Terracom Nursing Associates v. State of Illinois

OPINION

STEFFEN, J. THIS CAUSE COMING TO BE HEARD on Respondent’s Motion to Dismiss, due notice given and oral arguments presented, this Court being fully advised, finds as follows:

STATEMENT OF FACTS

Claimant, a long-term care facility, filed this complaint on January 21, 1997 against Illinois Department of Public Aid (IDPA) for non-payment of medical bills for services they rendered to Medicare recipients. The dates of services range from January 1, 1990 through February 28, 1995 (relevant time period). In 1993, pursuant to an IDPA audit, Respondent sought to recover $201,085.23 in overpayments. Claimant asserted it had been underpaid approximately $360,000.00. After a billing review process on January 22, 1996, IDPA mailed a remittance advice authorizing a $44,300.20 set-off against the $201,085.23 recoupment amount that Claimant owed IDPA. After the audit, and after exhausting its administrative remedies, Claimant filed the instant action to recover those underpayments.

ISSUES

The issue in the Motion to Dismiss is whether the claim is barred by the statute of limitations set forth in Section 22(b) of the Court of Claims Act, 705 ILCS 505/22(b), and section 11-13 of the Public Aid Code, 305 ILCS 5/11-13.

Respondent states that the claim is a Medical Vendor Claim and should have been filed within one year after the cause of action accrued. Additionally, Respondent states the Court lacks jurisdiction to hear causes under the quantum meruit doctrine. Claimant urges that the matter is in fact a contract or equitable action and the statute of limitations is not governed by section 11-13 because this section only applies to vendors that submit a bill. Claimant further argues in [*226] the alternative that it met the statutory requirements of section 11-13 because the claim was commenced within one year after IDPA issued a remittance advice.

Claimant reasons that the remittance advice is both the denial of some charges as well as a partial payment; both of which would restart the period of accrual.

Respondent’s Reply reaffirms that section 11-13 is applicable to this claim whether or not the Claimant has submitted a bill and that under either scenario the claim is time barred. Respondent ultimately proposes that the statute of limitations is jurisdictional and jurisdiction cannot be conferred by estoppel or equitable arguments.

ANALYSIS

Respondent has filed a Motion to Dismiss the claim pursuant to Section 2-619 of the Code of Civil Procedures, 735 ILCS 5/2-619(a)(5), for lack of specificity in the complaint and also pursuant to 705-ILCS 505/22(b) and 305 ILCS 5/11-13(2) for the claim being filed past the statute of limitations. As to Respondent’s motion pursuant to 2-619, the Claimant has attempted to cure the defect by filing additional documents. Therefore Respondent’s Motion to Dismiss based on that ground is denied. As to the statute of limitations argument, the Court’s analysis is as follows.

Section 22 of the Court of Claims Act, 705 ILCS 505/22, the applicable statute governing the limitations period under the Court of Claims Act, states in relevant part:

Every claim cognizable by the Court and not otherwise sooner barred by law shall be forever barred from prosecution therein unless it is filed with the Clerk of the Court within the time set forth as follows:

… (b) All claims cognizable against the State by vendors of goods or services under “the Illinois Public Aid Code” …must file within one year after the accrual of the cause of action, as provided by 11-13 of that Code (305 ILCS 5/11-13).

… (j) All time limitations established under this Act and rules promulgated under the Act shall be binding and jurisdictional, except upon extension authorized by law or rule and granted pursuant to a motion timely filed.

Section 11-13 of the Public Aid Code, 305 ILCS 5/11-13, Conditions for Receipt of Vendor Payments - Limitation Period for Vendor Action - Penalty for Violation, provides, in relevant part, as follows:

[*227] Vendors seeking to enforce obligations of a governmental unit of the Illinois Department for goods or services (1) furnished to or on behalf of recipients and (2) subject to a vendor payment as defined in Section 2-5, shall commence their actions in the appropriate Circuit Court or the Court of Claims, as the case may require, within one year next after the cause of action accrued.

A cause of action accrues within the meaning of this Section upon the following date: (1) If the vendor can prove that he submitted a bill for the service rendered to the Illinois Department of a governmental unit within 12 months of the date the service was rendered, then (a) upon the date the Illinois Department or a governmental unit mails to the vendor information that it is paying a bill in part or is refusing to pay a bill in whole or in part, or (b) upon the date one year following the date the vendor submitted such bill if the Illinois Department or a governmental unit fails to mail to the vendor such payment information within one year following the date the vendor submitted the bill; or (2) If the vendor cannot prove that he submitted a bill for the service rendered within 12 months of the date the service was rendered, then upon the date 12 months following the date the vendor rendered the service to the recipient.

The analysis of the statute of limitations issue begins with examination of the creation of the Court of Claims and its jurisdictional powers. The Court of Claims Act created a right to bring actions against the State and State agencies such as the IDPA otherwise barred by sovereign immunity. It also established that the time limitations under the Act are binding on the Court as jurisdictional. Rubin v. State, 47 Ill.Ct.Cl. 414, 420-21 (1992). The limitation period under the Act is a matter of subject matter jurisdiction and compliance with the limitation period is a prerequisite to any action. Hickey v. State, 48 Ill.Ct.Cl. 376, 381 (1995).

Claimant is a medical vendor under the Illinois Public Code but states that it is not subject to the limitation period for vendor action under section 11- 13 because it only applies to vendors that submit bills to the State. Under the current system nursing homes do not submit bills but rather wait for IDPA to generate pre-payment reports. Claimant argues that this method involves constant, long-term dispute resolution where IDPA controls how bills are created and disbursed. Therefore, they should not be forced to comply with the shorter limitation period. Respondent concedes that Claimant does not need to submit bills to initiate payment but argues that 305 ILCS 5/11-13 (2) applies precisely to such a situation. The Court concurs with this reasoning.

[*228] Section 11-13(2) provides that if the vendor cannot prove that he submitted a bill for the service rendered within 12 months of the service, then the cause of action accrues upon the date 12 months following the date the vendor rendered the service to the recipient. In the claim at bar, Claimant admits that no bills were submitted, because no bills were required to be served.

The dates of the service are from January 1, 1990 to February 28, 1994; the accrual dates would run from January 1, 1991 to February 28, 1995 and the claim should have to be filed within a year of accrual.

Illinois Bell Telephone v. State, 35 Ill.Ct.Cl. 345, 349 (1981), addressed the public policy behind the jurisdictional limitations of Section 22(b) of the Court of Claims Act. The Court stated: “Finally, this Court would be remiss if it did not note the sound public policy reason for the statute, which is that to all things there must be an end, and there is no hardship in requiring claimants to act within a reasonable time. Failure by a claimant to act, whether by lapse of time or omission, forfeits his title to the claim under the law, allowing the government to avail itself thereof in suits against it.” The reasoning and policy arguments of Illinois Bell Telephone, id. are sound and applicable to Terracom’s suit. Their argument that the statute of limitations should not accrue until possible audits or dispute resolution would create an open ended limitation period, not easily ascertained and perhaps only determined on a case by case basis. Such a finding would be contrary to the simple mandate of 11-13(2) and against the spirit and intent of the not only Illinois Bell but the Court of Claims Act. Therefore, Claimant Terracom, as a medical vendor, is subject to the statute of limitation requirement of Section 11-13(2).

Claimant argues that even if Section 22(b) of the Court of Claims Act and Section 11-13 of the Public Aid Code apply to this claim, the cause of action did not accrue until the audit and review process were completed and the remittance advice was issued on January 22, 1996. Claimant states that this is the first time they knew or should have known that IDPA did not intend to pay the claims. Claimant bolsters this argument under principles of equity by stating that Respondent’s review process and partial payment tolled the statute.

Respondent disagrees and the Court concurs with their argument and reasoning on this issue.

First, the Court of Claims simply does not have equitable jurisdiction to allow a claimant to utilize defenses such as waiver, estoppel or laches to overcome the Court’s strict limitations provisions. Klopfer v. Court of Claims, 286 Ill.App.3d at 505, 676 N.E.2d at 683 (1st Dist. 1997). A State officer is without power to waive or arrest the running of the statute. Illinois Bell v. State, 35 Ill.Ct.Cl. at 347. Therefore, Claimant’s reliance on the Respondent’s attempt to review the unpaid bill or even their assurances cannot negate the statute of limitations.

Second, Claimant’s argument that the remittance notice is the accrual date of the claims lacks legal basis. Claimant argues that subsection 11- 13(1)(a) is applicable in this matter and that the accrual date for the period of limitations should be measured from the date of the remittance notice.

[*229] Assuming arguendo that section 11-13(1) governs situations where a vendor can prove that he submitted a bill were to apply, the accrual date is measured from the date that IDPA first refused to pay the disputed amount. St. Anthony Hospital Medical Center v. State, 44 Ill.Ct.Cl. 98 (1991); Simon v. State, 40 Ill.Ct.Cl. 246, 250 (1987). The audit and resulting negotiations and paper exchange between the parties entailed resubmission of claims and fresh denials; they do not restart a new period of limitations.1 Capitol Claim Services, Inc. v.

State, 42 Ill.Ct.Cl. 97 (1988).

Assuming arguendo, the post audit submissions were not resubmissions, there is no legally justifiable ground to explain why Claimant waited nearly seven years after the first date of service to request payment other than the equitable argument that they relied on IDPA to their detriment. The record is silent as to why Claimant could not or did not review a particular patient’s bill upon the issuance of a remittance advice and ask for a written review immediately following the first pre-payment report. Also, by the 1997 filing date both the automated billing system and section 11-13(2)’s strict statutory language limiting the filing date had been in effect for some time. The balance of equities cannot extend the limitations period under this scenario.

Third, partial payment made by IDPA cannot initiate a new limitation period, nor can the actions of IDPA in negotiating payment for claims that they could have denied. Claimant’s argument to apply case law relating to extending statutory periods in other contract cases is distinguishable from this case. Those cases relate to the ordinary statute of limitations and not the unique statutory period established under the Court of Claims Act. The Illinois Supreme Court has held that where there is a general statute of limitations and another one particular to only one subject matter, the particular provisions must prevail. See Hernon v. E.W. Corrigan Construction Co., 149 Ill.2d 190, 1972, Ill.Dec. 200, 595 N.E.2d 561(1992), quoting Bowes v. City of Chicago, 3 Ill.2d 175, 205, 120 N.E.2d 15 (1954).

Lastly, it is clear that a claimant must file in the Court of Claims to prevent the tolling of the statute, even if it is pursing other remedies. National Railroad Passenger Corporation v. State, 36 Ill.Ct.Cl. 265, 267 (1982). The Administrative Code rules specifically provide procedures for a matter to be continued generally pending possible resolution through other means. Rules 6 (74 Ill.Adm.Code 60) and 7 (74 Ill.Adm.Code 70). Regardless of other remedies or procedures available, Claimant must file in the Court of Claims within this period of limitations.

Therefore, the Court finds that the Claimant has failed to file a timely action in this matter and the cause is barred by the statute of limitations.