1990). A court will not add another term to an agreement where an agreement is
silent. American States Insurance Co. v. A.J. Maggio Co., Inc, 593 N.E.2d 1083,
1086 (Ill. App. Ct. 1992). A “well-settled principle of contract construction [is] that
where a contract contains both general and specific provisions relating to the same
subject, the specific provision controls.” Medcom Holding Co. v. Baxter Travenol

Laboratories, Inc., 984 F.2d 223, 227 (7th Cir. 1993).

In the case at hand, the original and revised versions of Attachment B both
contained a Section 2 that governed “All Other Inpatient Services”. Attachment E
was added to the MSA by the First Amendment to the contract and while at that time
separate from the revised Attachment E, provided that Rush was entitled to
reimbursement at a rate of $450 per diem for care received in a Skilled Nursing
Facility. The Sixth Amendment to the MSA, effective on February 1, 1998 deleted
Attachment E in its entirety and incorporated the Skilled Nursing Facility Provision,
A. into Revised Attachment B. Section A.2, “All Other Inpatient Services” at no
time contained any language indicating that it applied to services rendered in a
Skilled Nursing Facility. Section A.4 is exclusively devoted to services provided at a
Skilled Nursing Facility and does not include a stop loss provision. There is no
additional language within Attachment B that indicates any additional reimbursement

is necessitated above the $450 per diem rate expressly listed.

Central to the inquiry, Prudential asserts, and Rush has not refuted, that the

JRB is a Skilled Nursing Facility. Because Attachment B specifically delineates “All

~13-


claiming that it is a post-acute care facility which provides post-hospital inpatient
recovery and rehabilitation services and Prudential claiming that it is a skilled
nursing facility.

Rush has brought a breach of contract claim based on an alleged breach of a
Medical Service Agreement (“MSA”) for failure to reimburse Rush for various
services provided to insured patients. In Count I, Rush seeks to recover from
Prudential $65,783.83 on charges submitted for services provided to 9 patients (John
Does I-[X) who underwent bone marrow transplants at Rush Presbyterian-St. Luke’s
Medical Center under Section A.3 of the MSA. In Count II, Rush seeks to recover
$370,324.89 on charges submitted for “extended care services” provided to 12
patients (John Does X-XXI) at Rush’s'J.R. Bowman Center under Paragraph 2(A) of
Attachment B of the MSA.

The parties are before the court based upon diversity jurisdiction. 28 U.S.C.§
1332(a)(1). Rush claims that it is a non-for-profit corporation organized pursuant to
the laws of Illinois and is located in Chicago, Illinois. Prudential claims that it is a

New Jersey company with its principal place of business in Newark, New Jersey.

LEGAL STANDARD
Summary judgment is appropriate when the record reveals that there is no
genuine issue as to any material fact and the moving party is entitled to judgment as

a matter of law. Fed. R. Civ. P. 56(c). In seeking a grant of summary judgment the

4.



The case rate identified in Attachment B to the MSA clearly delineates
subsections where different rates of reimbursement apply. Part 1 sets forth the case
rate for particular types of organ transplants. The term “transplantation,” given its
plain and ordinary meaning, must refer to the actual surgical procedure which occurs
on an inpatient basis. Had the parties intended an alternative meaning of
“transplantation” the term could have been alternatively defined in Article I of the
MSA where other possibly ambiguous terms are defined. A term of a contract is
“not rendered ambiguous simply because the parties do not agree upon its meaning.”
White v. White, 378 N.E.2d 1255, 1258 (Ill. App. Ct. 1978). The fact that Part II
specifically refers to “All Other Inpatient Services” gives additional effect to the
reasonable interpretation that Part I also covers certain inpatient services,
specifically organ transplants. Viewing the subparts of Section A in light of one
another, the only reasonable interpretation is that the case rates set forth in Part I
cover only the inpatient services related to the actual organ transplant, not a
combination of both inpatient and outpatient services.

Prudential improperly relies on the definition of “Covered Hospital Services”
to counter Rush’s interpretation of Section A to Attachment B. The term “Covered
Hospital Services” is included as part of an introductory clause that gives effect to
all subparts, Transplantation, All Other Inpatient Services, Outpatient Services and
Skilled Nursing Facility. The fact that “Covered Hospital Services” is defined as

both “inpatient and outpatient services... which are included on Attachment B”


DISCUSSION

The parties’ dispute regarding both claims in this case is purely a matter of
contract interpretation. Summary judgment is particularly appropriate in cases
involving the interpretation of contractual documents. Metalex Corp. v. Uniden
Corp. of America, 863 F.2d 1331, 1333 (7th Cir. 1988). Where a contract is
unambiguous, a court must determine its meaning as a matter of law, and where the
contract is ambiguous the contract’s meaning becomes a factual question and the
interpretation of the contract and resolution of the ambiguity is left to the trier of
fact. Id.; Illinois Conference of Teamsters and Employers Welfare Fund v.
Mrowicki, 44 F.3d 451, 459 (7th Cir. 1994) The lack of ambiguity within the
express terms of a contract “forecloses any genuine issue of material fact.” Ryan v.
Chromalloy American Corp, 877 F.2d 598, 602 (7th Cir. 1989). Ifthe court
determines that the relevant provisions of the contract are unambiguous, the court
“need not consider extrinsic evidence” and should declare the meaning of the
provisions. Id.

The language within a contract must be “interpreted according to its plain,
ordinary, and popular meaning.” Bourke v. Dun & Bradstreet Corp, 159 F.3d 1032,
1038 (7th Cir. 1998)(quoting O Rourke v. Access Health, Inc., 668 N.E.2d 214, 220
(Ill. App. Ct. 1996)); See also International Business Lists, Ltd. V. American Tel. &
Tel. Co., 878 F.Supp. 102, 106 (N.D. Ill. 1994)(stating that “[c]ourt’s interpreting

contracts must give effect to the parties’ intent, and that intent is best determined by

-6-



moving party must identify “those portions of ‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any,’ which it
believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). This initial
burden may be satisfied by presenting specific evidence on a particular issue or by
pointing out “an absence of evidence to support the non-moving party’s case.”/d. at
325. Once the movant has met this burden, the non-moving party cannot simply rest
on the allegations or denials in the pleadings, but, “by affidavits or as otherwise
provided for in [Rule 56], must set forth specific facts showing that there is a
genuine issue for trial.” Fed. R. Civ. P. 56(e). A “genuine issue” in the context of a
motion for summary judgment is not simply a “metaphysical doubt as to the material
facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp, 475 U.S. 574, 586
(1986). Rather, a genuine issue of material fact exists when "the evidence is such
that a reasonable jury could return a verdict for the nonmoving party." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Insolia v. Philip Morris, Inc, 216
F.3d 596, 599 (7th Cir. 2000). The court must consider the record as a whole, in a
light most favorable to the non-moving party, and draw all reasonable inferences that
favor the non-moving party. Anderson, 477 U.S. at 255; Bay v. Cassens Transport
Co., 212 F.3d 969, 972 (7th Cir. 2000).

5.



“Outpatient Services” further indicates that Part 1 and 2 were not intended to cover
services provided on an outpatient basis. Rush further relies on the express
terminology “Transplantation” to support their interpretation of the contract. Rush
asserts that by its plain meaning, transplantation may only occur on an inpatient
basis and that there is no express language in the MSA to support any other
interpretation.

Prudential argues that the introductory clause to Section A, which uses the
terminology “Covered Hospital Services” evidences the intent of the parties that the
case rate for transplantation covers both inpatient and outpatient services. “Covered
Hospital Services” is previously defined within the MSA as both “inpatient and
outpatient services .. . which are included on Attachment B”. Prudential contends
that this language can only be reasonably interpreted to include both inpatient and
outpatient services in the $110,000 case rate for bone marrow transplants.
Prudential also argues that Rush improperly relied on the term “Transplantation” to
define the subsection because pursuant to Article VIII, Section D of the MSA the
parties agreed that the “headings of the various Articles of [the] Agreement are
inserted merely for the purpose of convenience and do not, expressly or by
implication, limit or define . . . the specific terms of the Articles so designated.”
Prudential finally argues that because Part 3 does not read ‘“4// Outpatient Services”
(emphasis added), there is no indication that outpatient services cannot be also

included in Part | of the Agreement.


Minute Order Form (06/97)
*

United States District Court, Northern District of Iinois

(10) Mi [Other docket entry]

OOFRCP4(m) (Ci Local Rule 41.1 OO FRCP41({a)(1)

(J FRCPA1(a)(2).

Nive Magistrate Juage | __ Samuel Der-Yeghiayan | ST Sitned Judge
CASE NUMBER 02 C 947 DATE 3/30/2004
CASE Rush Presbyterian vs. Prudential Insurance
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.}
DOCKET ENTRY:
(1) i) Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) im Answer brief to motion due___. Reply to answer brief due___.
(4) oO Ruling/Hearingon___—sset for
(5) 0 Status hearing[held/continued to) [set for/re-set for]on__ set for
(6) oO Pretrial conference[held/continued to] [set for/re-set for] on set for __
7?) QO Trial[set for/re-set for]on__at
(8) Oo [Bench/Jury trial} [Hearing] held/continuedto__at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

For the reasons stated on the attached memorandum opinion, the Court hereby
grants plaintiff’s motion for summary judgment as to Count I and denies plaintiff's motion. for summary
judgment as to Count II. Furthermore, the Court denies defendant’s motion for summary judgment as to
Count I and grants defendant’s motions for summary judgment as to Count II. All pending dates and

qt)

motions are hereby stricken as moot. Terminating case. Enter Memorandum Opinion.

| [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required. .
number of notices

Notices mailed by judge’s staff.
Notified counsel by telephone.
Docketing to mail notices.

Mail AO 450 form,

Copy to judge/magistrate judge.

date maited notice

courtroom
Mw6 deputy's
initials

Date/time receiyed in ,,

central Clerk’s Office railing deputy initials



rather than a broader meaning... .”). Therefore, we grant Rush’s motion for
summary judgment on Count J and deny Prudential’s motion for summary judgment

on Count I.

IL. Reimbursement of Rush

Rush argues that pursuant to the “stop loss” provision of Attachment B,
Section A.2(a), it is entitled to be reimbursed 66% of all charges for cases exceeding
$52,000. Rush takes’ the position that because the services provided to patients at the
JRB were all part of the same “case”, the services provided were merely a
continuation of the “Other Inpatient Services”, also known as “extended care
services” provided at Rush. Rush does not characterize JRB as a Skilled Nursing
Facility, but rather relies on the different types of services that are rendered at the
facility to determine which provision of the fee schedule should apply. Rush relies
on diagnosis codes indicating that patients were transferred for followup care as
opposed to custodial care for various conditions to prove that these services were
merely a continuation of inpatient services.

Rush initially indicates in its Complaint that JRB is a Skilled Nursing Facility.
(Comp. par. 40). Also, pursuant to Local Rule 56.1 Rush admits that JRB is a skilled
nursing facility. Rush fails to directly deny Prudential’s statement of fact indicating
that JRB is a skilled nursing facility. (R SF 44). Instead, Rush responds simply by

summarizing an affidavit of Barbara J. Martin, Director of Nursing at JRB. See

-ll-



actually supports this Court’s interpretation that the phrase gives meaning to all 3
Parts of Section A.

It is clear from the placement of the term “Covered Hospital Services” in the
introduction that it is intended to refer to the various services listed in the three
sections of Attachment B which included some inpatient service sections and some
outpatient service sections. Section 1 entitled Transplantation does not contain the
term “Covered Services.” Thus, we would not be reading the MSA according to its
plain meaning if we were to find that Covered Services, which includes inpatient and
outpatient services, meant that the Transplantation section must also include in-
patient and outpatient services.

Furthermore, Prudential’s contention that Rush improperly relied on the
heading “Transplantation” to define the terms of the Articles within the MSA is
without merit. Article VIII, Section D specifically refers to headings of the various
Articles of the agreement. Attachment B is not an Article consistent with the
structure of the MSA. The MSA contains eight specific Articles which all introduce
subject transitions within the contract. Rush is not seeking to give additional
meaning to any of those eight articles, but merely requests that the term
“Transplantation” be given its plain and ordinary meaning consistent with cannons
of contract interpretation. See Interim Health Care of Northern Illinois, Inc. v.
Interim Health Care, Inc., 225 F.3d 876, 881 (7th Cir. 2000)(stating that the cannons

of contract construction require the court to “construe the words’ plain meaning

-10-



reference to the plain meaning of the words the parties used.”). The court must
presume that “contracting parties intend[ed] all portions of their contract to carry
meaning and no portion was meant to be mere surplusage.’’*Snelten v. Schmidt
Implement Co., 647 N.E.2d 1071, 1074 (Ill. App. Ct. 1995). Another rule of contract
interpretation is “that a document should be read to give effect to all its provisions
and to render them consistent with each other.” Mastrobuono y. Shearson Lehman
Hutton, Inc., 514 U.S. 52, 63 (1995). See also Srivastava v. Russell’s Barbecue, Ine,
523 N.E.2d 30, 33 (Ill. App. Ct. 1998)(stating that a principle of contract
construction is that contracts are to be interpreted as a whole, giving meaning and

effect to each provision).

1, Whether Transplant Case Rate Applied to Outpatient Services

Rush argues that pursuant to the express terms and organizational structure of
the MSA and Revised Attachment B, Section A, Part 1, the $110,000 case rate for
transplantation applies only to those inpatient services, specifically the organ
transplant itself, provided to the bone marrow transplant patients. Rush points out
Section A has 4 Parts respectively labeled: (1) Transplantation; (2) All Other
Inpatient Services; (3) Outpatient Services and (4) Skilled Nursing Facility. Relying
on this organizational structure, Rush contends that the use of the verbiage “All
Other Inpatient Services” utilized in Part 2 clearly indicates that Part 1 also covers

inpatient services. Rush argues that the more broad language in Part 3 covering

-7-


for a bone marrow transplant reimburses Rush only for inpatient services related to
the transplant, as asserted by Rush, or whether the case rate reimburses Rush for
both inpatient and outpatient services relating to the transplant, as asserted by
Prudential. Attachment B, Section A to the MSA consists of four separate
subsections: (1) Transplantation; (2) All Other Inpatient Services; (3) Outpatient
Services and (4) Skilled Nursing Facility. Rush contends that the organizational
structure of the MSA shows that the transplant case rate covers inpatient services
only. Prudential relies on the language “Covered Hospital Services” within Section
A to Attachment B, which the MSA defined in part as “inpatient and outpatient
services . . . not including long term care services” to support its contentionthat the
case rate covers both inpatient and outpatient services,

In Count II, the primary issue is which section of the fee schedule applies to
those patients who were treated at the J.R. Bowman Center (JRB”) for extended
care inpatient services, Rush asserts that because the inpatient services provided to
JRB patients were a continuation of the services that they were receiving at Rush,
they should be reimbursed according to the MSA provision that covers “inpatient
services” (i.¢., the stop loss provision). Under the stop loss provision, Rush claims
that Prudential is obligated to reimburse Rush 66% of the charges it incurred
providing inpatient services to JRB patients. Alternatively, Prudential asserts that
JRB is a skilled nursing facility which therefore entitles Rush to reimbursement

pursuant to a $450 per diem rate. The parties both contest the status of JRB, Rush

3-


Other Inpatient Services” from services derived at a “Skilled Nursing Facility”, the
only reasonable interpretation is that Rush is only entitled to reimbursement for these
services pursuant to Section A.4 of Attachment B. Where specific contractual
provisions are present, the court must apply those provisions over any general
provisions listed within the contract, See Central Die Casting and Mfg. Co. v.
Tokheim Corp., 1995 WL 699714 at *4 (N.D. Ill. 1995)(stating that “when a contract
contains both general and specific provisions relating to the same subject, the specific
provision controls”)(quoting Dolezal v. Plastic Resonstructive Surgery, S.C, 640

N.E.2d 1359, 1366 (Ill. App. Ct. 1994)).

Rush argues that Section A.2(a) should cover the services provided at JRB and
that the court should overlook the basic fact that JRB is a Skilled Nursing Facility.
Rush improperly relies on two particular factors in their arguments. First, Rush
relies on the diagnosis codes utilized for the patients at issue. The codes describing
the types of services provided, “post-surgical care” and “post congestive heart
failure” are irrelevant to the query. Such administrative codes are not determinative
of the actual type of care or the proper category of care under the MSA. Second, the
reliance on affidavit testimony of Barbara J. Martin, Director of Nursing is misplaced
because her conclusion that the JRB provides the type of care covered under Section
A.2(a) is not relevant for interpreting the intent of the parties at the time the MSA and

Attachment B were implemented.

-14-



Count II. Furthermore, Defendant Prudential’s motion for summary judgment on
Count I is denied and Defendant Prudential’s motion for summary judgment on Count

Il is granted.

Samuel Der-Yeghiayan “VY
United States District Court Judge

Dated: March 30, 2004

-16-



insurance company. In August of 1993, Rush and Rush Prudential Health Plans,
Rush Prudential HMO, Inc., and Rush Prudential Insurance Company (collectively
“Unicare Group”) entered into a Medical Service Agreement (“MSA”). The MSA
included attachment B which established the rates at which Rush was to be
reimbursed by the Unicare Group for various services Rush provides to patients.
Attachment B to the MSA underwent several revisions, the last revision occurring on
February 1, 1998, was incorporated into the MSA pursuant to the Sixth Amendment
to the MSA. In December of 1999, Wellpoint Health Networks, Inc. acquired the
Unicare Group from Rush, Rush affiliates and Prudential, and in connectionwith the
acquisition, assumed all liabilities for certain disputed claims related to any breach
of the MSA by the Unicare Group.

Prudential, Rush and Wellpoint entered into a Settlement Agreement on
November 20, 2001. On November 21, 2001, the agreement was amended whereby
Prudential agreed to assume any and all liabilities for certain disputed claims and
pay Rush 50% of the amounts of the disputed claims upon entry of a final, non-
appealable judgment which specifies the amounts of the disputed claims payable
under the MSA. The parties agree that amounts have been paid on each of the
claims in question, but disagree on whether Rush is entitled to any further payments.
The dispute in each count of Rush’s complaint is purely a matter of contract
interpretation.

In Count I, the issue is whether the $110,000 case rate specified by the MSA



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
RUSH PRESBYTERIAN - ST. LUKE’S )
MEDICAL CENTER, )
)
Plaintiff, )
)

v. ) No. 02 € 0947

)
THE PRUDENTIAL INSURANCE )
COMPANY OF AMERICA, )
)

Defendant. ) (Mieke,

*9 a 2004
MEMORANDUM OPINION

SAMUEL DER-YEGHIAYAN, District Judge

This matter is before the court on Plaintiff Rush Presbyterian-St. Luke’s
Medical Center’s (“Rush”) motion for summary judgment and on Defendant The
Prudential Insurance Company of America’s (“Prudential”) motion for summary
judgment. For the reasons stated below we grant Rush’s motion for summary
judgment on Count I and grant Prudential’s motion for summary judgment on Count

II.

BACKGROUND

Plaintiff Rush is a non-for-profit corporation. Defendant Prudential is an

| y


Jankovich v. Exelon Corp., 2003 WL 260714, at *5 (N.D. Ill. 2003)(indicating that
evasive denials, that do not directly oppose an assertion are improper and thus the
contested fact is deemed to be admitted pursuant to Local Rule 56.1).

Prudential argues that the rate of reimbursement for these services is
determined by Section A.4 which expressly defines rates which apply to a “Skilled
Nursing Facility”. Prudential contends that throughout the series of revisions of the
MSA and Attachment B, that Skilled Nursing Facility services have always been.
treated separately and distinctly from all other inpatient service cases. Prudential
specifically notes that Skilled Nursing Facility services are not listed in the services
that are covered under the stop loss provision of Section A.2, although they could
have easily been added were that the intent of the parties. Prudential also relies on
the fact that the Skilled Nursing Facility provision is more specific than the general
“All Other Inpatient Services” language within Section A.2. Based on this
observation, Prudential urges the court to apply the specific contractual provisions of
Section A.4 over the general contractual provisions of Section A.2. Furthermore,
Prudential notes that Section A.4 does not explicitly contain a stop loss prevision and
thus the court should not be inclined to read such a provision into the contract where
it does not exist.

A court should be wary of reading terms into a contract and “[t]here is a strong
presumption against provisions that easily could have been included in the contract

but were not.” Wright v. Chicago Title Ins. Co, 554 N.E.2d 511, 514 (Ill. App. Ct.

-12-



Rush itself referred to JRB as a skilled nursing facility in its complaint. Rush
states that “[a] number of insured patients were transferred from Rush to skilled
nursing facilities for provision of extended care services . . . [and that] patient John
Doe X was transferred to the J.R. Bowman Center (“JRB”) for provision of extended
care inpatient services.” (R SF 40, 41). The affidavit from Rush appears to be
nothing other than an attempt to rephrase the JRB services after Rush realized that it
could not recover under A.2(a). The threshold question for Illinois’ “four corners”
test contract interpretation is “whether the contract is ambiguous.” Bourke, 159 F.3d
at 1036. Ifthe relevant provisions of a contract are not ambiguous, then the
provisions “should be generally enforced as they appear, and those terms will control
the rights of the parties.” Dowd & Dowd, Ltd. v. Gleason, 693 N.E.2d 358, 368 (Ill.
1998)(citations omitted). Rush is unable to present any provision within the contract
that evidences intent that services rendered at a Skilled Nursing Facility are subject to
reimbursement under Section A.2(a). Accordingly, Rush’s motion for Summary
Judgment on Count II is denied and Prudential’s motion for Summary Judgment on
Count II is granted. Services rendered to John Does X-XXI must be reimbursed

pursuant to Section A.4, the Skilled Nursing Provision, of Attachment B.

CONCLUSION

For the reasons stated above, we grant Plaintiff Rush’s motion for summary

judgment on Count I and deny Plaintiff Rush’s motion for summary judgment on

-15-