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TRAVELERS INDEM. CO. OF ILLINOIS v. MOORE
642 F.Supp. 1119 (1986)
The TRAVELERS INDEMNITY COMPANY OF ILLINOIS, Plaintiff,
v.
Roy MOORE, Individually and as Administrator of the Estate of Gregory Moore; Shirley Moore; Eric Moore; Allen Tomlinson; Nancy Tomlinson; Critic Mills, Inc.; Washington Hospital Center; Burlington Northern Railroad; the Royal Insurance Company of America; Aetna Casualty and Surety of Illinois; Illinois Department of Public Aid; Employers of Wausau Insurance; First State Insurance, Defendants.
No. 84-3376.
United States District Court, C.D. Illinois, Springfield Division.
September 5, 1986.
Frederick P. Velde, Heyl, Royster, Voelker & Allen, Springfield, Ill., for plaintiff.
William A. Allison, Dane, Allison, Saint & Ehlers, Bloomington, Ill., Steven D. Keefe, Washington, D.C., David S. Fleming, Karon, Morrison & Savikas, Chicago, Ill., Robert E. Gillespie, Michael Logan, Calandrino, Logan, Robison & Long, Brent Cain, Giffin, Winning, Lindner, Newkirk, Cohen & Bodewes, Mary Lee Leahy, Springfield, Ill., Barry N. Gutterman, Naperville, Ill., for defendants.
OPINION AND ORDERMILLS, District Judge: We apply here the concept of "depecage". On April 1, 1982, an explosion occurred at a welding shop in Cass County, Illinois, resulting in serious injury to three persons named as Defendants in this lawsuit. Sometime after the explosion, the insurance carrier for the shop, the Travelers Indemnity Company of Illinois (Travelers), filed this statutory interpleader action pursuant to 28 U.S.C. § 1335 against Roy
Moore (administrator of the estate of Gregory Moore, who was killed in the explosion), the Washington Hospital Center of Washington, D.C. (which treated Gregory Moore), and a variety of other parties. The action seeks a declaratory judgment as to how the proceeds of the insurance policy covering the shop, currently deposited in escrow by Travelers, should be distributed. Presently before the Court are cross motions for summary judgment on Counts I and II of Washington Hospital's cross-claim against Moore, which seeks a declaration that as a result of services it provided to Gregory Moore, the hospital has a valid and enforceable lien against (1) the estate of Gregory Moore, and (2) the proceeds of any wrongful death claim Moore may have against any negligent party. Also before the Court are motions for summary judgment filed by other parties asserting claims to the proceeds of the insurance policy.1 These parties move for summary judgment on their cross-claims against Washington Hospital for declaratory relief to the effect that the hospital has no lien or claim to those proceeds. Summary Judgment StandardSummary judgment is proper only when "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R. Civ.P. 56(c). In determining whether an issue of material fact exists, the Court must construe the facts alleged in the light most favorable to the party opposing the motion for summary judgment. Adickes v. S.H. Kress & Co.,398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Stumph v. Thomas & Skinner, Inc.,770 F.2d 93, 97 (7th Cir.1985). Cross motions for summary judgment require no less careful scrutiny of the factual allegations. LacCourte Oreilles Band of Lake Superior Chippewa Indians v. Voigt,700 F.2d 341, 349 (7th Cir.1983). In determining whether such undisputed facts entitle one of the parties to judgment in their favor, the Court's inquiry "unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the [moving party] is entitled to a verdict—`whether there is [evidence] upon which a jury can properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed.'" Anderson v. Liberty Lobby, Inc., ___ U.S. ___, ___, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (quoting Improvement Co. v. Munson, 14 Wall. 442, 448, 81 U.S. 442, 20 L.Ed. 867 (1872) (emphasis in original)).
1. The following is a summary of all claims, liens, and demands known to have been asserted against the insured welding shop and its insurer, Travelers. Roy Moore, individually and as administrator of the estate of Gregory Moore, Shirley Moore and Eric Moore seek damages resulting from the death of Gregory Moore. Allen Tomlinson seeks damages for personal injury as a result of the explosion. Nancy Tomlinson seeks damages for loss of consortium as a result of Allen Tomlinson's injuries. Critic Mills seeks damages to its property in excess of $1.9 million. Washington Hospital has asserted a hospital lien under the laws and statutes of the District of Columbia against the insured's policy of insurance in the amount of $237,081.60. The Burlington Northern Railroad has asserted a property damage claim against the insured for $7,648.04. Royal Insurance Company of America is asserting a subrogation claim for $99,250.34, the amount paid by Royal Insurance to Critic Mills pursuant to a policy of insurance with Critic Mills. First State Insurance Company is asserting a subrogation claim in excess of $697,000.00, the amount paid by First State to Critic Mills pursuant to a policy of insurance with Critic Mills. Aetna Casualty and Insurance Company of Illinois is also asserting a subrogation claim based on a policy of insurance with Critic Mills. 2. Count II of the hospital's cross-claim against the Moores is based upon District of Columbia Code, § 38-301 et seq. (Hospital Lien Statute). That statute provides, in relevant part:
Section 38-301. Hospital's lien for services on recovery in accident cases. Every association, corporation, or other institution, in any agency of the United States or the District of Columbia, maintaining a hospital in the District of Columbia, which shall furnish medical or other service to any patient injured by reason of an accident causing injuries, ... shall, if such injured party shall assert or maintain a claim against another for damages on account of such injuries, have a lien upon that part going or belonging to such patient, of any recovery or sum had or collected or to be collected by such patient, or by his heirs or personal representatives in the case of his death, whether by judgment or by settlement or compromise to the amount of the reasonable and necessary charges of such hospital for the treatment of such patient in such hospital ... Section 38-302. Notice. No such lien shall be effective, however, unless a written notice containing the name and address of the injured person, and the name of the person or persons, firm or firms, corporation or corporations alleged to be liable to the injured party for the injuries received, shall be filed in the office of the Recorder of Deeds of the District of Columbia in a docket provided for such liens, prior to the payment of any monies to such injured person, his attorneys, or legal representatives as compensation for such injuries; nor unless the hospital shall also mail, postage prepaid, a copy of such notice with a statement of the date of filing thereof to the person or persons, firm or firms, corporation or corporations alleged to be liable to the injured party for the injuries sustained prior to the payment of any monies to such injured person, his attorneys, or legal representatives as compensation for such injuries. Such hospital shall mail a copy of such notice to any insurance carrier which has insured such person, firm, or corporation against such liability, where the name of such insurance carrier is ascertained. Since it is undisputed that the hospital filed, on June 17, 1982, a lien containing the information required by the statutes noted above and served copies of this lien on all interested parties prior to the payment of any monies to Mr. Moore's estate, Washington Hospital perfected its lien in accordance with District of Columbia law. 3. Aetna Casualty and Insurance Company of Illinois (Aetna) is another insurance company whose policy covers Critic Mills. The issues as to whether or not Washington Hospital is entitled to a lien for services rendered by it against either the Aetna policy of insurance or the Travelers policy of insurance are identical. Aetna, however, has not as yet paid out any funds under its policy. 4. Although a claim filed with a representative and not with the Court could be disallowed by the representative pursuant to Ill.Rev.Stat., ch. 110 ½, § 18-11(b), and could then be barred under § 18-12 in the same manner as a claim not timely filed, the claim is not so barred unless the notice of disallowance is mailed to the claimant and the claimant's attorney. The notice must inform the claimant that the claim must be presented to the Court within 60 days after the claimant receives notice of disallowance from the representative. Ill.Rev.Stat., ch. 110 ½, § 18-11(b) (1983 and Supp. 1984-85). No such notice was ever received by Washington Hospital or its attorneys. 5. The Moores, in response to Court interrogatories, also argue that Washington Hospital should be collaterally estopped from asserting its claim against the estate. In support of their argument, the Moores recite that the state court in Cass County, Illinois, ruling on a petition of Roy Moore filed in the probate proceedings pending there, entered an order dated May 29, 1984, to the effect that Washington Hospital has no lien on the proceeds of settlement as described in that order. That order includes, in relevant part, the following language:
THIS CAUSE comes on to be heard on the Petition filed by Roy Moore, Administrator of the Estate of Gregory S. Moore pursuant to paragraph 101 of Chapter 82 Illinois Revised Statutes 1983. This Court directed that Notice of said hearing be given by the Clerk of this Court and the proof of mailing of such notice is on file in this cause. * * * WASHINGTON HOSPITAL CENTER fails to appear. The Court further finds that Defendants, CRITIC MILLS, INC. and ROBERT EDWARDS, d/b/a EDWARDS WELDING, have offered the Petitioner $225,000.00 in settlement of this cause, and that Petitioner has accepted the same, subject to the determination by this Court of whether or not the WASHINGTON HOSPITAL CENTER is entitled to a lien on the proceeds of settlement. The Court having considered said Petition ... finds that it has jurisdiction of the parties hereto and the subject matter of this Petition. The Court further finds that said Petition should be allowed and that the WASHINGTON HOSPITAL CENTER should be adjudged to have no lien on the proceeds of settlement proposed by the parties thereto ... Thus, the Moores contend, Washington Hospital should not now be permitted to relitigate the issue previously decided by the state court. Under Ill.Rev.Stat., ch. 82, ¶ 97, et seq., however, a petition pursuant to ¶ 101 on its face only grants a state court the authority to adjudicate liens perfected pursuant to the Illinois Hospital Lien Statute and no others. Thus, apparently the only issue adjudicated pursuant to the Moores' petition was whether Washington Hospital held a valid enforceable lien under the Illinois Hospital Lien Act, Ill.Rev.Stat., ch. 82, ¶ 97, et seq. (1983), not whether it has a valid lien under the laws of the District of Columbia. Were the issues identical, res judicata or collateral estoppel might arguably apply. See Jones v. City of Alton,757 F.2d 878 (7th Cir.1985). Further, application of the doctrines of claim or issue preclusion require a judgment on the merits, Housing Authority v. YMCA,101 Ill.2d 246, 251-52, 78 Ill.Dec. 125, 461 N.E.2d 959 (1984), which apparently was not rendered in the prior proceeding. Since the Moores have offered no case law or argument to the contrary and since Washington Hospital does not argue that it perfected a lien pursuant to the Illinois Hospital Lien Act, this Court cannot agree that Washington Hospital should be collaterally estopped from asserting its claim for medical services or that res judicata is applicable. The parties have also reserved the issue of the valuation of the medical services rendered under the implied contract between Moore and the hospital. Consequently, this Court does not reach the issue of whether Washington Hospital is entitled to judgment against the estate for the full amount claimed. 6. Illinois would not enforce any lien against the proceeds of a wrongful death claim because the Illinois Wrongful Death Act has been construed by the Illinois Supreme Court to provide only a remedy for the pecuniary loss of the decedent. It does not afford a remedy for other losses such as pain and suffering or medical and burial expenses. Graul v. Adrian,32 Ill.2d 345, 205 N.E.2d 444 (1965). Ill.Rev.Stat., ch. 70, ¶ 1, provides as follows:
§ 1. Action for damages Whenever the death of a person shall be caused by wrongful act, neglect or default, and the act, neglect or default is such as would, if death had not ensued, have entitled the party injured to maintain an action and recover damages in respect thereof, then and in every such case the person who or company or corporation which would have been liable if death had not ensued, shall be liable to an action for damages, notwithstanding the death of the person injured, and although the death shall have been caused under such circumstances as amount in law to felony. Additionally, the Illinois Wrongful Death Act provides that "the amount recovered in every [wrongful death] action shall be for the exclusive benefit of the surviving spouse and next of kin" of the deceased person. 70 Ill.Rev.Stat. at ¶ 2. Although the Illinois Supreme Court has not addressed the issue of whether the "exclusive benefit" clause of ¶ 2 precluded the attachment and enforcement of a foreign hospital lien against the proceeds of a wrongful death action, the Appellate Court of Illinois in Schmidt v. Country Mutual Insurance Co.,79 Ill.App.3d 456, 34 Ill.Dec. 766, 398 N.E.2d 589 (1979), held that the "exclusive benefit" clause prevented an insurer from exercising subrogation rights against a wrongful death recovery. In Schmidt, the insurer had paid $6,000 on an automobile policy to the insured's widow following his death in an automobile accident. The widow then sued the other motorist for the wrongful death of her husband and recovered $100,000. The insurer sought reimbursement from the widow through subrogation for the $6,000 it had paid under the accidental death benefit and medical payment coverage of the automobile policy. In denying subrogation on the ground that the intent of the Wrongful Death Act was to make the proceeds of a wrongful death recovery exclusively for the benefit of the surviving spouse and next of kin, the Court concluded that a subrogation claim by an insurance company against the proceeds of a wrongful death action was against public policy. See also National Bank of Bloomington v. Podgorski,57 Ill.App.3d 265, 14 Ill.Dec. 951, 373 N.E.2d 82 (1978). Although the present case involves a hospital lien rather than a subrogation claim, the Court is confident that Illinois would not treat the two as distinguishable in this context. This conclusion is supported by the fact that in no event may medical expenses be awarded in a wrongful death action and that, as a general principle, creditors cannot reach the proceeds of a wrongful death action. Greenock v. Merkel,71 Ill.App.3d 958, 28 Ill.Dec. 96, 390 N.E.2d 78, 79 (1979); In re Shield's Estate, 320 Ill.App. 522, 51 N.E.2d 816 (1943). Under some circumstances, e.g., where the decedent leaves no widow or next of kin, a hospital lien may, in part, be satisfied out of the proceeds of a wrongful death recovery. See Ill.Rev.Stat., ch. 70, ¶ 2. These circumstances are not applicable in this case. 7. This is possible, even though § 16-2701 provides that last illness medical expenses shall be included in the judgment, in the event of failure of proof, oversight, etc. 8. The Moores' attempt to avoid the foregoing conclusion by arguing that, even if choice of law principles militate for the application of District of Columbia law, the District of Columbia Hospital Lien Statute was never intended to be applied beyond the territorial boundaries of the District of Columbia. The case authorities cited by the Moores to support that proposition are inapposite, and cannot be relied upon to defeat the enforcement of the hospital's lien. In both Butler v. Wittland,18 Ill.App.2d 578, 153 N.E.2d 106 (1958), and Dur-ite Co. v. Industrial Commission, 394 Ill. 338, 68 N.E.2d 717 (1946), the parties sought relief pursuant to Illinois statutes on causes of actions arising outside Illinois, and the cases merely held that the actions could not be brought under the Illinois statute. In contrast, Washington Hospital seeks relief pursuant to a District of Columbia statute for services provided in the District of Columbia. Thus, those cases fail to shed light on the question of whether the forum court in an interpleader action should give extraterritorial effect to another state's lien in that action. 9. Throughout this litigation, the Moores have contended that the only right they have to recover money deposited in this interpleader action comes from their cause of action for wrongful death of the decedent. However, in response to this Court's interrogatories filed June 25, 1986, First State, an insurance carrier for Critic Mills, has indicated that the Moores have brought an action against Critic Mills for personal injuries and medical expenses in addition to their cause of action for wrongful death. These claims allegedly are still pending in state court actions, which have been stayed pending determination of this interpleader action. Whether or not this fact is true is determinative of Washington Hospital's right to recover. Since there is apparent dispute over this factual matter, summary judgment against Washington Hospital on Count II at this time would be premature.
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