Country Mutual Insurance Co. v. State Farm Mutual Automobile Insurance Co.

Case Date: 05/16/2003
Court: 1st District Appellate
Docket No: 1-01-3139 Rel

FIFTH DIVISION
May 16, 2003





1-01-3139
   
   
COUNTRY MUTUAL INSURANCE COMPANY,

                           Plaintiff-Appellee,

                                   v.

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

                           Defendant-Appellant.

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Appeal from the
Circuit Court of
Cook County.


Honorable
John K. Madden,
Judge Presiding.



JUSTICE QUINN delivered the opinion of the court:

On September 9, 1997, Betty Raap sustained injuriesstemming from an automobile accident involving Robert Zeni. Atthe time of the accident, Raap was insured by plaintiff CountryMutual Insurance Company (Country Mutual) and Zeni was insured bydefendant State Farm Mutual Automobile Insurance Company (StateFarm). Following arbitration with State Farm, Country Mutual wasawarded $4,943.50. Pursuant to section 11 of the UniformArbitration Act (710 ILCS 5/11 (West 2000)), Country Mutual fileda petition with the circuit court to confirm the arbitrationaward. State Farm subsequently filed a motion for "leave to filecounterclaim and third party complaint for interpleader." Thetrial court denied State Farm's motion to file an interpleaderand ordered it to pay Country Mutual $4,943.50 plus costs andinterest. In a case of first impression, State Farm contends onappeal that the trial court erred in denying its motion to filean interpleader because pursuant to the Attorneys Lien Act (770ILCS 5/1 (West 2000)), the Hospital Lien Act (770 ILCS 35/1 etseq. (West 2000)), and the Physicians Lien Act (770 ILCS 80/1 etseq. (West 2000)) (collectively the Lien Acts), the liens of theparties covered by the Lien Acts attach to the arbitration awardit was ordered to pay Country Mutual. For the reasons set forthbelow, we affirm the judgment of the trial court.

BACKGROUND

In July 2000, Country Mutual filed its petition forconfirmation of the arbitration award in the municipal divisionof the circuit court of Cook County. According to the petition,following the automobile accident between Raap and Zeni, Raap wastreated for her injuries and Country Mutual paid the amounts owedfor that treatment. Country Mutual stated that pursuant to an"Inter-Company Arbitration Agreement," it and State Farm hadagreed to binding arbitration to resolve subrogation disputesrelating to payments for medical care.

Under the rules and regulations governing the arbitration,the parties agreed:

"The Medical Payment Subrogation Arbitration Agreementis applicable only to controversies involving insurancecompanies. The interests of parties other thaninsurance carriers may not be arbitrated under theAgreement. The fact that such parties may be insuredsof signatory companies does not alter thisprohibition."

In its petition, Country Mutual asserted that State Farm hadfailed to comply with the rules and regulations governing thearbitration by paying judgment within 30 days of July 6, 1999,the date of the arbitration award. Country Mutual soughtenforcement of the award against State Farm in addition to costs,interest and attorney fees.

In its answer, State Farm explained that it had tendered acheck to Country Mutual on August 19, 1999, for the amountawarded, which was payable to "COUNTRY COMPANIES [sic] A/S/OBETTY RAPP [sic] & CENTRA/DR. ARTHUR LA MARRE & CENTRAL DU PAGEHOSPITAL & RICHARD E[.] STECK, P.C., ATTORNEY & COUNSELLOR [sic]AT LAW ON BEHALF OF BETTY RAPP [sic]." Country Mutual refusedthe check. State Farm asserted that under the Lien Acts, it waslegally obligated to include the three parties named in theAugust 1999 check in addition to Raap because each of them hadserved liens on State Farm prior to the arbitration proceeding.

In addition to filing its answer, State Farm filed a "motionto transfer cause to chancery division and for leave to filecounterclaim and third party complaint for interpleader." OverCountry Mutual's objection, the trial court transferred the caseto the municipal division. As for the counterclaim and third-party petition for interpleader, State Farm sought to interpleadDr. Arthur La Marre, Central DuPage Hospital and attorney RichardSteck, all of whom had previously filed liens with State Farm. The trial court denied State Farm's motion and granted a separatemotion filed by Country Mutual for judgment on the pleadings. State Farm was ordered to pay Country Mutual $4,943.50 plus costsand interest. State Farm's motion for reconsideration wasdenied, and it now appeals to this court.

ANALYSIS

On appeal, State Farm contends that the trial court erred indenying its motion to file a counterclaim and third-partycomplaint for interpleader against the lienholders. Directingthis court to provisions of the Lien Acts, State Farm argues thatthe liens filed against it prior to the arbitration attach toCountry Mutual's award.

Section 1 of the Attorney's Lien Act provides in relevantpart:

"Attorneys at law shall have a lien upon allclaims, demands and causes of actions, including allclaims for unliquidated damages, which may be placed intheir hands by their clients for suit or collection, orupon which suit or action has been instituted, for theamount of any fee which may have been agreed upon byand between such attorneys and their clients ***." (Emphasis added.) 770 ILCS 5/1 (West 2000).

Section 1 of the Hospital Lien Act provides:

"Every hospital rendering service in thetreatment, care, and maintenance, of an injured personshall have a lien upon all claims and causes of actionof the injured person for the amount of its reasonablecharges up to the date of payment of damages." (Emphasis added.) 770 ILCS 35/1 (West 2000).

Section 1 of the Physicians Lien Act provides:

"Every licensed physician practicing in this State who renders services by way of treatment to injured persons *** shall have a lien upon all claims and causes of action for the amount of his reasonablecharges up to the date of payment of such damages." (Emphasis added.) 770 ILCS 80/1 (West 2000).

In reliance upon the emphasized language, State Farm arguesthat because the Lien Acts provide that liens attach to "allclaims and causes of action," and there is no exception forarbitration awards, the trial court erred in not allowing it tointerplead the three parties who filed the liens.

This appeal requires us to interpret provisions of the LienActs. We interpret statutes de novo, without any deference tothe trial court's interpretation. Michigan Avenue National Bankv. County of Cook, 191 Ill. 2d 493, 503 (2000). Wheninterpreting a statute, it is proper to ascertain thelegislature's intent. Paris v. Feder, 179 Ill. 2d 173, 177(1997). The best evidence of that intent is the language thelegislature used in the statute, and we should give the languageits plain and ordinary meaning. Paris, 179 Ill. 2d at 177.

State Farm ignores the legal principle that wheninterpreting a statute, it must be read as a whole, and no wordshould be interpreted so as to be rendered meaningless. Temesvary v. Houdek, 301 Ill. App. 3d 560, 565 (1998). Section 1of the Hospital Lien Act is applicable only to "claims and causesof action of the injured party." (Emphasis added.) 770 ILCS 35/1(West 2000). Here, the subject matter of the arbitration was notRaap's claim, as the injured party, but rather Country Mutual'ssubrogation rights relating to its previous expenditures forRaap's medical treatment. The arbitration proceeding wasseparate and distinct from any "claims and causes of action" thatRaap may have against Zeni due to the accident. Therefore, wefind that the Hospital Lien Act does not provide a mechanism fora lien to attach to Country Mutual's arbitration award.

Although section 1 of the Physicians Lien Act is not limitedto claims and causes of actions of the injured party, a review ofsection 2 of that act mandates affirmance of the trial court'sdecision not to allow State Farm to interplead Dr. La Marre.

Section 2 of the Physicians Lien Act provides:

"The lien of any such licensed physicianpracticing in this State shall, from and after the timeof service of the aforesaid notice, attach to anyverdict, judgment or order secured in any suit oraction by the injured party based on the negligent orwrongful act, and to any money or property which may berecovered by compromise settlement, or in any suit oraction brought by such injured person on account ofsuch claim or right of action." (Emphasis added.) 770 ILCS 80/2 (West 2000).

When interpreting a statute, a fundamental rule of statutoryconstruction is that when a general provision and a specificprovision of a statute relate to the same subject, it is thespecific provision that controls and should be applied. Peoplev. Villarreal, 152 Ill. 2d 368, 379 (1992). Both section 1 andsection 2 of the Physicians Lien Act address the attachment ofliens by doctors. Although State Farm is correct that section 1provides for attachment "upon all claims and causes of action,"section 2 restricts attachment to suits or actions "by theinjured party." 770 ILCS 80/1,2 (West 2000). In this case,Country Mutual's arbitration award was for reimbursement forfunds it had paid for medical care for Raap. This is not a suitor action by the injured party.

We note that section 2 of the Hospital Lien Act, similar tosection 2 of the Physicians Lien Act, provides that a perfectedhospital lien "shall *** attach to any verdict or judgmentsecured in any action by the injured party." 770 ILCS 35/2 (West2000). Thus, section 2 of the Hospital Lien Act, like section 2of the Physicians Lien Act, only permits attachment to judgmentsresulting from suits or actions "by the injured party," notarbitration awards between insurance companies, which do notdirectly involve the injured party.

As for the Attorneys Lien Act, we find that the trial courtwas also correct in not allowing State Farm to interplead Raap'sattorney.

In People v. Philip Morris, Inc., 198 Ill. 2d 87, 97 (2001),our supreme court stated:

"[I]t is quite settled that an attorney's lien underthe [Attorneys Lien] Act 'is a lien upon the proceeds,only, of the litigation or settlement of the claim.' Baker v. Baker, 258 Ill. 418, 421 (1913). Theattorney's only interest is in the proceeds of thelitigation or its settlement. Process Color Plate Co.v. Chicago Urban Transportation District, 125 Ill. App.3d 885, 891 (1984)."

The funds Country Mutual was awarded after arbitration,which are merely a reimbursement for money it had expended forRaap's care following the accident, are not proceeds "of thelitigation or its settlement." Furthermore, an attorney's lienattaches only upon those proceeds that the attorney recovers forthe client through his or her professional services. See PhilipMorris, 198 Ill. 2d at 97; Watkins v. GMAC Financial Services,337 Ill. App. 3d 58 (2003) (an attorney's lien is not superior toa previously perfected security interest in insurance proceedspayable by loss or damage to collateral); cf. Bishop v. Burgard,198 Ill. 2d 495 (2002) (the common fund doctrine requires anERISA plan to reimburse a plaintiff's attorney for reasonablevalue of legal services rendered in protecting the plan'ssubrogation lien). In the instant case, Raap's attorney hadnothing to do with the arbitration proceeding wherein CountryMutual sought, and was awarded, reimbursement for its payment ofRaap's medical expenses.

We note that our ruling today does not adversely affect therights of the various lienholders. Under all of the Lien Acts,the lienholders can obtain payment for their services fromamounts recovered in litigation relating to the accident. Moreover, to the extent that the proceeds of the litigation areinsufficient to satisfy the respective liens, the lienholders canalso sue their client to recover for their services. See PhilipMorris, 197 Ill. 2d at 98 ("[I]t is well settled that, outside ofthe [Attorneys Lien] Act, attorneys can still sue their clientsto recover for their services"); Piller v. Weippert, 260 Ill.App. 3d 677, 680 (1994) ("Nothing in [the Physicians Lien] Actabrogates the right of the physician to file an action to recoverfor medical services rendered").

Finally, State Farm asserts that it should not have tocompensate Country Mutual for monies owed to Central DuPageHospital that were never paid to the hospital. We will notaddress this matter as it should have been addressed in thearbitration proceeding.

Accordingly, the judgment of the circuit court of CookCounty is affirmed.

Affirmed.

CAMPBELL, P.J., and REID, J., concur.