The defendant Southern Illinois Hospital Services d/b/a Herrin Hospital (Herrin Hospital) appealed from the trial court’s July 25, 2014 order adjudicating liens and distributing the settlement proceeds from an injury case. Herrin Hospital contended that the trial judge improperly included Medicare, Medicare Part D and Medicaid “liens” in the total amount of liens subject to the 40% cap mandated by the Illinois Healthcare Services Lien Act. Because the court allowed 100% reimbursement of the Medicare and Medicaid liens, Herrin Hospital’s reimbursement was substantially decreased.
In addition, Herrin Hospital claimed that the trial court improperly required the lien holders to pay the plaintiff Edwin McKim’s cost of suit pursuant to the Common Fund Doctrine. The Illinois Appellate Court — in its decision — found that the judgment ordered distributing the settlement was contrary to the plain language of the Healthcare Services Lien Act and is in conflict with Medicare’s secondary payer provision and the Illinois Public Aid Code. Additionally, the trial court’s assessment of court costs to Herrin Hospital and Williamson County Ambulance does not comply with the Illinois Supreme Court’s decisions on this topic.
The appeal involved the adjudication of liens under the Healthcare Services Lien Act (770 ILCS 23/1 et seq.). The Healthcare Services Lien Act limits the total amount of liens to 40% of the verdict. At issue is whether bills owed to Medicare, Medicare Part D and Medicaid can be included in the 40% cap under the Healthcare Services Lien Act. Also at issue is whether the 40% of the settlement is a “common fund” created for the benefit of the lienholders and whether the plaintiff’s attorney’s costs should be paid by the lienholders from their pro rata shares of the 40% of the settlement.
In this case, Edwin McKim was involved in a motor vehicle crash and sustained injuries. He was treated at Herrin Hospital. A settlement in the amount of $16,000 was reached with the at-fault driver.
McKim filed a complaint to adjudicate liens on May 23, 2014. His medical bills, resulting from the injuries sustained in the motor vehicle crash, totaled $10,172.32. Herrin Hospital held a $5,803 lien against McKim’s settlement proceeds. McKim owed Williamson County Ambulance $1,530.
McKim also identified Medicare, Medicare Part D and Medicaid as entities to which he owed money. The total amount owed to those three entities was $2,389.32. In his prayer for relief, McKim asked the trial court to limit all of the medical liens (including the Medicare and Medicaid “liens”) to no more than 40% of the $16,000 settlement or $6,400. Acknowledging that the Medicare and Medicaid liens take priority, McKim asked the court to divide the balance of the $6,400 minus $3,568.68 – pro rata between Herrin Hospital and Williamson County Ambulance. He also asked the court to apportion the costs of the lawsuit between the two Illinois Healthcare Services Lien Act lienholders. McKim’s costs were $494.93.
Herrin Hospital argued that the Medicaid and Medicare liens could not be subject to the Healthcare Services Lien Act but instead should be adjudicated pursuant to 42 U.S.C. ¶ 1395y(b)(2)(A)(ii) (hereinafter referred to as the Medicare Secondary Payer Act) and the Illinois Public Aid Code (305 ILCS 55/11-22). Herrin Hospital argued that the priority of the liens was Medicare followed by the attorney’s lien, Medicaid, Healthcare Services Lien Act, providers and finally McKim.
The trial court held a hearing and entered the order proposed by McKim on July 25, 2014. The court’s order directed full reimbursement of the Medicare, Medicare Part B and Medicaid. The remaining balance was to be shared pro rata by Herrin Hospital and Williamson County Ambulance. Medicaid, Medicare and Medicare Part D was not assessed a share of the court costs. The court directed the cost to be subtracted pro rata from the shares of Herrin Hospital and Williamson County Ambulance. Finally, the court awarded McKim and his attorney each 30% of the $16,000. Herrin Hospital appealed from that order.
Herrin Hospital and Williamson County Ambulance are healthcare providers. The total combined amount of their liens was $7,133, which represented 44.6% of the $16,000 settlement. Therefore, the liens of Herrin Hospital and Williamson County Ambulance exceed the 1/3 limitation, and thus they were only entitled to pro rata shares of 1/3 of the settlement, $5,333.33.
The appeals panel stated that the trial court’s adjudication was incorrect and must be vacated. The court pointed out that the distribution of the settlement under the Illinois Healthcare Services Lien Act can limit recovery in certain situations. Pursuant to section 10(c) of the Healthcare Services Lien Act, “[N]o individual licensed category of health care professional (such as physicians) or health care providers (such as hospitals) * * * may receive more than 1/3 of the * * * settlement * * * secured by or on behalf of the injured person on his or her claim or right of action 770 ILCS 23/10(c). In addition, based on the court’s analysis and opinion, it found that the $16,00 settlement distribution included the full amounts to Medicare and Medicare Part D that it claimed, McKim’s attorney’s fees limited to 30%, Medicaid receiving the full amount of its claimed lien and as indicated above, the Healthcare Services Lien Act lienholders received 33 1/3%. McKim received a total of $3,027.35. Accordingly, pursuant to Illinois Supreme Court Rule 366(a)(5) (eff. Feb. 1, 1994), the court modified the judgment of the Circuit Court of Franklin County, Ill., according to the detailed contained in this opinion.
McKim v. Southern Illinois Hospital Services, et al., 2016 IL App (5th) 140405 (Aug. 26, 2016).
Kreisman Law Offices has been handling catastrophic injury cases, automobile crash cases, truck accident cases, motorcycle accident cases, bicycle accident cases and pedestrian accident cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 40 years in and around Chicago, Cook County and its surrounding areas, including Morton Grove, Niles, LaGrange Park, Crestwood, Orland Park, Burr Ridge, Clarendon Hills, Hinsdale, western Springs, Countryside, Arlington Heights, Brookfield, Chicago (South Loop, Roscoe Village, Wrigleyville, wildwood, West Loop, Old Town Triangle, Pill Hill, Pilsen, Prairie District, Printer’s Row, Loyola Park, Englewood, Chinatown), Geneva, Des Plaines and Cicero, Ill.
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