Illinois Appellate Court Reverses Public Aid Lien Claim in Medical Malpractice Lawsuit

Lois K. Ries, a public aid recipient, was paralyzed by what was alleged to be medical malpractice. This took place in 2011. Her medical malpractice lawsuit was pending when she died. After settling the case for $415,000, her two sons, who were the co-executors of her estate and her sole heirs, received an unpleasant surprise.

During the negotiations, the Illinois Department of Healthcare and Family Services (the holder of the Illinois public aid lien) reduced its lien under Section 11-22 of the Illinois Public Aid Code to $20,000. It had paid $124,679 for her medical expenses after she was paralyzed. The sons expected to receive the next proceeds of the settlement: $80,819. However, the department insisted that it was entitled to all of the money based on Section 5-13 because it had provided $87,929 in medical benefits to Rise before her injury.

The co-executors objected, insisting that they never would have settled the medical malpractice lawsuit if they knew they would receive nothing. They would have instead pressed on, taking the case to trial with the hope that they would obtain a verdict more than the settlement and thus have some money for themselves after satisfying the public aid lien.

A Winnebago County court judge viewed the $80,819 as “wholly and 100 percent traceable” to a payment that had already been trimmed by a compromised lien by the department and ruled that the department was not entitled to take a “second bite at the same fund apple.” The more-specific statute (Section 11-22) applied over the more general law (Section 5-13), the judge concluded.

On appeal, the Illinois Appellate Court reversed, finding that absent a clear statement or a global settlement on the lien, which was not here, the source of the funds in the estate appeared to be irrelevant. The appeals court ruled, as Section 18-14 of the Probate Act provides that, generally, claims against an estate are chargeable against all personal and real property within the estate, “without distinction.”

The appeals panel stated that money is fungible and interchangeable, regardless of its source. Moreover, the appeals panel concluded that they agreed with the Department that neither Section 11-22 nor Section 5-13 is more specific than the others; rather, they apply to different situations.

In sum, there is no support in the code, case law, or equity that a trial court’s decision that the Department was foreclosed from pursuing a claim against the estate for expenses paid on Lois’ behalf before her injury. Merely because the sole asset in the estate was comprised of settlement funds from the personal-injury action (medical malpractice lawsuit) in which the Department accepted a reduced amount for its lien related to that injury, did not prevent the Department from asserting its lien for the whole amount.

Accordingly, the court reversed the finding of the trial court and held that the estate was responsible for the entire claim made by the Department.

Ries v. Department of Healthcare and Family Services, 2021 IL App (2d) 191027 (Jan. 19, 2021).

Kreisman Law Offices has been handling federal and Illinois state appeals, probate litigation, commercial litigation, medical malpractice lawsuits, and catastrophic injury cases for individuals, families and loved ones who have been harmed, injured or died as a result of the carelessness or negligence of a medical provider for more than 45 years in and around Chicago, Cook County and its surrounding areas, including Oak Park, Bedford Park, Bridgeview, Woodridge, Naperville, Carol Stream, Hoffman Estates, Buffalo Grove, Deerfield, Vernon Hills, Grayslake, Crystal Lake, Fox Lake, Northbrook, Berwyn, Cicero, Aurora, Hinsdale, Joliet, Chicago (East Side, West Roseland, Englewood, Back of the Yards, Bronzeville, South Loop, Lower West Side, North Lawndale, East Garfield Park, Wrigleyville, Hyde Park, Uptown, Portage Park, Irving Park, North Center, Belmont Garden, Galewood), River Grove, Franklin Park, Schiller Park and Wilmette, Ill.

Robert D. Kreisman has been an active member of the Illinois and Missouri bars since 1976.