Case Name: CHICAGO HOSPITAL RISK POOLING PROGRAM, Plaintiff and Counter-defendant-Appellee, v. ILLINOIS STATE MEDICAL INTER-INSURANCE EXCHANGE, Defendant and Counterplaintiff-Appellant
Court: Illinois Appellate Court
Jurisdiction: Illinois
Decision Date: 2001-09-27
Citations: 325 Ill. App. 3d 970
Docket Number: Nos. 1—99—3507, 1—99—3508 cons
Parties: CHICAGO HOSPITAL RISK POOLING PROGRAM, Plaintiff and Counter-defendant-Appellee, v. ILLINOIS STATE MEDICAL INTER-INSURANCE EXCHANGE, Defendant and Counterplaintiff-Appellant.
Judges: 
Reporter: Illinois Appellate Court Reports, Third Series
Volume: 325
Pages: 970–987

Head Matter:
CHICAGO HOSPITAL RISK POOLING PROGRAM, Plaintiff and Counter-defendant-Appellee, v. ILLINOIS STATE MEDICAL INTER-INSURANCE EXCHANGE, Defendant and Counterplaintiff-Appellant.
First District (4th Division)
Nos. 1—99—3507, 1—99—3508 cons.
Opinion filed September 27, 2001.
QUINN, J., specially concurring.
Clausen Miller P.C., of Chicago (Robert L. Reifenberg, Edward M. Kay, and Barbara I. Michaelides, of counsel), for appellant.
Meckler, Bulger & Tilson, of Chicago (Michael M. Marick and Hallie Miller Fahey, of counsel), for appellee.

Opinion:
JUSTICE THEIS
delivered the opinion of the court:
The Chicago Hospital Risk Pooling Program (CHRPP) brought an action against defendant, the Illinois State Medical Inter-Insurance Exchange (ISMIE), under theories of equitable contribution, unjust enrichment, and quantum meruit to recover one-half of a settlement payment it made on behalf of a physician covered by both CHRPP and ISMIE. ISMIE filed an affirmative defense, alleging, inter alia, that CHRPP's contribution claim was barred by the physician's selective tender of his claim to CHRPP The trial court rejected ISMIE's argument, holding that the selective tender rule applied only to traditional insurance companies and did not apply to a self-insured risk-pooling trust. Thereafter, ISMIE filed a motion to dismiss the complaint pursuant to section 2 — 615 of the Illinois Code of Civil Procedure (the Code) (735 ILCS 5/2 — 615 (West 1998)), alleging that as a risk-pooling trust CHRPP lacked the necessary elements to state a cause of action for equitable contribution. The trial court denied ISMIE's motion but certified the following questions of law for review under Illinois Supreme Court Rule 308 for interlocutory appeal. 155 Ill. 2d R. 308.
"1. Whether the 'selective tender' rule of Institute of London Underwriters v. Hartford Fire Ins. Co., 234 Ill. App. 3d 70, 599 N.E.2d 1311 (1st Dist. 1992), and its progeny can be applied to the Plaintiff in this case, [CHRPP], which is a self-insurance retention trust established under the Illinois Religious and Charitable Risk Pooling Trust Act; and
2. Whether [CHRPP], a self-insurance retention trust established pursuant to the Illinois Religious And Charitable Risk Pooling Trust Act, may state a cause of action for equitable contribution, unjust enrichment, or quantum meruit against [ISMIE], an insurance company, to recover one-half of a settlement payment that [CHRPP] made on behalf of a physician covered by [ISMIE] and [CHRPP]."
We answer the certified questions as follows and remand for further proceedings consistent with this opinion.
BACKGROUND
In September 1993, Luz Rivera filed a medical malpractice action against Norwegian-American Hospital, Dr. Ha Nguyen, Dr. Carlos Baldoceda, and her private obstetrician, alleging that they were negligent in delivering her twin sons, causing the death of one and the brain damage of the other. Dr. Baldoceda was insured under a professional liability policy issued by ISMIE. He was also covered under CHRPP as an employed physician of the hospital. CHRPP administers a trust established pursuant to the Religious and Charitable Risk Pooling Trust Act (the Risk Pooling Act or Act) (215 ILCS 150/1 et seq. (West 1998)), whereby participating nonprofit hospitals pool certain risks associated with the care and treatment provided to their patients. Under the CHRPP trust agreement (the Trust Agreement), participating hospitals are required to contribute certain sums to CHRPP in consideration of CHRPP's promise to pay judgments or settlements in response to medical malpractice suits against the participating hospital or other "Covered Persons," which include hospital employees while acting within the scope of their employment.
ISMIE agreed to defend Dr. Baldoceda with respect to the Rivera action. CHRPP declined Dr. Baldoceda's request for a defense under a reservation of rights and claimed that ISMIE had the primary obligation to defend and indemnify him with respect to liability arising out of the Rivera action. However, despite refusing Dr. Baldoceda's tender of the claim, CHRPP settled the Rivera action for $3 million. The settlement reflected that $1 million was paid on behalf of Dr. Baldoceda. ISMIE did not participate in settlement negotiations.
Thereafter, CHRPP sought half of the settlement costs from ISMIE under theories of equitable contribution, unjust enrichment, and quantum meruit based on the court's holding in Padilla v. Norwegian-American Hospital, Inc., 266 Ill. App. 3d 829, 641 N.E.2d 572 (1994). Therein, the court found that, where ISMIE and CHRPP had coincidental coverage obligations to the same physician and where their "other insurance" clauses were deemed incompatible, the liability for a judgment or settlement was owed equally. The "other insurance" clauses construed in Padilla are identical to those at issue in this case.
ISMIE set forth its affirmative defenses to the complaint, including that the action for equitable contribution was defeated by the "selective tender" rule as expressed in Institute of London Underwriters v. Hartford Fire Insurance Co., 234 Ill. App. 3d 70, 599 N.E.2d 1311 (1992), and its progeny. Under the rule, where two policies potentially apply to the same loss, the insured may choose to forego coverage under one policy, thereby foreclosing the targeted insurer from obtaining contribution from the nontargeted insurer. ISMIE alleged that, pursuant to the holding in Institute, Dr. Baldoceda exercised his right to tender the defense and indemnity obligation for the Rivera action to CHRPP under the Trust Agreement, and elected not to trigger the defense and indemnity obligations of ISMIE. Accordingly, it alleged that CHRPP could not obtain contribution from ISMIE for its settlement of the Rivera action. In addition, ISMIE filed a counterclaim seeking to recoup the costs it incurred in defending Dr. Baldoceda.
CHRPP responded that ISMIE could not rely on the "selective tender" rule because the rule only applied to traditional insurance companies and that CHRPP was not an insurance company but, rather, a trust. CHRPP claimed that applying the rule to the trust would violate the purpose of the Risk Pooling Act, to minimize the amount of money nonprofit hospitals spend on protecting themselves from the risks of financial loss due to their liabilities (215 ILCS 150/2 (West 1998)), and would undermine its function to provide a public health benefit. CHRPP also argued that the "selective tender" rule could not apply to it because the rule presumes a duty to defend and its Trust Agreement does not obligate it to defend Dr. Baldoceda. Lastly, CHRPP argued that Dr. Baldoceda did not "unequivocally" renounce his coverage under his ISMIE policy in order to exclusively trigger the coverage obligations of CHRPP
The trial court found that the "selective tender" rule was not applicable to a trust established under the Risk Pooling Act. The court examined the language of the Act which states that trusts formed pursuant to the Act are not to be considered insurance companies or to be in the business of insurance nor are they to be subject to regulation under the Illinois Insurance Code except as specifically provided. 215 ILCS 150/25 (West 1998). Based upon the plain language of the Act, the court concluded that CHRPP was not intended to be treated as insurance and strictly construed the selective tender rule as only applying to traditionally constituted insurance companies. The court held that to hold otherwise would "undermine the legislative intent that the trusts * operate for the benefit of the participating hospitals and would be contrary to the public policy of the [Sjtate of Illinois, as enunciated in the Act, that a trust such as CHRPP should not be considered an insurance company or in the business of insurance."
Thereafter, ISMIE filed a motion to dismiss the complaint, arguing, in part, that the reasons underlying the court's refusal to treat CHRPP as an insurance company for purposes of the "selective tender" rule also dictated that CHRPP could not seek equitable contribution. Specifically, ISMIE argued that the remedy of equitable contribution is available only to insurers that insure on the same basis and that there must be identity between the policies as to parties, insurable interests and risks. Since CHRPP, not being an insurance company, lacked the identity of insurable interests necessary to obtain such a remedy, it could not maintain its cause of action. The trial court denied ISMIE's motion, finding that CHRPP was entitled to the equitable remedies it sought from ISMIE.
Subsequently, the trial court granted a joint motion for interlocutory appeal under Supreme Court Rule 308 (155 Ill. 2d R. 308), finding that the rulings involved questions of first impression under Illinois law and a substantial ground for difference of opinion.
ANALYSIS
Before answering the certified questions, we review some general principles of insurance law necessary to an understanding of this case. Ordinarily, where an insured has concurrent coverage for the same liability, both of its insurers are obligated to provide coverage under the terms of their respective policies and their coverage obligations are then coordinated, typically by reference to the policies' "other insurance" provisions. These clauses take many forms, but generally provide that, where there is other insurance available to cover the claim, the loss will be apportioned according to various formulas in order to limit each insurer's potential obligation to the insured. See, e.g., Padilla, 266 Ill. App. 3d 829, 641 N.E.2d 572.
However, "other insurance" clauses only affect insurers' rights among themselves; they do not affect the insured's right to recovery under each concurrent policy (Zurich Insurance Co. v. Raymark Industries, Inc, 145 Ill. App. 3d 175, 199, 494 N.E.2d 634, 650 (1986)), nor do they affect the insured's right to selectively tender a claim to one insurer alone. Under the "selective tender" rule, an insured has the paramount right to choose or knowingly forgo an insurer's participation in a claim. John Burns Construction Co. v. Indiana Insurance Co., 189 Ill. 2d 570, 727 N.E.2d 211 (2000).
In Burns, a construction company hired a subcontractor to pave a parking lot. The subcontract agreement required the subcontractor to name the construction company as an additional insured on its policy in addition to the construction company's own insurance coverage. After the paving was completed, a commuter was injured in the parking lot and sued the construction company. The company notified the subcontractor of the lawsuit and requested that its insurer defend and indemnify it. The subcontractor's insurer rejected the tender of the claim and later sought a declaration that both insurance policies were obligated to contribute equally to the claim based on the policies' "other insurance" clauses, notwithstanding the insured's election of coverage. Burns, 189 Ill. 2d at 571-72, 727 N.E.2d at 213-14.
The supreme court held that an insured has the exclusive right to determine whether to trigger coverage under an available policy by allowing the insured to make a "selective tender" of its claim to one of several potential insurers, irrespective of the presence of an "other insurance" clause. The targeted insurer has the sole responsibility to defend and indemnify the insured, thereby foreclosing a claim for equitable contribution from the excluded insurer. Burns, 189 Ill. 2d at 578, 727 N.E.2d at 217. An insurer does not have the right to trigger the insured's coverage under another policy in contravention of his wishes. Otherwise, the policy becomes, in effect, a third-party beneficiary contract entered into by the insured for the direct benefit of other insurers. Bituminous Casualty Corp. v. Royal Insurance Co. of America, 301 Ill. App. 3d 720, 726, 704 N.E.2d 74, 79 (1998). See also Cincinnati Cos. v. West American Insurance Co., 183 Ill. 2d 317, 701 N.E.2d 499 (1998); Richard Marker Associates v. Pekin Insurance Co., 318 Ill. App. 3d 1137, 743 N.E.2d 1078 (2001); Alcan United, Inc. v. West Bend Mutual Insurance Co., 303 Ill. App. 3d 72, 707 N.E. 687 (1999).
Does Selective Tender Apply to CHRPP?
With these principles in mind, we turn to an analysis of the questions before us. The scope of our review pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308) is strictly limited to the questions certified by the trial court. Klak v. Skellion, 317 Ill. App. 3d 1092, 1094, 741 N.E.2d 288, 290 (2000). In the first certified question, we are asked to decide whether the nature of this particular risk-pooling trust requires that it be treated differently than a traditional insurance company for purposes of applying the "selective tender" rule. As stated previously, unlike a traditional insurer, CHRPP administers a trust established pursuant to the Risk Pooling Act whereby participating nonprofit hospitals pool certain risks associated with the care and treatment provided to their patients. As part of a broad category of "self-insurance," this type of program has been described in many jurisdictions as both the "antithesis" of insurance and the "functional equivalent" to insurance, depending upon the nature of the analysis and the particular facts and circumstances of each case. Compare, e.g., State v. Continental Casualty Co., 126 Idaho 178, 183, 879 P.2d 1111, 1116 (1994) (because self-insurance does not involve a transfer of the risk of loss, it is not insurance), with Ohio Government Risk Management Plan v. County Risk Sharing Authority, Inc., 130 Ohio App. 3d 174, 180, 719 N.E.2d 992, 996 (1998) (structure of risk-sharing authority analogous to insurance); Hillegass v. Landwehr, 176 Wis. 2d 76, 81-82, 499 N.W.2d 652, 654-55 (1993) (self-insurance is a form of insurance).
In the past, CHRPP and ISMIE have looked to their respective "other insurance" clauses to apportion liability between themselves as they did in Padilla. However, in the present case, ISMIE alleges that Dr. Baldoceda selectively tendered his claim to CHRPP, thereby foreclosing CHRPP from seeking equitable contribution. CHRPP argues in response that the rule has only been applied to commercial insurance carriers and by statute CHRPP is not to be considered an insurance company or in the business of insurance. It further maintains that the plain language of the Risk Pooling Act, the legislative intent, and the provisions of CHRPP's Trust Agreement prevent the common law rules regarding selective tender from applying to a self-insured risk-pooling trust. To resolve this question, we must examine the nature of the Risk Pooling Act, the Trust Agreement, and the relationship of the relevant parties involved.
The impetus for enacting this particular risk-pooling legislation can best be understood in its historical context. It is generally recognized that during the 1970s there was a medical malpractice insurance crisis stemming from an increasing reluctance of insurance companies to issue policies and the dramatic rise in premiums being demanded by those companies that were issuing policies. As a result, many health-care providers were forced to curtail or cease to render their services due to the difficulty in obtaining insurance at reasonable rates. Anderson v. Wagner, 79 Ill. 2d 295, 301, 402 N.E.2d 560, 562 (1979). In 1977, in the wake of this crisis, the Religious and Charitable Risk Pooling Trust Act was enacted to allow nonprofit organizations, including hospitals, to pool their risks of certain financial losses as a method of protecting themselves against the imposition of legal liability. 215 ILCS 150/2 (West 1998). Thus, the Act provided nonprofit hospitals with a cost-effective, alternative means to cover their medical malpractice liability instead of having to purchase insurance and pay premiums on the commercial market.
While the Act expresses that these trust funds "shall not be considered insurance companies or to be in the business of insurance" or be regulated under the Insurance Code (215 ILCS 150/25 (West 1998)), nothing in the Act exempts CHRPP from its common law contractual rights, duties, and obligations to indemnify covered persons as expressed in its Trust Agreement. Indeed, CHRPP has conceded that "in many respects the coverage provisions of the [TJrust [Ajgreement follow the same basic structure as an insurance policy."
In many ways, the CHRPP Trust Agreement purports to be a contract of insurance. It provides "hospital liability coverage" and further provides that it will pay on behalf of "Hospitals" judgments or settlements, as well as defense costs, incurred in response to medical malpractice suits. Additionally, to the extent that a physician qualifies as a "Covered Person" under the Trust Agreement, he is entitled to coverage for all sums that he becomes legally obligated to pay as damages due to malpractice injury. Each participating hospital is obligated to pay a contribution to the trust on behalf of covered persons, and each has a minimum deductible to be paid by the hospital. CHRPP has a claims management program, a risk management program, and an underwriting committee which has the right to seek a reservation of rights in relation to covered persons under the trust. The Trust Agreement includes an "other insurance" clause with provisions regarding the allocation of funds in cases where there is concurrent coverage. It also includes provisions to allow CHRPP to reinsure its risk. Furthermore, each participating hospital is required to provide written notice to CHRPP as soon as possible of any threatened claims against the hospital or covered persons.
Based upon the particular provisions in this Trust Agreement, CHRPP should be treated no differently than a traditional insurer for purposes of applying common law insurance principles as they relate to coverage issues. For example, under the Trust Agreement, if the notice provisions of the contract are not adhered to, CHRPP would certainly be entitled to raise coverage defenses to any claim brought by a covered person for lack of timely notice. See, e.g., Northbrook Property & Casualty Insurance Co. v. Applied Systems, Inc., 313 Ill. App. 3d 457, 466, 729 N.E.2d 915, 922 (2000). If CHRPP is entitled to its contractual rights under the Trust Agreement, we find no reason why it should not also be required to meet its contractual obligations to its covered persons.
Furthermore, Burns specifically makes it clear that the "selective tender" rule is concerned with construing the contractual relationship between the insurer and the covered person. Thus, the key question here is not whether a self-insured risk-pooling trust is insurance, but whether CHRPP's Trust Agreement and ISMIE's policy cover the loss to Dr. Baldoceda on the same basis such that the coverage provided to him is concurrent. As stated previously, the relationship between CHRPP and ISMIE is not effectuated until multiple coverage is triggered. See Burns, 189 Ill. 2d at 576-78, 727 N.E.2d at 216-17.
In construing the relevant relationship here, from Dr. Baldoceda's perspective, he has chosen to shift his risk of individual liability to ISMIE by paying a premium, and he has also chosen to shift his risk to CHRPP as a contracted-for benefit of his employment just as in Burns. 189 Ill. 2d at 571, 727 N.E.2d at 213-14 (where construction company paid a premium for its own liability insurance and also negotiated its additional insured status as a bargained-for benefit of its subcontract). For purposes of the "selective tender" rule, it does not matter to Dr. Baldoceda whether his coverage derives from a commercial carrier or from a private indemnity agreement. Nor is it of significance from Dr. Baldoceda's perspective how the coverage is funded, whether ISMIE funds the claims or reinsures them or whether the hospital pools its risk or purchases additional commercial coverage.
Moreover, nothing in the Act or the CHRPP Trust Agreement limits Dr. Baldoceda's right to exclusively select his CHRPP coverage and to knowingly forgo his ISMIE coverage. Had CHRPP or the participating hospitals desired to impose a contractual duty upon their covered persons to tender claims to all other insurers that cover the loss, they could have done so by providing such language in their Trust Agreement. Alcan, 303 Ill. App. 3d at 82, 707 N.E.2d at 693-94, citing American Country Insurance Co. v. Kraemer Brothers, Ihc., 298 Ill. App. 3d 805, 812, 699 N.E.2d 1056, 1061-62 (1998). Thus, where CHRPP has a concurrent obligation to cover the risk of Dr. Baldoceda, he has the "paramount" right to exclusively select his CHRPP coverage to the exclusion of his ISMIE coverage. By this holding, CHRPP is only being required to do what it contracted for, provide indemnification for Dr. Baldoceda's individual liability arising out of his employment at the hospital.
CHRPP next argues that public policy dictates that it should not be responsible for the full amount of its obligation to Dr. Baldoceda under the "selective tender" rule. Specifically, it maintains that to do so would deplete the assets of the trust, reducing the amount of funds that could be tunneled into the public health initiatives of CHRPP member hospitals. However, the purpose of the trust is not to provide a safe haven for nonprofit hospitals against employee claims but, rather, to provide a cost-effective means of obtaining coverage for its legal liabilities. Additionally, the Second District of this court recently rejected an argument that the rule unduly prejudices the targeted insurer because it holds it solely responsible without the benefit of equitable contribution. The court held that prejudice will always result when the insured elects a particular insurer. Nevertheless, Illinois has chosen to protect the insured's right to choose or knowingly forgo coverage over the insurer's right to contribution. Pekin, 318 Ill. App. 3d at 1144, 743 N.E.2d at 1083. Accordingly, we find that
CHRPP's status as a risk-pooling trust does not defeat the application of the "selective tender" rule and answer the first certified question in the affirmative.
However, although the above conclusion materially advances the termination of this litigation under Rule 308 (155 Ill. 2d R. 308), there are many unresolved factual and legal questions that impact on the ultimate determination of whether the "selective tender" rule applies to CHRPP in the instant case. A factual question remains as to whether Dr. Baldoceda effectively renounced the coverage under his ISMIE policy and properly perfected his selective tender of the claim to CHRPP Dr. Baldoceda and his ISMIE-appointed defense attorney wrote to CHRPP that "[i]t is Dr. Baldoceda's wish to have his ISMI[E] coverage remain secondary; the ISMI[E] policy would be used only in the event that there was insufficient CHRPP coverage (primary and excess) to cover his entire loss." The trial court never reached this issue because it held that selective tender only applied to insurance companies in the strict sense of the term.
Additionally, the trial court never reached, and the parties did not fully address on appeal, whether CHRPP had a duty to defend Dr. Baldoceda. The "selective tender" rule presumes that both insurers have a concurrent coverage obligation. Burns, 189 Ill. 2d at 574-78, 727 N.E.2d at 214-17; Alcan, 303 Ill. App. 3d at 77-78, 707 N.E.2d at 690-91. Without a duty to defend, Dr. Baldoceda would not have two available policies from which to target and the selective tender rule would therefore not be applicable to him. Accordingly, if on remand the trial court finds that either CHRPP had no duty to defend Dr. Baldoceda in the Rivera claim or that Dr. Baldoceda failed to properly perfect the selective tender of his CHRPP coverage, CHRPP would not be subject to the selective tender rule in this case.
Can CHRPP State a Cause of Action for Equitable Remedies?
Our disposition of the second certified question depends upon the answers to the above unresolved questions on remand. If the "selective tender" rule applies in the instant case, CHRPP would not be entitled to the equitable remedies it seeks from ISMIE. As explained in Burns, the targeted insurer has the sole responsibility to defend and indemnify its insured. 189 Ill. 2d at 575, 727 N.E.2d at 215. If, however, CHRPP had no duty to defend Dr. Baldoceda or he did not effectively perfect his tender of the defense and indemnity obligations exclusively to CHRPR then we must consider whether CHRPP could state a cause of action for the equitable remedies it seeks.
Contribution is an equitable principle arising among co-insurers which permits one who has paid the entire loss to be reimbursed from other insurers that are also liable for the loss. Schal Bovis, Inc. v. Casualty Insurance Co., 315 Ill. App. 3d 353, 362, 732 N.E.2d 1179, 1186 (2000). The reason for this rule is that one insurer has paid a debt that is equally owed by the other insurers. The fact that one insurer undertakes the burden of a full settlement payment does not mean the insurer is a volunteer. Aetna Casualty & Surety Co. of Illinois v. James J. Benes & Associates, Inc., 229 Ill. App. 3d 413, 417, 593 N.E.2d 1087, 1090 (1992). In order for the settling party to recover in a contribution action, the policies must cover a risk on the same basis and there must be identity between the policies as to parties and insurable interests and risks. Schal Bovis, Inc., 315 Ill. App. 3d at 362, 732 N.E.2d at 1186. Thus, since contribution claims are matters solely between insurers, the focus of question two shifts to the relationship between CHRPP and ISMIE.
Many courts have examined this relationship in the context of whether self-insurance can be considered "other valid and collectible insurance" for the purpose of assigning liability between insurance providers and self-insureds. These courts have held that, when an entity chooses to completely retain the risk of a particular loss rather than obtain a traditional insurance policy, self-insurance is not insurance. As stated in USX Corp. v. Liberty Mutual Insurance Co., "Illinois appears to have aligned itself with the majority in rejecting attempts by commercial carriers to treat self-insurance as 'other insurance' " in this context. USX Corp. v. Liberty Mutual Insurance Co., 269 Ill. App. 3d 233, 243, 645 N.E.2d 396, 403 (1994).
For example, in Benes, 229 Ill. App. 3d 413, 593 N.E.2d 1087, the court considered whether the Intergovernmental Risk Management Agency (IRMA), a municipal joint risk management pool, had the same obligation to contribute to the settlement of a claim as an insurer. The court held that IRMA did not have the same obligation for purposes of equitable contribution because, " 'when a municipality self-insures, it bears all risks itself, and settlements or awards are paid directly from government coffers.' " Benes, 229 Ill. App. 3d at 421, 593 N.E.2d at 1092, quoting Antiporek v. Village of Hillside, 114 Ill. 2d 246, 250, 499 N.E.2d 1307, 1308 (1986). The court concluded that the sharing of risk among the self-insured entities under IRMA was distinguishable from the shifting of the same risk to for-profit companies. See also St. John's Regional Health Center v. American Casualty Co. of Reading, Pennsylvania, 980 F.2d 1222 (8th Cir. 1992) (pooled liability fund was not "other insurance"); Wake County Hospital Systems, Inc. v. National Casualty Co., 804 F. Supp. 768 (E.D.N.C. 1992) (holding that hospital's self-insured retention did not constitute "other valid and collectible insurance" within meaning of "other insurance" clause of nurse's commercial policy); Physicians Insurance Co. of Ohio v. Grandview Hospital & Medical Center, 44 Ohio App. 3d 157, 542 N.E.2d 706 (1988) (determining that self-insured hospital's contract to provide professional liability coverage for its residents was not "other insurance" within the meaning of residents' professional liability policy, and characterizing self-insurance as the "antithesis" of insurance since it is the retention of the risk of loss by one upon whom it is directly imposed by law or contract); American Nurses Ass'n v. Passaic General Hospital, 98 N.J. 83, 484 A.2d 670 (1984) (holding hospital's self-insured retention was not "other insurance"). Accordingly, a true self-insured does not share an identity of insurable interests and risks with a traditional insurance carrier because it has chosen to retain its risk rather than shift any of that risk to a commercial carrier. Therefore, there can be no equitable contribution from the commercial carrier or to the commercial carrier.
However, the facts in this case present us with a unique set of circumstances. Here, unlike in Benes or any of the other cited cases, CHRPP like ISMIE, has chosen to include an "other insurance" clause in its Trust Agreement. By doing so, it seeks to share the risk of loss with a commercial carrier when they have coincidental coverage, and it is therefore something other than a pure self-insured which, as stated previously, chooses to retain all of its risk. As such, CHRPP and ISMIE should be treated no differently than they were treated in Padilla. Where both CHRPP and ISMIE have a duty to indemnify Dr. Baldoceda for the Rivera claim, CHRPP is entitled to seek contribution for the settlement costs it paid on behalf of Dr. Baldoceda.
We reject ISMIE's argument that, if CHRPP had no duty to defend, it does not insure the same interests and risks for purposes of contribution. " 'It is not necessary that the policies provide identical coverage in all respects in order for the two policies to be considered concurrent,' " and " 'as long as the particular risk actually involved in the case is covered by both policies, the coverage is duplicate, and contribution will be allowed.' " Schal Bovis, Inc., 315 Ill. App. 3d at 363, 732 N.E.2d at 1186, quoting 15 Couch on Insurance § 218:6 (3d ed. 1999). Here, both CHRPP and ISMIE had a primary duty to indemnify Dr. Baldoceda and CHRPP seeks contribution for indemnification costs only. Accordingly, we find that CHRPP's status as a risk-pooling trust does not defeat its cause of action for contribution.
We further find that, where the "other insurance" clauses of CHRPP's Trust Agreement and ISMIE's policy govern the relationship of the parties in allocating liability, CHRPP cannot state a cause of action for unjust enrichment or quantum meruit. People ex rel. Hartigan v. E&E Hauling, Inc., 153 Ill. 2d 473, 497, 607 N.E.2d 165, 177 (1992); Canel & Hale, Ltd. v. Tobin, 304 Ill. App. 3d 906, 913, 710 N.E.2d 861, 868 (1999). Lastly, we decline to address ISMIE's counterclaim for defense costs where it is outside the scope of the certified questions.
Accordingly, for the foregoing reasons, we answer the certified questions and remand for further proceedings consistent with this opinion.
Certified questions answered; cause remanded.
REID, J., concurs.
The Padilla court did not specifically order an equal sharing of the settlement costs. However, on remand the contract was interpreted to require ISMIE to reimburse CHRPP for 50% of the settlement costs.
We also note that the plain language of the Risk Pooling Act appears to limit indemnification for professional liability solely to the participating hospitals for their liabilities arising out of their corporate practices or for their role as respondeat superior. 215 ILCS 150/2, 5 (West 2000). However, we need not address this issue, where the parties both concede for purposes of this litigation that the Act also authorizes CHRPP to indemnify the employees of the participating hospitals for their legal liability while acting within the scope of their employment.