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Docket No. 99067-Agenda 15-March 2005.

CHATHAM FOOT SPECIALISTS, P.C., Appellant, v. HEALTH
CARE SERVICE CORPORATION, d/b/a Blue Cross Blue Shield of Illinois, Appellee.

Opinion filed September 22, 2005.
 

JUSTICE McMORROW delivered the opinion of the court:

Plaintiff, Chatham Foot Specialists, P.C., filed a breach of contract action to recover fees against defendant, Health Care Service Corporation, d/b/a Blue Cross Blue Shield of Illinois (Blue Cross). The circuit court of Cook County granted Blue Cross' motion for summary judgment on the basis that plaintiff's failure to register as a professional service corporation with the Illinois Department of Professional Regulation (the Department), pursuant to section 12 of the Professional Service Corporation Act (Act) (805 ILCS 10/12 (West 2000)), rendered plaintiff's contract with Blue Cross void and precluded plaintiff from maintaining an action to recover fees under any legal theory. The appellate court affirmed the judgment of the circuit court. No. 1-03-3425 (unpublished order under Supreme Court Rule 23). For the reasons that follow, we reverse the judgment of the appellate court.

BACKGROUND

The facts underlying this appeal are undisputed. Plaintiff is an Illinois professional service corporation whose purpose is to deliver podiatric services to its patients. During the time period relevant to this litigation, Dr. Mitchell M. Rosner, a licensed podiatrist, is, and has been, plaintiff's sole shareholder, officer and director. Plaintiff also has in its employment a number of additional podiatrists, who are all properly licensed to practice podiatry.

On June 1, 2000, plaintiff entered into a contractual agreement with defendant, Blue Cross. Blue Cross is in the business of providing health insurance. Under the June 2000 agreement, plaintiff contracted with Blue Cross to deliver podiatric services as a participating provider under Blue Cross' insurance plans. Blue Cross, in turn, agreed to timely pay to plaintiff fees for podiatric services provided by plaintiff to patients insured by Blue Cross. At the time plaintiff executed the agreement with Blue Cross, plaintiff was properly organized under the Act and was in good standing with the Secretary of State. However, plaintiff did not possess a current certificate of registration issued by the Department.

On November 26, 2001, Blue Cross unilaterally cancelled the agreement with plaintiff, effective December 25, 2001. On December 27, 2001, plaintiff filed a four-count complaint against Blue Cross, seeking to recover payments under the June 2000 agreement for podiatric services rendered to patients insured by Blue Cross. In count I, plaintiff alleged that Blue Cross breached the June 2000 agreement because Blue Cross failed to pay its bills due plaintiff on a timely basis. Count II of plaintiff's complaint alleged that Blue Cross engaged in fraud, in that Blue Cross intentionally misrepresented that it would pay claims for treatment of its insureds by plaintiff, causing plaintiff monetary damages. In count III of the complaint, plaintiff alleged that Blue Cross committed unfair and deceptive acts in violation of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2 (West 2000)). Finally, count IV of plaintiff's complaint alleged that Blue Cross violated section 155 of the Illinois Insurance Code by delaying and failing to pay its claims (215 ILCS 5/155 (West 2000)).

On March 5, 2002, Blue Cross filed in the circuit court a motion to dismiss plaintiff's complaint pursuant to sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 2000)). Blue Cross alleged that, based upon the fact that plaintiff did not possess a current certificate of registration issued by the Department, plaintiff had "not complied with the mandatory licensing provisions of the Illinois Medical Practice Act and Medical Corporation Act and, therefore, under established case law, [plaintiff] is barred from maintaining an action to recover fees for medical services under any legal theory."

In response, plaintiff did not deny that it had failed to maintain a current certificate of registration with the Department. However, plaintiff asserted that its lack of compliance with the registration requirement neither violated public policy nor harmed the public welfare. According to plaintiff, neither the Medical Practice Act nor the Medical Corporation Act governed plaintiff and its practitioners. Because plaintiff is a professional service corporation incorporated for the purpose of delivering podiatric services and not medical services, plaintiff contended that only the statutory licensing requirements contained in the Podiatric Medical Practice Act of 1987 (225 ILCS 100/1 et seq. (West 2000)), and the administrative requirements contained in the Act (805 ILCS 10/1 et seq. (West 2000)) applied to plaintiff and its podiatrists.

Plaintiff noted that each podiatrist in its employ maintained a valid license to practice podiatry in Illinois, and that it therefore complied with the licensing requirements under the Podiatric Medical Practice Act. With respect to the administrative requirements set forth in the Act, plaintiff argued that because the Act's "certificate of registration is just an administrative mechanism to confirm that an incorporated practitioner holds a valid Illinois professional license," its lack of registration did not bar it from maintaining an action against Blue Cross.

On October 30, 2002, the circuit court denied Blue Cross' motion to dismiss without prejudice. Although the court granted plaintiff leave to file an amended complaint, plaintiff did not avail itself of this opportunity. Blue Cross thereafter filed a motion to reconsider. The circuit court denied this motion on December 16, 2002.

On April 16, 2003, Blue Cross filed in the circuit court a motion for summary judgment, pursuant to section 2-1005 of the Code of Civil Procedure (735 ILCS 5/2-1005 (West 2000)). In its summary judgment motion, Blue Cross repeated the argument that it had unsuccessfully advanced in its prior motion to dismiss. Blue Cross asserted that it was entitled to judgment on plaintiff's complaint as a matter of law because plaintiff failed to obtain a certificate of registration from the Department pursuant to section 12 of the Act (805 ILCS 10/12 (West 2000)) and, therefore, was barred from maintaining an action to recover fees for medical services under any legal theory. In addition, Blue Cross argued, because plaintiff lacked a certificate of registration, it was engaged in the unlicensed practice of medicine, an absolute bar to any right of recovery. In its motion, Blue Cross noted that plaintiff had admitted that it did not possess a certificate of registration from the Department at the time it entered into the June 2000 agreement, but that plaintiff did obtain a certificate of registration in September 2002.

In response, plaintiff reiterated the argument it had advanced in opposition to Blue Cross' earlier motion to dismiss. Plaintiff argued that its lack of compliance with the certificate of registration requirement neither violated public policy nor harmed the public welfare. Plaintiff noted that each podiatrist in its employ maintained a valid license to practice podiatry in Illinois, that it therefore complied with the licensing requirements under the Podiatric Medical Practice Act, and that its lack of registration as a professional service corporation did not bar it from maintaining an action against Blue Cross.

On July 17, 2003, the circuit court granted Blue Cross' motion for summary judgment with respect to counts III and IV of plaintiff's complaint, wherein plaintiff asserted that Blue Cross violated provisions of the Consumer Fraud and Deceptive Business Practices Act, as well as the Insurance Code. However, the circuit court entered and continued Blue Cross' motion for summary judgment with respect to the dual claims that Blue Cross breached the June 2000 contract and engaged in fraud, allegations contained in counts I and II of plaintiff's complaint. The circuit court granted plaintiff leave to file a motion to supplement the record to submit and address any new evidence.

In its motion to supplement the record, plaintiff argued that a professional service corporation offends neither public policy nor the public welfare by performing services without a current certificate of registration. Plaintiff noted that section 12.1 of the Act addresses the operation of a professional corporation with a lapsed certificate of registration. 805 ILCS 10/12.1 (West 2000)). Plaintiff observed that the only sanction imposed based upon a lapsed certificate is that the Department may require that the corporation pay a renewal fee. Plaintiff asserted that nothing in section 12.1 bars a professional service corporation from maintaining an action to recover its fees, even if the corporation lacks a current certificate of registration. In addition, according to plaintiff, when it renewed its registration certificate in September 2002, the Department waived payment of any additional fees. This, according to plaintiff, further supported its position that the failure to maintain a current certificate of registration with the Department did not impinge upon the public safety.

In its supplemental pleading, plaintiff also introduced statistics generated by the Department that only 38% of active professional corporations and 50% of active medical corporations in Illinois possess a current certificate of registration issued by the Department. Plaintiff argued that such a widespread lack of compliance bolstered its claim that the legislature never intended the Act's certificate of registration requirement to be the vehicle for expressing public policy or protecting the public welfare. Plaintiff asserted that if the registration requirement had been intended to protect the public, the legislature would have provided a criminal penalty for noncompliance with this requirement.

In addition, plaintiff introduced a flyer created by Blue Cross which stated that Blue Cross' participating provider network encompasses over 80% of all Illinois physicians. Plaintiff surmised that, given that 50% of the medical corporations in Illinois do not have a current certificate of registration, this means that a great number of medical corporations in the Blue Cross network do not have current certificates of registration with the Department. Yet, plaintiff argued, it could be assumed that Blue Cross nevertheless paid these unregistered providers, while refusing to pay plaintiff.

On October 14, 2003, the circuit court entered a written memorandum opinion and order, granting Blue Cross summary judgment on the remainder of the counts in plaintiff's complaint. The circuit court held:

"[T]his court agrees with [Blue Cross'] analysis of the applicable case law regarding the purpose of the Illinois Medical Practice Act, Medical Corporation Act, Illinois Podiatric Medical Practice Act and the Professional Service Corporation Act, i.e., that the legislative intent behind the various licensing requirements is for the protection of the public. [Plaintiff's] failure to obtain an appropriate certificate of registration from the Department of Professional Regulation affects the public welfare. The court notes that each individual doctor could have contracted with [Blue Cross] and that those contracts would have been valid. Further, this court reviewed the supplemental evidence provided by the plaintiff in conjunction with its motion to supplement the record. This court finds that said supplemental evidence failed to show that plaintiff did in fact have the requisite certificate of registration. Although the result here is harsh, the court's analysis of the law and facts requires its finding that [plaintiff's] failure to maintain its registration precludes [plaintiff] from enforcing its contract with [Blue Cross]."

Accordingly, the circuit court granted Blue Cross' motion for summary judgment in its entirety.

On appeal, the appellate court affirmed the judgment of the circuit court. The appellate court held that the Podiatric Medical Practice Act of 1987 provides that a corporation having a purpose of practicing podiatry is required to be organized under the Act. In turn, the Act requires such a corporation to obtain a certificate of registration from the Department. The appellate court, quoting Ransburg v. Haase, 224 Ill. App. 3d 681, 684-85 (1992), observed that it is the general rule that courts will not enforce contracts involving a party " 'who does not have a license called for by legislation that expressly prohibits the carrying on of the particular activity without a license where the legislation was enacted for the protection of the public.' "

Finding that the terms "license" and "certificate of registration" are used interchangeably in the Act (see 805 ILCS 10/3.3 (West 2000)), the appellate court stressed that, in instances where the licensing requirements are intended to protect the public, contracts violating statutes governing the licensing of professionals have been held to injure the public welfare and, thus, to be unenforceable under any legal theory. Citing to Tovar v. Paxton Community Memorial Hospital, 29 Ill. App. 3d 218, 220 (1975), the appellate court observed that it has been held that failure to comply with the licensing provisions of the Medical Practice Act precludes a party from maintaining an action for fees or services as a physician or surgeon. Quoting from Tovar, 29 Ill. App. 3d at 220, the appellate court concluded that because " '[t]he purpose of the statutes establishing a licensing requirement is not to generate revenue, but rather to protect the public by assuring them of adequately trained practitioners,' " it followed that " 'a person who practices medicine without obtaining the required license cannot maintain an action for his promised compensation.' " Accordingly, the appellate court held, the rule set forth in Tovar had similar application to the instant matter.

The appellate court also rejected plaintiff's argument that its failure to obtain a certificate of registration from the Department should be excused by the valid license to practice podiatry held by Dr. Rosner, plaintiff's sole shareholder, officer and director. The appellate court held that an essentially identical argument was rejected in Kaplan v. Tabb Associates, Inc., 276 Ill. App. 3d 320, 325 (1995), where an architectural firm lacked the requisite license but the sole owner of the corporation was a licensed architect.

Finally, the appellate court rejected plaintiff's further argument, premised on Joseph P. Storto, P.C. v. Becker, 341 Ill. App. 3d 337 (2003), that its failure to obtain a certificate of registration did not implicate public welfare concerns and, therefore, did not render its contract with defendant void. The appellate court held that, contrary to plaintiff's assertions, the lack of criminal penalties for a violation of the registration requirement contained in the Act is not dispositive here because, unlike the registration provisions found in our Rule 721 that apply to attorneys and was at issue in Storto, the statutory language of the Podiatric Medical Practice Act explicitly establishes the public safety implications of the licensing requirement for the practice of podiatric medicine. Accordingly, the appellate court held that "plaintiff's failure to obtain the requisite certificate of registration renders its contract with defendant void and precludes it from maintaining an action to recover fees under any theory."

This court granted plaintiff's petition for leave to appeal pursuant to our Rule 315 (177 Ill. 2d R. 315). We also granted leave to the Illinois Podiatric Medical Association, the Illinois Chiropractic Society, and the Chicago Dental Society to file amicus curiae briefs in this matter.

ANALYSIS

A motion for summary judgment is properly granted when the pleadings, depositions, admissions, and affidavits on file establish that no genuine issue of material fact exists and, therefore, the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2000); Land v. Board of Education of the City of Chicago, 202 Ill. 2d 414, 421 (2002). In ruling upon a motion for summary judgment, a court has a duty to construe the evidence strictly against the movant and liberally in favor of the nonmovant. Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278, 292 (2001). Although summary judgment is an efficient and useful aid in the expeditious disposition of a lawsuit, "summary judgment is a drastic measure and should only be granted if the movant's right to judgment is clear and free from doubt." Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992). In appeals from summary judgment rulings, our review is de novo. Travelers Insurance Co., 197 Ill. 2d at 292.

In the instant cause, the circuit court, pursuant to section 2-1005 of the Code of Civil Procedure (735 ILCS 5/2-1005 (West 2000)), granted Blue Cross' motion for summary judgment. The circuit court held that because plaintiff failed to obtain from the Department a certificate of registration pursuant to section 12 of the Act, plaintiff endangered the public safety and, therefore, plaintiff was precluded from enforcing against Blue Cross any contracts with respect to its provision of podiatric services. Accordingly, at issue in this appeal is whether plaintiff's lack of a current certificate of registration issued by the Department pursuant to section 12 of the Act means that plaintiff is providing podiatric services without a license, thereby rendering the June 2000 contract with Blue Cross void.

Plaintiff contends that the appellate court erred in affirming the circuit court's grant of summary judgment to Blue Cross. According to plaintiff, the appellate court improperly equated a professional service corporation's failure to register pursuant to section 12 of the Act with the unlicensed practice of podiatry. Plaintiff asserts, contrary to the holding of the appellate court, that the Act's certificate of registration requirement is not a regulatory provision enacted to protect public safety. Rather, it is an administrative provision which not only allows individual professionals to form a corporation through which they may provide their services to the public, but also functions as a means to raise revenue for the state.

According to plaintiff, the appellate court arrived at its holding by improperly reading provisions of the Podiatric Medical Practice Act (225 ILCS 100/1 (West 2000)) into the Act. Plaintiff observes that the Podiatric Medical Practice Act contains specific licensing requirements and explicitly states that its provisions are intended to protect the public health and welfare. Plaintiff emphasizes that at all times relevant to this litigation it has been in compliance with the licensing requirements of the Podiatric Medical Practice Act, and argues that the certificate of registration requirement imposed on corporations by the Professional Service Corporation Act is unrelated to licensing. Plaintiff contends that because it is in compliance with all licensing requirements, the appellate court erred in finding that its contract with Blue Cross was unenforceable as against public policy.

In addition, plaintiff asserts, the only other appellate court decisions to interpret the scope of the Act's certificate of registration requirement rejected the analysis and conclusion arrived at by the appellate court below, and found that the Act's registration requirement is not intended to protect the public health, safety and welfare. See Riggs v. Woman to Woman Obstetrics & Gynecology, P.C., 351 Ill. App. 3d 268 (2004); Brockett v. Davis, 325 Ill. App. 3d 727 (2001). Plaintiff concludes that there is a distinct difference between requiring an individual to obtain a license to practice a profession, which does affect the public welfare, and requiring a medical professional corporation to maintain a certificate of registration, which does not.

In support of the position taken by plaintiff in the instant cause, the Illinois Podiatric Medical Association (Podiatric Association) has filed a brief as amicus curiae, contending that the appellate court's decision is contrary to the plain language of the relevant statutes. According to the Podiatric Association, the Act, unlike the Podiatric Medical Practice Act, is not meant to protect public health, safety and welfare. To the contrary, the only stated legislative intent in the Act is merely to allow individuals who are already licensed under other statutes-such as the Podiatric Medical Practice Act-to operate in corporate form. See 805 ILCS 10/2 (West 2000). The Podiatric Association maintains that the purpose of professionals operating in corporate form, pursuant to the provisions of the Act, is to obtain the protection of limited liability, as well as garner certain tax benefits. The Podiatric Association asserts that the lower courts in this case erred by mistakenly reading into the Act provisions from an entirely different statute-the Podiatric Medical Practice Act-which was expressly intended to protect public health and safety.

In addition, the Chicago Dental Society (Society) has filed an amicus brief with this court in support of plaintiff's position. In its submission, the Society argues that the effect of the appellate court's decision below is to void all contracts executed by professional service corporations which are unregistered pursuant to section 12 of the Act. The Society stresses that podiatrists are not the only health-care professionals who organize as professional service corporations and which have participating provider agreements with insurers. According to the Society, the decisions of the lower courts which determined these agreements to be void not only leave unregistered professional service corporations with numerous patients who now do not have insurance, but also permits the insurers to reap a substantial windfall.

The Society further argues that the appellate court below erred in holding that the Act was intended to protect the public welfare because the court relied upon cases invalidating contracts executed by medical providers who did not obtain a license to practice. Clearly, a health-care provider who does not have a license to practice cannot enter into a valid fee agreement with patients. The Society argues that in this case, however, it is merely the professional service corporation which failed to obtain an administrative certificate of registration under the Act, and issues of licensing are not involved.

In response, Blue Cross asserts that the legislature has crafted a "statutory scheme" intended to protect the public safety, and the certificate of registration requirement is an integral part of this mechanism. Blue Cross observes that the Podiatric Medical Practice Act explicitly states that the practice of podiatric medicine affects the public health, safety and welfare, and is subject to regulation and control in the public interest. In addition, Blue Cross notes, the Podiatric Medical Practice Act also provides that any corporation that wishes to offer podiatric services to the public must be organized under the Act. Thus, Blue Cross argues, the Podiatric Medical Practice Act specifically incorporates the requirement for a certificate of registration imposed by the Act. Blue Cross therefore concludes that because the stated purpose of the Podiatric Medical Practice Act is to protect the public, the certificate of registration requirement also necessarily serves this purpose.

Blue Cross further asserts that, even if the Podiatric Medical Practice Act did not incorporate the Act into its legislative scheme, it is apparent that the Act's certificate requirement, standing alone, is also intended to safeguard the public. According to Blue Cross, "the requirement to obtain a certificate is the mechanism by which a professional service corporation is subjected to the jurisdiction of the Department," and a corporation that does not apply for a certificate thereby evades the Department's regulatory powers. Blue Cross argues that because the legislature vested the Department with oversight responsibilities to protect the public from receiving services from unlicensed individuals, the requirement that a professional service corporation obtain a certificate of registration from the Department protects public safety. We reject each of the arguments advanced by Blue Cross.

It is well settled that "courts will not aid a plaintiff who bases his cause of action on an illegal act." King v. First Capital Financial Services Corp., 215 Ill. 2d 1, 35 (2005). More specifically, "courts will not enforce a contract involving a party who does not have a license called for by legislation that expressly prohibits the carrying on of the particular activity without a license where the legislation was enacted for the protection of the public, not as a revenue measure." Ransburg v. Haase, 224 Ill. App. 3d 681, 684-85 (1992); see generally Restatement (Second) of Contracts