Midwest Neurosurgeons, LLC v. Abell

2022 IL App (5th) 210394-U

• Court: Appellate Court of Illinois
• Decided: November 21, 2022
• Docket: 5-21-0394
• Status: Unpublished

Opinion

NOTICE 2022 IL App (5th) 210394-U NOTICE 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, 1 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

2 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

3 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

4 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

6 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

7 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-

8 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

9 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.