Illinois Appellate Court Broadens Protection of Hospital Liens to Allow Recovery Against Damage Awards Traditionally Deemed Off-Limits

Lien protection and preservation has been at the forefront of the ongoing evolution of personal injury law in Illinois for the last decade.  The recent First District Appellate Court decision in Manago v. The County of Cook, 2013 IL App. (1st) 121365, offers insight into the application of the statutory language found in the Health Care Services Lien Act, 770 ILCS 23/10 (West 2004) (“the Act”), and answers the question of whether a lienholder can enforce its lien against a judgment that does not contain an award for medical specials.  In the end, the Manago court’s interpretation of the Act is beneficial for healthcare providers, strengthening the likelihood that healthcare providers can recover their liens against patient-plaintiffs.

On August 5, 2005, Akeem Manango, then a minor, was injured after climbing through the ceiling of an elevator located in a Chicago Housing Authority (“CHA”) complex.  Following his injury, he received treatment at the John H. Stroger, Jr., Hospital of Cook County (“the Hospital”).  The plaintiff, through his mother, filed a timely Complaint and subsequent Amended Complaint alleging that he was injured as a result of the negligent inspection and maintenance of the elevator.  Neither complaint asserted a theory of recovery under the Family Medical Expense Act.  After suit was filed, Cook County served its notice of lien on the plaintiff’s attorney by certified mail.  Through the notice, the County asserted a lien for the Hospital’s medical services against any recovery by the plaintiff in his lawsuit against the CHA.

After a bench trial, the plaintiff requested an award of $79,572.63 to the minor plaintiff’s mother for medical bills stipulated to by the parties, $350,000 to the minor plaintiff for scarring, $300,000 for past pain and suffering, and $54,000 for future loss of a normal life.  The court entered judgment in favor of the plaintiffs in the amount of $200,000 after the application of contributory negligence.  Despite the stipulation of the minor plaintiff’s related medical bills, the court held that the plaintiff had failed to produce any evidence that the minor plaintiff’s mother was responsible for their payment, and therefore rendered a verdict absent of any award for medical bills.  The plaintiff filed a motion to reconsider this denial, which was rejected by the trial court.

Following the trial, the trial court retained jurisdiction for adjudication of liens. The plaintiff subsequently brought a petition to strike and extinguish the Hospital’s lien.  The plaintiff argued that absent an award for medical damages, the Hospital could not recover its lien against the awards for scarring, pain and suffering and loss of a normal life.  The trial court agreed, and granted the plaintiff’s motion to extinguish the lien.  The County subsequently appealed this ruling.

In reversing the trial court’s ruling, the appellate court cited to its decision in Anderson v. Department of Mental Health & Developmental Disabilities, which interpreted a prior version of the Health Care Services Lien Act to allow attachment of liens to “any verdict or judgment obtained in any action by the injured person ‘based on the negligent or wrongful act.’”  305 Ill. App. 3d 262, 266 (1st Dist. 1999).  On the basis of the statute’s language, the Anderson court concluded that in order for a lien to attach to an award of damages, the underlying action and subsequent award had to be causally tied to the injury for which the medical treatment (and resulting lien) was provided.

In 2003, the Act was amended by the legislature, presumably in response to the Anderson decision.  The amendment removed the language requiring a causal connection between the lien and the negligent or wrongful act.  Instead, the amendment provided that after serving a lien notice, a healthcare provider’s lien would “attach to any verdict, judgment, award, settlement, or compromise secured by or on behalf of the injured person.”  770 ILCS 23/20 (West 2004).

The Manago court concluded that the Anderson decision clearly indicated that a change in the language of the Act would alter the circumstances under which a lien interest would attach to an award or settlement.  Thus, based on the amended language of the Act and the fact it no longer required a causal connection between the injury, the care, and the award, the Manago court held that a hospital’s lien  could “attach to any verdict or judgment recovered by the injured party, regardless of whether the recovery included an award for medical expenses.” 2013 IL App. (1st) 121365 at ¶ 29.

The holding in favor of the Hospital was not without dissent.  The dissent in Manago argues that enforcing a hospital’s lien against a judgment that does not apportion damages for medical specials amounts to an assignment of tort (i.e., an assignment of one’s pain and suffering, loss of a normal life, etc.), which is against public policy.  Second, while parents are primarily responsible for their minor’s medical bills under Illinois law, the holding allows hospitals to skirt this rule and seek recovery directly against the minor.  Finally, the dissent voices concern that the Hospital’s lien was validated without proof that its charges were fair and reasonable, as required by law and as typical in a subrogation action.

The holding in Manago gives hospitals broadened protection in asserting liens arising under the Health Care Services Lien Act.  Enforcing a lien under the Act permits recovery against judgments that have traditionally been off-limits, including judgments without damages apportioned for medical specials, and judgments in favor of minors.  The court’s holding in Manago also deters plaintiffs from intentionally avoiding an award for medical expenses in an effort to thwart the assertion of a medical lien.

Ryan Armour

Ryan Armour

Ryan Armour is a partner is the firm’s Rockford office where he focuses his practice primarily on medical malpractice defense litigation. Mr. Armour also has a substantial practice in general insurance defense and related insurance coverage issues.

Stephen Gorski

Stephen Gorski

Stephen Gorski is an associate in the firm’s Rockford office where he focuses his practice on medical malpractice and civil rights defense litigation. He also practices general insurance defense and related coverage issues, as well as the defense of premises liability matters.