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February 2012Vol. 47, No. 2Illinois State Bar AssociationTort TrendsThe newsletter of the Illinois State Bar Association’s Section on Tort LawInsideEditor’s noteBy John L. Nisivaco, Boudreau & Nisivaco, ChicagoThe first article of this edition, written byBridget Duignan, discusses the Illinois Supreme Court’s decision in O’Connell v. Turner Construction, and the court’s interpretation ofSection 414 in construction negligence cases.The second article is written by Dennis Berkbigler and provides some helpful advice for plaintiff attorneys confronted with the trend of hospi-Editor’s note . . . . . . . . . . . . . . 1tals, clinics, and other medical providers refusingto submit their bills and charges to their clients’health insurance carriers, preferring, instead, topursue liens against the clients’ recoveries underthe Health Care Services Lien Act.Thank you to all of the contributors. The articles are excellent and we hope you find the materials helpful. O’Connell v. Turner Construction, Inc. andSection 414 of the Restatement (Second) of TortsO’Connell v. TurnerConstruction, Inc. andSection 414of theRestatement (Second)of Torts . . . . . . . . . . . . . . . . . . . 1A strategy for dealingwith medical providerswho refuse tosubmit their bills tohealth insurance. . . . . . . . . . 3Upcoming CLEprograms. . . . . . . . . . . . . . . . . 6By Bridget Duignan, Latherow Law Office, ChicagoBefore its repeal in 1994, the StructuralWork Act was a significant vehicle throughwhich workers sought relief for construction-related injuries. Legislative attempts to revive the Act have been unsuccessful, the most recent in 2008. See HB 2094 ‘Construction Safety Act.’Section 414 of the Restatement (Second) of Torts,said to be the Structural Work Act’s “commonlaw negligence corollary,” survived that repealand currently serves as the criterion under whichconstruction-related injuries are analyzed. Bokodiv. Foster Wheeler Robbins, Inc., 312 Ill.App.3d 1051,1057-1058 (1st Dist. 2000). Section 414 states thatone who entrusts work to an independent contractor, but who retains the control of any part ofthe work, is subject to liability for physical harmto others for whose safety the employer owes aduty to exercise reasonable care, which is causedby his failure to exercise his control with reasonable care. Section 414 is the exception to the general rule that one who employs an independentcontractor is not liable for his acts or omissions.Rangel v. Brookhaven Constructors, Inc., 307 Ill.App.3d 835, 838 (1st Dist. 1999). The most hotlycontested issue within these claims is the degreeof retained control necessary to create a duty ofcare. The demarcation between retained controland the lack thereof is not clear-cut and the Illinois Supreme Court has not revisited this issuesince it first recognized Section 414 as a statement of Illinois law, over 45 years ago. Larson v.Commonwealth Edison Co., 33 Ill.2d 316 (Ill. 1965);Martens v. MCL Construction, Corp., 347 Ill.App.3d303, 314 (1st Dist. 2004). There has been a lack ofconsensus among the appellate districts, mostsignificantly regarding control, but also regarding direct and vicarious liability claims withinthis context. See e.g., Moiseyev v. Rot’s Buildingand Development, Inc., 369 Ill.App.3d 338, 350(3rd Dist. 2006) (“in order to establish liability.adefendant must retain control over routine andincidental aspects of the work, which includesan operative detail analysis”); Diaz v. Legat Architects, Inc., 397 Ill.App.3d 13, 39 (“controlling theContinued on page 2If you're gettingthis newsletterby postal mailand wouldprefer electronicdelivery, justsend an e-mail toAnn Boucher ataboucher@isba.org
Tort Law February 2012, Vol. 47, No. 2O’Connell v. Turner Construction, Inc. and Section 414of theRestatement (Second) of TortsContinued from page 1operative details of the subcontractors’ workis necessary for vicarious liability; direct liability stems from the failure to exercise general supervisory control”); Wilfong v. L.J. DoddConstruction, 401 Ill.App.3d 1044, 1061 (2ndDist. 2010)(“to prevail under a section 414claim.[a defendant must] have control overthe means and methods of an independentcontractor’s work”). We can probably blamethe comments of Section 414 for some of thatconfusion. Nonetheless, the lack of uniformity as it related to the degree of retained control was ironically predictable in that practitioners knew how the summary judgmentmotion would read. That is, until O’Connellv. Turner Construction, Inc., 2011 Ill.App.LEXIS531 (1st Dist. 2011).Lawrence O’Connell was injured whileworking on a new high school campus forGrayslake Community High School District127. O’Connell at 3-4. At the time of the incident he was employed by Linden Erectors,which was a subcontractor hired by Waukegan Steel. Waukegan Steel contracted directlywith the school district. The school districtalso separately contracted with Turner Construction. O’Connell at 4. Turner had designated itself ‘construction manager’ at theconstruction site. O’Connell at 7. As construction manager, Turner assisted the school district in drafting the contracts and handledthe bidding process for hiring subcontractors, which included advising the school district about which bids to accept. O’Connellat 9. Although Turner disclaimed directresponsibility over the subcontractors forjob site safety and construction means andmethods, it was contractually obligated toreview the subcontractors’ safety programsand coordinate these programs among thecontractors. O’Connell at 2.The plaintiff filed suit and his claimsagainst Turner were premised on Sections343 and 414 of the Restatement (Second) ofTorts. O’Connell at 1. With regard to the Section 414 Count, the plaintiff maintained thatTurner was liable for his injuries because it“exercised significant operational and/or supervisor control over the trade contractors,particularly with respect to safety, but alsoas to the details of construction means andmethods.” O’Connell at 4. The trial court dis-Tort TrendsPublished at least four times per year.agreed and granted Turner summary judgment. O’Connell at 4. On appeal, the plaintiffasserted that summary judgment was improper because the scope of Turner’s controlat the construction site was a material issueof fact and the determining factor for liabilityunder Section 414. O’Connell at 6. Althoughthe former may have been true, the courtstated that control alone does not trigger liability. O’Connell at 6; citing Haberer v. Villageof Sauget, 158 Ill.App.3d 313, 319 (1987). In anunprecedented analysis of Section 414, thecourt focused on whether Turner entrustedthe work to the plaintiff as, it stated, “entrustment of the work to an independent contractor by the defendant is a prerequisite for theapplication of Section 414.” O’Connell at 6-7.The court clarified that in previous cases,retained control was the determining factor in Section 414 claims because the parties’relationship had not been at issue. O’Connellat 7. Here, it appears that the contractualdynamic between the parties was the proverbial elephant in the room. Specificallythat Linden, the plaintiff’s employer, was notdirectly or indirectly hired or contractedby Turner. Linden was hired by WaukeganSteel, which contracted with the school district. Turner had a separate contract withthe school district. The school district, notTurner, signed the contract. O’Connell at 8.Notwithstanding the absence of a contractbetween Linden and Turner, the court statedthat because Turner did not select the subcontractors, particularly Linden, it could notbe said that Turner entrusted them with thework. O’Connell at 8. The court refused toconsider the plaintiff’s assertion that Turnervoluntarily assumed a duty of care outsideof Section 414 based upon its conduct on thesite, as it was not raised before the trial court.O’Connell at 8-9. As an aside, the court alsofound no premises liability under Section 343Restatement (Second) of Torts. It distinguishedbetween Turner’s control over the people oractivities on the site and a dominion overthe land. O’Connell at 11-12. Turner was notthe possessor of the construction site andthe court found that the plaintiff also failedto demonstrate that Turner controlled or intended to control the land at issue. O’Connellat 15.2Annual subscription rate for ISBAmembers: 20.To subscribe, visit www.isba.orgor call 217-525-1760OfficeIllinois Bar Center424 S. Second StreetSpringfield, IL 62701Phones: 217-525-1760 OR 800-252-8908www.isba.orgEditorJohn L. Nisivaco120 N. LaSalle St., Ste. 2850Chicago, IL 60602Associate EditorGeorge Leynaud1200 38th St., Ste. 1Peru, IL 61354Managing Editor/ProductionKatie Underwoodkunderwood@isba.orgTort Law Section CouncilMartin L. Glink, ChairKevin T. Veugeler, Vice ChairMichael R. Hartigan, SecretaryYvonne M. O’Connor, Ex-OfficioKaren A. Enright, Board LiaisonJohn R. BailenDennis L. BerkbiglerPerry J. BrowderHon. Elizabeth M.BudzinskiDavid I. CatesWiliam A. CirignaniJames Lawrence DeAnoBridget C. DuignanAlbert E. DurkinRobert D. FinkJeffrey D. FrederickMichael C. FunkeyKelley A. GandurskiKenya A. Jenkins-WrightRonald W. KalishMark L. KarnoScott D. LaneTimothy J. LondriganThomas J. LongDennis M. LynchStacey E. LynchHon. Thomas V. Lyons IIMichael McCutcheonJames J. Morici, Jr.Nicholas T. MotherwayKevin E. O’ReillyVictor J. PioliBradley N. PollockMichael A. PowellBrett J. SwansonBruno J. TassonePanos T. TopalisDaniel P. WurlPatricia A. ZimmerLynne Davis, Staff LiaisonSharon L. Eiseman, CLE Committee LiaisonDisclaimer: This newsletter is for subscribers’ personaluse only; redistribution is prohibited. Copyright IllinoisState Bar Association. Statements or expressions of opinionappearing herein are those of the authors and not necessarily those of the Association or Editors, and likewise thepublication of any advertisement is not to be construed asan endorsement of the product or service offered unless itis specifically stated in the ad that there is such approval orendorsement.Articles are prepared as an educational service to members of ISBA. They should not be relied upon as a substitutefor individual legal research.The articles in this newsletter are not intended to beused and may not be relied on for penalty avoidance.Postmaster: Please send address changes to the IllinoisState Bar Association, 424 S. 2nd St., Springfield, IL 627011779.
February 2012, Vol. 47, No. 2 Approximately two months later, theNorthern District of Illinois may have shedsome light as to how O’Connell could influence future interpretation of Section 414. Sojka v. Bovis Lend Lease, Inc., 2011 U.S. Dist. LEXIS 56952 (N.D. Ill. 2011). There, ChristopherSojka, Jr., an employee of McHugh Construction, filed suit against Bovis, the construction manager on the project, after he wasinjured while working at Trump Tower. Sojkaat 3-4. Like the defendant in O’Connell, Boviscontracted with the owner, as did McHugh.Sojka at 13. Although Bovis and McHugh didnot directly contract with each other for thework, Bovis signed the contract between theowner and McHugh, as the owner’s agent.Bovis invoked O’Connell and maintained thatthere can be no entrustment of the work byBovis to McHugh absent that contractuallink. Sojka at 13. The court disagreed and distinguished O’Connell. It found it significantthat in O’Connell, Linden was “one step removed” from Turner and the school district.Sojka at 14-15. In other words, Bovis lackedits’ own ‘Waukegan Steel.’ The court also clarified that a direct contract between Bovis andMcHugh is unnecessary to show entrustment. Sojka at 14-15. Bovis’ contract withthe owner was much broader in scope thanthat in O’Connell. For example, Bovis had significant authority to act as the owner’s agentover the selection of trade contractors andspecifically, the selection of McHugh. Sojkaat 14-15. The opposite was true in O’Connell,Tort Lawwhere Turner did not select the contractors.Although the court found that the plaintiffestablished that Bovis entrusted the work toMcHugh, summary judgment was grantedto Bovis on other grounds. Sojka at 23.It cannot be said that the decision inO’Connell completely changed how plaintiffsprosecute and defendants defend Section414 claims. There still remains the blurredline as it concerns retained control and theconfusion surrounding direct versus vicarious liability within this context. Further, I suspect that that the appellate districts will havea different view, based upon the facts beforeit, as to what constitutes entrustment of thework. We will have to wait and see how theanalysis evolves. A strategy for dealing with medical providers who refuse tosubmit their bills to health insuranceBy Dennis L. Berkbigler, EffinghamAttorneys who represent plaintiffs inpersonal injury cases are all too familiar with the trend of hospitals, clinics, and other medical providers refusing tosubmit their bills and charges to their clients’health insurance carriers, preferring, instead,to pursue liens against the clients’ recoveries under the Health Care Services Lien Act.In cases where they believe a tort recoveryby the patient is likely, the medical providersare trying to avoid the often substantial discounts that are typically applied to their billswhen they are submitted to health insurancecarriers. But, there are a number of situationswhere the personal injury client may benefitmore by having his or her medical expensespaid by health insurance rather than out ofthe tort recovery.When faced with this situation, the following letter, or some variation of it, may be usedin an attempt to induce the recalcitrant provider to comply with the demand to submitthe client’s bills to his or her health insurance.While the legal theories expressed in the letter may have not been court tested, nearly allof the medical providers to whom it has beensent have complied with the demand withina short time.Sample Letterlargely defrayed by his insurance.“ABC Hospital”In spite of the foregoing, ABC Hospital has thus far steadfastly refused tosubmit my client’s bills related to thevehicle collision to XYZ for payment,instead taking the position that theliability insurance policy covering thedriver of the vehicle that collided withMr. Doe is “primary” coverage, and thatMr. Doe’s health or medical insurancecoverage is secondary. You have obviously taken this position to maximizeyour income by attempting to avoidthe discounts (voluntarily negotiatedand agreed to by your managementin order to become a member of theXYZ Insurance provider network) thatwould be applied to your bills andcharges if they are submitted to XYZas one of its network providers. Apparently in the hope of collecting the entire amount of your charges at your full“rack rates”, ABC Hospital has insteadclaimed a lien upon my client’s claimfor damages against the at fault driverthat collided with him and his liabilityinsurance carrier by serving a lien notice pursuant to the Illinois Health CareGentlemen:This firm represents John Doe inconnection with his personal injuryclaims arising from a vehicle collisionon [date], in which he sustained serious injuries. He received treatmentand was hospitalized at your facility forthose injuries as a result of which youare claiming an amount due from Mr.Doe of 73,083.74.At the time of the collision and Mr.Doe’s treatment at your facility, he wascovered by a health or medical insurance policy issued by XYZ Insurance.Mr. Doe’s insurance coverage information was provided to you at the timeof his admission and treatment. Yourfacility is, and at all relevant times hasbeen, a preferred provider in the XYZnetwork. Mr. Doe had obtained thishealth insurance coverage precisely sothat in the event he required medicalcare and treatment, the cost of suchcare and treatment would be paid or3
Tort Law February 2012, Vol. 47, No. 24
February 2012, Vol. 47, No. 2 Services Lien Act.In prior phone calls to you, I demanded that you submit my client’scharges to his health insurance carrierfor payment. You have thus far refusedto do so, citing your “policy” to regardthe liability insurance as “primary” coverage. Some of the reasons you maywant to change your position andcomply with this demand include thefollowing.1. THE MAXIMUM AMOUNT YOUMAY COLLECT BASED ON YOURLIEN CLAIM IS FAR LESS THANWHAT YOU WILL COLLECT BYSUBMITTING YOUR BILLS TO MYCLIENT’S HEALTH INSURANCECARRIER. The per person liability limit on the liability policycovering my client’s injury claimis 100,000.00. In addition toyour lien claim of 73,083.74,DNR Hospital has asserted a lienclaim for 26,924.15, and ABCClinic has asserted a lien claimfor 9,886.60, making the totalliens asserted against my client’srecovery thus far 109,894.49.Under the Illinois lien statute, thetotal of all liens may not exceed 40%of the settlement, and no individualcategory of health care provider mayreceive more than one-third of the total settlement (770 ILCS 23/10). Thus,the two hospitals claiming liens cannot receive more than a combinedtotal of 33,333.33 from the proposedsettlement in satisfaction of their liens.According to my calculations, themaximum amount ABC Hospital canreceive on its lien claim is therefore 24,359.33.I am confident that you will recoupsubstantially more than that amountby submitting your charges to XYZ Insurance as we have demanded, eventhough the amounts paid will presumably be discounted in accord with youragreement or contract with them.2. MY CLIENT IS A THIRD-PARTYBENEFICIARY OF THE AGREEMENTS BETWEEN ABC HOSPITAL AND XYZ INSURANCEPROVIDING FOR DISCOUNTEDPAYMENTS IN SATISFACTION OFTHE PATIENT’S ACCOUNTS. Thelaw is clear that a third-partybeneficiary of such a contractis entitled to enforce the contract and sue for damages forits breach. By refusing to submit his medical bills to my client’s health insurance carrier,you are depriving him of thebenefits of the discounts andother provisions of the negotiated agreement between thehospital and XYZ whereby ABCHospital became a member ofthe provider network. My client’s damages for this breachare, at a minimum, the amountsyou would have been paid if thecharges had been submittedto health insurance as we havedemanded, and the satisfactionof my client’s remaining liabilityfor any additional charges otherthan deductibles and co-paysthat may apply. Additional damages may be applicable.My client is prepared to initiatelegal action for breach of contractshould you not promptly comply withour demand.3. THE INTENTIONAL REFUSAL TOSUBMIT MY CLIENT’S CHARGESTO HIS HEALTH INSURANCE FORPAYMENT CONSTITUTES ANACTIONABLE TORTIOUS INTERFERENCE WITH HIS CONTRACTWITH HIS HEALTH INSURANCEPROVIDER. As mentioned earlier, Mr. Doe had the foresightto purchase health insurancecoverage to protect him in theevent he was injured or becameill with the expectation that covered medical expenses wouldbe paid by that insurance. Hehas paid premiums to obtainthat insurance coverage.By willfully and intentionally refusing to submit my client’s medical billsarising from this occurrence to hishealth insurance carrier, ABC Hospitalis depriving him of the benefits of hiscontract with his health insurance carrier. Compensatory damages recoverable for this tort include the amountsthat the hospital would have been5Tort Lawpaid, plus the fact that my client’s liability for the medical expenses would besatisfied by the discounted payments,other than deductibles or co-pays thatmight apply. Consequential damages,including my client’s attorney fees andexpenses, and punitive or exemplarydamages are also recoverable in a tortious interference with contract causeof action.Again, my client and I are fullyprepared to initiate this litigation ifABC Hospital persists in its refusal topromptly comply with our demand.Sincerely,***If there is or may be questionable liability,even with adequate liability insurance coverage, the substantial risks and delays associated with continuing to pursue their lienrights instead of being paid by the client’shealth insurance need to be brought to theprovider’s attention as well. So far at least,just the threat of the litigation set forth in theletter has provided sufficient leverage to induce the health provider involved to complywith the demand. Perhaps soon, some courtwill rule on the theories outlined in the foregoing letter. Now Every Article Isthe Start of a DiscussionIf you’re an ISBA sectionmember, you can comment onarticles in the online versionof this newsletterVisitto access the archives.
Tort Law February 2012, Vol. 47, No. 2Upcoming CLE programsTo register, go to www.isba.org/cle or call the ISBA registrar at 800-252-8908 or 217-525-1760.MarchThursday, 3/1/12- Chicago, ISBA Chicago Regional Office—eTechnology in theCourthouse: Present and Future. Presentedby the ISBA Bench and Bar Section. 1:30-4:45.Thursday, 3/1/12- Live Webcast—eTechnology in the Courthouse: Present andFuture. Presented by the ISBA Bench and BarSection. 1:30-4:45.Friday, 3/2/12- Chicago, ISBA ChicagoRegional Office—Legal Trends for Non-Techies: Topics, Trends, and Tips to Help YourPractice. Presented by the ISBA Committeeon Legal Technology. 9-4:30.Monday, 3/5/12- Chicago- ISBA Chicago Regional Office—Foundations, Evidenceand Objections. Presented by the ISBA TortLaw Section. 9-12:30.Monday, 3/5/12- Webcast—Clients, Ethics and Negotiations. Presented by the Alternative Dispute Resolution Section. 1:30-3:00.Monday, 3/5/12- Webinar—Introduction to Legal Research on FastCase. Presented by the Illinois State Bar Association. 2:303:30.Tuesday, 3/6/12- Teleseminar—Defending Against IRS Audits & Collections, Part1. Presented by the Illinois State Bar Association. 12-1.Wednesday, 3/7/12- Webinar—Advanced Tips for Enhanced Legal Research onFastCase. Presented by the Illinois State BarAssociation. 2:30-3:30.Wednesday, 3/7/12- Teleseminar—Defending Against IRS Audits & Collections, Part2. Presented by the Illinois State Bar Association. 12-1.Wednesday, 3/7/12- BloomingtonMcLean County Museum of History—2012Ethics Extravaganza for Government Lawyers. Presented by the ISBA Committee onGovernment Lawyers. 12-4.Club—General Practice Update 2012: Quincy Regional Event. Presented by the ISBABench and Bar Section; co-sponsored by theAdams County Bar Association and the ISBAGeneral Practice Section. 8-5.Tuesday, 3/13/12- Teleseminar—Business Planning With Series LLCs. Presented bythe Illinois State Bar Association. 12-1.Wednesday, 3/14/12- Chicago, ISBAChicago Regional Office—Medical CO-Ops:A Plan for Physicians to Contract Directlywith Patients and Employers to Become theirHealth Insurer. Presented by the ISBA HealthCare Section. 11-12.Wednesday, 3/14/12- LIVE Webcast—Medical CO-Ops: A Plan for Physicians toContract Directly with Patients and Employers to Become their Health Insurer. Presentedby the ISBA Health Care Section. 11-12.Wednesday, 3/14/12- LIVE Webcast—Protecting Personal Information: What Businesses and Consumers Should Know. Presented by the Standing Committee on Racialand Ethnic Minorities and the Law and theISBA Government Lawyers Section. 1-3.Thursday, 3/15/12- Chicago- ISBA Chicago Regional Office—Litigating, Defending and Preventing Employment Discrimination Cases: Practice Updates for the IllinoisHuman Rights Act. Presented by the ISBAHuman Rights Section. 9-4Friday, 3/16/12- Bloomington, DoubleTree—A Roadmap to the New Illinois Religious Freedoms and Civil Union Act. Presented by the Standing Committee on SexualOrientation and Gender Identity; co-sponsored by the ISBA Family Law Section. 1:55-5.Monday, 3/19/12- LIVE Studio Webcast—Judgments and Enforcement. Presented by the Commercial Banking, Collections and Bankruptcy Section. 11-1.Tuesday, 3/20/12- Teleseminar—Drafting Employment Agreements. Presented bythe Illinois State Bar Association. 12-1.Friday, 3/9/12- Quincy, Quincy Country6Thursday, 3/22/12- Teleseminar—Forming a New Non-Profit Organization. Presented by the Illinois State Bar Association.12-1.Thursday, 3/22/12- Peoria, Four PointsSheraton—Family Law Spring Training2012- From Rookie to Major League. Presented by the ISBA Family Law Section. 8-5.Monday, 3/26/12- Webinar—Fast CaseBoolean (Keyword) Search for Lawyers. Presented by the Illinois State Bar AssociationComplimentary to ISBA Members. 2:30-3:30.Tuesday, 3/27/12-Saturday, 3/31/12Chicago, ISBA Chicago Regional Office—40HourMediation/ArbitrationTraining. Presented by the Illinois State BarAssociation. 8-5 daily.Tuesday, 3/27/12- Teleseminar—SocialMedia Policies and Liability in the Workplace.Presented by the Illinois State Bar Association. 12-1.Thursday, 3/29/12- Teleseminar—Lawyer Marketing: An Ethics Guide. Presented bythe Illinois State Bar Association. 12-1.AprilTuesday, 4/3/12- Teleseminar—Portability of the Estate and Gift Tax ExemptionsPlanning in 2012. Presented by the IllinoisState Bar Association. 12-1.Wednesday, 4/4/12- Webinar—Advanced Tips for Enhanced Legal Research onFastCase. Presented by the Illinois State BarAssociation. 9-10am.Friday, 4/6/12- STUDIO TAPING—Economic Development Tools: What are the Options for Local Government. Presented by theLocal Government Law Section. 9:30-11:30.Monday, 4/9/12- Webinar—Introduction to Legal Research on FastCase. Presented by the Illinois State Bar Association. 9-10.Tuesday, 4/10/12- Teleseminar—Employee Discipline and Discharge: Policies andProcedures to Limit Liability. Presented bythe Illinois State Bar Association. 12-1.
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Springfield, IL 62701 Phones: 217-525-1760 OR 800-252-8908 www.isba.org editor John L. Nisivaco 120 N. LaSalle St., Ste. 2850 Chicago, IL 60602 associate editor George Leynaud 1200 38th St., Ste. 1 Peru, IL 61354 Managing editor/ Production Katie Underwood kunderwood@isba.org Tort law section council Martin L. Glink, Chair Kevin T. Veugeler .
