Opinion ID: 1746593
Heading Depth: 2
Heading Rank: 2

Heading: Liability under implied contract theory.

Text: The district court judge concluded that Pelo was liable for payment of the private hospital bill under a contract implied in law or quasi-contract theory.
A contract implied in law is an obligation imposed by the law without regard to either party's expressions of assent either by words or acts. Irons v. Community State Bank, 461 N.W.2d 849, 855 (Iowa App.1990) (citing Corbin on Contracts § 19 (1952)). Such contracts do not arise from the traditional bargaining process, but rather rest on a legal fiction arising from considerations of justice and the equitable principles of unjust enrichment. Hunter v. Union State Bank, 505 N.W.2d 172, 177 (Iowa 1993). As such, they are not real contracts and the general rules of contracts therefore do not apply to them. Id.; accord 1 Samuel Williston, A Treatise on the Law of Contracts § 1:6, at 27 (Richard A. Lord ed., 4th ed.1990) (hereinafter Williston). More specifically, the contracts clause of article I, section 10 of the United States Constitution does not apply to quasi-contracts. Williston, § 1:6, at 27. Restitution and unjust enrichment are modern designations for the older doctrine of quasi contracts or contracts implied in law, sometimes called constructive contracts. Robert's River Rides v. Steamboat Dev. Corp., 520 N.W.2d 294, 302 (Iowa 1994) (citations omitted). The term `unjust enrichment is an equitable principle mandating that one shall not be permitted to unjustly enrich oneself at the expense of another or to receive property or benefits without making compensation for them.' Id. (quoting West Branch State Bank v. Gates, 477 N.W.2d 848, 851-52 (Iowa 1991)). Under these principles, where a person acts to confer benefits on another in a setting in which the actor is not acting officiously, the benefited party may be required to make restitution to the actor. Okoboji Camp Owners Co-op. v. Carlson, 578 N.W.2d 652, 654 (Iowa 1998) (citing Restatement of Restitution §§ 1, 2 (1936)). Thus, where a person performs services for another which are known to and accepted by the latter, the law implies a promise to pay for those services. Patterson v. Patterson's Estate, 189 N.W.2d 601, 604 (Iowa 1971); Snyder v. Nixon, 188 Iowa 779, 781, 176 N.W. 808, 809 (1920) (The general rule is that where one renders services of value to another with his knowledge and consent, the presumption is that the one rendering the services expects to be compensated, and that the one to whom the services are rendered intends to pay for the same, and so the law implies a promise to pay.). The Restatement of Restitution states that [a] person who officiously [2] confers a benefit upon another is not entitled to restitution therefor. Restatement of Restitution § 2. Under this rule, recovery is denied so that one will not have to pay for a benefit forced upon one against one's will, see 1 E. Allan Farnsworth, Farnsworth on Contracts § 2.20, at 173 (2d ed.1998), or for which one did not request or knowingly accept. See Nursing Care Servs. v. Dobos, 380 So.2d 516, 518 (Fla.Dist.Ct.App.1980) (referring to rule as the officious intermeddler doctrine). In certain circumstances, however, restitution for services performed will be required even though the recipient did not request or voluntarily consent to receive such services. For example, section 116 of the Restatement of Restitution provides: A person who has supplied things or services to another, although acting without the other's knowledge or consent, is entitled to restitution therefor from the other if (a) he acted unofficiously and with intent to charge therefor, and (b) the things or services were necessary to prevent the other from suffering serious bodily harm or pain, and (c) the person supplying them had no reason to know that the other would not consent to receiving them, if mentally competent; and (d) it was impossible for the other to give consent or, because of extreme youth or mental impairment, the other's consent would have been immaterial. (Emphasis added.) Comment b to section 116 states: Knowledge of dissent. There can be no restitution for services or things rendered to a person who refuses to accept the services and who is of sufficient mental capacity to understand the necessity of receiving them. ... If, however, the person is insane, or if he is otherwise not fully mentally competent, . . . a person rendering necessaries or professional services is entitled to recover from such person under the conditions stated in this Section, although the person expresses an unwillingness to accept the things or services. [3] (Emphasis added.) In addition to the principles set forth in the Restatement of Restitution discussed above, cases from other jurisdictions have concluded that a patient is liable for the reasonable value of medical services rendered by a hospital based on an implied in law contract theory. See Nursing Care Servs., 380 So.2d at 518 (concluding that provider of nursing care services was entitled to value of services provided to patient based on emergency aid quasi-contract theory); Galloway v. Methodist Hosps., Inc., 658 N.E.2d 611, 614 (Ind.Ct.App. 1995) (holding that equity demanded that patients pay for medical services rendered by hospital in birth of child to prevent unjust enrichment); Heartland Health Sys. v. Chamberlin, 871 S.W.2d 8, 11 (Mo. Ct.App.1993) (affirming on appeal judgment entered in favor of hospital against patient for payment of medical services under quantum meruit theory); Morehead v. Conley, 75 Ohio App.3d 409, 599 N.E.2d 786, 789 (1991) (holding defendant liable under quasi-contract theory for reasonable value of services rendered by physician); Porter v. McPherson, 198 W.Va. 158, 479 S.E.2d 668, 675 (1996) (holding that hospital had claim against patient based on implied contract for reasonable value of services rendered even though patient was not fully compensated by settlement with at-fault party; medical provider's claim rests upon debtor-creditor relationship and cannot be extinguished by doctrine of subrogation).
The district court concluded that Pelo benefitted by his hospitalization and that Pelo was liable for medical services rendered to him. Upon our review, we agree with the district court's decision. We first point out that Pelo does not challenge the factual basis for his hospitalization. Nor is it likely that such a challenge would be successful given the fact that the necessary probable cause findings concerning emergency hospitalization by the magistrate, see Iowa Code § 229.22(3), and involuntary commitment procedures by the hospitalization referee, see Iowa Code § 229.11, were made. These fact-finding requirements are in place to guarantee a patient's liberty and due process interests when the state exercises its authority through emergency hospitalization and involuntary commitment proceedings. This authority is based on the standard for commitment, serious mental impairment as defined in section 229.1(14), which melds the important elements of the police power and parens patriae doctrine. B.A.A. v. University of Iowa Hosps., 421 N.W.2d 118, 122-23 (Iowa 1988) (discussing historical background of state's authority in involuntary commitment proceedings). Pelo also does not challenge the hospitalization referee's finding that he suffers from mental illness described as bipolar disorder. Nor does Pelo challenge the district court's finding that $2,775.79 was the reasonable cost of services provided to him during his hospitalization. Pelo contends, however, that he has no duty to pay for those services because he did not ask to be hospitalized and derived no benefit from his hospitalization. Pelo bases his argument, in part, on the hospitalization referee's finding made after the commitment hearing that further hospitalization was not authorized (based on a finding that there was not clear and convincing evidence that Pelo was seriously mentally impaired, see Iowa Code § 229.13). Pelo apparently interprets the referee's decision to mean that he should not have been hospitalized in the first place and that he therefore derived no benefit from his hospitalization. We find no merit in these contentions. First, the hospitalization referee's final decision is not relevant to Pelo's duty to pay for services previously rendered to him by the hospital. The referee's decision only addressed the propriety of any future hospitalization, not whether there was an adequate basis for hospitalization of Pelo in the first place or whether he medically benefited from his hospitalization. Second, Pelo's opinion as to whether he needed or consented to medical services provided to him during his hospitalization is essentially irrelevant. This is because the emergency hospitalization order, which was based on the magistrate's probable cause finding that Pelo was seriously mentally impaired, see Iowa Code § 229.22(3), establishes that Pelo lacked sufficient judgment to make responsible decisions concerning hospitalization and lacked the ability to consent to treatment. See Iowa Code § 229.1(14) (defining seriously mentally impaired). Additionally, like the district court, we find that Pelo's hospitalization was indeed of medical benefit to him. The hospital provided services to Pelo from January 8 to 13, 1995, in good faith and not gratuitously. Such services were provided for Pelo's benefit, pursuant to court orders based on probable cause findings that Pelo was seriously mentally impaired and likely to injure himself or others if not immediately detained in the hospital. Based on the later reports of the physicians who examined and evaluated Pelo during his hospitalization, the referee found that Pelo clearly is in need of and would benefit from treatment for a serious mental illness. This finding, we believe, would at a minimum alert Pelo to the seriousness of his mental illness and the need for further treatment, a fact that would surely be of medical benefit to him. The fact that Pelo was involuntarily hospitalized in order that this evaluation and finding could be made, and the fact that he may disagree with whether this finding is of medical benefit to him, does not eliminate the medical benefit he received from such hospitalization. We conclude that plaintiff is entitled to recover the value of those medical services provided to Pelo. See Restatement of Restitution § 116 cmt. b (if a person is otherwise not fully mentally competent, a person rendering necessaries or professional services is entitled to recover from such person although the person expresses an unwillingness to accept the services). The district court therefore properly determined that Pelo was legally obligated to pay for those services based on an implied in law contract theory. See Heartland Health Sys., 871 S.W.2d at 11 (affirming on appeal judgment entered in favor of hospital against patient for payment of medical services under quantum meruit theory). Because we conclude that Pelo is legally obligated to pay for medical services provided to him under an implied contract in law or quasi-contract theory, we need not consider whether an express contract was formed based on Pelo's later signature on the hospital admission form. See Johnson v. Dodgen, 451 N.W.2d 168, 175 (Iowa 1990) (the existence of a contract generally precludes the application of the doctrine of unjust enrichment); Chariton Feed & Grain, Inc. v. Harder, 369 N.W.2d 777, 791 (Iowa 1985) (an express and an implied contract cannot be found to exist on the same subject matter).