AEROFUND FINANCIAL, INC., Claimant, v. STATE OF ILLINOIS, DEPARTMENT OF HUMAN SERVICES, Respondents.
Case summary
Claimant, an assignee of payments under a contract between its assignor and the Department of Human Services, sought payment for medical provider services. The court dismissed the claim, holding that the assignment was prohibited by contract terms and federal/state statutes incorporated therein, and that claimant lacked privity of contract.
Cases cited: Thinking Machine Corp. v. State (1998), 51 Ill. Ct. Cl. 367; Tully v. State (1994), 47 Ill. Ct. Cl. 400; Walt v. State (1999), 51 Ill. Ct. Cl. 383
AI-generated summary from the opinion text — may contain errors. The opinion text and PDF above are the official record.
Headnotes
- Contracts - UCC provisions subservient to plain language - A UCC notice provision is subservient to the plain language of a contract for provision of medical care with federal and state grant funds by statute.
ORDER
JANN, J. THIS CAUSE is considered upon cross-motions for summary judgment on the issue of payments for medical provider services to the original contracting party after an assignment of the proceeds/payments under the contract which obligated Respondent to the assignor, and the assignee gave notice to Respondent. Respondent did not agree to the assignment.
The Court has reviewed the points and authorities and contracts of record and finds:
1. Claimant was not a party to the contract at issue, regardless of UCC notice to Respondent.
2. Assignment of payments is specifically prohibited by the relevant contract terms and regulations made part of the contract, which Claimant’s assignor entered into with Respondent. All payments were made to the contracting party, Claimant’s assignor, per the record as agreed.
3. While prohibitions of assignment are generally abrogated in private contracts by provisions of the Uniform Commercial Code [*230] with notice, as Claimant asserts, this contract’s assignment prohibitions are required by the terms of state and federal statute incorporated in the contract as set forth in the record.
4. Claimant’s arguments of notice under the UCC provisions for assignment, and the proof of an enforceable contract it entered into with the assignor, are not persuasive to establish a duty owed Claimant by Respondent. The assignor’s contract with Respondent creates no new rights upon an illegal assignment to a third party.
5. No breach of contract claimed against Respondent may arise if Claimant has no privity of contract. Respondent asserts without rebuttal by Claimant, that all amounts due under the contract were paid to the contracting party, Claimant’s assignor.
6. The statutory and contract provision state no assignment will be accepted or payment made to a person or entity other than the original contracting party without permission of Respondent.
Payments to “factors” are prohibited. The relevant federal and state statutes funding the subject contract between Claimant’s assignor and Respondent are explicitly incorporated in the subject service contract made part of the record we consider.
7. The Court has previously addressed a UCC assignment and the State’s written acceptance of notice for payment in Thinking Machine Corp. v State (1998), 51 Ill. Ct. Cl. 367, 371 wherein, Respondent accepted and acknowledged receipt and notice of an assignment which was not prohibited by law or regulation applicable in that specific contract.
8. Claimant has made demand for fees and costs of suit, as well as interest without citation of authority to allow such an award.
Public policy is noted as the legislative intent for enactment of the statutory rules and regulations prohibiting assignments of federal and state designated funds underlying this contract. Claimant has made no argument to support a proposition that these provisions are not determinative of this cause.
Hence, neither privity nor breach of an agreement to which Claimant is not a party, may be asserted in this case, the UCC notice provisions is subservient to the plain language and exceptions in the contract for provision of medical care with federal and state grant funds by statute.
[*231] Judgment is denied for any and all claims arising from an assignment for services rendered under any of the grant funds set forth in respondents crossmotion for summary judgment.
All claims for fees and interest are stricken as no statutory authority is cited to grant such costs as required in this Court Tully v State (1994), 47 Ill. Ct.
Cl. 400, Walt v State (1999), 51 Ill. Ct. Cl. 383.
Respondent’s Motion for Summary Judgment is granted on a finding of lack of jurisdiction over the Complainant in this Court. The UCC provisions negating contract clauses, which prohibit assignment, do not apply to this contract. Claimant is admittedly a corporation engaged in the factor of debt or sums owed a third party. Federal and State statutes and regulations incorporated in the service contract Claimant was assigned, expressly prohibit such an assignment.
Based upon the record presented IT IS ORDERED:
Claimant’s pleas for costs, fees and interest are stricken.
Claimant’s Motion for Summary Judgment is Denied.
Respondent’s Motion for Summary Judgment is Granted.
This cause is hereby dismissed with prejudice.