Case Title: Carroll v. Paddock

Citation: 

Docket Number: 90771, 90772, 90778

State: illinois

Court: Illinois Supreme Court

Date: 2002-02-07T00:00:00Z

Document:
Docket Nos. 90771, 90772, 90778 cons.–Agenda 23–November 
2001.
PAUL D. CARROLL, as Adm’r of the Estate of Joshua A. Carroll,
   Deceased, Appellee, v. JERRY PADDOCK et al., Appellants.
Opinion filed February 7, 2002.
       JUSTICE KILBRIDE delivered the opinion of the court:
       The primary issue in this appeal is whether a not-for-profit
charitable hospital and a not-for-profit mental-health-care
organization are “local public entities” within the meaning of
section 1–206 of the Local Governmental and Governmental Tort
Immunity Act (Tort Immunity Act or Act) (745 ILCS 10/1–206
(West 2000)). Plaintiff, Paul D. Carroll, as administrator of his son
Joshua’s estate, brought this wrongful-death action against
defendants Jerry Paddock, Rod Neeson, Human Resources Center
of Edgar and Clark Counties (HRC), Paris Community Hospital
(Hospital) and Dr. Mamerto Guinto, alleging that the defendants’
malpractice caused Joshua’s death by suicide. The circuit court of
Edgar County held that the action was time barred by the Act’s
one-year statute of limitations. 745 ILCS 10/8–101 (West 2000).
       The appellate court reversed and remanded, finding that HRC
and the Hospital are not local public entities within the meaning of
the Tort Immunity Act and, thus, neither those entities nor their
employees are entitled to invoke the protection of the Act. 317 Ill.
App. 3d 985, 995. We consolidated and granted all of defendants’
petitions for leave to appeal (177 Ill. 2d R. 315) and now affirm the
judgment of the appellate court.
 
BACKGROUND
       On April 14, 1997, Paul and Patricia Carroll brought their son,
Joshua, to the emergency room of Paris Community Hospital after
Joshua attempted to commit suicide. Joshua was seen by Dr.
Guinto, an employee of the Hospital, and Jerry Paddock, an
employee of HRC. Joshua was discharged without being admitted.
On April 15, 1997, Paul and Patricia took Joshua to HRC, where
he received psychological assessment, care and treatment from Rod
Neeson. Later that morning, Joshua took his own life.
       On April 15, 1999, plaintiff filed a wrongful-death action
against defendants. HRC, Paddock, Neeson, and Guinto filed
motions to dismiss pursuant to section 2–619 of the Code of Civil
Procedure (735 ILCS 5/2–619 (West 2000)), arguing plaintiff’s
complaint was not timely filed under the one-year statute of
limitations contained in the Tort Immunity Act. The Hospital filed
a motion for summary judgment on the same ground. In their
motions, the defendant entities claimed that they were not-for-profit corporations organized for the purpose of conducting public
business and that they and their employees were local public
entities entitled to assert immunities and defenses afforded by the
Act.
       Plaintiff responded that HRC and the Hospital did not qualify
as local public entities under the Act. In the alternative, plaintiff
argued that section 1–206 of the Act constitutes special legislation
in violation of article IV, section 13, of the Illinois Constitution of
1970 (Ill. Const. 1970, art. IV, §13) and that section 1–206 of the
Act delegates tort immunity to private entities in violation of article
I, section 12, and article XIII, section 4, of the Illinois Constitution
(Ill. Const. 1970, art. I, §12; art. XIII, §4).
       The complaint, exhibits and discovery depositions filed of
record supply a factual basis for assessing the status of defendants
under the Act. HRC is a not-for-profit corporation. It is composed
of three divisions: developmental disabilities, community services,
and clinical services. The clinical services division provides out-patient mental-health services, and its employees administered
mental-health screening to Joshua and assessed his condition.
       HRC came into being as a result of the merger of two existing
not-for-profit corporations known as the Edgar County Mental
Health Center and the Edgar County Alcohol and Drug Abuse
Council. Following the merger, the entity assumed its present
designation as the Human Resources Center of Edgar and Clark
Counties. HRC’s board of directors consists of private citizens, as
did its original incorporators.
       According to its articles of incorporation, HRC is organized
“exclusively for charitable and educational purposes, the purposes
being limited to those set forth in section 501(c)(3) of the Internal
Revenue Code (26 U.S.C. §501(c)(3) (1994).” The articles also
provide that “no part of [HRC’s] net income will inure to the
benefit of private individuals” and “the organization will not be
operated for the benefit of private individuals or designated
individuals, the creators or their families, or persons controlled
directly or indirectly by such private interest.” Further, HRC’s
mission statement explains that the corporation shall “promote and
conserve the mental health of the people of Edgar and Clark
Counties.”
       In a discovery deposition, the executive director of HRC, John
Young, testified about the operations of that entity. He stated that
HRC provides clinical services, including outpatient mental-health
care and substance-abuse evaluations and classes. According to
Young, HRC also furnishes services for developmentally disabled
persons, including placement of those individuals with private
corporations for work experience and income. Young further
stated that HRC renders community services through contracts
with area hospitals and health-care providers and that HRC
provides laundry services for many private entities.
       Like HRC, the Hospital is a not-for-profit organization. Its
purpose, as stated in the articles of incorporation, is:
“To conduct and carry on the work of the corporation
not for profit but exclusively for scientific, educational,
and charitable purposes in such a manner that no part of
its income or property shall inure to the private benefit of
any donor, member, officer, or individual having a
personal or private interest in the activities of the
corporation.
* * *
To operate a charitable hospital in Edgar County,
Illinois, for the care of the sick of the area without regard
to their ability to pay for such services and without regard
to their race, color, or creed.”
The Hospital’s board of directors does not include members of the
county board of Edgar County. It is composed primarily of
community business representatives.
       The interim administrator of the Hospital, Chris Ellington,
testified at his discovery deposition that the Hospital is managed by
his employer, Allied Management Services, a not-for-profit
corporation, owned by another not-for-profit corporation, Norton
Health Care, Inc., of Louisville, Kentucky. Allied Management
Services charges an annual management fee of $132,000. In
addition to this fee, the hospital pays salaries to the chief executive
officer and chief financial officer, both of whom are selected by
Allied Management Services.
       According to Ellington, the hospital’s services are on a fee-for-service basis. It designates services as charity care only if
collection efforts have been unavailing. Ellington stated that, to his
knowledge, there was no difference in the purpose and operation
of the defendant not-for-profit hospital and other for-profit
hospitals.
       The bylaws of the Hospital establish classes of members.
Individuals can become members of the Hospital by making
donations to the Hospital. Members are entitled to vote at annual
and special meetings.
       Following two hearings, the trial court granted the defendants’
motions, concluding HRC and the Hospital are “local public
entities” within the meaning of section 1–206 of the Tort Immunity
Act (745 ILCS 10/1–206 (West 2000)). The trial court also
rejected plaintiff’s constitutional challenges to section 1–206 of the
Act. Plaintiff appealed.
       In reversing, the appellate court held that neither HRC nor the
Hospital are “local public entities” within the meaning of section
1–206 of the Tort Immunity Act. 317 Ill. App. 3d at 995. The
court primarily relied on the fact that neither of the entities were
almost entirely government funded. 317 Ill. App. 3d at 994-95.
Having determined that the Act did not apply, the court declined
to consider plaintiff’s constitutional challenges to section 1–206.
317 Ill. App. 3d at 995. We consolidated and allowed defendants’
petitions for leave to appeal.
 
ANALYSIS
       The present matter comes to this court following the circuit
court’s decision to grant three motions to dismiss pursuant to
section 2–619(a)(5) and one motion for summary judgment. An
appeal from a section 2–619 dismissal is the same in nature as one
following a grant of summary judgment: each matter is given de
novo review. Guzman v. C.R. Epperson Construction, Inc., 196 Ill. 2d 391, 397 (2001). In both instances, the reviewing court must
ascertain whether the existence of a genuine issue of material fact
should have precluded the dismissal or, absent such an issue of
fact, whether dismissal is proper as a matter of law. Kedzie &
103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116-17
(1993).
       Defendants argue that both HRC and the Hospital are local
public entities within the meaning of section 1–206 of the Tort
Immunity Act. Thus, the issue before us is one of statutory
construction.
       The most fundamental rule of statutory construction is to
ascertain and give effect to the legislature’s intent. In re Estate of
Andernovics, 197 Ill. 2d 500, 507 (2001). The statute’s language
is the best indicator of such intent. Michigan Avenue National
Bank v. County of Cook, 191 Ill. 2d 493, 504 (2000). When
interpreting a statute, we must, however, give effect to the entire
statutory scheme rather than looking at words and phrases in
isolation from other relevant portions of the statute. Michigan
Avenue National Bank v. County of Cook, 191 Ill. 2d 493, 504
(2000). Put another way, statutes should be construed as a whole
with each provision evaluated in connection with every other
section. Primeco Personal Communications, L.P. v. Illinois
Commerce Comm’n, 196 Ill. 2d 70, 88 (2001).
       As provided within the statute, the purpose of the Tort
Immunity Act is “to protect local public entities and public
employees from liability arising from the operation of government.”
745 ILCS 10/1–101.1 (West 2000). The Act defines the term
“[l]ocal public entity” as:
“a county, township, municipality, municipal
corporation, school district, school board, educational
service region, regional board of school trustees,
community college district, community college board,
forest preserve district, park district, fire protection
district, sanitary district, museum district, emergency
telephone system board, and all other local governmental
bodies. ’Local public entity’ also includes library systems
and any intergovernmental agency or similar entity formed
pursuant to the Constitution of the State of Illinois or the
Intergovernmental Cooperation Act as well as any
not-for-profit corporation organized for the purpose of
conducting public business. It does not include the State
or any office, officer, department, division, bureau, board,
commission, university or similar agency of the State.”
(Emphasis added.)  745 ILCS 10/1–206 (West 1998).
       The appellate court correctly noted that no Illinois court has
specifically defined the phrase “organized for the purpose of
conducting public business.” 317 Ill. App. 3d at 991. The court
then went on to analyze several appellate court cases and one
United States district court case that have applied this language in
different fact situations. See Smith v. Northeast Illinois Regional
Commuter R.R. Corp., 210 Ill. App. 3d 223 (1991); Johnson v.
Decatur Park District, 301 Ill. App. 3d 798 (1998); O’Melia v.
Lake Forest Symphony Ass’n, 303 Ill. App. 3d 825 (1999);
Niehaus v. Rural Peoria County Council on Aging, Inc., 314 Ill.
App. 3d 665 (2000);  McQueen v. Shelby County, 730 F. Supp. 1449 (C.D. Ill. 1990). In four of those cases, the court considered
to what extent the entity in question relied upon public funding in
order to determine whether the entity was “organized for the
purpose of conducting public business.” See Smith, 210 Ill. App.
3d at 227 (entity with no shareholders, funded with public funds
that operates its commuter rail line in the public interest was
organized for the purpose of conducting public business); Johnson, 
301 Ill. App. 3d at 811 (regardless of its mission statement or
sources of funding, an entity that existed to benefit its members,
not the public at large, was not a public entity under the Act);
Niehaus, 314 Ill. App. 3d at 670 (entity that received 65% of its
cash funds from government sources, including local government
funding, was not “almost entirely government funded” and thus
was not organized for the purpose of conducting public business);
McQueen, 730 F. Supp.  at 1453 (entity that received over 90% of
its financing from state and local sources was organized for the
purpose of conducting public business).
       In light of these cases, the appellate court concluded that
public funding is a determinative factor as to whether an entity is
a local public entity under the Act. 317 Ill. App. 3d at 994-95.
With regard to HRC, the court reasoned:
“HRC argues that it receives substantial government
funding–66.13% from government grants and membership
dues in fiscal year 1998 and 55% from fees and grants
from governmental agencies in fiscal year 1997. ***
We conclude that HRC is not 'organized for the
purpose of conducting public business’ and is not a 'local
public entity’ under the Act. HRC is not almost entirely
government funded; the fact that it receives some grants
from government sources does not bring it within the
scope of the Act.” 317 Ill. App. 3d at 994.
       In relation to the Hospital, the appellate court stated:
“The Hospital obtained 49.1% of its revenue from
private sources, namely, insurance payments and self-pay
collections. It receives the remainder of its revenue from
federal programs–Medicaid and Medicare. The only local
government funding is provided by Edgar County through
a contract for ambulance services. *** We conclude that
the Hospital is not government funded, nor is it almost
entirely government funded.” 317 Ill. App. 3d at 994-95.
       Having concluded that HRC and the Hospital were not
government funded, the appellate court held that neither was a
local public entity under the Act and, therefore, neither the entities
nor their employees were entitled to invoke the one-year statute of
limitations pursuant to section 8–101 of the Act. 317 Ill. App. 3d
at 994-95.
       Although the appellate court reached the correct conclusion,
we believe the court placed too much emphasis on government
funding. Irrespective of the degree of government funding, a
not-for-profit corporation must be “organized for the purpose of
conducting public business” in order to satisfy the definition of a
“[l]ocal public entity.” 745 ILCS 10/1–206 (West 2000).  The term
“public business” is not defined in the Act. As indicated by the
appellate court, every undefined word in a statute must be ascribed
its ordinary and popularly understood meaning. Texaco-Cities
Service Pipeline Co. v. McGaw, 182 Ill. 2d 262, 270 (1998). The
appellate court went on to quote the O’Melia court observation
that:
“ ' “Public” is defined as “[p]ertaining to a state, nation, or
whole community; proceeding from, relating to, or
affecting the whole body of people or an entire
community. Open to all ***. Belonging to the people at
large; *** not limited or restricted to any particular class
of the community.”  Black’s Law Dictionary 1227 (6th ed.
1990). *** Thus, to conduct “public business” under the
Act, a corporation must pursue an activity that benefits the
entire community without limitation. In addition, the
phrase “public business” is also today commonly
understood to mean the business of the government.’ ”
317 Ill. App. 3d at 992, quoting O’Melia, 303 Ill. App. 3d
at 828.
We agree with this definition of “public business” and we hereby
adopt it as our own.
       While HRC and the Hospital were organized for charitable
purposes, the characteristics making a not-for-profit corporation
a charitable organization do not, without more, also qualify the
corporation as a “local public entity” under the Tort Immunity Act.
See 317 Ill. App. 3d at 994-95. Both HRC and the Hospital
conduct operations common to many entities in the private sector.
Interim administrator Ellington admitted that there was no
difference in the purpose and operation of the defendant not-for-profit Hospital and other for-profit hospitals. Moreover, both HRC
and the Hospital were privately created and are privately managed.
       Furthermore, the board of directors of each not-for-profit
consists solely of private citizens. There is no evidence in the
record indicating that the entities are subject to the control of the
county board or any other unit or agency of local government.
Without evidence of local governmental control, it cannot be said
that a not-for-profit corporation conducts “public business” for
purposes of the Act. Thus, in order to receive the benefits of the
Act, the not-for-profit corporation must also be subject to the
kinds of organizational regulations and control that are typical of
other governmental units.
       An indicia of the requisite control might be shown by evidence
that the governing body of the not-for-profit corporation is subject
to regulations such as the Open Meetings Act (5 ILCS 120/1.01 et
seq. (West 2000)) or the Freedom of Information Act (5 ILCS
140/1 et seq. (West 2000)) or is otherwise “ '[o]pen to *** the
[public] at large’ ” (O’Melia, 303 Ill. App. 3d at 828, quoting
Black’s Law Dictionary 1227 (6th ed. 1990)). The necessary
control might also be evidenced by particular local ordinances that
dictate the means and methods to be used by the not-for-profit
corporation in conducting its business. Other indicia of control
might include evidence that members of the county board or other
local governing bodies control the governing body of the not-for-profit corporation.
       Private endeavors often improve or affect the public interest,
but that fact standing alone does not transform those private
enterprises into public businesses. Undoubtedly, health care is an
endeavor in the public interest. Nonetheless, it cannot be said that
a not-for-profit hospital and a not-for-profit mental-health-care
organization are the same as public health-care facilities operated
by public employees and controlled by governmental officials or a
governmental entity.
       Public business is the business of government and a local
public entity must either be owned by or operated and controlled
by a local governmental unit. Immunity under the Act only attaches
to liability arising from the operation of government. 745 ILCS
10/1–101.1 (West 2000). Therefore, a not-for-profit is involved in
the operation of the government’s public business if and only if the
not-for-profit is tightly enmeshed with government either through
direct governmental ownership or operational control by a unit of
local government.
       As to the Hospital’s contention that its activities fall within the
ambit of “conducting public business” because the Act itself sets
out detailed provisions regarding “hospital activities” (see 745
ILCS 10/6–101 through 6–110 (West 2000)), the appellate court
was correct that the Hospital has misread the Act. 317 Ill. App. 3d
at 994. To receive immunity from injuries resulting from “hospital
activities,” it must initially be determined that the entity is a “local
public entity” under the Act. 317 Ill. App. 3d at 994. Simply
because an entity engages in “hospital activities” does not
necessarily mean that the entity conducts “public business” under
section 1–206 of the Act. 317 Ill. App. 3d at 994.
       Given that the Act does not apply to HRC or the Hospital, we,
like the appellate court, decline to address the constitutional issues
raised by the plaintiff.
 
CONCLUSION
       For the above-stated reasons, we hold that neither the Human
Resources Center of Edgar and Clark Counties nor Paris
Community Hospital were organized for the purpose of conducting
public business. Accordingly, neither of those not-for-profit
corporations or their employees are entitled to assert the
immunities and defenses contained within the Tort Immunity Act.
The judgment of the appellate court is therefore affirmed.
 
 Affirmed.
       JUSTICE GARMAN took no part in the consideration or
decision of this case.