Gass v. Anna Hospital Corporation

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State: Illinois

Court: 5th District Appellate

Docket No: 5-08-0405 Rel

Case Date: 06/23/2009

Preview:NO. 5-08-0405
NOTICE Decision filed 6/23/09. T he text of

IN THE APPELLATE COURT OF ILLINOIS

this decision may be changed or corrected prior to the filing of a Peti tion for Rehearing or th e

FIFTH DISTRICT ________________________________________________________________________ BARBARA MARIE GASS, as Special Administrator of the Estate of Patricia A. Pike, Deceased, ) Appeal from the ) Circuit Court of ) Williamson County. ) Plaintiff-Appellee, ) ) v. ) No. 07-L-179 ) ANNA HOSPITAL CORPORATION, d/b/a ) Union County Hospital, ) ) Defendant-Appellant, ) ) and ) ) COMM UNITY HEALTH SYSTEM S, INC., ) and DR. DALE VORBRICH, ) ) Defendants ) ) (Dr. Raja C. Maddipoti, of Prairie ) Honorable Cardiovascular Consultants Ltd., Respondent ) Brad K. Bleyer, in Discovery). ) Judge, presiding. ________________________________________________________________________ PRESIDING JUSTICE WEXSTTEN delivered the opinion of the court: The plaintiff, Barbara Marie Gass, as the special administrator of the estate of Patricia A. Pike, deceased, filed a medical negligence complaint in the circuit court of Williamson County against the defendants, Anna Hospital Corp. (AHC), an Illinois corporation doing business as Union County Hospital; Community Health Systems, Inc. (CHS), a Delaware corporation; and Dr. Dale Vorbrich. The complaint was for the decedent's wrongful death. The plaintiff named Dr. Raja C. M addipoti as a respondent in discovery. The circuit court denied AHC's motion to transfer venue from Williamson County to Union County. We

disposition of the same.

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granted AHC's petition for leave to appeal the circuit court's order. Dr. Vorbrich's petition for leave to appeal was stricken for a lack of jurisdiction. W e reverse and remand. FACTS On November 19, 2007, the plaintiff filed her original two-count complaint in Williamson County against Dr. Vorbrich and AHC for failing to properly diagnose and treat the decedent when she arrived at the Union County Hospital emergency room complaining to the nursing staff and Dr. Vorbrich of chest pain and shortness of breath. In her caption, the plaintiff identified AHC as "a subsidiary of Community Health Systems Professional Services Corporation." Because AHC did not have an office or provide patient care in Williamson County and because Dr. Vorbrich resided in Union County and AHC's hospital was located in Union County, Dr. Vorbrich and AHC filed motions to transfer venue to Union County. At a hearing on February 25, 2008, the plaintiff made an oral motion for leave to file an amended complaint to add CHS as a defendant, and the circuit court granted the plaintiff's motion. On February 6, 2008, the plaintiff filed an affidavit of David Youngberg, a licensed private investigator, and attached exhibits, such as incorporation verifications, press releases, security exchange commission forms, and Web site printouts, to establish that CHS acquired and wholly owned as subsidiaries AHC and Marion Hospital Corp. (MHC), doing business as Heartland Regional Medical Center in Williamson County, Illinois. Youngberg also stated that AHC, MHC, and CHS shared corporate executives, in that Martin Schweinhart was AHC's corporate president and CHS's senior vice president of operations and that Rachel Seifert was AHC's and MHC's corporate secretary and CHS's senior vice president, secretary, and general counsel. On March 5, 2008, the plaintiff filed a five-count, first amended complaint, adding CHS as a defendant and again alleging that the decedent received negligent medical care and

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treatment from Dr. Vorbrich and the nursing staff in the emergency room at Union County Hospital. In the amended complaint, the plaintiff alleged that CHS wholly owned AHC and MHC; that CHS operated and administered AHC and MHC through its own corporate executives; that the business relationship and stock ownership between CHS and AHC "were ostensibly such that the two companies were not truly separate and distinct entities but rather had interlocking executives running both companies"; and that CHS's ownership and acquisition of AHC, along with their common executives, were "indicative of a unity of interest and ownership between the two companies whereby [CHS] was the dominant share holder and operator of [AHC, doing business as Union County Hospital]." Dr. Vorbrich and AHC again filed motions to transfer. In AHC's motion, it asserted that because the plaintiff could not establish the factors necessary to pierce the corporate veil of AHC to establish liability against CHS or of MHC to establish venue in Williamson County, CHS was not a proper defendant and the action was improperly venued in Williamson County. AHC argued that because all the transactions which formed the basis of the plaintiff's suit had occurred in Union County and because both proper defendants, Dr. Vorbrich and AHC, resided in Union County, the only proper venue for the plaintiff's suit was Union County. In the plaintiff's response, the plaintiff argued that CHS was a proper defendant based upon the vicarious liability of CHS, as a parent agency, for the alleged medical negligence. The plaintiff alleged that CHS owned, operated, and controlled AHC's Union County Hospital and that CHS did business in Williamson County through its ownership, operation, and control of MHC's Heartland Regional Medical Center. The plaintiff alleged that "the circumstances of ownership between [CHS] and its subsidiaries, [AHC] and [MHC], is [sic ] such that a unity of interest and ownership exists whereby" CHS may be responsible for the torts of its subsidiary corporate employees.

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AHC submitted in the record the affidavit of Ben Fordham, the vice president and senior litigation counsel for Community Health Systems Professional Services Corp. In the affidavit, Fordham attested that CHS was a holding company with no employees and its shares were publicly traded on the New York Stock Exchange. CHS was the only member of and owned all the outstanding ownership interest of Community Health Investment Company, LLC. Community Health Investment Company, LLC, owned, among other assets, all the issued and outstanding corporate stock of AHC and MHC. Fordham stated in the affidavit that CHS maintained no control over AHC or MHC, that CHS did not operate the hospitals, that CHS did not control the day-to-day operations of the hospitals, and that CHS did not control disputes concerning medical staff. Fordham stated that such functions were the responsibility of AHC and MHC as delegated to each hospital's board of trustees. Fordham stated that CHS maintained accounting records separate from those of the hospitals and maintained separate corporate minutes and records. Fordham stated that the patients treated at the hospitals pay the hospitals, not CHS, and that CHS maintained its own banking relationships. Fordham asserted that neither AHC nor MHC was designated as an agent for CHS and that CHS had not diverted assets from the hospitals to the detriment of any creditors. Fordham further stated that there was no overlap between CHS's board of directors and AHC's board of trustees. Fordham stated that CHS did not make clinical decisions regarding patients at the hospitals and, specifically, did not make any clinical decisions regarding the decedent's care. Fordham attested that CHS did not employ Dr. Vorbich, Dr. Vorbich was not an agent of CHS, and CHS was not involved in credentialing or supervising Dr. Vorbich. Fordham stated that CHS also did not employ the nursing staff at the hospitals and was not involved in supervising the nursing staff at the hospitals.

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In a docket entry dated July 7, 2008, the circuit court held that AHC had not proven that venue in Williamson County was improper. See 735 ILCS 5/2-101 (West 2006). The circuit court also denied the motion to transfer based on the doctrine of forum non conveniens. On September 29, 2008, we granted AHC's petition for leave to appeal. ANALYSIS "The determination of proper statutory venue raises separate questions of fact and law because it necessarily requires a trial court to rule on the legal effect of its factual findings." Corral v. Mervis Industries, Inc., 217 Ill. 2d 144, 153-54 (2005). "A trial court's findings of fact will not be disturbed on review unless those findings are against the manifest weight of the evidence." Corral, 217 Ill. 2d at 154. The trial court's decision is against the manifest weight of the evidence when an opposite conclusion is apparent or when the findings appear to be unreasonable, arbitrary, or not based on the evidence. Corral, 217 Ill. 2d at 155. "After reviewing the trial court's factual findings, we review the legal effect of the trial court's conclusions de novo ." Corral, 217 Ill. 2d at 155. It is the defendant's burden to prove that the plaintiff's venue selection was improper. Corral, 217 Ill. 2d at 155. The defendant must provide specific facts to support a clear right to the relief it requests. Corral, 217 Ill. 2d at 155. Doubts arising from inconsistencies or inadequacies of the record will be resolved against the defendant. Corral, 217 Ill. 2d at 155. The plaintiff in the present case does not assert that the transaction arose in Williamson County. See 735 ILCS 5/2-101 (West 2006) (an action must be commenced in the county where the cause of action arose or where the defendant resides). Instead, the plaintiff asserts that CHS, once MHC's corporate veil is pierced, resides in Williamson County because M HC's Heartland Regional Medical Center is an "other office" that is "doing business" in Williamson County. See 735 ILCS 5/2-102(a) (West 2006) (any private corporation is a resident of any county in which it has its registered office or other office or

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is doing business). The plaintiff acknowledges that to obtain a judgment against CHS, however, she is also required to pierce AHC's corporate veil. The Illinois venue statute provides, in pertinent part, that an action "must be commenced *** in the county of residence of any defendant who is joined in good faith and with probable cause for the purpose of obtaining a judgment against him or her and not solely for the purpose of fixing venue in that county." 735 ILCS 5/2-101(1) (West 2006). "The legislature joined together three requisites in order to bring the case within the scope of the statute: good faith, probable cause, and a joinder not made for the sole purpose of conferring venue." Green v. Unity Container Corp., 7 Ill. App. 2d 215, 220-21 (1955). " 'Good faith' is hardly capable of an exact definition; it consists of an honest intention to abstain from taking any unconscientious advantage of another, even through forms and technicalities of the law." Green , 7 Ill. App. 2d at 221. " 'Probable cause' is a reasonable belief that the claim on which the suit is brought is valid." Green , 7 Ill. App. 2d at 221; see Webb v. Morgan , 176 Ill. App. 3d 378, 385 (1988). AHC argues that it has presented sufficient facts to show that the plaintiff is unable to pierce its corporate veil and obtain a judgment against CHS. AHC argues, therefore, that it has met its burden to demonstrate that the plaintiff did not join CHS in good faith and with probable cause for the purpose of obtaining a judgment against it but joined CHS solely for the purpose of fixing venue in Williamson County. See 735 ILCS 5/2-101(1) (West 2006). Recognizing that it is AHC's burden to show that the plaintiff did not join CHS in good faith and with probable cause for the purpose of piercing AHC's corporate veil and obtaining a judgment against CHS, the plaintiff argues that she need only allege that there is a unity of interest and ownership between AHC, CHS, and MHC to establish venue in Williamson County. The plaintiff argues that, although CHS may not control AHC's actions directly, because the plaintiff has shown that CHS wholly owned AHC and shares corporate officers

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with AHC, she has demonstrated that CHS has a unity of interest with AHC and that, therefore, AHC's motion to transfer venue to Union County was properly denied. "[B]y definition, a parent corporation is a corporation that has working control of the subsidiary corporation through stock ownership. See 18 Am. Jur. 2d Corporations

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