Hospital claims take precedence

Liens by a hospital against payments for personal injury are to be paid promptly even when a structured settlement defers payment to the victim. The Illinois Supreme Court's decision of December 6 made this interpretation of the Hospital Lien Act (see Illinois Revised Statutes 1987, ch. 82, sec. 97).

In this case the guardian of a minor injured in a traffic accident entered a structured settlement with an insurance company under which an annuity was set up to make substantial payments in 1998, 2005 and 2010 to the victim. To secure court approval a guardianship estate was set up. Cardinal Glennon Hospital of St. Louis filed a lien against the estate for over $57,000 of expenses in treating the victim. The Cook County Circuit Court ruled that the estate presently has no assets, so that payment of the lien could not begin until 1998 and would probably drag out until 2010.

The Hospital Lien Act allows hospitals to file liens up to "one-third of the sum paid or due to said injured person." In overturning both the circuit and appelate court decisions, the high courd said, "The funds used to procure the structured settlement annuity, although not technically passing through the annuitant's hands, are, nevertheless, sums paid or due that person. . . . It is to these funds that the hospital lien attaches."

The court pointed out that the purpose of the act is to allow hospitals to treat accident victims without worrying about their ability to pay. Deferring payment would defeat this purpose. The court noted that the estate's attorneys were paid immediately, saying "we do not feel it proper that the structured settlement here should accommodate attorney fees while ignoring a valid hospital lien." It also felt that the rising popularity of structured settlements might indicate that "the time is ripe for the legislature to consider the problem."

Justice Howard C. Ryan wrote the opinion in In re Estate of Larry Cooper (Docket No. 65414). Justice John J. Stamos had participated in the appellate decision and absented himself from these deliberations.

No libel without malice

Malice is the essential ingredient if a charge of libel against a newspaper is to prevail. The Illinois Supreme Court's decision of December 15 found a newspaper's statements libelous but refused to find for the plaintiff because the writer believed the the statements to be true at the time of writing. The court did not address the defendant's contention that an editorial, as opinion, enjoys first amendment protection.

In 1980 the Belleville News Democrat supported Jerry Costello's campaign for chairman of the St. Clair County board because it believed that he had taken a position against establishing a mass transit district supported by an increase in sales tax without referendum. When the board established such a district at its first meeting under his chairmanship the paper editorially branded him a liar.

Costello (a Democrat who won a special election in August 1988 and the regular November election for the late Melvin Prices's 21st district seat in the U.S. Congress) filed an action for libel. He presented evidence that he had tried to influence board members to vote against the motion establishing the mass transit district and that he had planned an unsuccessful parliamentary maneuver to table the motion. He also showed that rules governing conduct of board meetings prevented him from speaking or voting on the issue at the meeting. The paper's editor and publisher both asserted that they were unaware of all of this at the time of the editorial.

The high court said, "[T]he evidence convincingly proved that the critical statements in the disputed editorial were false." It cited several U.S. Supreme Court cases requiring the plaintiff to show that "the defendant published the defamatory statements with knowledge that the statements were false or with reckless disregard for the truth." Costello did not do this to the court's satisfaction but only showed "that the defendants were careless and professionally inadequate in investigating Costello's efforts to defeat the transit district resolution."

Justice Daniel P. Wared wrote the opinion in Costello v. Capital Cities Communication, Inc. (Docket No. 65083). Justices Joseph F. Cunningham and John J. Stamos did not participate.

Selling papers door-to-door

Soliciting newspaper subscriptions door to door is not the same thing as peddling brushes or cosmetics according to the Illinois Supreme Court's opinion of December 15.

Ordinances of the village of Downers Grove require registration of door-to-door solicitors and establish more stringent regulations for commercial than noncommercial permits. The Chicago Tribune Company argued that placing its solicitors in the commercial category violates first amendment protection of freedom of the press and speech.

The high court agreed with lower courts that newspapers should be classified as noncommercial because of first amendment protections. The village's ordinance is lenient towards charitable, religious and political solicitation, and the court found "no showing (nor, we suspect, could there be) that these 'noncommercial' solicitors as a class are less annoying or disturbing than their 'commercial' counterparts." Thus the classification was not seen as meeting the goals of the ordinance — protection of residents from annoyance. The court observed that "there are less draconian means to protect citizens from annoyance than by imposing these arbitrary restrictions."

The decision was unanimous, with an opinion by Justice Howard C. Ryan in Chicago Tribune v. Village of Downers Grove (Docket No. 65418).

Checks to be deposited as drawn

It may seem obvious that banks must deposit checks as a drawer directs, but the Illinois Supreme Court had to rule to that effect in a decision filed December 15.

Frank Quinn drew a $30,000 check payable to Limetree Beach Associates Ltd., to enter an investment partnership formed by Dan L. Wey. Wey endorsed the check for payment into his personal business account and his bank duly made the deposit. Quinn brought action against his own bank to have his account recredited.

The Uniform Commercial Code says, "As against its customer, a bank may charge against his account any item which is otherwise properly payable . . . ." (see Ill. Rev. Stat. 1985, ch. 26, sec. 1-101(1)). The court observed: "Central to the contract between the drawee bank and the drawer is the obligation of the bank to follow only the orders of its customer." It required Quinn's bank to recredit his account for the $30,000.

The court found no other case exactly touching this issue, although it cited several that exhibited some parallels. Justice William G. Clark wrote the opinion in National Bank of Monticello v. Quinn (Docket No. 65761).

F. Mark Siebert

February 1989 | Illinois Issues | 29