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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Select Medical Rehabilitation )

Services, Inc., a Delaware corporation, )

)

Plaintiff, )

)

v. ) No. 12-cv-4662

)

Morris Healthcare & Rehabilitation )

Services, Inc., an Illinois corporation, )

)

Defendant. )

COMPLAINT

Plaintiff Select Medical Rehabilitation Services, Inc. (referred to herein as “Select 

Medical”), through counsel Segal McCambridge Singer & Mahoney, Ltd., states as follows for 

its Complaint against Defendant Morris Healthcare & Rehabilitation Services, Inc. (referred to 

herein as “Morris Healthcare”): 

NATURE OF THE ACTION

1. Plaintiff Select Medical is a contractor that furnishes therapy services to medical 

providers and other facilities. Morris Healthcare operates a licensed skilled nursing facility that 

furnishes nursing care to residents.

2. These parties entered into a contract pursuant to which Select Medical agreed to 

furnish therapy services to patients of Morris Healthcare, in exchange for compensation. While 

Select Medical upheld its end of the bargain by furnishing the requested services, Morris 

Healthcare has repeatedly failed to compensate Select Medical, even though Select Medical 

provided Morris Healthcare with several opportunities to cure. Accordingly, Select Medical 

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hereby seeks recovery for the damages it has sustained as a result of Morris Healthcare’s 

material breach. 

PARTIES

3. Plaintiff Select Medical is a contractor who employs or otherwise engages 

licensed professionals who furnish speech-language pathology, physical and occupation therapy 

services to medical providers and other facilities. 

4. Morris Healthcare operates a licensed skilled nursing facility that furnishes 

nursing care to residents who are in need of therapy services that are not directly available from 

Morris Healthcare.

JURISDICTION AND VENUE

5. This Court has subject matter jurisdiction over this matter pursuant to the 

provisions of 28 U.S.C. §1332. 

6. Plaintiff Select Medical has its principal place of business located in Clearwater, 

Florida, is incorporated in Delaware, and therefore is a citizen of Delaware and Florida. 

7. Defendant Morris Healthcare was incorporated in Illinois, has its principal place 

of business in Illinois, and therefore is a citizen of Illinois. 

8. The parties are diverse in citizenship.

9. The amount in controversy exceeds $75,000, exclusive of interests and costs. 

10. Pursuant to 28 U.S.C. § 1391(a), venue is proper in this District because 

Defendant executed and performed the subject agreements in this District, and a substantial part 

of the events giving rise to the suit occurred here. 

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FACTS COMMON TO ALL COUNTS

11. On or about June 28, 2011, Select Medical and Morris Healthcare entered into a 

Therapy Services Agreement. (the “Agreement” is attached as “Exhibit A”).

12. Select Medical agreed to furnish rehabilitation services to patients of Morris 

Healthcare in exchange for compensation as outlined in the payment provision of the Agreement. 

13. The Agreement further obligates Morris Healthcare to pay interest at a rate of 

fifteen percent (15%) per annum for the late payment of amounts due and owing under the 

Agreement. 

14. The Agreement further states that, in an action to enforce the terms of the 

Agreement, the prevailing party “shall be paid by the other party its reasonable attorneys’ fees, 

as well as court costs.” (¶ 20; Ex. A).

15. The Agreement states that it will be governed by the law of the state in which 

Morris Healthcare’s licensed nursing facility is located, in this case Illinois. (¶ 18; Ex. A). 

16. On February 7, 2012, Select Medical served a 10-day written notification of intent 

to terminate the Agreement, effective February 19, 2012, due to Morris Healthcare’s failure to 

pay Select Medical for services provided. (A copy of the February 7, 2012 Termination Notice 

is attached as “Exhibit B”).

17. At the time of the February 7, 2012 Termination Notice, Morris Healthcare owed 

Select Medical $379,264.64 for services provided through January 31, 2012, an amount which 

did not include what Morris Healthcare owed for services provided during February, 2012. (Id.)

18. On February 22, 2012, Select Medical served a revised Termination Notice, 

confirming the agreement of the parties to extend the term of the Agreement to February 29, 

2012. (A copy of the February 22, 2012 revised Termination Notice is attached as “Exhibit C”). 

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Select Medical issued this revised Termination Notice in light of Morris Healthcare’s continued 

breach of the payment provision of the Agreement. 

19. On or about February 28, 2012, the parties entered into a Payment Agreement 

which obligated Morris Healthcare to make specific payments to Select Medical from February 

through July, 2012. (A copy of the February 28, 2012 Payment Agreement is attached as 

“Exhibit D”) 

20. Morris Healthcare failed to satisfy the conditions of the Payment Agreement. 

21. On or about April 2, 2012, Select Medical served a third Termination Notice, 

confirming that Select Medical had terminated the Agreement effective Friday, March 30, 2012 

in light of Morris Healthcare’s breach of the February 28, 2012 Payment Agreement, and 

pursuant to its terms. (A copy of the April 2, 2012 third Termination Notice is attached as 

“Exhibit E”). 

22. At the time of the April 2, 2012 Termination Notice, Morris Healthcare owed 

Select Medical $339,382.66 for services rendered through March 30, 2012. 

23. To date, Morris Healthcare has failed to pay Select Medical for all services 

rendered at its facility. 

COUNT I – BREACH OF CONTRACT

24. Select Medical restates Paragraphs 11 through 23 as though fully stated herein.

25. The Agreement includes an express payment provision obligating Morris 

Healthcare to tender payments to Select Medical for services rendered. 

26. Morris Healthcare has failed to satisfy the payment provision of the Agreement.

27. Morris Healthcare is, therefore, in material breach of that Agreement. 

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28. As a result of Defendant Morris Healthcare’s breach, Plaintiff Select Medical has 

sustained damages.

WHEREFORE Plaintiff Select Medical Rehabilitation Services, Inc. requests that this 

Court enter an order against Defendant Morris Healthcare & Rehabilitation Services, Inc.

providing for judgment in its favor in an amount in excess of the jurisdictional limit of $75,000 

exclusive of interest and costs; awarding Plaintiff its attorneys’ fees as well as court costs; 

awarding Plaintiff the contractual interest owed by Defendant; and providing for any other just 

relief.

COUNT II – BREACH OF FEBRUARY 28, 2012 PAYMENT AGREEMENT

29. Select Medical restates Paragraphs 11 through 23 as though fully stated herein.

30. On or about February 28, 2012, Morris Healthcare agreed to a payment schedule 

that required certain payments to Select Medical in February through July 2012.

31. The February 28, 2012 Payment Agreement was intended by the parties to amend 

and supplement the Agreement. 

32. Morris Healthcare failed to make the timely payments required by the February 

28, 2012 Payment Agreement.

33. Morris Healthcare is, therefore, in material breach of said Payment Agreement.

34. As a result of Defendant Morris Healthcare’s breach, Plaintiff Select Medical has 

sustained damages.

WHEREFORE Plaintiff Select Medical Rehabilitation Services, Inc. requests that this 

Court enter an order against Defendant Morris Healthcare & Rehabilitation Services, Inc. 

providing for judgment in its favor in an amount in excess of the jurisdictional limit of $75,000 

exclusive of interest and costs; awarding Plaintiff its attorneys’ fees as well as court costs; 

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awarding Plaintiff the contractual interest owed by Defendant; and providing for any other just 

relief.

COUNT III – ACTION FOR ACCOUNT STATED

35. Select Medical restates Paragraphs 11 through 23 as though fully stated herein.

36. Throughout the relationship between the parties, Select Medical has rendered 

invoices constituting statements of account for amounts owed by Morris Healthcare in exchange 

for services furnished by Select Medical.

37. During this time, Morris Healthcare has retained the aforementioned invoices for 

a substantial period of time without objection.

38. Morris Healthcare has recognized and acknowledged the correctness of the 

account, as reflected in the invoices submitted by Select Medical, without contesting same.

39. Morris Healthcare, on numerous occasions, has promised to pay the outstanding 

balance due and owing to Select Medical.

40. Morris Healthcare’s failure to object constitutes an acceptance of the amounts due 

and owing as reflected in the aforementioned invoices.

41. Morris Healthcare has failed to make payments to Select Medical which has, as a 

result, sustained damages. 

WHEREFORE Plaintiff Select Medical Rehabilitation Services, Inc. requests that this 

Court enter an order against Defendant Morris Healthcare & Rehabilitation Services, Inc. 

providing for judgment in its favor in an amount in excess of the jurisdictional limit of $75,000 

exclusive of interest and costs; awarding Plaintiff its attorneys’ fees as well as court costs; 

awarding Plaintiff the contractual interest owed by Defendant; and providing for any other just 

relief.

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COUNT IV – QUANTUM MERUIT

42. Select Medical restates Paragraphs 11 through 23 as though fully stated herein.

43. Pleading in the alternative, Select Medical is entitled to payment for services 

furnished to Morris Healthcare in quantum meruit.

44. Select Medical furnished valuable services to Defendant, who received and 

accepted said services.

45. The services furnished by Select Medical were performed non-gratuitously.

46. The circumstances and dealings between the parties are such that it would be 

unjust for Morris Healthcare to retain the benefits of the services without compensating Select 

Medical for same.

47. Despite repeated demands, Morris Healthcare has refused and failed to tender the 

payments due to Select Medical. 

48. Select Medical is entitled to recovery of the reasonable value of the services 

furnished to Morris Healthcare. 

49. There exists no justifiable basis for Morris Healthcare’s failure to submit 

payments. 

WHEREFORE Plaintiff Select Medical Rehabilitation Services, Inc. requests that this 

Court enter an order against Defendant Morris Healthcare & Rehabilitation Services, Inc. 

providing for judgment in its favor in an amount in excess of the jurisdictional limit of $75,000 

exclusive of interest and costs; awarding Plaintiff its attorneys’ fees as well as court costs; 

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awarding Plaintiff the contractual interest owed by Defendant; and providing for any other just 

relief.

COUNT V – IMPLIED CONTRACT

50. Select Medical restates Paragraphs 11 through 23 as though fully stated herein.

51. Pleading in the alternative, should the Court determine that no express contact 

exists, then there exists an implied contract between the parties. 

52. The circumstances and dealings between the parties establish that Plaintiff Select 

Medical offered to furnish therapy services to patients of Morris Healthcare in exchange for 

compensation, and that Morris Healthcare agreed to and accepted Select Medical’s offer.

53. There exists consideration in support of the implied contract as well as a meeting 

of the minds between the parties with respect to the obligations, terms and conditions of the 

implied contract.

54. The conduct, actions and expressions of Select Medical and Morris Healthcare 

have created an implied contract between these parties. 

55. Pursuant to the implied contract, Morris Healthcare was and remains obligated to 

compensate Select Medical for services furnished to patients of Morris Healthcare.

56. Despite demands and requests for payment, Morris Healthcare has failed to tender 

said compensation to Select Medical. 

57. Morris Healthcare is, therefore, in material breach of the implied contract.

58. As a result of Defendant Morris Healthcare’s breach, Plaintiff Select Medical has 

sustained damages.

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WHEREFORE Plaintiff Select Medical Rehabilitation Services, Inc. requests that this 

Court enter an order against Defendant Morris Healthcare & Rehabilitation Services, Inc. 

providing for judgment in its favor in an amount in excess of the jurisdictional limit of $75,000 

exclusive of interest and costs; awarding Plaintiff its attorneys’ fees as well as court costs; 

awarding Plaintiff the contractual interest owed by Defendant; and providing for any other just 

relief.

JURY DEMAND

Plaintiff demands trial by jury, pursuant to Federal Rule of Civil Procedure 38(b).

Respectfully submitted,

Segal McCambridge Singer & Mahoney, Ltd. 

By: /s/ Chad J. Layton

Attorneys for Plaintiff

Select Medical Rehabilitation Services, Inc.

Robert E. O’Malley, Esq. (ARDC No. 6193458)

Chad J. Layton, Esq. (ARDC No. 6243339)

Segal McCambridge Singer & Mahoney, Ltd.

233 S. Wacker Dr., Suite 5500

Chicago, Illinois 60606

Phone: (312) 645-7800

Fax: (312) 645-7711

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