# Jones v. Chicago HMO Ltd. of Illinois > Illinois Supreme Court · May 18, 2000 · 191 Ill. 2d 278 URL: https://www.frixlaw.com/law-library/cases/9516727 ## Case - **Full name:** SHEILA JONES, Individually and as Mother and Next Friend of Shawndale Jones, a Minor, Appellant, v. CHICAGO HMO LTD. OF ILLINOIS, Appellee - **Court:** Illinois Supreme Court - **Decided:** May 18, 2000 - **Citations:** 191 Ill. 2d 278; 246 Ill. Dec. 654; 730 N.E.2d 1119; 2000 Ill. LEXIS 656 - **Precedential status:** Published - **Opinion:** Concurring in part by Rathje - **Judges:** Bilandic, Miller, Rathje - **Cited by:** 173 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9516727 ## How later opinions describe it (automated extraction) - stating that the plaintiffs claim that she could “maintain a cause of action on [a] contract” to which she was not a party “while also disclaiming any reliance on a third-party beneficiary theory of liability” was “not correct as a matter of law” - noting that “the same reason” in determining whether an injury was reasonably foreseeable applied to the determination of the likelihood of an injury ## Opinion text JUSTICE RATHJE, also concurring in part and dissenting in part: I agree with both the majority’s affirmance of summary judgment on the breach of contract claim and its determination that plaintiff has waived the breach of warranty claim. I strongly disagree, however, with the majority’s holding that Chicago HMO can be liable under a theory of institutional liability. The majority reasons that, because an HMO is an “amalgam of many individuals” like a hospital, then Chicago HMO can be institutionally liable under the rule set forth in Darling v. Charleston Community Memorial Hospital, 33 Ill. 2d 326 (1965). 191 Ill. 2d at 293. Although both a hospital and an HMO hire many different people for many different reasons, the reasons for holding hospitals liable under this theory do not hold true for Chicago HMO. Generally, institutional liability attaches when an organization breaches a duty it owes as an organization. 1 Under Darling, hospitals are vulnerable to institutional liability partly because, as organizations, they offer complete medical services, including nurses, doctors, orderlies, and administration. Darling, 33 Ill. 2d at 332 . Hospital facilities include both the place and the staff, and hospitals “assume certain responsibilities for the care of the patient.” Darling, 33 Ill. 2d at 332 . In Darling, the hospital was negligent for two reasons: it failed to properly review the work of an independent doctor, and its nurses failed to administer necessary tests. Darling, 33 Ill. 2d at 333 . The rule set forth in Darling is that a hospital must act as a reasonably careful hospital would and is responsible for reviewing and supervising the medical care given to its patients. Advincula v. United Blood Services, 176 Ill. 2d 1, 28-29 (1996). Shannon v. McNulty, 718 A.2d 828 (Pa. Super. 1998), the case upon which the majority relies, is perfectly consistent with the principles set forth in Darling and Avincula. In Shannon, the defendant HMO was not serving simply as a vehicle through which a member’s medical bills are paid. Instead, the HMO employed nurses to work its own triage service and to advise members on medical decisions such as whether to seek treatment at a hospital. Shannon, 718 A.2d at 832-33 . The court concluded: “Where the HMO is providing health care services rather than merely providing money to pay for services their conduct should be subject to scrutiny. We see no reason why the duties applicable to hospitals should not be equally applied to an HMO when that HMO is performing the same or similar functions as a hospital. When a benefits provider, be it an insurer or a managed care organization, interjects itself into the rendering of medical decisions affecting a subscriber’s care it must do so in a medically reasonable manner. Here, HealthAmerica provided a phone service for emergent care staffed by triage nurses. Hence, it was under a duty to oversee that the dispensing of advice by those nurses would be performed in a medically reasonable manner. Accordingly, we now make explicit that which was implicit in McClellan [u. Health Maintenance Organization of Pennsylvania, 413 Pa. Super. 128 , 604 A.2d 1053 (1992)] and find that HMOs may, under the right circumstances, be held corporately liable.” (Emphasis added.) Shannon, 718 A.2d at 835-36 . The passage demonstrates why Chicago HMO is not subject to institutional liability. Under Chicago HMO’s contract with Dr. Jordan, Chicago HMO is responsible for enrolling members, providing the doctor’s group with a current list of those members, paying capitation fees, providing a list of hospitals and health care providers, providing other funding, and obtaining the appropriate regulatory licensure for the doctor’s group. The doctor’s group is solely responsible for providing the health services. Moreover, Chicago HMO’s member’s handbook specifically explains that the individual doctors are responsible for nurses and all other medical attention. Unlike the HMO in Shannon, which “provided] health care services,” Chicago HMO “merely provided] money to pay for services.” Thus, institutional liability is inappropriate in this case. The primary flaw in the majority’s analysis is that it attempts to create a rule of general application that fails to take into account not only the differences that exist between a hospital and an HMO but also those that exist among HMOs. To determine whether an HMO should have the same duty to its members that a hospital has to its patients, a court must assess not only whether hospitals are similar to HMOs but also whether the patient’s relationship to the hospital is similar to the member’s relationship to the HMO. See Kirk v. Michael Reese Hospital & Medical Center, 117 Ill. 2d 507, 525 (1987) (the question of whether a duty exists is “whether the defendant and the plaintiff stood in such a relationship to one another that the law imposed upon the defendant an obligation of reasonable conduct for the benefit of the plaintiff’). Hospitals are “institutions holding themselves out as devoted to the care and saving of human life.” Johnson v. St. Bernard Hospital, 79 Ill. App. 3d 709, 716 (1979). Institutional liability makes sense in the hospital context because a person in need of treatment must be assured that the hospital will abide by a sufficient standard of care. That patient generally does not have the time or opportunity to compare hospital bylaws or look for the hospital with the best administrative policies and the highest standard of care. A person goes to the nearest hospital in an emergency or to a hospital where his doctor has privileges in a nonemergency. In many cases, including most emergent cases, the patient has no time to make an informed choice. In his relationship with a hospital, the patient is at a severe disadvantage, which the law acknowledges by subjecting hospitals to institutional liability. By contrast, the goal of an HMO is to provide health care in a cost-sensitive manner. B. Furrow, Managed Care Organizations and Patient Injury: Rethinking Liability, 31 Ga. L. Rev. 419 , 457 (1997). HMOs offer medical services, but they do not do so in the same way that hospitals do. HMOs offer the funding and the contact with the medical professionals. In Chicago HMO, for instance, the way in which daily business is conducted, the duties of nurses and other staff, and other day-to-day decisions are made by the individual doctor or hospital with whom the HMO has contracted. 2 This type of HMO makes no decision as to what type of care is ultimately given; they only decide whether the HMO will pay for that care. Moreover, when a person joins an HMO, he knows beforehand what that HMO will cover and, in most cases, chooses which HMO he will join based on his assessment of the costs and benefits. To become a member, that person usually has to contract with the HMO. 3 As a result, the HMO will be held accountable for any failure to comply with its own policies through a contract action. In this case, the Chicago HMO representative arrived at plaintiff’s door and asked her whether she would prefer to receive her public aid medical benefits through the HMO or continue receiving them directly through public aid. He reviewed the policies, and plaintiff made the decision to join, signing a statement that her participation in the HMO was voluntary and that she could disenroll at any time. Plaintiff was given the opportunity to make an informed choice and chose to receive her medical services through an HMO. Just as hospitals can differ substantially from HMOs, substantial differences may exist among HMOs. Generally, HMOs are organized under one of four major models: (1) staff, in which the providers are all salaried employees of the HMO; (2) medical group, in which the HMO contracts with an organized group of doctors who have combined their practices; (3) independent practice association, in which the HMO contracts with individual physicians who are solo or group practitioners; and (4) network models, in which the HMO contracts with two or more physician group practices who may serve several HMOs at the same time. Both the methods of organization and the methods of reimbursement vary among the models. E. Weiner, Managed Health Care: HMO Corporate Liability, Independent Contractors, and the Ostensible Agency Doctrine, 15 J. Corp. L. 535 , 540 (1990). In some cases, an HMO may behave very much like a hospital, and institutional liability might be appropriate in such cases. In most cases, however, an HMO will do everything in its power not to behave like a hospital, precisely to avoid the liability that comes with operating as one. Having a uniform standard of care for all HMOs makes little sense, given the major differences in structure. Before concluding, I wish to stress that I by no means believe that HMOs should not be held accountable for their actions. Ordinarily, an HMO will be accountable to its members through the contract that is signed by both parties. Unfortunately, in this case, plaintiff was receiving benefits from the HMO through public aid and, therefore, did not contract with the HMO. Consequently, as the majority correctly holds, her particular situation leaves her unable to enforce the policy provisions because she was not a party to the contract. 191 Ill. 2d at 305-06. While I sympathize with plaintiffs unenviable position, the fact remains that plaintiffs theory of liability is not one permissible under our laws. Contrast with vicarious liability, which attaches to an organization when one of its agents breaches his duty. Some HMOs do employ the staff and provide the facilities for care, but most do not. See E. Weiner, Managed Health Care: HMO Corporate Liability, Independent Contractors, and the Ostensible Agency Doctrine, 15 J. Corp. L. 535 , 540 (1990). This case is an exception to that rule because the HMO membership was given to plaintiff by the Department of Public Aid. See 191 Ill. 2d at 305-06. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9516727. Public record. Not legal advice.