospital, of such payments as are required to be made under the Lease and the Indenture, and all other contractual obligations, entered into with respect to the Bonds, in such amounts and at such times as the same are required.”

On or about January 7, 1981, defendant Mt. Vernon Hospital entered into a' “Pharmaceutical Services Agreement” with plaintiff under which plaintiff was to provide pharmaceutical services and supplies for the operation of the hospital. One of the signatories to the agreement was Edward L. Holley, the hospital administrator, who was an agent and employee of defendant HMA. The hospital opened for business shortly thereafter, and plaintiff began providing the pharmaceutical goods and services required by its agreement with the hospital.

The complaint suggests that the hospital began experiencing serious financial difficulties during the months which followed. On or about October 1, 1981, defendant Centerre contacted an individual named Michael A. Alexander and requested that he assume the positions of chairman of the board and trustee on the board of trustees of the hospital. Alexander accepted those positions. Thereafter, a new management company was retained to replace HMA in the operation of the hospital. HMA’s management obligations were ultimately assumed by defendants National Medical Health Care Services, Inc., and National Medical Enterprises, Inc. (collectively, National Medical), pursuant to an agreement executed on or about July 1, 1982. The defendant hospital’s agreement with National Medical provided, among other things, that

“[i]n accordance with policies to be established by the Hospital, [National Medical] shall deposit all receipts and money arising from the operation of the facility or otherwise received by [National Medical] on behalf of Hospital, and shall make disbursements from the accounts on behalf of Hospital and facility in such amounts and at such times as the same are required. Signatories and approvals as to the amounts on all checks shall be in accordance with the duly adopted policy of Hospital ***.”

The contract further provided that “[t]he parties acknowledge^] that the cooperation of the Trustee is essential to the financial viability of the facility.”

Plaintiff continued to provide pharmaceutical goods and services to defendant Mt. Vernon Hospital under the terms of its original agreement even after the management companies changed. These goods and services were, in turn, resold by the hospital to its patients. Plaintiff, however, never received one cent in payment. Instead, all revenues generated by the hospital, including the revenues from the resale of goods and services provided by plaintiff to the hospital’s patients, were paid over by defendants HMA and National Medical to defendant Centerre (pursuant to the terms of the indenture and financing agreements) or to the hospital’s other creditors. When the hospital’s debt to plaintiff reached nearly $1 million, this litigation commenced.

Plaintiff’s second amended complaint contained nine counts. Count I sought recovery against defendant Mt. Vernon Hospital for breach of the January 7, 1981, pharmaceutical services agreement.

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HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc.
527 N.E.2d 97 (Appellate Court of Illinois, 1988)

Cite This Page — Counsel Stack

Bluebook (online)
527 N.E.2d 97, 172 Ill. App. 3d 718, 122 Ill. Dec. 725, 1988 Ill. App. LEXIS 1122, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hpi-health-care-services-inc-v-mt-vernon-hospital-inc-illappct-1988.