Neade v. Portes

Case Date: 03/31/1999
Court: 2nd District Appellate
Docket No: 2-97-1099

Neade v. Portes, No. 2-97-1099

2nd District, March 31, 1999



THERESE NEADE, as Independent Adm'r of the Estate of Anthony Robert Neade, Deceased,

Plaintiff-Appellant,

v.

STEVEN PORTES, and PRIMARY CARE FAMILY CENTER, S.C.,

Defendants-Appellees

(Thomas Engel, Defendant).

Appeal from the Circuit Court of Lake County.

Nos. 92--L--1074, 94--L--1103

Honorable Bernard E. Drew, Judge, Presiding.

JUSTICE THOMAS delivered the opinion of the court:

Plaintiff, Therese Neade, as the administrator of the estate of her deceased husband, Anthony Neade, appeals the circuit court's judgment dismissing portions of count I and all of count II of her amended complaint against defendants Steven Portes, M.D., and Primary Care Family Center, S.C. (Primary Care). At the times alleged in plaintiff's complaint, Dr. Portes was president of Primary Care. Count I alleged that defendants committed medical negligence, which caused the death of Anthony Neade. Count II alleged that Dr. Portes breached his fiduciary duty to Anthony Neade by failing to disclose that he had a contract with Neade's Health Maintenance Organization (HMO) that created an incentive to minimize diagnostic tests and specialist referrals. On appeal, plaintiff contends that the trial court erred in striking the allegations from count I of her amended complaint because those allegations adequately alleged a breach of the applicable standard of care. Plaintiff also contends that the trial court erred in dismissing count II of the amended complaint because that count stated a cause of action for breach of fiduciary duty.

I. FACTS

Plaintiff's amended complaint alleged the following. Anthony Neade was approximately 37 years old in 1990 when he began to show the classic symptoms of coronary artery blockage, including chest pain radiating into his arm and shortness of breath. As a result, Neade was hospitalized from August 10 to 13, 1990. In addition to his physical symptoms, Neade had a family history of heart disease, was overweight, suffered from hypertension, smoked, and had a high cholesterol count. While in the hospital, Neade underwent various tests, including a thallium stress test. Dr. Thomas Engel (a defendant below but not a party to this appeal) interpreted the result as normal and discharged Neade with a diagnosis of hiatal hernia and/or esophagitis. Count III of plaintiff's amended complaint, which is not at issue in this appeal, alleged that Dr. Engel misinterpreted the thallium stress test and EKG data results. However, even if the test results were properly interpreted, plaintiff alleged that Dr. Portes knew that 20% of normal or negative thallium stress test results are false negatives.

Following his discharge from the hospital, Neade continued to experience chest pain and, therefore, saw Dr. Portes on August 17, August 28, and September 24, 1990. Dr. Portes did not examine Neade during these visits but, relying on the thallium stress test and EKG data, assured Neade that his chest pain was not cardiac related.

In October 1990, Neade again went to Primary Care complaining of stabbing chest pain. Dr. Portes asked his associate, Dr. George Huang, to examine Neade. Primary Care employed Dr. Huang part time, and he had no hospital privileges. After examining Neade, Dr. Huang recommended that he undergo an angiogram, a test that is more specific for coronary artery disease than the thallium stress test. Because Dr. Portes was Neade's primary care physician, however, Dr. Portes had to authorize any hospitalization or additional tests. Without examining Neade, Dr. Portes told Dr. Huang that the pain was not cardiac related and refused to authorize Neade's hospitalization for an angiogram.

In June 1991, Neade again returned to Primary Care, complaining of chest pain radiating up the right side of his neck and sweating when the pain was great. At Dr. Portes's request, Dr. Seymour Schlager, another part-time employee of Primary Care, saw Neade. Dr. Schlager also recommended hospitalization for an angiogram, but Dr. Portes again refused to authorize hospitalization. Without examining Neade and relying on the thallium stress test, Dr. Portes advised Dr. Schlager that Neade's chest pain was not cardiac related.

Count I of plaintiff's amended complaint alleged that Dr. Portes's reliance on the thallium stress test and the EKG and his failure to authorize an angiogram constituted medical negligence. Further, as a proximate result of defendants' medical negligence, Neade suffered a massive myocardial infarction caused by coronary artery blockage on September 16, 1991. Neade died nine days later.

The allegations that were stricken from count I of plaintiff's amended complaint alleged that Dr. Portes, as president of Primary Care, negotiated and entered into contracts with various entities, including Chicago HMO. That contract provided a capitation fee for subscribers of Chicago HMO who utilized defendants' services, as well as a "Medical Incentive Fund," which was to be used for various purposes, including certain tests and referrals to medical specialists. The contract further provided that any monies left in the Medical Incentive Fund at the end of the 12-month contract period would be split 60-40 between defendants and Chicago HMO. Neade's health care insurance was through Chicago HMO. Therefore, if Neade received an angiogram and a referral to a specialist, those fees would be paid from the Medical Incentive Fund administered by defendants.

Count II of plaintiff's amended complaint alleged that a fiduciary relationship existed between Dr. Portes and Neade pursuant to which Dr. Portes had a duty to act in good faith and in the best interest of Neade. Plaintiff alleged that Dr. Portes breached his fiduciary duty by refusing to authorize further testing of Neade, refusing to allow specialists to examine Neade, failing to disclose to Neade defendants' financial relationship with Chicago HMO, including the Medical Incentive Fund, and entering into a contract with Chicago HMO which put defendants' financial well-being in direct conflict with Neade's physical well-being. Plaintiff claimed that as a proximate result of defendants' breach of fiduciary duty, Neade suffered a massive myocardial infarction and died.

Dr. Portes and Primary Care moved to strike from count I the allegations regarding the Medical Incentive Fund and to dismiss Count II entirely. Defendants argued that any financial motive was irrelevant to whether Dr. Portes violated the applicable standard of care in treating Neade. Defendants also argued that there was no cause of action against a physician for breach of fiduciary duty. The trial court granted defendants' motion as to both counts with prejudice.

Plaintiff then filed a motion to reconsider, attaching to the motion plaintiff's affidavit and excerpts of the deposition of Dr. Jay Schapira. Dr. Schapira testified that the applicable standard of care, as well as ethical considerations, required a doctor to divulge his financial interest in withholding care so that a patient could make an informed decision concerning the quality of care he is receiving and concerning the doctor's true motivation in treating him. Plaintiff's affidavit stated that had she known of Dr. Portes's financial interest in refusing to authorize additional treatment for decedent, she would have sought a second opinion. Plaintiff also filed a proposed "supplement" to the complaint incorporating these additional allegations. Defendants filed a motion, which the trial court denied, to strike the deposition excerpt and affidavit from plaintiff's motion to reconsider. However, after considering those materials, the court denied the motion to reconsider. Plaintiff timely appealed.

II. JURISDICTION

Initially, defendants contend that we lack jurisdiction to consider the court's order with regard to count I. Defendants note that the trial court's original dismissal order striking sections of count I and dismissing all of count II of plaintiff's complaint was with prejudice but contained Illinois Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)) language only with respect to count II. In its subsequent order denying plaintiff's motion for reconsideration, however, the trial court stated that its prior order striking portions of count I and dismissing count II remained a final and appealable order pursuant to Rule 304(a) (155 Ill. 2d R. 304(a)). Defendants claim that because the orders are ambiguous and because the bases for recovery of the stricken portions of count I are the same as the remaining portions of count I, the trial court's order with respect to count I cannot be a final and appealable order as a matter of law.

Rule 304(a) provides that if multiple claims for relief are involved in an action, a party may appeal a final judgment as to one or more but fewer than all of the claims only if the trial court has made an express written finding that there is no just reason to delay enforcement or appeal of its order. 155 Ill. 2d R. 304(a). Thus, where separate counts in the same complaint contain different bases of recovery, and where the trial court makes the requisite finding, the dismissal of a count in the complaint is appealable because it disposes of a distinct cause of action. Viirre v. Zayre Stores, Inc., 212 Ill. App. 3d 505, 511 (1991).

We note that Rule 304(a) speaks in terms of "claims," and not "counts." Therefore, even though the trial court struck only portions of count I of plaintiff's amended complaint, those stricken portions, along with Count II, clearly resolved a distinct portion of the controversy between the parties: whether defendants are liable for failing to disclose the existence of the Medical Incentive Fund. Accordingly, because the trial court's order disposed of a distinct claim against defendants, and the trial court made an express written finding in its second order that its order was final and appealable, we conclude that we have jurisdiction of plaintiff's entire appeal.

III. STANDARD OF REVIEW

Defendants' motion to dismiss plaintiff's amended complaint was brought pursuant to section 2--615 of the Code of Civil Procedure. 735 ILCS 5/2--615 (West 1996). Under that section, a trial court should dismiss a complaint only when it clearly appears that no set of facts that would entitle plaintiff to relief could be proved under the pleadings. Ogle v. Fuiten, 102 Ill. 2d 356, 360-61 (1984). A section 2--615 motion admits all well-pleaded facts but not conclusions of law or factual conclusions unsupported by allegations of specific facts. Talbert v. Home Savings of America, F.A., 265 Ill. App. 3d 376, 379 (1994). We review the granting of a section 2--615 motion de novo. Schiffner v. Motorola, Inc., 297 Ill. App. 3d 1099, 1103 (1998).

IV. BREACH OF FIDUCIARY DUTY

As a preliminary matter, we note that defendants again object that plaintiff submitted her affidavit and excerpts from Dr. Schapira's deposition in her motion to reconsider. As noted earlier, defendants had filed a motion to strike these materials, which the trial court denied. The purpose of a motion for reconsideration is to apprise the court of newly discovered evidence, of any changes in the law, or of any errors in the trial court's earlier application of existing law. Farley Metals, Inc. v. Barber Colman Co., 269 Ill. App. 3d 104, 116 (1994). Defendants contend that the materials submitted by plaintiff were not newly discovered evidence, did not indicate any change in the law, and were not necessary to plaintiff's argument that the trial court had erred in applying existing law.

In her motion for reconsideration, plaintiff stated that the trial court had relied upon this court's decision in Taber v. Riordan, 83 Ill. App. 3d 900 (1980), in dismissing count II of her complaint, that none of the parties had cited the Taber decision, and that the trial court had not provided a copy of the Taber decision to the parties during the hearing on defendants' motion to dismiss. Plaintiff then argued that her case was distinguishable from Taber because expert testimony, which was missing in Taber, was present in her case, as evidenced by Dr. Schapira's deposition and her affidavit. Under the circumstances and in light of the unique facts of this case, we believe that the materials attached to plaintiff's motion for reconsideration were properly submitted in support of plaintiff's argument that the trial court had erred in applying existing law. The trial court, therefore, properly denied defendants' motion to strike the affidavit and deposition excerpt.

Defendants then claim that there is no case law to support plaintiff's argument that Dr. Portes had a fiduciary duty to disclose his contractual compensation relationship with Chicago HMO. Defendants are correct that there is no Illinois case law addressing this issue. In fact, in our review of other jurisdictions, we have found no cases that address the specific issue raised in this case. However, given the changing nature of health care in this country, courts most likely will be faced with increasing issues concerning managed care and its effect on the physician-patient relationship. Cost containment measures in the health care industry have come under increasing scrutiny in recent years. Traditionally, the entity responsible for paying for health care was separate from the person or organization that delivered the health care. Note, Financial Incentives to Limit Services: Should Physicians Be Required to Disclose These to Patients?, 83 Geo. L.J. 1821 (1995). More and more, however, the financing and the delivery of health care have been integrated, requiring physicians to be both a care giver and a cost manager. 83 Geo. L.J. at 1821. Under managed health care plans similar to the plan through which Neade was insured, a patient must choose a primary care physician who serves as a "gatekeeper," deciding whether the patient requires laboratory tests, inpatient hospitalization, or a referral to a specialist. 83 Geo. L.J. at 1827. Further, in risk/bonus arrangements like the Medical Incentive Fund here, the gatekeeper is paid a bonus for controlling referrals, which arguably creates an incentive for the gatekeeper to limit the use of high-end health services. 83 Geo. L.J. at 1828.

As one commentator has noted, most HMO enrollees do not know that their physicians have financial deterrents to providing more expensive health care to their patients. 83 Geo. L.J. at 1837. Thus, in order to make proper choices concerning health care, "the mechanisms that govern the restrictions on treatment need to be disclosed to the patient." 83 Geo. L.J. at 1837. In this case, plaintiff contends that the obligation to disclose financial incentive arrangement should be placed on the gatekeeper physician pursuant to his fiduciary duty and that a failure to do so constitutes a breach of fiduciary duty.

As noted, in reviewing case law from other jurisdictions, we have found no cases that have addressed whether a physician has a fiduciary duty to disclose the financial incentive arrangement he has with an HMO, although we have found federal case law holding, under analogous fact patterns, that a patient has a cause of action against his HMO for failing to disclose the financial incentive scheme that it has with its physicians. Herdrich v. Pegram, 154 F.3d 362 (7th Cir. 1998); Shea v. Esensten, 107 F.3d 625 (8th Cir. 1997).

For example, in Shea, following hospitalization for severe chest pain while on an overseas business trip, the decedent made several visits to his family doctor complaining of symptoms of heart disease. Shea, 107 F.3d at 626. The decedent complained of chest pains, shortness of breath, muscle tingling, and dizziness and discussed his extensive family history of heart disease. Shea, 107 F.3d at 626. The decedent's physician said that a visit to a cardiologist was unnecessary. Shea, 107 F.3d at 626. When his symptoms did not improve, the decedent said he would pay for the cardiologist himself, but his physician persuaded him that he was too young to have heart disease and that he did not have enough symptoms to justify an appointment with a cardiologist. Shea, 107 F.3d at 626. A few months later, decedent died of heart failure. Shea, 107 F.3d at 626. The decedent's health insurance was through an HMO which, unknown to the decedent, had a financial incentive agreement with its doctors that was designed to minimize referrals by rewarding the physicians for not making referrals to specialists and by docking the physicians a portion of their fees if they made too many referrals. Shea, 107 F.3d at 627. Decedent's widow claimed that if her husband had known about the financial incentive, he would have disregarded his physician's advice and would have consulted a cardiologist at his own expense. Shea, 107 F.3d at 627.

The district court dismissed plaintiff's claim alleging breach of the HMO's fiduciary duties under the Employee Retirement Income Security Act (ERISA) (29 U.S.C.A.