Vine Street Clinic v. Healthlink, Inc.

Docket No. 99790.

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

VINE STREET CLINIC et al., Appellants and Cross-Appellees, v.

HEALTHLINK, INC., Appellee and Cross-Appellant.

Opinion filed September 21, 2006.

JUSTICE KARMEIER delivered the judgment of the court, with

opinion

Chief Justice Thomas and Justices Freeman, Fitzgerald, and

Kilbride concurred in the judgment and opinion.

Justices Garman and Burke took no part in the decision.

OPINION

On March 4, 2003, plaintiff Vine Street Clinic (Vine Street) filed

a putative class action lawsuit in Sangamon County against defendant

HealthLink, Inc. (HealthLink), seeking a declaration that the

“percentage fee” provision of the parties’ services contract violated

section 22(A)(14) of the Medical Practice Act of 1987 (Act) (225

ILCS 60/22(A)(14) (West 2002)). Vine Street also sought a refund of

all administrative fees paid to HealthLink under the contract. On May

27, 2003, plaintiff Ursula Thatch, M.D., was granted leave to

intervene in this action, and Vine Street and Thatch (plaintiffs) were

allowed to amend their complaint. Plaintiffs’ amended complaint

sought a declaration that: (1) the percentage fee violated the Act; (2)

HealthLink’s new “flat fee” also violated the Act; and (3) HealthLink

was barred from collecting any administrative fees under the Illinois

Insurance Code (Insurance Code) (215 ILCS 5/1 et seq. (West

2002)). The amended complaint also sought injunctive relief and

recovery of all administrative fees previously paid to HealthLink.

On June 26, 2003, HealthLink filed a verified counterclaim for

declaratory relief, seeking a declaration that the flat fee does not

violate the Act, and asking the court to enter judgment against

plaintiff Thatch for any administrative fees that she owed. On July

30, 2003, the circuit court entered judgment on the pleadings, holding

that although HealthLink’s former percentage fee violated the Act, its

current flat fee did not. The circuit court further held that previously

paid monies were not recoverable because any alleged illegal contract

was unenforceable. Finally, the court granted defendant’s motion to

dismiss plaintiffs’ counts alleging: (1) the Insurance Code bars

HealthLink from collecting administrative fees; and (2) unjust

enrichment. Plaintiffs appealed and HealthLink cross-appealed.

The appellate court affirmed the circuit court’s ruling with respect

to the repayment of fees previously paid, but the majority held that

both the flat fee and the previously charged percentage fee were

prohibited by the Act. 353 Ill. App. 3d 929. The appellate court did

not address plaintiff’s argument that HealthLink violated the

Insurance Code. Justice Steigmann dissented, arguing that both the

percentage and flat fee were permissible. Appeal lies in this court as

a result of the appellate court thereafter granting an application for a

certificate of importance pursuant to Supreme Court Rule 316 (155

Ill. 2d R. 316). This court has granted leave to file an amicus curiae

brief in support of HealthLink to: (1) America’s Health Insurance

Plans; and (2) the American Federation of State, County and

Municipal Employees, AFL-CIO, and Egyptian Area Schools

Employee Benefit Trust. We have also granted the Illinois State

Medical Society leave to file an amicus brief in support of plaintiffs.

155 Ill. 2d R. 345.

Plaintiff Vine Street is a partnership consisting of physicians who

render psychiatric services, and plaintiff Thatch is an Illinois

physician specializing in obstetrics and gynecology. Defendant

HealthLink is an Illinois corporation that enters into participating

physician agreements with physicians, and different agreements with

those offering other health-care services, thereby creating a network

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of health-care providers. HealthLink makes these provider networks

available to members of health plans that are offered by insurance

carriers, self-funded employer groups, governmental entities and

union trusts (collectively payors). Participating physicians agree to

provide medical services to payor members at a discounted rate and

to send their claims for reimbursement to HealthLink. HealthLink

then processes the claims and sends them to the payor for benefit

determination and payment. Vine Street was a provider in

HealthLink’s network from 1989 to 2001, and during that time paid

HealthLink a 5% administrative fee that totaled at least $21,720.28.

Thatch is a provider in HealthLink’s network who, from 1993 until

June 30, 2002, paid HealthLink a percentage-based fee totaling

$25,079.06.

The Illinois Attorney General is charged with enforcing state law,

including the Act, and one duty of the Attorney General is to provide

written opinions on legal questions to certain government officers

and agencies. 15 ILCS 205/4 (West 2002). In an opinion letter dated

March 5, 2002, Attorney General James E. Ryan responded to an

inquiry made by Charles A. Hartke, assistant majority leader of the

House of Representatives, and concluded that section 3.7 of the

HealthLink agreement, requiring each participating physician to pay

HealthLink an administrative fee equal to 5% of the amount allowed

in HealthLink’s rate schedule for services provided to members by

the physician, violated section 22(A)(14) of the Act and was

therefore void under Illinois law. 2002 Ill. Att’y Gen. Op. No.

02–005, slip op. at 4. On May 30, 2002, HealthLink notified its

providers that to comply with the Attorney General’s opinion, it

would now charge a fixed flat fee instead of the percentage-based fee.

HealthLink calculated the flat fee based on two factors: (1) physician

speciality; and (2) volume of claims submitted by the physician

during the preceding calendar year. HealthLink calculated Thatch’s

new fixed flat fee at $600 per month. Thatch refused to pay the flat

fee. On May 27, 2003, as noted, plaintiffs filed their amended

complaint seeking, inter alia, a declaration that both the percentage-

based fee and the flat fee violated the Act, and the recovery of all fees

previously paid.

In this court, HeathLink contends that: (1) neither its flat fee nor

its former percentage fee for administrative services violates section

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22(A)(14) of the Act; and (2) its administrative fees violate no public

policy. Plaintiffs contend herein that: (1) the lower courts erred by

allowing HealthLink to retain the administrative fees paid by

plaintiffs; (2) if the fees are not returned to plaintiffs, HealthLink

should be divested of these fees and the funds applied to benefit the

public; and (3) HealthLink was acting as an administrator under the

Illinois Insurance Code (215 ILCS 5/1 et seq. (West 2002)).

As it is the linchpin issue raised herein, we first address cross-

appellant HealthLink’s assertion that the appellate court erred in

finding that both its percentage and flat fees violated section

22(A)(14) of the Act. Because this issue concerns the construction of

a statute, it is a question of law, and our standard of review is de

novo. Bowman v. American River Transportation Co., 217 Ill. 2d 75,

80 (2005); Progressive Universal Insurance Co. of Illinois v. Liberty

Mutual Fire Insurance Co., 215 Ill. 2d 121, 128 (2005). The primary

rule of statutory construction is to ascertain and give effect to the

legislature’s “true intent and meaning.” Bowman, 217 Ill. 2d at 83;

Progressive Universal Insurance, 215 Ill. 2d at 134. “We determine

legislative intent by examining the language of the statute, which is

‘the most reliable indicator of the legislature’s objectives in enacting

a particular law.’ ” In re Detention of Lieberman, 201 Ill. 2d 300, 308

(2002), quoting Michigan Avenue National Bank v. County of Cook,

191 Ill. 2d 493, 504 (2000). “A court construing a statute should read

it as a whole, give the statutory language its plain meaning, and

import to the statute the fullest possible meaning to which it is

susceptible.” People v. Ferrell, 277 Ill. App. 3d 74, 77 (1995).

Further, when undertaking the interpretation of a statute, we must

presume that when the legislature enacted a law, it did not intend to

produce absurd, inconvenient or unjust results. Progressive Universal

Insurance, 215 Ill. 2d at 134.

Here, the relevant language of the Medical Practice Act of 1987

provides:

Ҥ22. Disciplinary action.

(A) The Department [of Professional Regulation] may

revoke, suspend, place on probationary status, or take any

other disciplinary action as the Department may deem proper

with regard to the license or visiting professor permit of any

person issued under this Act to practice medicine, or to treat

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human ailments without the use of drugs and without

operative surgery upon any of the following grounds:

***

(14) Dividing with anyone other than physicians with

whom the licensee practices in a partnership, Professional

Association, limited liability company, or Medical or

Professional Corporation any fee, commission, rebate or

other form of compensation for any professional services

not actually and personally rendered.” 225 ILCS

60/22(A)(14) (West 2002).

Well-reasoned opinions of the Attorney General interpreting or

construing an Illinois statute are persuasive authority and are entitled

to considerable weight in resolving a question of first impression,

although they do not have the force and effect of law. See Bonaguro

v. County Officers Electoral Board, 158 Ill. 2d 391, 399 (1994); see

also City of Springfield v. Allphin, 74 Ill. 2d 117, 130-31 (1978);

Sparks & Wiewel Construction Co. v. Martin, 250 Ill. App. 3d 955,

965 (1993). While our appellate court has reviewed the meaning of

section 22(A)(14) in somewhat similar contexts to the one presented

here, this court has never examined the parameters of section

22(A)(14)’s prohibition of percentage fee arrangements involving

Illinois licensed physicians, or, more specifically, whether entering

into participating physician agreements with a corporation such as

HealthLink, which required as an administrative fee a percentage of

the amount the physicians received for medical services performed,

is violative of section 22(A)(14). We therefore find the reasoning set

forth in the Attorney General’s March 2002 opinion letter to be

useful here in determining the propriety of the lower courts’ holdings

that the percentage fee set forth in section 3.7 of HealthLink’s

standard agreement with its participating physicians violated the fee

sharing prohibition of section 22(A)(14) of the Act.

Prior to May 30, 2002, section 3.7 of HealthLink’s participating

physician agreement stated, in pertinent part: “In consideration of the

services provided hereunder by HealthLink, each PHO Participating

Provider shall pay HealthLink an administrative fee equal to five

percent (5%) of the amounts allowed to the PHO Participating

Provider under the Rate Schedule for the provision of Medical

Services to Members by the Participating Provider.” As earlier stated,

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the Attorney General’s opinion letter concluded that section 3.7 of

HealthLink’s participating provider agreement was in violation of

section 22(A)(14) of the Act. The Attorney General’s finding was

essentially based upon several Illinois Appellate Court opinions

which the Attorney General found had “construed subsection

22(A)(14) to prohibit payments by physicians for management or

other services based upon a percentage of professional income.” 2002

Ill. Att’y Gen. Op. No. 02–005, slip op. at 3.

In the earliest of these cases, E&B Marketing Enterprises, Inc. v.

Ryan, 209 Ill. App. 3d 626 (1991), a marketing firm agreed to

promote the name and practice of a physician engaged in private

practice, primarily to insurance carriers, in return for a consulting fee

of 10% on all billings collected by the physician in connection with

such referrals. The appellate court held that the agreement was a fee

splitting contract, in violation of section 16(14) of the Medical

Practice Act (Ill. Rev. Stat. 1985, ch. 111, par. 4433(14)), and was

therefore void as against public policy. E&B Marketing, 209 Ill. App.

3d at 628-30. The fact that the contracting physician collected the

fees from insurance companies, rather than from individual patients,

had no effect upon the illegality of the underlying fee splitting

contract. E&B Marketing, 209 Ill. App. 3d at 629-30.

Although not noted by the Attorney General, E&B Marketing was

clearly based on section 16(14) of the Medical Practice Act, which is

not identical to section 22(A)(14) of the Medical Practice Act of

1987. Rather section 16(14) stated that anyone licensed or certified

under the Medical Practice Act was subject to disciplinary action for:

“Directly or indirectly giving to or receiving from any physician,

person, firm or corporation any fee, commission, rebate or other form

of compensation for any professional services not actually and

personally rendered.” Ill. Rev. Stat. 1985, ch. 111, par. 4433(14).

Section 16(14) further stated that nothing therein prohibited those

licensed under the Act from practicing medicine in a partnership,

corporation or as an association and “pooling, sharing, dividing or

apportioning the fees and monies received.” Ill. Rev. Stat. 1985, ch.

111, par. 4433(14). The Medical Practice Act was repealed effective

December 31, 1997. See E&B Marketing, 209 Ill. App. 3d at 629 n.1.

Thus, it was based on this earlier statutory language that the court

in E&B Marketing found: “The Act, in its plain terms, prohibits the

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receipt of any fee or commission, direct or indirect, for professional

services not actually rendered. E&B’s receipt of money ‘indirectly’

through insurance companies was in direct violation of the Act.”

E&B Marketing, 209 Ill. App. 3d at 629-30. We must therefore ask

whether the differences between the language of the now-repealed

section 16(14) and the language of section 22(A)(14) affect the

Attorney General’s finding that HealthLink’s percentage-based fee

violates the current Act. A comparison of the two sections reveals

that, of the portion at issue here, only the language in the first phrase

of the first sentence has been changed. Section 16(14) begins:

“Directly or indirectly giving to or receiving from any physician,

person, firm or corporation any fee ***,” whereas section 22(A)(14)

begins: “Dividing with anyone other than physicians with whom the

licensee practices in a partnership, Professional Association, limited

liability company, or Medical or Professional Corporation any fee

***.”

Examining the plain language of these two sections, we find that

they both prohibit traditional “fee splitting,” i.e., “a dividing of a

professional fee for a specialist’s medical services with the

recommending physician,” (Webster’s Third New International

Dictionary 835 (1986)), as well as prohibiting the sharing of such a

fee with any other “person, firm or corporation” (Ill. Rev. Stat. 1985,

ch. 111, par. 4433(14)). The phrases at issue appear to differ only in

that the legislature moved to the first sentence of section 22(A)(14)

the language setting forth, in more inclusive terms, the exemption

from the fee sharing prohibition for those physicians practicing in a

“partnership, Professional Association, limited liability company, or

Medical or Professional Corporation.” 225 ILCS 60/22(A)(14) (West

2002). Therefore, we conclude that the Attorney General’s analysis

of the issue before us was not affected by the slightly different

language of now-repealed section 16(14).

Support for this conclusion comes from comparing the remaining

cases examined by the Attorney General. In Lieberman & Kraff,

M.D., S.C. v. Desnick, 244 Ill. App. 3d 341 (1993), which also

construed the language of section 16(14), the appellate court

invalidated a contract for the sale of a medical practice which

provided compensation to the seller over a 20-year period, holding

that the contract was an illegal fee-sharing agreement, regardless of

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the fact that the purpose of the contract was benign. In similar fashion

to E&B Marketing, the court in Lieberman & Kraff, 244 Ill. App. 3d

at 345, found that “nothing in the language of the statute indicates an

intent to restrict the reach of the statute solely to conduct traditionally

known as fee splitting,” i.e., that which occurs “when a physician

refers a patient to another physician and then collects a portion of that

patient’s fee.” Rather, the issue is whether the parties’ agreement

violates the statute as written. Lieberman & Kraff, 244 Ill. App. 3d at

345.

“When read as a whole, the plain language of section 16

of the Medical Practice Act prohibits the sharing, pooling,

dividing, or apportioning of professional fees by physicians

unless the fee agreement falls within one of the enumerated

exceptions. The statute specifically permits physicians who

practice within the framework of a partnership, corporation or

association to share fees. (Ill. Rev. Stat. 1985, ch. 111, par.

4433(14).) *** However, the reach of the statute is not

limited to ‘fee splitting.’ The Medical Practice Act also

prohibits all other fee-sharing arrangements not specifically

authorized.” Lieberman & Kraff, 244 Ill. App. 3d at 345.

Nine months later, the appellate court decided Practice

Management Ltd. v. Schwartz, 256 Ill. App. 3d 949, 952 (1993), a

case which reviewed a percentage-fee agreement for management

services and the referral of patients between, inter alios, plaintiff, a

business which employed unlicensed optometrists, and defendants,

two licensed ophthalmologists, under “the pertinent section of the

Illinois Medical Practice Act of 1987 (Act) (225 ILCS 60/22(A)(14)

(West 1992)).” We first observe that the court in Schwartz actually

erred in basing its decision on section 22(A)(14) of the Medical

Practice Act of 1987, where, as the Lieberman & Kraff court noted,

“under the Regulatory Agency Sunset Act, the repeal [of the Medical

Practice Act] does not become effective until December 31, 1997.

Thus, the statute *** remains in effect. See Ill. Rev. Stat. 1991, ch.

127, par. 1904.9.” Lieberman & Kraff, 244 Ill. App. 3d at 344 n.1.

However, as we have previously found, the differences in the

language of section 16(14) and section 22(A)(14) do not, for our

purposes, change the analysis of whether a prohibited fee

arrangement occurred. The Schwartz court held that the fee

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agreement was improper, even though some legitimate management

services were performed by the unlicensed optometry business,

because the agreement allowed the business to be compensated

through a percentage of the net profits generated by the licensed

physicians, and the Act prohibits not only fee splitting, but all other

fee-sharing arrangements not specifically authorized therein.

Schwartz, 256 Ill. App. 3d at 953-55, citing Lieberman & Kraff, 244

Ill. App. 3d at 345.

Finally, in TLC The Laser Center, Inc. v. Midwest Eye Institute

II, Ltd., 306 Ill. App. 3d 411 (1999), the appellate court held that a

service contract violated section 22(A)(14) because it provided, in

part, for an annual fee to be paid by the defendant medical practice

to the plaintiff, an unlicensed corporation, in addition to specific

reimbursements. Although the fee was not calculated on a straight

percentage, the court found a “direct relation” between the revenues

generated by the practice and the fee the physicians were required to

pay to plaintiffs. TLC, 306 Ill. App. 3d at 428. With respect to this fee

arrangement, the TLC court observed:

“Section 22 of the Medical Practice Act does not only

prohibit sharing of fees for patient referrals; Illinois courts

have struck down contracts for the sale of a medical practice

(see Lieberman & Kraff v. Desnick, 244 Ill. App. 3d 341, 614

N.E.2d 379 (1993)) and contracts which involved

‘performance of some legitimate management services’ (see

Practice Management Ltd. v. Schwartz, 256 Ill. App. 3d 949,

954, 628 N.E.2d 656 (1993)) on the basis that the contracts

ran afoul of the statute. The ‘*** Medical Practice Act also

prohibits all other fee-sharing arrangements not specifically

authorized.’ Lieberman & Kraff, 244 Ill. App. 3d at 345, 614

N.E.2d at 382. The policy reasons behind the prohibition are

the danger that such an arrangement might motivate a

nonprofessional to recommend a particular professional out

of self-interest, rather than the professional’s competence. In

addition, the judgment of the professional might be

compromised, because the awareness that he would have to

split fees might make him reluctant to provide proper (but

unprofitable) services to a patient, or, conversely, to provide

unneeded (but profitable) treatment. Practice Management,

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256 Ill. App. 3d at 953, 628 N.E.2d at 658, quoting E&B

Marketing Enterprises, Inc. v. Ryan, 209 Ill. App. 3d 626,

630, 568 N.E.2d 339, 342 (1991).” TLC, 306 Ill. App. 3d at

427-28.

It is evident from this quotation that the reasoning used by the

TLC court to find a violation of section 22(A)(14) of the Act was the

same reasoning applied in prior appellate court decisions which were,

or should have been, made under the previous, but equivalent, section

16(14) of the Medical Practice Act. Thus, the Attorney General

reasonably relied on this unchanging line of Illinois cases to conclude

that HealthLink’s participating physician agreement, which included

a percentage fee for its services, was violative of section 22(A)(14)

of the Act and therefore void under Illinois law. While we believe the

Attorney General’s opinion letter is entitled to considerable weight,

it is not binding on the courts (Bonaguro v. County Officers Electoral

Board, 158 Ill. 2d at 399), and thus should be considered in light of

the arguments raised by the parties herein.

HealthLink claims that we should follow Practice Management

Associates, Inc. v. Orman, 614 So. 2d 1135 (Fla. App. 1993), a

Florida case construing section 22(A)(14)1 and holding that it did not

preclude physicians from agreeing to pay a percentage of their profits

to an unlicensed entity in exchange for marketing and management

services provided by that entity. As the Attorney General’s opinion

points out, several of the decisions from our appellate court

specifically disagreed with Orman, finding that while the Florida

court interpreted our Act to prohibit only traditional fee splitting, the

language of our statute is broad and nothing therein evinces an intent

by our legislature to limit the prohibition to unaffiliated physicians.

See Schwartz, 256 Ill. App. 3d at 952-54; Lieberman & Kraff, 244 Ill.

App. 3d at 347. We too cannot agree with the Florida court that the

intent of section 22(A)(14) “is to prohibit fee splitting for patient

referrals in the traditional sense and that the [nonprofessional

corporation’s percentage-fee based] contract does not fall within the

conduct proscribed.” Orman, 614 So. 2d at 1138.

1

We again note that it was section 16(14), and not section 22(A)(14),

which was in effect in 1993, when Orman was decided.

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Next, we examine an alternative argument made by plaintiffs

which not only is without merit, but which also unnecessarily

confuses those attempting to construe section 22(A)(14) of the Act.

Plaintiffs contend that the meaning of “professional services” in

section 22(A)(14) is not limited only to medical services, as this

interpretation ignores the term “anyone” in the phrase “[d]ividing

with anyone.” Indeed, plaintiffs’ reply brief states that the legislature

intended section 22(A)(14) to prohibit the division of fees between

licensees and “any other individual or entity that may render

professional services.” (Emphasis in original.) We disagree.

Under the interpretation of section 22(A)(14) which we have now

adopted, the conduct which the legislature seeks to prohibit is the

agreement by a licensee to share a percentage of the fees he or she

earned for “professional services *** actually and personally

rendered,” with “anyone,” “other than physicians with whom the

licensee practices.” 225 ILCS 60/22(A)(14) (West 2002). This

interpretation contemplates that words and phrases should not be

construed in isolation, as plaintiffs’ argument necessitates, but must

be interpreted in light of “other relevant provisions of the statute.”

Alternate Fuels, Inc. v. Director of the Illinois Environmental

Protection Agency, 215 Ill. 2d 219, 238 (2004), citing Michigan

Avenue National Bank, 191 Ill. 2d at 504.

Here, our examination of the entirety of section 22 and another

section of the Act supports our holding that only the sharing of a

percentage of the licensee’s fees for medical “professional services

not actually and personally performed” by the licensee was meant to

be prohibited. First, the final sentence of section 22(A)(14) itself

reads:

“Nothing contained in this subsection shall abrogate the right

of 2 or more persons, holding valid and current licenses under

this Act, to each receive adequate compensation for

concurrently rendering professional services to a patient and

divide a fee; provided, the patient has full knowledge of the

division, and, provided, that the division is made in

proportion to the services performed and responsibility

assumed by each.” (Emphasis added.) 225 ILCS 60/22(A)(14)

(West 2002).

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Next, section 22(A)(25) states that another ground for

disciplinary action occurs when a licensee commits: “Gross and

wilful and continued overcharging for professional services,

including filing false statements for collection of fees for which

services are not rendered ***.” (Emphasis added.) 225 ILCS

60/22(A)(25) (West 2002). Finally, section 26 of the Act, entitled

“Advertising,” states: “Any person licensed under this Act may

advertise the availability of professional services in the public media

or on the premises where such professional services are rendered.”

(Emphases added.) 225 ILCS 60/26(1) (West 2000).

These “other relevant provisions of the statute” corroborate our

determination that the plain meaning of “professional services” in

section 22(A)(14) of the Act encompasses only medical services. See

Alternate Fuels, 215 Ill. 2d at 238; see also Andrews v. Kowa

Printing Corp., 217 Ill. 2d 101, 106 (2005) (courts should consider

a statute in its entirety, keeping in mind the subject it addresses and

the legislature’s apparent objective in enacting it). Thus, “[b]y

definition, it is impossible for a nonphysician to render ‘professional

services’ to a patient.” 353 Ill. App. 3d at 935. We therefore reject

plaintiffs’ claim that section 22(A)(14) was meant to prohibit the

division of fees between licensees and any other individual or entity

that may render professional services under the Act, as “professional

services” cannot be performed by anyone other than those licensed

to practice medicine.

As earlier noted, examining the language of the statute is the best

indicator of the legislature’s intent in enacting a particular law. In re

Detention of Lieberman, 201 Ill. 2d at 308. In section 22(A) of the

Act, the legislature sets forth a number of grounds upon which the

Department of Professional Regulation may take disciplinary action

with regard to the license of, inter alios, “any person issued under

this Act to practice medicine.” 225 ILCS 60/22(A) (West 2002). One

of these grounds for disciplinary action, deliniated in section

22(A)(14), involves: “Dividing with anyone other than physicians

with whom the licensee practices in a partnership, *** any fee,

commission, rebate or other form of compensation for any

professional services not actually and personally rendered.”

(Emphases added.) 225 ILCS 60/22(A)(14) (West 2002).

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Based on the foregoing, we conclude that plaintiffs main

argument is correct; i.e., that section 22(A)(14) of the Act prohibits:

(1) “traditional” fee splitting for patient referrals between licensees,

except those in a partnership or corporate-type relationship and

licensees concurrently rendering professional services to a patient;

and (2) fee-sharing agreements whereby a licensee “divides with

anyone,” for any service rendered to the licensee, a percentage of the

monies earned by the licensee for medical services he or she has

performed. 225 ILCS 60/22(A)(14) (West 2002). Thus, where

HealthLink’s agreement with plaintiffs required them to pay

HealthLink an administrative fee, equal to 5% of the amounts

allowed in HealthLink’s rate schedule for medical services provided

to members by plaintiffs, the agreement was in violation of section

22(A)(14). “Nonphysicians can receive a fee for services rendered,

apart from referral, but cannot receive a percentage of the physician’s

profit, or its equivalent.” 353 Ill. App. 3d at 935. We therefore hold

that the lower courts herein, as well as the Attorney General, properly

found that HealthLink’s percentage-fee based contract with plaintiffs

was void as against Illinois law.

Next, we examine HealthLink’s contention that the appellate

court erred in holding that the Act also prohibits HealthLink’s fixed

flat fee, which was established in response to the Attorney General’s

opinion. The appellate court reasoned, in part, as follows:

“HealthLink argues the flat fee currently paid by

physicians is for administrative services, such as

administrating and implementing HealthLink’s policies,

procedures, and programs, and not for patient referrals.

*** [However,] [t]he fact that HealthLink does not

technically refer a member-patient to a specific provider does

not negate the fact that HealthLink exercises substantial

control over its member-patients.” 353 Ill. App. 3d at 935.

We agree with HealthLink that the flat fee now in place is for

administrative services and not for patient referrals. Therefore, the

appellate court’s similar conclusion, that HealthLink does not make

patient referrals to specific providers, appears at odds with its

additional finding that there is no “significant difference” between

making a network of thousands of physicians available to payors for

use by member-patients, as HealthLink does, and making an

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agreement with certain physicians to send them specific patients. 353

Ill. App. 3d at 935. It is the member-patient who makes the choice of

physician, not HealthLink, and this fact constitutes the difference

between a prohibited referral for a percentage of the physician’s fee

and the provision of a service to both HealthLink’s participating

physicians and its payors. See Schwartz, 256 Ill. App. 3d at 954

(although plaintiffs provided legitimate management services, the

method of payment for these services was improper, as were the

patient referrals, where plaintiffs referred patients of the optometrists

the company employed to specific opthalmologists for medical

services which only a licensed physician could provide).

In the instant case, this court has concluded that HealthLink’s

percentage fee was violative of section 22(A)(14) because the

agreement required participating physicians to pay HealthLink a

portion of the fee they received from each patient for medical

services they performed. As the Attorney General stated in the

addendum to his opinion letter, “it has not been suggested that the

object of the agreement is violative of public policy, or that the

services that Healthlink provides are improper in any way. The only

aspect of the agreement found invalid *** was the basis upon which

the fees for the administrative services performed under the

agreement are calculated.” 2002 Ill. Att’y Gen. Op. No. 02–005,

Addendum, slip op. at 2. Accordingly, HealthLink amended its

participating physician agreements to allow a flat fee for

administrative services to be paid monthly on a basis independent of

the physician’s fees.

HealthLink’s flat fee is not based or linked to revenue, gross

receipts or billings collected. Instead, it is based on the volume of

claims that HealthLink processed for a physician during the prior

year and the physician’s specialty. For example, a participating

physician who submitted a large number of claims for relatively

inexpensive procedures and who made a modest income might pay

a higher administrative fee to HealthLink than a physician in the

same specialty who submitted fewer claims, but for more expensive

procedures, and who earned a higher income. Because a higher

volume of claims or a more complicated specialty translates into a

higher volume of work for HealthLink, the flat-fee arrangement now

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charged to participating physicians fairly compensates HealthLink

without being a prohibited division of the physician’s remuneration.

Thus, the appellate court erred in comparing HealthLink’s flat

fee, based on claims volume, with the fee charged by the

nonprofessional entity in TLC, which was based on revenue volume.

353 Ill. App. 3d at 937; see TLC, 306 Ill. App. 3d at 428 (although

the contract did not structure the annual fee in literal terms of a

percentage of the practice’s revenue per se, the fee clearly increased

as the revenues increased). Here, in contrast, because HealthLink’s

flat fee is based on the volume and complexity of the administrative

services provided, the fee will not automatically increase as the

revenue of the participating physician increases. We therefore find

that where HealthLink’s monthly flat fee does not constitute

prohibited fee sharing, it is not violative of section 22(A)(14).

As to plaintiffs’ claim that the flat fee is against public policy, we

first note that the general purpose of the Medical Practice Act of 1987

is to protect the public health and welfare from those not qualified to

practice medicine. Ikpoh v. Department of Professional Regulation,

338 Ill. App. 3d 918, 926 (2003), citing Carter-Shields v. Alton

Health Institute, 201 Ill. 2d 441, 458 (2002). Further, we have

established that the goal of section 22(A)(14) is to prevent persons

licensed under the Act from sharing a percentage of their fees with

anyone except those licensees specifically set forth. The underlying

purpose of this prohibition, as earlier noted, is to eliminate the danger

of a nonprofessional recommending a particular physician out of self-

interest, rather than the physician’s competence, and to maintain the

professional independence of physicians. See TLC, 306 Ill. App. 3d

at 427.

As to the former danger to the public, HealthLink’s flat fee is

charged to each participating physician for administrative services

rendered, not for referrals and, thus, no “recommendation”

component exists. As for the latter danger, in Schwartz, the appellate

court held “fee-splitting arrangements” violated public policy by

creating a danger that: “ ‘a doctor, knowing that he had to split his

fees with one who did not render medical services, might be hesitant

to provide proper services to a patient. Conversely, unneeded

treatment might be rendered just because of the need to split fees.’ ”

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Schwartz, 256 Ill. App. 3d at 953, quoting E&B Marketing, 209 Ill.

App. 3d at 630. Here, however, HealthLink’s flat-fee agreement

places no such improper influence on the professional choices made

by its participating physicians, because it does not require a sharing

of professional fees which would relate patient care to an increase or

decrease in revenue.

“ ‘An agreement is against public policy if it is injurious to

the interests of the public, contravenes some established

interest of society, violates some public statute, is against

good morals, tends to interfere with the public welfare or

safety, or is at war with the interests of society or is in

conflict with the morals of the time.’ ” E&B Marketing, 209

Ill. App. 3d at 630, quoting Marvin N. Benn & Associates,

Ltd. v. Nelsen Steel & Wire, Inc., 107 Ill. App. 3d 442, 446

(1982).

Given our conclusion that HealthLink’s flat-fee agreement does not

contravene any public policy underlying section 22(A)(14), we opine

that the agreement also meets the E&B Marketing test set forth

above.

Finally, we note that plaintiffs’ definition of “professional

services,” which we earlier rejected, makes no more sense in a flat-

fee context. Because HealthLink’s provision of administrative

services to plaintiffs does not encompass medical “professional

services” within the meaning of the Act, no violation of section

22(A)(14) can occur. This reading of section 22(A)(14) gives the

statutory language its plain and ordinary meaning without reading

into it exceptions, limitations or conditions which conflict with the

express legislative intent. See Alternate Fuels, 215 Ill. 2d at 238.

Accordingly, we hold that the flat fee HealthLink now charges its

participating physicians for administrative services which HealthLink

performs for them is not violative of section 22(A)(14) of the Act, nor

is it against public policy.

Next, we address plaintiffs’ contention that the lower courts erred

in allowing HealthLink to retain the percentage and flat fees it

previously collected from plaintiffs. We agree with the lower courts

herein that plaintiffs are not entitled to recover any fees previously

paid, be they percentage-based or flat fees. 353 Ill. App. 3d at 937.

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The lower courts’ decision not to reimburse plaintiffs for the fees

paid pursuant to their HealthLink contracts reflects the maxim that

“the law will not aid either party to an illegal act, but will leave them

without remedy as against each other,” with the caveat that they are

of equal knowledge, wilfulness and wrongful intent, or in pari

delicto. Rees v. Schmits, 164 Ill. App. 250, 258 (1911); see also King

v. First Capital Financial Services Corp., 215 Ill. 2d 1, 33-34 (2005)

(the doctrine of in pari delicto embodies the principle that a plaintiff

who has participated in wrongdoing may not recover damages

resulting from the wrongdoing). Plaintiffs argue that the lower courts

failed to recognize that two of the exceptions to the availability of the

in pari delicto defense are present in this case where: (1) there is no

parity in the culpability of the parties; and (2) there exists a necessity

to support the public interest or policy. See Evans v. Funk, 151 Ill.

650, 657-58 (1894). We find that neither exception exists under the

facts of this case.

As to the first exception, plaintiffs claim they are only seeking to

be restored to the status quo, and that they are not in pari delicto with

HealthLink, because they were coerced into signing the contracts in

order to have access to patients. Yet we see nothing of record to

suggest that the agreements were anything other than arm’s-length

transactions between HealthLink and plaintiffs. Thus, we concur with

the appellate court’s finding that: “This is not a case *** where

anyone ‘held a gun’ to plaintiffs’ heads. Plaintiffs could have sought

relief from the courts, the Attorney General, or the Department of

Professional Regulation at any time.” 353 Ill. App. 3d at 937. Further,

it is the plaintiffs, as licensees under the Act, who have violated

section 22(A)(14), not HealthLink. 353 Ill. App. 3d at 938, citing

TLC, 306 Ill. App. 3d at 428-29 (“the physician is the wrongdoer”

under the Act).

We are similarly unimpressed with plaintiffs’ related argument

that the voluntary payment doctrine should not apply because the fees

were paid to HealthLink under circumstances amounting to

compulsion. Plaintiffs have not alleged that the money paid to

HealthLink was a result of fraud, misrepresentation or mistake of

fact. Instead, plaintiffs argue the agreements were illegal and against

public policy. However, money voluntarily paid under a claim of

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right to the payment, and with knowledge of the facts by the person

making the payment, cannot be recovered by the payor solely because

the claim was illegal. Kanter & Eisenberg v. Madison Associates,

116 Ill. 2d 506, 512 (1987); see also Harris v. Johnson, 218 Ill. App.

3d 588, 594 (1991) (if a party has advanced money under an

agreement that is against public policy, that party cannot obtain

redress); Evans v. Funk, 38 Ill. App. 441, 444 (1890) ( “No rule of

law is better settled than that money voluntarily paid in consideration

of the payee doing, or agreeing to do, something opposed to public

policy, can not be recovered back”).

Therefore, we find ourselves in agreement with the appellate

court’s reasoning (353 Ill. App. 3d at 937), which relied on the

following passage from Practice Management v. Schwartz:

“Where a contract is illegal or against public policy, the

contract should not be enforced, because to allow such relief

would undermine the policy considerations in prohibiting fee

splitting. (O’Hara v. Ahlgren, Blumenfeld & Kempster

(1989), 127 Ill. 2d 333, 537 N.E.2d 730; Schnackenberg v.

Towle (1954), 4 Ill. 2d 561, 123 N.E.2d 817). In order to

discourage professionals and nonprofessionals from

attempting illegal fee splitting, the court will leave the parties

where they have placed themselves. Leoris v. Dicks (1986),

150 Ill. App. 3d 350, 501 N.E.2d 901.” Schwartz, 256 Ill.

App. 3d at 955.

In the instant case, where we have found the percentage-based fee

agreement between plaintiffs and HealthLink to have violated the

broad prohibition against sharing fees set forth in section 22(A)(14),

the proper course is for the parties to be left “where they have placed

themselves.” 353 Ill. App. 3d at 937.

We also reject plaintiffs’ contention that HealthLink is prohibited

from retaining fees paid under the agreements because the necessity

to support public policy prevents defendants from using in pari

delicto as a defense. It is true that in Evans, 151 Ill. at 657, this court

stated that “this general rule has its exceptions, arising out of

necessity or from unyielding principles of public policy, or from the

different conditions of the parties.” However, the exception to the use

of the in pari delicto defense in Evans stemmed “from the strongest

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necessity of upholding the principles of public policy, in maintaining

the purity and honor of the courts of justice free from all scandal or

suspicion of improper conduct on the part of the judges.” Evans, 151

Ill. at 658.

Traditionally, and in keeping with the principle of freedom of

contract, this court has been reluctant to declare a private contract as

void as contrary to public policy. H&M Commercial Driver Leasing,

Inc. v. Fox Valley Containers, Inc., 209 Ill. 2d 52, 57 (2004).

“In considering whether any contract is against public policy

it should be remembered that it is to the interests of the public

that persons should not be unnecessarily restricted in their

freedom to make their own contracts. Agreements are not

held to be void, as being contrary to public policy, unless they

be clearly contrary to what the constitution, the statutes or the

decisions of the courts have declared to be the public policy

or unless they be manifestly injurious to the public welfare.”

Schumann-Heink v. Folsom, 328 Ill. 321, 330 (1927).

See also H&M Commercial Driver, 209 Ill. 2d at 57. Thus, we

believe that Evans is an example of the extreme circumstances

needed to forego the general rule of in pari delecto, i.e., where the

public welfare must be protected from manifest injury. The same

vehement need to support public policy by forcing HealthLink to

refund the illegal percentage-based fees paid by plaintiffs is absent

here.

Regarding HealthLink’s flat fees, as Justice Steigmann stated in

his partial dissent below: “[T]he goal of the Act is to regulate the

licenses of physicians, not to prevent them from entering into

legitimate contracts or relieve them of the corollary duty to pay for

services *** rendered pursuant to such contracts.” 353 Ill. App. 3d at

941 (Steigmann, J., specially concurring in part and dissenting in

part). Thus, where we have found that HealthLink’s flat fee is neither

illegal nor against public policy, the parties’ agreements requiring

payment by plaintiffs of a fixed monthly amount for administrative

services must be upheld.

Moreover, we need not address plaintiffs alternative request that,

if this court declines to return the fees to plaintiffs, “the Court

[should] draw upon its equitable powers to require [HealthLink] to

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fully account for and then apply the illegal fees toward a public fund

or charity.” This request stems from plaintiffs’ belief that allowing

HealthLink to keep its collected fees has a more deleterious effect on

public policy and the prohibition against physician fee sharing than

does returning those monies to plaintiffs. However, as we have found

that HealthLink’s percentage fees can be retained by virtue of the in

pari delicto defense, and that its flat fees do not violate either the Act

or public policy, no further consideration is necessary. Additionally,

we note that, even had we the desire to examine this contention, it is

not properly brought here where plaintiffs have failed to: (1) raise it

at any time in the lower courts (People ex rel. Waller v. 1989 Ford

F350 Truck, 162 Ill. 2d 78, 90-91 (1994) (issues not raised in either

the trial court or the appellate court are considered waived and may

not be raised for the first time on appeal to this court); or (2) cite any

authority for this novel remedy (People v. Ward, 215 Ill. 2d 317, 332

(2005) (a point raised in a brief but not supported by citation to

relevant authority fails to satisfy the requirements of Supreme Court

Rule 341(e)(7), and is thus forfeited).

Plaintiffs additionally claim that HealthLink is an

“Administrator” as that term is defined in sections 511.101 and

370g(g) of the Insurance Code (215 ILCS 5/511.101, 370g(g) (West

2002)), and that under these definitions HealthLink violated the Code

by collecting unauthorized fees from health-care providers. As earlier

noted, although plaintiffs raised this issue on direct appeal, it was not

considered by the appellate court. We choose to briefly address the

issue in the interest of judicial economy (People v. Wilson, 143 Ill. 2d

236, 249 (1991), as we may dispose of it without examining the

merits of plaintiffs’ argument. Plaintiffs are without standing to seek

the return of administrative fees under the Code because such a

private right of action is not available. See Weis v. State Farm Mutual

Automobile Insurance Co., 333 Ill. App. 3d 402, 406 (2002) (the

enforcement of the insurance rules was clearly delegated to the

Department of Insurance and, as such, a plaintiff cannot plead or

pursue a private action based on an insurer’s violation of these rules);

215 ILCS 5/401 through 407 (West 2004); see also Village of

McCook v. Illinois Bell Telephone Co., 335 Ill. App. 3d 32, 36

(2002). Accordingly, where this count of plaintiffs’ complaint does

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not allege a valid cause of action, we affirm its dismissal by the

circuit court.

Thus, based upon the foregoing, we agree with the appellate

court’s holdings that HealthLink’s percentage based fee violates

section 22(A)(14) of the Act, and that plaintiffs cannot recover any

monies paid pursuant to their participating provider agreements with

HealthLink. However, we disagree with the appellate court’s finding

that the fixed flat fee charged to plaintiffs by HealthLink violates

section 22(A)(14) of the Act or this state’s public policy.

Additionally, we find plaintiffs’ claim that HealthLink should be

required to divest itself of any fees paid by plaintiffs was forfeited,

and that plaintiffs’ claim that those fees should be returned to them

based on a violation of the Illinois Insurance Code was properly

dismissed.

The appellate court’s judgment is affirmed in part and reversed

in part, and the circuit court’s judgment is affirmed.

Appellate court judgment affirmed

in part and reversed in part;

circuit court judgment affirmed.

JUSTICES GARMAN and BURKE took no part in the

consideration or decision of this case.

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