SIXTH DIVISION
March 31, 2005
Nos. 1-02-0264 & (1-02-0409, 1-02-0410, 1-02-0411, 1-02-0412, 1-02-0686, 1-02-1149,
1-02-1150, 1-02-1151, 1-02-1152, 1-02-1153, 1-02-1154, 1-02-1155, 1-02-1156, 1-02-1157,
1-02-1158, 1-02-1159, 1-02-1160, 1-02-1161, 1-02-1162, 1-02-1437, 1-02-1438, 1-02-1439,
1-02-1440, 1-02-1443, 1-02-2220, 1-02-2222, 1-02-2223, 1-02-2224, 1-02-2225, 1-02-2226,
1-02-2227, 1-02-2228, 1-02-2229, 1-02-2230, 1-02-2231, 1-02-2232, & 1-02-2233)
(Consolidated)
| v. NATHANIEL S. SHAPO, the Director of Insurance of the Defendants-Appellees Defendants-Appellees and Cross-Appellants). LITTLE COMPANY OF MARY HOSPITAL, COUNTY Plaintiffs v. Defendant | ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) | Appeal from the Circuit Court of Cook County Case Nos: 01 CH 5654, 01 CH 5656, 01 CH 5659, 01 CH 5660, 01 CH 5661, 01 CH 5662, 01 CH 5663, 01 CH 5664, 01 CH 5665, 01 CH 5667, 01 CH 5669, 01 CH 5671, 01 CH 5672, 01 CH 5673, 01 CH 5674, 01 CH 5675, 01 CH 5684, 01 CH 5685, 01 CH 5686, 01 CH 5687, 01 CH 5688, 01 CH 5690, 01 CH 5691, and 01 CH 5692 (Consolidated) Consolidated with: Case Nos: 01 CH 5597, 01 |
Plaintiff-appellant, the Illinois Health Maintenance Organization Guaranty Association ("plaintiff" or "Association"), filed 24 complaints for administrative review in the trial court seeking review of decisions issued by Nathaniel Shapo, the Director of the Illinois Department of Insurance (Department). In those decisions Director Shapo (the Director) found plaintiff liable to health care providers for services rendered by them to enrollees of an insolvent health maintenance organization (HMO) known as MedCare HMO, Inc. (MedCare). MedCare was the largest HMO insolvency in Illinois state history. Over the course of approximately six years, the parties took more than 40 depositions, approximately 60 hearings were conducted, and a record of over 12,000 pages was generated. The record consists of 96 volumes.
The following 24 defendants-appellees are health care providers that provided services to MedCare enrollees: EHS Hospitals-Christ Hospital, EHS Hospitals-South Chicago Community Hospital, EHS Hospitals-Bethany Hospital, University of Chicago Hospitals, Loyola University Medical Center, South Suburban Hospital, Children's Memorial Hospital, St. James Hospital-Chicago Heights, Little Company of Mary Hospital, Oak Park Hospital, Grant Hospital, Loyola Medical Practice Plan, University of Chicago Physician's Group, Westlake Community Hospital, Westside Community Hospital, d/b/a Sacred Heart Hospital, Thorek Hospital and Medical Center, SSM Regional Health Services, d/b/a St. Francis Hospital and Health Center, Hartgrove Hospital, County of Cook on behalf of John H. Stroger, Jr. Hospital of Cook County, Paul T. Atkenson, St. Bernard Hospital, Rush-Presbyterian-St. Luke's Hospital, Ravenswood Hospital and Medical Center, and West Suburban Hospital.
The Director's decisions addressed three separate issues: plaintiff's liability to the providers for services rendered, plaintiff's liability for interest on principal amounts awarded, and the allocation of hearing costs. The Director found plaintiff liable to 20 of the 24 providers and awarded specific principal amounts but declined to assess interest on those principal amounts. Based upon the "contract" (or "contracted provider") defense relied upon by plaintiff in motions for summary disposition, the Director did not find plaintiff liable to the following four providers: St. Bernard Hospital, Hartgrove Hospital, St. James Hospital-Chicago Heights, and Thorek Hospital and Medical Center. The Director assessed hearing costs against plaintiff as well as these four providers. Plaintiff's complaints against these four providers seek review of the Director's decision only on the issue of hearing costs.
The trial court consolidated plaintiff's administrative complaints and subsequently dismissed them because plaintiff did not request a rehearing before the Director prior to filing them and thus failed to exhaust its administrative remedies. The trial court later entered judgments on the Director's awards; those judgments totaled more than $22 million and included prejudgment and post-judgment statutory interest.
Plaintiff appeals the dismissal of its 24 complaints, contending the trial court refused to consider its underlying claims by improperly applying the exhaustion doctrine. Plaintiff further contends it was not liable for the underlying monetary judgments and hearing costs. In addition, three of the care providers, EHS Hospitals-Bethany Hospital, EHS Hospitals-Christ Hospital, and EHS Hospitals-South Chicago Community Hospital, cross-appeal the amount of prejudgment interest awarded in their favor by the trial court.
BACKGROUND
Plaintiff is a legal entity created by the Illinois Health Maintenance Organization Guaranty Association Law (Guaranty Law) (215 ILCS 125/6-1 et seq. (West 2000)). The purpose of the Guaranty Law is "to protect enrollees of health care plans who reside in [Illinois], and their beneficiaries, payees and assignees, *** against failure in the performance of contractual obligations due to the impairment or insolvency of the organization operating such health care plans." 215 ILCS 125/6-2 (West 2000). The Guaranty Law gives plaintiff specified powers and duties to carry out this purpose. Among other things, if a health maintenance organization (HMO) is insolvent, plaintiff "shall, subject to the approval of the Director *** assure payment of the contractual obligations of the insolvent organization to covered persons." 215 ILCS 125/6-8(2)(b) (West 2000).
The providers rendered health care services to several thousand people enrolled in MedCare pursuant to contracts they had with MedCare. In addition, MedCare contracted with the Illinois Department of Public Aid (IDPA) to provide or pay for health care services, including emergency services, to public aid recipients. The providers submitted bills to MedCare for the services rendered, but MedCare failed to pay them. MedCare was declared insolvent by the circuit court of Cook County on January 4, 1993. Following the declaration of MedCare's insolvency, the providers submitted payment claims to plaintiff for services rendered to MedCare's enrollees. Plaintiff denied the claims, and the providers in turn sought review by the Director under the Guaranty Law. In October 1994, hearing officers Michael B. Nash and Royal B. Martin were appointed to conduct hearings on the providers' claims.
Plaintiff asserted numerous defenses to the providers' claims. The hearing officers rejected most of plaintiff's alleged defenses and found plaintiff liable to 20 of the 24 providers for their principal claims and for prejudgment interest. Based upon the findings of the hearing officers that plaintiff was liable to 20 of the 24 providers for various principal amounts and interest on those amounts, plaintiff and the providers entered into stipulations specifying the total amount of principal and interest plaintiff would owe each provider if the hearing officers' conclusions were upheld. The hearing officers submitted their findings of fact, conclusions of law, and recommendations to the Director and recommended hearing costs totaling $499,526.49, of which $491,526.49 was allocated to plaintiff. The Director adopted and approved the hearing officers' findings of fact and conclusions of law on the principal claims in the stipulated amounts. The Director, however, declined to award interest on those principal amounts, concluding that he lacked statutory authority to do so. The Director accepted the hearing officers' recommendation that hearing costs be imposed, but reduced the $499,526.49 in hearing costs recommended by them based on a payment made by the Department in partial satisfaction of that amount. Specifically the Director imposed hearing costs pursuant to section 408(5) of the Illinois Insurance Code (Code) (215 ILCS 5/408(5) (West 2000)) totaling $295,023.94, of which $289,122.54 was assessed against plaintiff.
Plaintiff did not request a rehearing on any of the Director's orders. Rather, it filed 24 separate complaints for administrative review in the trial court. Twenty of the complaints were brought by plaintiff against the twenty providers to which the Director found plaintiff liable for principal amounts and hearing costs. The other four complaints were brought by plaintiff against the four providers to which the Director found plaintiff was not liable; these complaints sought review of the Director's decision only on the issue of hearing costs.
Fourteen providers filed separate administrative complaints in the trial court seeking judicial review only of the part of the Director's decisions which denied them interest. Plaintiff moved to consolidate its 24 cases with the providers' 14 cases. The motion to consolidate was granted. All the providers filed motions to dismiss plaintiff's complaints pursuant to section 2-619(a) of the Illinois Code of Civil Procedure (735 ILCS 5/2-619(a)(9) (West 2000) based on plaintiff's failure to exhaust its administrative remedies. In these motions, the providers relied upon section 2402.280(c) of the Illinois Administrative Code (50 Ill. Adm. Code