Madison-Kedzie v. State of Illinois

The Claimant, Madison-Kedzie, Inc., seeks an award of $63,370.45in payments claimed to be due from the Illinois Department of Public Aid for vendor payments due for services rendered to or on behalf of welfare recipients.

This claim was presented to a commissioner of this Court for the taking of evidence. The Claimant alleges that the Respondent did not have the authority to terminate the Claimant as a vendor under the Medical Assistance Program and that the Respondent did not prove the Claimant was guilty of fraud and, therefore, the Claimant is entitled to the full amount requested. The Respondent argues that the Claimant should be paid for services only until the date of its termination from the program and that in the alternative that the claim should be denied in its entirety due to Claimant’s fraudulent conduct in providing claimed services to welfare recipients.

The evidence is summarized as follows: The Claimant seeks an award of damages for the nonpayment of 7687 prescriptions provided to welfare recipients who were receiving public assistance from the Illinois Department of Public Aid (IDPA), an agency of the Respondent. During 1975 the IDPA conducted an audit of the Claimant’s pharmacy business, which for the most part provided services to public aid recipients. The IDPA decided to terminate the Claimant as a provider and advised the Claimant that it would be terminated effective February 27,1976. The Claimant appealed this decision which was ultimately upheld by the Director of the IDPA on February 25, 1977. Thereafter, the Claimant filed this claim in this court.

Hiram Anderson, a co-owner of the Claimant’s pharmacy business testified that the Claimant submitted [*18] duplicates of prescriptions filled by the pharmacy which was the only documentation required by IDPA in 1976.

Anderson testified that the Claimant was not paid $20,252.00 for prescriptions filled between February 11, 1976, and February 27, 1976. The remaining amount claimed results in the prescription fees from February 27, 1976, until July 1976 while the termination was in the internal appeal process. The Respondent’s witness, Michael L. Berger, testified that he did not know how much of the $20,252.00 claimed was paid by IDPA. The Respondent also called Lawrence G. Thompson to support its affirmative defense that the Claimant had engaged in fraudulent conduct and, therefore, its claim should be barred by the provisions of section 14 of the Court of Claims Act (Ill. Rev. Stat. 1977, ch. 37, par. 439.14), and by the provisions of section 8A-1 of the Illinois Public Aid Code (Ill. Rev. Stat. 1983, ch. 23, par. 8A-1). Thompson reviewed the prescription forms in 1982. He questioned less than two percent of all the prescriptions submitted.

The Claimant initially argues that the director of IDPA was not authorized at that time to terminate vendors under the Medical Assistance Program that were suspected of fraud. This court in Z 6 D Pharmacy v . State (1984), 37 Ill. Ct. C1. 37, has decided the same issue as raised herein. The decision in Z 6 D Pharmacy was based upon the ruling of the Illinois Supreme Court in Bio-Medical Laboratories, Znc. v. Trainor (1977), 68 Ill. 2d 540,370 N.E.2d 223. In Bio-Medical the director of IDPA attempted to terminate a vendor from participation in the Medicaid program for welfare recipients. The supreme court found that the director was not entitled to suspend a vendor where there were no intelligible standards provided to guide the director in the exercise of his discretion. In the absence of [*19] statutory authority, the director may not suspend a vendor. In addition section 12-15 of the Illinois Public Aid Code (Ill. Rev. Stat. 1977, ch. 23, par. 12-15) provides that the Attorney General may file suit against vendors to recover overpayments made to vendors.

Since the decision in Bio-Medical, the General Assembly has enacted section 12-4.25 of the Illinois Public Aid Code (Ill. Rev. Stat. 1977, ch. 23, par. 12- 4.25), which allows under certain conditions the IDPA to terminate or suspend a medical vendor and withhold payments. This statute was effective on December 1, 1977. Pursuant to section 12-4.26 of the Illinois Public Aid Code (Ill. Rev. Stat. 1977, ch. 23, par. 12-4.26), the powers conferred by section 12-4.25 are effective only subsequent to the effective date of December 1, 1977 (with certain enumerated exceptions not relevant in this case).

In Roth v . Department of Public Aid (1982), 109 Ill.

App. 3d 457, 440 N.E.2d 910, the IDPA attempted to recoup payments made to a vendor of medical services prior to December 1, 1977. The appellate court found that section 12-4.26 of the Illinois Public Aid Code does not authorize the IDPA to exercise powers of recoupment retroactively. The Department would be able to recoup funds, but only by exercising its common law right by bringing a civil action for recovery of funds.

In I G D Pharmacy v. State (1984), 37 Ill. Ct. C1.37 this Court ruled on the identical issue raised in the instant case. It was held in that case which is dispositive of the same issue raised herein, that: “The Respondent’s initial defense is that the services rendered after the contract was terminated by the director on February 28, 1976, are not entitled to payment. The director took such action without referral of the [*20] claimed fraud to the Attorney General for prosecution. . . . While the director has the authority to promulgate rules governing the quality and quantity of medical services rendered by vendors . . . there is no authority for the director to act as he did in the instant case terminating Claimant’s rights under the contract. . . . We therefore find that the director’s action was improper and that the Claimant could continue to fill prescriptions until the date it voluntarily terminated its participation in the medical assistance program.” 37 111. Ct. CI. 37, 38-39.

In the instant case the IDPA determination was made before the effective date of section 12-4.25 of the Illinois Public Aid Code. Based on the authority cited herein the Respondent is not entitled to withhold payments because the director of IDPA did not have the authority at the time he did so to suspend or terminate a vendor as he did in this claim. The director could have referred this matter to the Attorney General but did not do so. Therefore, the Claimant would be entitled to payment unless the Respondent could sustain its affirmative defense that the claim is barred by Claimant’s alleged fraud.

In order to sustain its affirmative defense of fraud the Respondent must prove the fraudulent conduct by clear and convincing evidence. The Respondent must also prove the Claimant made a false representation with the intent to deceive. Such evidence of fraud must be affirmatively proved by clear and convincing testimony and cannot be based on suspicion. Bethune Plaza, Znc. v . State Department of Public Aid (1980), 90 Ill. App. 3d 1133, 414 N.E.2d 183; Oltmer v . Zumom (1981), 94 Ill. App. 3d 651,418 N.E.2d 506.

A review of the evidence offered by the Respondent on its affirmative defense of fraud shows that the Respondent has not met its burden of proof by clear and convincing evidence. The Respondent’s witness questioned less than two percent of the prescriptions submitted. While the Claimant could have kept better [*21] records, that does not equate to proof of fraud. The Respondent has not met its burden of proof on the affirmative defense of fraud, and therefore the Claimant is entitled to an award for the amount claimed. See Z 6 D Pharmacy v . State, supra, for the discussion of fraud as an affirmative defense in a similar factual situation.

Based upon all the evidence presented, the Claimant, Madison-Kedzie, Inc., has proved its entitlement to an award of $63,370.45.

It is hereby ordered: That the Claimant, Madison-Kedzie, Inc., be awarded the sum of sixty-three thousand, three hundred seventy dollars and forty-five cents.

( No . 79-CC-0454-Claimants awarded $34,500.00.)

WILLIAM JAGER et al., Claimants, v . THE STATE OF ILLINOIS, Respondent.

Opinion filed April 30,1986.

Order on denial of petition for rehearing filed September 8,1986.

EDWARD R. VRDOLYAK, LTD. (BRUCE M. BOZICH, of counsel), for Claimants.

NEIL F. HARTIGAN, Attorney General (M ARY A. MULHERN, Assistant Attorney General, of counsel), for Respondent.

NEGLlGENCE-COl~~nwith State police car at intersection-officer negligent-awards granted. Awards were granted to several persons who were passengers in a van which was struck at an intersection by a State police car which was responding to a call for help, since the evidence [*22] established that the State trooper’s negligence was the proximate cause of the resulting collision and injuries.

OPINION

MONTANA, C.J. This is a claim for damages suffered as a resu-, of a collision between a vehicle driven by William Jager and an Illinois State Police automobile operated by an Illinois State Trooper on the evening of April 24,1977, at the intersection of Cedar Road and Francis Road in New Lennox, Illinois.

Hearings have been held for this claim, all parties have filed their briefs, and the commissioner has duly filed his report. The matter now comes before the Court for a decision.

The evidence shows that Cedar Road is a two-lane, two-way north-south street and Francis Road is a twolane, two-way east-west street. The intersection is controlled by four-way stop signs. Claimant William Jager was driving a van owned by Charles Jager in a northerly direction upon Cedar Road. Claimants

Maureen Jager, Pamela Morrison-Zakhar, Roger Rodeck

and Theresa Settles were passengers in the Jager van. As the Jager vehicle came to a stop at the stop sign, a pickup truck operated by Jean Ann Timm entered the intersection eastbound on Francis Road, having previously stopped for the stop sign for eastbound traffic at that intersection. At the same time, an Illinois State Police squad car, driven by Trooper Richard Nichols was entering the intersection in a southerly direction on Cedar Road. The police car collided with the pickup truck in the intersection and then struck the Jager van and stopped just south of the intersection.

[*23] The issue presented for consideration is whether the State trooper was guilty of negligence which proximately caused the accident and the resulting injuries to Claimants.

Four witnesses testified as to the actions of Trooper Nichols at the time of the occurrence.

Trooper Nichols testified that just prior to the occurrence, while driving his vehicle southbound on Cedar Road, he received a radio call of an officer needing assistance when he was approximately threefourths of a mile to a mile north of the intersection. He stated he activated his vehicle’s red flashing lights upon hearing the call and proceeded toward the intersection at 30 to 35 miles per hour. He was unable to estimate how much time elapsed from activation of the lights until the first impact. He never turned on the siren prior to the accident nor did he ever sound the horn. He braked before entering the intersection at about 20 miles per hour, not stopping at the stop sign since he saw all the vehicles at the intersection including a Cadillac stopped westbound on Francis Road and all the vehicles seemed to him to be yielding to him. As he was threefourths of the way through the intersection he observed the pickup truck entering the intersection. He collided with the pickup truck and then veered to his left striking the stopped van. His vehicle finally stopped 70 feet south of the intersection. He admitted never applying his brakes just prior to the collision with the pickup truck.

William Jager testified that he was approximately 20 car lengths south of the intersection when he saw the police vehicle approximately the same distance north of the intersection. He estimated the speed of the police vehicle to have been at least 55 miles per hour and stated that it had not activated its flashing red lights. The [*24] flashing lights were activated when the police car was about 50 feet from the intersection but, by that time, the pickup truck had already entered the intersection. The police car never reduced speed prior to entering the intersection and collided with the pickup truck, veered into the northbound lanes of Cedar Road, collided headon with the van, pushing the van backwards two car lengths and then careened off about 150 feet further south, striking a telephone pole.

Eyewitness Gary Gossett testified that he was operating a vehicle northbound 30 to 40 feet directly behind the Jager van just before the collision. He stated that prior to entering the intersection the police car only had headlights on, that upon entering the intersection its flashing lights were activated no more than one or two seconds prior to the impact between the pickup truck and the police car, and that the police car was traveling about 35 miles per hour, never slowing down before impact.

Finally, Jean Ann Timm, the driver of the pickup truck, testified that she first saw the police vehicle when it was approximately one quarter mile north of the intersection and that it had no flashing lights on at that time. After she stopped at the intersection she saw a flash of red light and was simultaneously jolted by impact with the police car. She said the police car ended up resting against a telephone pole 70 to 80 feet south of the intersection.

In the opinion of the Court it has been proven, by a preponderance of the evidence, that Trooper Nichols was negligent in the operation of his vehicle. He, admittedly, failed to activate his siren or horn prior to entering the intersection at which he observed three vehicles. He failed to stop at the stop sign. We are [*25] persuaded, from the force of the impact with Claimants’ vehicle and the fact that he ended up colliding with a telephone pole 70 feet south of the intersection after two impacts, that his speed was in excess of his estimate of 20 miles per hour and was in excess of that which was reasonable considering the circumstances. Additionally, according to two witnesses who are not parties to this action, he failed to activate his flashing red lights until seconds before the first impact, too late to provide warning to the pickup truck entering the intersection.

Since, by all accounts, the Jager‘van was at a stop at the stop sign at the time of the impact, there can be no question of any contributory negligence on the part of its driver, William Jager.

As to the injuries suffered, the evidence was undisputed. Claimant Maureen Jager, immediately after the accident was bleeding from her right eyelid and her right ankle was swollen and painful. She was transported by ambulance to Silver Cross Hospital where her eyelid was sutured by Dr. Tsai. She was obliged to use crutches to accommodate the soft tissue injury to her ankle for three weeks. She saw Dr. Moll of Frankfort Clinic three times and saw Dr. Tsai for a second time for the removal of the sutures. Her complaints at the time of the hearing were occasional ankle pain and drooping of her right eyelid and scarring from the sutures. Her medical special damages amount to $431.00. We find that she is entitled to an award of $3,500.00.

William Jager was knocked out of the driver’s seat of his van from the force of the impact. He was knocked unconscious and was revived at the Silver Cross I Hospital. He suffered a laceration of the head which was sutured. He suffered headaches for one week and lost two days of work, amounting to $80.00. His medical [*26] special damages amounted to $237.00. We find that he is entitled to an award of $1,000.00.

Claimant Pamela Morrison-Zakhar was seated on the floor of the van at the time of the impact. As a result of the impact she was propelled forward to the front of the van where she struck her face and knees against various objects. She was taken by ambulance to Silver Cross Hospital where her upper lip was sutured. She was referred to Dr. Svalina, an oral surgeon, who testified that she had the following damage: left incisor was completely avulsed and missing; a fractured crown of the right central incisor, a fractured crown of the left lateral incisor; avulsions out of the socket of teeth Nos. 10-12; and a fractured root of tooth No. 12, the left first premolar. Treatment consisted of placement of a wire fixation device around the damaged and adjacent teeth.

Recently, she has had continuing problems including the fact that the end root of her upper left cuspid tooth has begun to protrude through the wall of the bone which may reflect a rejection process of the tooth.

Dr. Kosel, her regular dentist, fashioned and installed a temporary and then a permanent bridge in her mouth, which in her lifetime might need to be replaced four to six times because of normal wear and tear. In March of 1982 she was treated by Dr. Garber, a dentist who replaced the bridge installed by Dr. Kosel because of receding of the gums.

Approximately one year after the accident Claimant Morrison-Zakhar was operated on by Dr. Gotsis, a plastic surgeon who recut her lip as a result of lesions from her lacerations. She has suffered swelling and pain in both of her knees requiring X rays and temporary restriction of activities. Kneeling or standing for long periods of time still hurts her knees. ,Her medical and [*27] dental bills thus far are $4,944.00. Expected bridge replacements were estimated at $14,400.00. We find that she is entitled to an award of $30,000.00.

As to Claimants Roger Rodeck, Theresa Settles and Charles Jager, no evidence was presented on their behalf and we find, therefore, that their claims must be denied.

Wherefore, it is hereby ordered that awards be granted in this case to the following persons in the following amounts: (a) $3,500.00 to Maureen Jager (b) $l,o00.00 to Willlam Jager (c) $30,000.00 to Pamela Morrison-Zakhar It is further ordered that the claims of Roger Rodeck, Theresa Settles, and Charles Jager, be denied.