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The Illinois Appellate Court has reversed a Circuit Court judge’s order dismissing a lawsuit related to insurance coverage. John Smolinski was in a car accident on March 3, 2012. At the time, Smolinski was driving a rented car. Mr. Smolinski had previously entered into a “personal auto policy” with Allmerica Financial Alliance Insurance Co.

On September 27, 2012, Smolinski filed a lawsuit pro se against Allmerica claiming that it had violated the terms of the insurance contract by refusing to pay for damages to Smolinski’s car.

Allmerica filed its appearance and a hearing was set for December 17. Smolinski was not present at the December 17 court hearing and the matter was dismissed for want of prosecution.

The defendant Southern Illinois Hospital Services d/b/a Herrin Hospital (Herrin Hospital) appealed from the trial court’s July 25, 2014 order adjudicating liens and distributing the settlement proceeds from an injury case. Herrin Hospital contended that the trial judge improperly included Medicare, Medicare Part D and Medicaid “liens” in the total amount of liens subject to the 40% cap mandated by the Illinois Healthcare Services Lien Act. Because the court allowed 100% reimbursement of the Medicare and Medicaid liens, Herrin Hospital’s reimbursement was substantially decreased.

In addition, Herrin Hospital claimed that the trial court improperly required the lien holders to pay the plaintiff Edwin McKim’s cost of suit pursuant to the Common Fund Doctrine. The Illinois Appellate Court — in its decision — found that the judgment ordered distributing the settlement was contrary to the plain language of the Healthcare Services Lien Act and is in conflict with Medicare’s secondary payer provision and the Illinois Public Aid Code. Additionally, the trial court’s assessment of court costs to Herrin Hospital and Williamson County Ambulance does not comply with the Illinois Supreme Court’s decisions on this topic.

The appeal involved the adjudication of liens under the Healthcare Services Lien Act (770 ILCS 23/1 et seq.). The Healthcare Services Lien Act limits the total amount of liens to 40% of the verdict. At issue is whether bills owed to Medicare, Medicare Part D and Medicaid can be included in the 40% cap under the Healthcare Services Lien Act. Also at issue is whether the 40% of the settlement is a “common fund” created for the benefit of the lienholders and whether the plaintiff’s attorney’s costs should be paid by the lienholders from their pro rata shares of the 40% of the settlement.

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