On August 22, 2003, the plaintiff, Earl Holmes, filed, in the circuit court of MadisonCounty, a complaint for a declaratory judgment against the defendant, Federal InsuranceCompany, to recover medical expenses arising from an accidental fall on the premises of thedefendant's insured. The insurance policy in question contains a medical expenses provisionstating that, subject to the applicable limits of liability, the defendant "will pay each personwho sustains bodily injury caused by an accident all medical expenses incurred," providedthe accident takes place during the policy period and the bodily injury arises "out of thepremises or operations for which [the insured is] afforded bodily injury liability coverage." The parties agree that this is a "no fault" provision and that payment does not depend on afinding of liability on the part of the insured.

At the time of the filing of the declaratory judgment action, the plaintiff also hadpending in the circuit court of St. Clair County an action against the insured to recover forhis personal injuries. This action sounded in negligence, premises liability, and res ipsaloquitur.

On October 8, 2003, the defendant filed a motion to dismiss the declaratory judgmentaction on the ground that the plaintiff cannot proceed with a claim against the defendantinsurer while essentially the same claim is pending against the insured. The defendant'smotion is based primarily on Zegar v. Sears Roebuck & Co., 211 Ill. App. 3d 1025 (1991),a decision from the First District of this court. Zegar held that, absent an express or clearlyimplied right in the insurance contract to sue the insurer directly to recover medicalexpenses, an injured party cannot maintain an action to recover those expenses directly fromthe insurer, at least until after a settlement, adjudication, or release of claim against theinsured has been secured. Zegar, 211 Ill. App. 3d at 1032.

On November 17, 2003, after receiving oral and written argument, the circuit courtof Madison County dismissed the declaratory judgment action, on the basis of Zegar. Theplaintiff appeals. Our review of the granting of a motion to dismiss is de novo. Redwood v.Lierman, 331 Ill. App. 3d 1073, 1077 (2002).

In Zegar, the plaintiff brought suit against Allstate Insurance Company (Allstate), theinsurer of Sears Roebuck & Company (Sears), to recover medical expenses for an injuryincurred on the premises of a Sears store. Sears was not a party to the action or to anindependent action for damages. The insurance policy in question provided that Allstatewould pay medical expenses for bodily injury caused by an accident in a Sears storeregardless of fault. The plaintiff sued Allstate under the theory that she was a third-partybeneficiary of the insurance contract and could therefore bring a direct action against theinsurance company. Allstate moved to dismiss on the basis of certain policy language thatAllstate argued prohibited a lawsuit against the insurer before a final judgment or settlementagainst the insured was obtained. The trial court agreed with Allstate and dismissed the suit. Zegar, 211 Ill. App. 3d at 1026.

The First District of this court affirmed the trial court on the basis of policy languagethat it described as a "no direct action" clause. Zegar, 211 Ill. App. 3d at 1032. Thatlanguage in the Zegar policy is virtually identical to language contained in the policy in thecase at bar. The language in this case provides as follows:

"No person or organization has a right under this insurance:

to join us as a party or otherwise bring us into a suit asking for damages froman insured; or

to sue us on this insurance unless all of its terms have been fully compliedwith.

A person or organization may sue us to recover on an agreed settlement or on a finaljudgment against an insured obtained after:

an actual trial in a civil proceeding ***."

Based on similar language, the First District determined that the injured party was not athird-party beneficiary of the contract between the insured and the insurer, because thecoverage provisions of an insurance policy are primarily for the benefit of the contractingparties and only incidentally for injured claimants. Zegar, 211 Ill. App. 3d at 1031. In lightof the "no direct action" clause, nothing in the insurance policy stated or strongly suggestedthat a claimant may maintain a direct action for medical expenses without regard to theresolution of his potential claim against the insured for bodily injuries. Zegar, 211 Ill. App.3d at 1032. In the absence of an express or clearly implied right to sue Allstate directly forthe medical expenses, the plaintiff could not maintain an action to recover medical expensesdirectly from Allstate, "at least until after a settlement, adjudication, or release of claimagainst Sears has been secured." Zegar, 211 Ill. App. 3d at 1032.

Finally, the Zegar court held that the "no direct action" clause comports with statedIllinois public policy that direct actions against insurance companies are against publicpolicy, citing as authority cases holding that direct actions to recover damages for theinsured's negligence could not be brought prior to the entry of a judgment against theinsured. Zegar, 211 Ill. App. 3d at 1027-28; see Marchlik v. Coronet Insurance Co., 40 Ill.2d 327, 333 (1968); Richardson v. Economy Fire & Casualty Co., 109 Ill. 2d 41, 47 (1985). We note that neither of these cases cited in Zegar involved a direct action for medicalexpenses, a benefit which is available under the policy without regard to fault.

We believe that the First District has misconstrued the "no direct action" clause of thepolicy, at least insofar as it relates to third-party suits to recover no-fault medical expensesunder the policy. The "no direct action" clause here prohibits only "a suit asking fordamages from an insured." A suit to collect under the medical expenses provision is not asuit asking for damages from the insured. As explained in Garcia v. Lovellette, 265 Ill. App.3d 724, 728-29 (1994):

"[T]he medical payment provision is not an indemnity agreement which depends ona determination of the negligence of the policyholder before the [injured party] maylook to the insurer for payment. Rather, it is a separate agreement for direct paymentto the injured [party] ***. For a separate consideration and by the very terms of theprovision, the insurer undertook an obligation to pay directly to [the injured party]. It amounts to a 'no-fault' type of limited coverage which comes into effect upon thehappening of defined events. ***

*** Such a provision constitutes separate accident coverage divisible from theremainder of the policy which 'creates a direct liability to the contemplatedbeneficiaries' and whose 'purpose is to grant peace of mind *** so that those injuredwill not necessarily be contemplating how to impose liability upon the insured.' [Citations.] The obligation of the insurer under this type of coverage clearly runsseparately and directly to the injured person rather than to the person insured againstliability under a standard *** policy."

The policy language in the case at bar provides that the defendant insurer "will pay eachperson who sustains bodily injury caused by an accident all medical expenses incurred." This is a benefit that runs separately and directly to the injured person rather than to theperson insured against liability under the policy. It is a direct liability running from thedefendant insurer to the injured plaintiff. Accordingly, the plaintiff's declaratory judgmentagainst the defendant insurer is not "a suit asking for damages from an insured." It is a suitbrought by the plaintiff to recover benefits under the policy that are owed directly to him,regardless of fault, under the terms of the policy. The obligation of the defendant insurer tothe injured plaintiff is separate from the obligation to the insured and is owed directly to theinjured plaintiff, as the defendant insurer undertook, through its contract, to make paymentdirectly to the injured party. The defendant does not assert that the plaintiff has failed tofully comply with the terms of the policy. Accordingly, the "no direct action" clause of thepolicy does not bar the plaintiff's action in the case at bar.

Furthermore, we believe that the plain language of the medical expenses provision ofthe policy manifests an intent of the parties to the insurance contract to make the plaintiff adirect beneficiary of the contract. Indeed, the plaintiff is the only direct beneficiary of themedical expenses provision, which provides that the defendant insurer "will pay each personwho sustains bodily injury caused by an accident all medical expenses incurred." (Emphasisadded). The plaintiff, who was allegedly injured while on the insured's premises, was anintended beneficiary of the insurance contract, not a third-party tort claimant whose rightsarose only incidentally from the negligence of the insured.

In Illinois, a third party who is a direct beneficiary of an insurance contract hasstanding to enforce the obligations intended for his benefit under the contract. Garcia v.Lovellette, 265 Ill. App. 3d 724, 731 (1994). It is not necessary that the contract for thebenefit of a third-party beneficiary identify him by name; the contract may define the partybenefited by the description of a class. Garcia, 265 Ill. App. 3d at 732. Accordingly, theplaintiff had standing to enforce the direct obligation undertaken by the defendant insurer tothe plaintiff under the medical expenses provision of the insurance contract.

Nor does our holding conflict with the stated public policy of Illinois that no directaction may be brought against an insurance company to recover damages for the insured'snegligence prior to the entry of a judgment against the insured. See Marchlik v. CoronetInsurance Co., 40 Ill. 2d 327, 333 (1968); Richardson v. Economy Fire & Casualty Co., 109Ill. 2d 41, 47 (1985). The policy against direct actions is not a completely mandatory andinflexible prohibition against third-party practice. Garcia, 265 Ill. App. 3d at 731. It isapplied where the issue of the insurer's liability would be intermingled with that of theinsured and with the assessment of damages. Garcia, 265 Ill. App. 3d at 731. As we havealready explained, a suit by an injured party to recover under the medical expenses provisionof the policy is not a suit to recover damages for the insured's negligence. Because fault isnot an issue with respect to medical expenses benefits, there is no danger that the liabilityof the insured and the liability of the insurer would become intermingled. See LoeberMotors, Inc. v. Sims, 34 Ill. App. 3d 342, 353 (1975) (Simon, J., concurring in part anddissenting in part). As we have explained, the obligation of the insurer to the injured partyis separate and direct, as the insurer undertook, through its contract, to make paymentdirectly to the injured party. Further, the payment of medical expenses is not premised onthe insurer's indemnification or on the negligence of the policyholder. Rather, the insurer'sobligation arises upon the happening of a defined event, and there is no need to interminglethe liability of the insurer with that of the insured. In these circumstances, the direct actionagainst the defendant insurer does not violate public policy.

We reverse the order of the circuit court dismissing the plaintiff's complaint. Becauseit appears that the trial court did not consider alternative grounds presented by the defendantfor a full or partial dismissal of the complaint, we decline on appeal to address issues relatingto those grounds, and we remand the cause to the circuit court of Madison County for furtherproceedings on the complaint.

For the foregoing reasons, the order of dismissal entered by the circuit court ofMadison County is hereby reversed, and this cause is remanded.

Reversed; cause remanded.

GOLDENHERSH and KUEHN, JJ., concur.