Rosewood Care Center v. Caterpillar, Inc.

SUPREME COURT CASES

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State: Illinois

Docket No: 103212 Rel

Case Date: 11/01/2007

Preview:Docket No. 103212.

IN THE SUPREME COURT OF THE STATE OF ILLINOIS

ROSEWOOD CARE CENTER, INC., Appellee, v. CATERPILLAR, INC., Appellant. Opinion filed November 1, 2007.

JUSTICE BURKE delivered the judgment of the court, with opinion. Chief Justice Thomas and Justices Freeman, Fitzgerald, Kilbride, Garman, and Karmeier concurred in the judgment and opinion.

OPINION Plaintiff, Rosewood Care Center, Inc. of Peoria (Rosewood), filed an action against defendant Caterpillar, Inc., seeking reimbursement for skilled nursing care services provided to Caterpillar's employee, Betty Jo Cook, while she was a patient at Rosewood. Rosewood alleged in its complaint that Caterpillar had promised to pay for the care and treatment Rosewood provided to Cook. In response, Caterpillar moved to dismiss the complaint, arguing that the alleged promise to pay for Cook's care was not enforceable because it was not in writing as required by the Frauds Act (statute of frauds) (740 ILCS 80/1 (West 2004)). The circuit court granted Caterpillar's motion and Rosewood appealed.

The appellate court reversed and remanded. 366 Ill. App. 3d 730. Relying on Williams v. Corbet, 28 Ill. 262 (1862), and Hartley Bros. v. Varner, 88 Ill. 561 (1878), the appellate court held that a promise to pay the debt of another is subject to the statute of frauds only if the debt exists at the time the promise is made. Applying a "preexisting debt rule," the appellate court concluded that, because Caterpillar's alleged promise to pay for Cook's care was made before the debt came into existence, it was not subject to the statute of frauds and the circuit court erred in dismissing Rosewood's complaint. We subsequently granted Caterpillar's petition for leave to appeal (210 Ill. 2d R. 315) and now affirm the judgment of the appellate court, although we do so on different grounds. BACKGROUND The following facts are taken from Rosewood's complaint and attached exhibits. On October 21, 2001, Cook suffered injuries at work and was hospitalized from that date until January 30, 2002. Sometime thereafter, Cook filed a workers' compensation claim against Caterpillar. On January 3, 2002, Caterpillar contacted HSM Management Services (HSM), the management agent for Rosewood, a skilled nursing facility. Caterpillar requested that Rosewood admit Cook on a "managed care basis (fixed rate)." HSM advised Caterpillar that Rosewood would not admit Cook on those terms. Shortly thereafter, on January 10, Dr. Norma Just, Caterpillar's employee in charge of medical care relating to workers' compensation claims, contacted HSM. Just told HSM that Cook had sustained a work-related injury and was receiving medical care at Caterpillar's expense under the workers' compensation laws. Just requested that Cook be admitted to Rosewood for skilled nursing care and therapy, and stated that the cost of Cook's care would be 100% covered and paid directly by Caterpillar to Rosewood with a zero deductible and no maximum limit. Just further advised HSM that Cook had been precertified for four weeks of care. Just asked that Rosewood send the bills for Cook's care to Caterpillar's workers' compensation division. That same day, HSM faxed a letter to Dr. Just confirming their conversation. In this letter, HSM requested Just to acknowledge that -2-

she had agreed to (1) a "SNF admission for Cook," (2) four weeks of treatment, and (3) the need for further evaluation in connection with the length of care Cook would require. Just signed the fax, acknowledging her agreement, and returned it the next day.1 On January 20, "Sue" from Dr. Just's office telephoned HSM and confirmed approval for Cook's transfer from the hospital to Rosewood. On January 30, Sue reconfirmed, via telephone, Caterpillar's authorization for Cook's care and treatment in accordance with the January 10 agreement, except that Sue now advised HSM that Cook was precertified for two weeks of care instead of the original four weeks. On January 30, Cook was admitted to Rosewood. Upon her admission, Cook signed a document entitled "Assignment of Insurance Benefits" as required by law. In this document, Cook assigned any insurance benefits she might receive to Rosewood and acknowledged her liability for any unpaid services. Caterpillar, through its health-care management company, continued to orally "authorize" care for Cook and did so on February 8, February 25, March 11, March 21, April 8, April 18, May 16, and June 4. Cook remained at Rosewood until June 13, 2002. The total of Rosewood's charges for Cook's care amounted to $181,857. Rosewood billed Caterpillar on a monthly basis on February 12, March 11, April 15, May 14, June 10, and July 15. Caterpillar never objected to the bills being sent to it for Cook's care, nor did it ever advise Rosewood that treatment was not authorized. However, Caterpillar ultimately refused to pay for services rendered to Cook. Rosewood filed an amended complaint against both Caterpillar and Cook. Relevant here, count III of Rosewood's complaint stated a claim for breach of contract against Caterpillar, count IV a claim for promissory estoppel, and count V a claim for quantum meruit. In connection with the promissory estoppel claim, Rosewood averred that, prior to Cook's admission, Caterpillar had, in the past, requested, authorized, and approved care and treatment at Rosewood for other injured employees and had paid for the services. Rosewood averred

Rosewood does not contend that this letter satisfies the writing requirement of the statute of frauds.

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that it only admitted Cook based on Caterpillar's promise. Rosewood further averred that it would not have admitted Cook without Caterpillar's promise to pay. Caterpillar moved to dismiss the breach of contract count (count III) and the promissory estoppel count (count IV), pursuant to section 2

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