Martis v. Pekin Memorial Hospital

SUPREME COURT CASES

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State: Illinois

Court: 3rd District Appellate

Docket No: 3-08-0543 Rel

Case Date: 10/20/2009

Preview:No. 3-08-0543 _________________________________________________________________ Filed October 20, 2009 IN THE APPELLATE COURT OF ILLINOIS THIRD DISTRICT A.D., 2009 RICHARD MARTIS, on Behalf of Himself and All Others Similarly Situated, ) Appeal from the Circuit Court ) of the Tenth Judicial Circuit ) Tazewell County, Illinois, ) Plaintiff-Appellant, ) ) v. ) ) PEKIN MEMORIAL HOSPITAL INC., ) a Not-For-Profit Corporation ) d/b/a Pekin Hospital and ) Progressive Health Systems; ) PEORIA-TAZEWELL PATHOLOGY ) GROUP S.C.; ELIZABETH ) ALENGHAT; ELIZABETH A. BAUER- ) No. 05-L-23 MARSH; ALLAN C. CAMPBELL; ) RONALD CHAMPAGNE; WILLIAM EBY;) DAVID J. FLANDERS; DONALD L. ) FREDERICK; JON F. GENTRY; ) KATHRYN O. KRAMER; KAREN F. ) McCARRON; DOUGLAS J. McGRADY; ) JOE MUSSELMAN; DEVENDRA V. ) TRIVEDI; THOMAS A. WEBB; and ) JOHN DOES 1 THROUGH 20, Being ) Former Partners of Peoria) Tazewell Pathology Group not ) presently known to Plaintiff; ) and DATA MANAGEMENT, INC., ) Honorable ) John A. Barra, Defendants-Appellees. ) Judge, Presiding. _________________________________________________________________ JUSTICE LYTTON delivered the opinion of the court: _________________________________________________________________ Plaintiff, Richard Martis, filed a complaint against

defendants, Pekin Memorial Hospital, Data Management, Inc., and Peoria-Tazewell Pathology Group and its individual shareholders. Defendants filed motions to dismiss, which the trial court granted.

We affirm. In October 2004, plaintiff's physician instructed plaintiff to undergo laboratory testing at Pekin Memorial Hospital. Plaintiff At the

did not have medical insurance at the time of the testing.

hospital, plaintiff received a form authorizing treatment, which stated in pertinent part: "I understand, some physicians who furnish professional services to me (the patient), whether that service is provided directly or care or are

indirectly,

independent contractors and are not agents or employees of the hospital. This provision includes, but is not

limited to radiologists, pathologists, anesthesiologists and any physicians called in as consultants. The

hospital does not bill for the services rendered by each physician that tends to my needs during the course of my care and treatment. By signing ______ (initial) I agree

to pay these charges for physician services if my health plan does not cover all of the physician charges." Plaintiff placed his initials where indicated on the form. Approximately one month later, plaintiff received two bills for the tests: one from the hospital for $609 and one from the pathology group for $73.30. The bill from the pathology group

contained the following explanation of services: "You recently had some laboratory work performed at the hospital noted on the front of this statement. The

laboratory at this hospital is directed by the medical 2

group of pathologists as referenced on the front of this statement. A pathologist is a physician who specializes

in applying medical knowledge and judgment to the testing of laboratory specimens. This bill is for the professional services of a pathologist of the named group. These services do not

necessarily involve personal review of your test(s). They include the pathologist's supervision of the

laboratory to make sure that your results are timely and medically reliable. They also include the pathologist's

availability - seven days a week, 24 hours a day - to review any result that is questionable and to discuss various medical issues that might be raised about your test results by your doctor. The hospital will make a separate charge for its role in your testing. That charge will cover the

Hospital's costs in furnishing the space, equipment, and technician's service involved with your test(s). *** PROFESSIONAL COMPONENT SERVICES You may receive a bill from the pathologists for their professional component services which are required, by law, for the operation of the clinical laboratory. These services are provided on a 24 hours a day, seven days a week basis and include, but are not limited to: 1. Assuring that tests, examinations, and procedures are properly performed, recorded and reported. 3

2. Interacting with members of the medical staff regarding issues of laboratory operations, quality and test availability. 3. Designing protocols and establishing parameters for performance of clinical testing. 4. Recommending appropriate follow-up diagnostic tests, when appropriate. 5. Supervising laboratory technical personnel and advising them about aberrant results. 6. Selecting, evaluating and validating test

methodologies. 7. Direct, performing, and evaluating quality

assurance and control procedures. 8. Evaluating clinical laboratory data and

establishing a process for review of test results prior to issuance of patient reports. 9. Assuring the hospital's laboratory's compliance with state licensure laws, Medicare conditions, JCAHO standards, Laboratory the College of American Program Pathologists and federal

Accreditation

certification standards." Plaintiff filed a two-part complaint against defendants.1

1

Part I

challenged the hospital's billing practices toward

uninsured patients. Plaintiff and the hospital entered into a settlement agreement disposing of those claims. 4 Only the claims

Part II consisted of nine counts that alleged defendants doublebilled for their services. Plaintiff alleged that the pathology

group and its members violated the Medical Practice Act of 1987 (225 ILCS 60/1 et seq. (West 2006)), the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2006)), and the Medical Patient Rights Act (410 ILCS 50/1 et seq. (West 2006)), and that they were unjustly enriched. He further alleged that the hospital violated the

Medical Patient Rights Act, the Consumer Fraud Act and that it was unjustly enriched. Finally, plaintiff alleged that Data Management violated the Consumer Fraud Act. Plaintiff requested declaratory

and injunctive relief against all defendants on behalf of himself and others similarly situated. Defendants filed motions to dismiss plaintiff's complaint. The trial court granted the motions, holding that professional component billing is not actionable. We review de novo the trial court's order granting defendants' motions to dismiss for failure to state a claim. See Pooh-Bah Enterprises, Inc. v. County of Cook, 232 Ill. 2d 463, 473, 905 N.E.2d 781, 789 (2009). I. Medical Practice Act Claims Plaintiff billing for argues that the pathology group's practice of

professional

component

services

violates

section

22(A)(14) of the Medical Practice Act because such services are not

contained in part II are relevant for purposes of this appeal. 5

"actually and personally rendered" to patients. Defendants respond that plaintiff has no private right of action under the Act and, even if he did, defendants did not violate the Act. The Medical Practice Act is a regulatory statute designed to protect the public health and welfare from those not qualified to practice medicine. Ikpoh v. Department of Professional Regulation, 338 Ill. App. 3d 918, 926, 789 N.E.2d 442, 449 (2003); Tovar v. Paxton Community Memorial Hospital, 29 Ill. App. 3d 218, 220, 330 N.E.2d 247, 249 (1975). Section 22(A)(14) of the Act prohibits TLC The Laser

fee-splitting and other fee-sharing arrangements.

Center, Inc. v. Midwest Eye Institute II, Ltd., 306 Ill. App. 3d 411, 427, 714 N.E.2d 45, 56 (1999). Specifically, section 22(A)(14) states that a physician may be disciplined for the following conduct: "Dividing with anyone other than physicians with whom the licensee practices in a partnership,

Professional Association, limited liability company, or Medical or Professional Corporation any fee, commission, rebate or other form of compensation for any professional services not actually and personally rendered." 225 ILCS 60/22(A)(14) (West 2006). The conduct that the legislature seeks to prohibit in section 22(A)(14) is (1) fee-splitting for patient referrals between

licensees and (2) fee-sharing arrangements, "whereby a licensee 'divides with anyone' *** a percentage of the monies earned by the licensee for medical services he or she has performed." 6 (Emphasis

omitted.) Vine Street Clinic v. Healthlink, Inc., 222 Ill. 2d 276, 292, 856 N.E.2d 422, 433-34 (2006). The purpose of section 22(A)(14) is to ensure that physicians are making responsible and appropriate medical decisions that are not motivated by monetary compensation. As the court in TLC stated: "The policy reasons behind the prohibition are the danger that such an arrangement might motivate a non-

professional to recommend a particular professional out of self-interest, rather than the professional's

competence. In addition, the judgment of the professional might be compromised, because the awareness that he would have to split fees might make him reluctant to provide proper (but unprofitable) services to a patient, or, conversely, treatment." 56. An arrangement that does not relate patient care to an increase or decrease in revenue does not violate section 22(A)(14) of the Act. See Vine Street Clinic, 222 Ill. 2d at 296, 856 N.E.2d at 435-36. The primary rule of statutory construction is to ascertain and give effect to the legislature's intent and meaning. Brucker v. Mercola, 227 Ill. 2d 502, 513, 886 N.E.2d 306, 313 (2007). The to provide unneeded (but profitable)

TLC, 306 Ill. App. 3d at 427, 714 N.E.2d at

language of the statute is the best indication of legislative intent. Brucker, 227 Ill. 2d at 513, 886 N.E.2d at 313. All

provisions of a statute are viewed as a whole. 2d at 514, 886 N.E.2d at 313.

Brucker, 227 Ill.

Accordingly, all words and phrases 7

must be interpreted in light of other provisions of the statute and must not be construed in isolation. 886 N.E.2d at 313. Brucker, 227 Ill. 2d at 514,

Each word, clause and sentence of the statute Brucker, 227

must be given meaning and not rendered superfluous. Ill. 2d at 514, 886 N.E.2d at 313.

In determining the legislative

intent, a court may properly consider not only the language of the statute, but also the purpose of the law, the evils sought to be remedied, and the goals to be achieved. 514, 886 N.E.2d at 313. If we assume for purposes of this decision that a private right of action exists under the Medical Practice Act, plaintiff has nonetheless failed to establish that defendants engaged in feesharing or fee-splitting. Plaintiff alleged that defendants Brucker, 227 Ill. 2d at

violated section 22(A)(14) of the Act by charging for services "not actually and personally rendered." However, section 22(A)(14) does not prohibit such conduct. fee-splitting and Rather, section 22(A)(14) prohibits for services "not actually and

fee-sharing

personally rendered."

225 ILCS 60/22(A)(14) (West 2006); TLC, 306

Ill. App. 3d at 427, 714 N.E.2d at 56. According to the bill the pathology group sent to plaintiff and the form plaintiff signed upon entering the hospital, the bills from the hospital and pathology group are for separate services: the hospital bills for its "costs in furnishing the space,

equipment, and technician's service," while the pathology group bills for "the professional services of a pathologist." Two

separate entities sending bills for different services is not fee8

splitting or fee-sharing.

Thus, plaintiff has failed to allege a See Vine Street Clinic,

violation of section 22(A)(14) of the Act. 222 Ill. 2d at 296, 856 N.E.2d at 436.

The trial court properly

dismissed plaintiff's Medical Practice Act claims. II. Consumer Fraud Act Claims

Plaintiff argues that defendants violated the Consumer Fraud Act by (1) failing to comply with the Medical Practice Act, and (2) billing for services not directly provided to a patient, which is unfair and deceptive. The Consumer Fraud Act is intended to

protect consumers against unfair and deceptive business practices. Ramirez v. Smart Corp., 371 Ill. App. 3d 797, 806, 863 N.E.2d 800, 811 (2007). The elements of a claim under the Consumer Fraud Act

are: an unfair or deceptive act or practice by the defendant; the defendant's intent that plaintiff rely on the deception; the

occurrence of the deception during a course of conduct involving trade or commerce; and actual damage to the plaintiff proximately caused by the deception. N.E.2d at 811-12. Ramirez, 371 Ill. App. 3d at 806, 863

To be unfair, the defendant's conduct must: (1)

offend public policy; (2) be immoral, unethical, oppressive, or unscrupulous; and (3) cause substantial injury to consumers.

Ramirez, 371 Ill. App. 3d at 806, 863 N.E.2d at 812. A. Medical Practice Act

The Illinois legislature has identified 29 statutes which, if violated, will constitute an unlawful practice within the meaning of the Consumer Fraud Act. 815 ILCS 505/2Z (West 2006). The

Medical Practice Act is not one of the named statutes. 9

See 815

ILCS 505/2Z (West 2006).

When certain things are enumerated in a

statute, that enumeration implies the exclusion of all other things even if there are no negative words of prohibition. See People ex

rel. Daley v. Grady, 192 Ill. App. 3d 330, 333, 548 N.E.2d 764, 766 (1989) (applying the statutory rule of construction of expressio unius est exclusio alterius ("the expression of one thing is the exclusion 1979))). Plaintiff claims that defendants' alleged violation of the Medical Practice Act constitutes a violation of the Consumer Fraud Act. We disagree. First, as we have already found, plaintiff of another") (Black's Law Dictionary 521 (5th ed.

failed to state a claim for violation of the Medical Practice Act. Second, even if plaintiff had properly alleged a violation, such a violation does not constitute an unlawful practice. The Medical

Practice Act is not included in section 2Z of the Consumer Fraud Act. If the legislature had intended Medical Practice Act

violations to constitute unlawful practices under the Consumer Fraud Act, it could have included them in section 2Z. See McCabe

v. Crawford & Co., 210 F.R.D. 631, 640 (N.D. Ill. 2002) (provision of the Illinois Vehicle Code not listed in section 2Z could not form the basis for a Consumer Fraud Act claim). Because the

Medical Practice Act is not an enumerated statute under section 2Z, an unlawful practice cannot be implied, and plaintiff's claim must fail. B. Unfair or Deceptive Practice

Next, we must determine if plaintiff has adequately alleged 10

that defendants' practice of billing for professional component services of pathologists is unfair or deceptive. professional component billing by pathology The practice of groups has been

litigated in several courts. In the majority of cases, courts have upheld the practice. See Central States, Southeast & Southwest

Areas Health & Welfare Fund v. Pathology Laboratories of Arkansas, P.A., 71 F.3d 1251 (7th Cir. 1995); Health Options, Inc. v. Palmetto Pathology Services, P.A., 983 So. 2d 608 (Fla. App. 2008); Arizona Society of Pathologists v. Arizona Health Care Cost

Containment System Administration, 201 Ariz. 553, 38 P.3d 1218 (App. 2002). But see Central States, Southeast & Southwest v.

Florida Society of Pathologists, 824 So. 2d 935 (Fla. App. 2002). In Central States v. Pathology Laboratories of Arkansas, an employee welfare plan brought suit under the Employee Retirement Income Security from Act (ERISA), seeking to enjoin for Pathology

Laboratories

billing

patients

directly

professional

component services. Pathology

The Seventh Circuit refused to prohibit from billing because patients "patients directly agreed for when

Laboratories component

professional

services

entering the Baptist Hospitals to pay all bills, whether or not the fees were covered by insurance." Pathology Laboratories, 71 F.3d

at 1253. The court found that professional component fees were not "bogus" because the pathology group "provides supervisory services of value to all patients, and interpretation services of value to some." Pathology Laboratories, 71 F.3d at 1253.

In Health Options, a pathologists' group brought an action 11

against a health maintenance organization (HMO) to recover payment for professional component services. In Florida, an HMO must pay

for services rendered by a provider to an HMO member as long is it is "medically necessary and approved physician care rendered to a non-Medicare subscriber." Health Options, 983 So. 2d at 614,

citing Fla. Stat. Ann.

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