Court Opinion

ID: 4379048
Source: CourtListenerOpinion
Date Created: 2019-03-20 20:04:10.834116+00
Date Added: 2024-06-11T14:24:50.050212
License: Public Domain

2019 IL App (1st) 180160
                                                                                    FIRST DISTRICT
                                                                                  SECOND DIVISION
                                                                                      March 19, 2019

                                               No. 1-18-0160

     WILLIAM HARRIS, as Special Administrator of               )
     the Estate of Lillie Michelet,                            )
                                                               )
                                    Plaintiff-Appellant,       )
     v.                                                        )
                                                                         Appeal from the
                                                               )
                                                                         Circuit Court of
     SYMPHONY COUNTRYSIDE, LLC, d/b/a                          )
                                                                         Cook County, Illinois.
     Symphony of Orchard Valley; COUNTRYSIDE                   )
     CARE CENTRE, INC.; COUNTRYSIDE CARE,                      )
                                                                         No. 16 L 6058
     LLC; and PRESENCE CENTRAL AND                             )
     SUBURBAN HOSPITALS NETWORK d/b/a                          )
                                                                         Honorable
     Presence Mercy Medical Center,                            )
                                                                         Patricia O’Brien Sheahan,
                                Defendants                     )
                                                                         Judge Presiding.
                                                               )
     (Countryside Care Centre, Inc., and Countryside           )
     Care, LLC,                                                )
                                  Defendants-Appellees).       )
                                                               )

               PRESIDING JUSTICE MASON delivered the judgment of the court, with opinion.
               Justices Pucinski and Hyman concurred in the judgment and opinion.

                                                 OPINION

¶1             Lillie Michelet was admitted to the Countryside Care Centre nursing home on April 21,

     2014. She was discharged on June 21 with bedsores on various parts of her body, which

     allegedly caused sepsis and led to her death on June 29. Her son, William Harris, as special

     administrator of her estate, brought suit against various entities, including Countryside Care

     Centre, Inc., and Countryside Care, LLC (collectively, Countryside defendants), alleging

     negligence and violations of the Nursing Home Care Act (210 ILCS 45/1-101 et seq. (West

     2014)).
     No. 1-18-0160

¶2          The trial court granted summary judgment to the Countryside defendants because they

     sold Countryside Care Centre to Symphony Countryside, LLC (Symphony), on December 31,

     2011, and had no ownership, operational interest, or financial interest in the facility during the

     time Michelet was a resident. Harris appeals, arguing that, after acquiring the nursing home,

     Symphony represented itself to the public as “Countryside Care Centre” with the knowledge and

     acquiescence of the Countryside defendants, thus creating an issue of fact as to whether the

     Countryside defendants can be held vicariously liable for Symphony’s negligence under a theory

     of apparent agency. Pursuant to our supreme court’s recent decision in Yarbrough v.

     Northwestern Memorial Hospital, 2017 IL 121367, we disagree and affirm.

¶3                                            BACKGROUND

¶4          Prior to December 31, 2011, Countryside Care Centre, Inc., managed Countryside Care,

     LLC, which operated Countryside Care Centre, a nursing home in Aurora, Illinois. On December

     31, 2011, Countryside Care, LLC, entered into an “Operations Transfer Agreement” to transfer

     operation of the home to Symphony, as well as rights to the home’s name, website, and

     telephone numbers. The agreement provided that Countryside Care, LLC, would terminate the

     home’s employees, and Symphony had sole discretion regarding rehiring. The agreement also

     included a disclaimer stating: “Nothing contained herein shall be construed as forming a joint

     venture or partnership between the parties hereto.”

¶5          The operational transfer is reflected in three Illinois Department of Public Health (IDPH)

     forms. First, on November 30, 2011, Symphony submitted an “Application for Licensure” to the

     IDPH, requesting to be licensed as the operator of the nursing home. Second, on January 10,

     2012, the IDPH issued a form titled “Approved Licensure Actions” in which it approved

     Symphony’s application. Symphony’s effective date of ownership is listed as December 31,

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     No. 1-18-0160

     2011, and its effective date of licensure is January 10, 2012. Finally, the IDPH issued an “Illinois

     Department of Public Health Initial & Change of Ownership Application Checklist,” dated

     January 10, 2012, which lists Symphony as operator/licensee.

¶6          After the transfer, the Countryside defendants did not retain any management or financial

     interest in the nursing home, according to Shael Bellows, the president of Countryside Care

     Centre, Inc. The Countryside defendants had no employees at the home nor did they have any

     responsibility or role in the care and treatment of residents. But Symphony continued to operate

     the nursing home under the name “Countryside Care Centre” at all relevant times. 1 The facility

     name was on the front of the building, on shirts worn by nursing home staff, on internal medical

     records and bills sent to patients, and on the home’s Facebook page and website.

¶7          On April 16, 2014, 74-year-old Michelet experienced shortness of breath and chest pains

     and was admitted to Presence Mercy Medical Center (Presence Mercy), where she was

     diagnosed with congestive heart failure. Her treating physician, Dr. Siddiqui, recommended that

     she receive pulmonary rehabilitation at a nursing home. Hospital records reflect that Michelet

     was “initially resistant” to the idea but eventually agreed to be placed at Countryside Care

     Centre, to which she was admitted on April 21. Two months later, on June 21, Michelet was

     discharged from Countryside Care Centre with open wounds, rashes, blisters, infections, and

     sores on various parts of her body. She thereafter developed sepsis, went into septic shock, and

     died on June 29.

¶8          On June 17, 2016, Harris brought suit against the Countryside defendants (and Presence

     Mercy, which is not involved in this appeal), alleging, in relevant part, that the Countryside

            1
             In February 2016, a few months before this lawsuit was filed, Symphony changed the home’s
     name to “Symphony of Orchard Valley.”
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       No. 1-18-0160

       defendants neglected Michelet’s care in violation of the Nursing Home Care Act (210 ILCS

       45/1-101 et seq. (West 2014)). He did not initially name Symphony as a defendant.

¶9            The Countryside defendants moved to dismiss based on the fact that they sold the nursing

       home to Symphony in 2011. Before the trial court could rule on the motion, 2 Harris amended his

       complaint to add Symphony as a defendant. He also alleged that the Countryside defendants

       were “agents, employees, apparent agents, and/or joint venturers” of Symphony and vice versa.

       More specifically, he alleged that the Countryside defendants were engaged in a joint venture

       with Symphony to share profits from the nursing home.

¶ 10          The Countryside defendants then moved for summary judgment, asserting that after

       transferring the nursing home to Symphony in 2011, they had no responsibility or role in the care

       and treatment of residents nor did they have any financial or business interest in the home. In

       support, they attached Bellows’s affidavit, the operations transfer agreement with Symphony,

       and the IDPH forms reflecting Symphony’s licensure as the operator of the facility, effective

       January 10, 2012. The Countryside defendants also asserted that the IDPH forms were “readily

       obtainable by any party” and the transfer was, therefore, a matter of public record.

¶ 11          In his response, Harris effectively conceded that there was no evidence of a joint venture

       or actual agency relationship between Symphony and the Countryside defendants. But he argued

       there was still an issue of fact as to apparent agency since (i) Symphony, by operating the

       nursing home under the name “Countryside Care Centre,” held itself out as an agent of the

       Countryside defendants; (ii) in doing so, Symphony acted with the knowledge and acquiescence

       of the Countryside defendants; and (iii) Michelet relied on that “holding out” in choosing to be

       admitted to the facility. Thus, Harris argued, even in the absence of any actual agency, the

              2
               In fact, it appears the motion to dismiss was never explicitly ruled on.
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       No. 1-18-0160

       Countryside defendants could be held vicariously liable for Symphony’s medical negligence in

       treating Michelet.

¶ 12          In support of his “holding out” argument, Harris attached copies of various websites.

       First, he attached a December 2014 printout of the Countryside Care Centre website, located at

       http://www.countrysidecare.com. Although the home is consistently referred to as “Countryside

       Care Centre,” the first sentence of the “About Us” page states: “Countryside Care Centre is a

       proud member of Symphony Post Acute Network.” Additionally, at the bottom of each page is

       the text “A MEMBER OF THE SYMPHONY POST ACUTE NETWORK.”

¶ 13          Second, Harris attached printouts from the IDPH online database of nursing homes in

       Illinois, reflecting that the facility’s name was “Countryside Care Centre” in July 2015. Notably,

       he did not include the “Ownership Information” page, which displays the licensee name for the

       facility. See Nursing Homes in Illinois, Ill. Dep’t of Pub. Health, https://ltc.dph.illinois.gov/

       webapp/LTCApp/ltc.jsp (last visited Mar. 5, 2019) [https://perma.cc/FGE5-BMWS] (select any

       facility name, then click “Ownership Information”).

¶ 14          On December 14, 2017, the trial court granted summary judgment in favor of the

       Countryside defendants. The court explained that allowing a successor owner to continue to use

       a business’s trade name was insufficient to constitute “holding out” the subsequent owner as an

       agent. Otherwise, the court stated, “[n]o business would ever feel safe allowing a subsequent

       company to use a trade name [after] selling a company.” The court also found that Harris had not

       established that Michelet relied on any “holding out” when choosing to be admitted to

       Countryside Care Centre. Finally, the court found that there was no just reason to delay

       enforcement or appeal under Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016). This timely

       appeal followed.

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       No. 1-18-0160

¶ 15                                               ANALYSIS

¶ 16          Harris argues, as he did in the trial court, that there is an issue of fact as to whether

       Symphony was the apparent agent of the Countryside defendants, which would subject them to

       vicarious liability for Symphony’s alleged negligence.

¶ 17          Agency is a fiduciary relationship in which the principal controls the agent’s conduct and

       the agent has authority to act on the principal’s behalf. Zahl v. Krupa, 365 Ill. App. 3d 653, 660

       (2006). An agent’s authority can be either actual or apparent. Id. Here, it is undisputed that

       Symphony had no actual authority to act on behalf of the Countryside defendants, who retained

       no control over the management or operation of the nursing home after December 31, 2011.

       Nevertheless, under the doctrine of apparent authority, “[a] principal will be bound not only by

       that authority which he actually gives to another, but also by the authority that he appears to

       give.” Gilbert v. Sycamore Municipal Hospital, 156 Ill. 2d 511, 523 (1993); see also Patrick

       Engineering, Inc. v. City of Naperville, 2012 IL 113148, ¶ 35. This doctrine is based upon

       principles of estoppel since “ ‘if a principal creates the appearance that someone is his agent, he

       should not then be permitted to deny the agency if an innocent third party reasonably relies on

       the apparent agency and is harmed as a result.’ ” York v. Rush-Presbyterian-St. Luke’s Medical

       Center, 222 Ill. 2d 147, 187 (2006) (quoting O’Banner v. McDonald’s Corp., 173 Ill. 2d 208,

       213 (1996)).

¶ 18          Our supreme court first applied the apparent authority doctrine in a medical malpractice

       context in Gilbert, 156 Ill. 2d 511, the main case on which Harris relies. Gilbert went to a

       hospital emergency room suffering from pain in his chest and left arm. A physician prescribed

       pain medications and discharged him. Later that evening, Gilbert died as a result of a myocardial

       infarction. Id. at 517. Gilbert’s estate brought suit against the hospital, which obtained summary

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       No. 1-18-0160

       judgment on grounds that the physician was an independent contractor for whose actions the

       hospital could not be vicariously liable. Id. at 516-17. Our supreme court reversed, finding an

       issue of fact as to whether the physician was the hospital’s apparent agent. Id. at 517.

¶ 19          Gilbert based its decision on two “realities of modern hospital care.” Id. at 520. First,

       “ ‘hospitals have become big business, competing with each other for health care dollars.’ ” Id.

       (quoting Kashishian v. Port, 481 N.W.2d 277, 282 (Wis. 1992)). As part of this competition,

       hospitals hold themselves out to the public as providers of quality health care, inducing patients

       to seek emergency room services from which the hospitals benefit. Id. Second, it is natural for

       patients to assume (correctly or not) that emergency room physicians are hospital employees. Id.

       at 521. “ ‘Absent a situation where the patient is directed by his own physician or where the

       patient makes an independent selection as to which physicians he will use while there, it is the

       reputation of the hospital itself upon which he would rely.’ ” Id. (quoting Arthur v. St. Peters

       Hospital, 405 A.2d 443, 447 (N.J. Super. Ct. Law Div. 1979)).

¶ 20          Thus, Gilbert held that a hospital may be vicariously liable for the acts of its independent-

       contractor physicians under principles of apparent authority. “[I]t is settled that an apparent

       agency gives rise to tort liability where the injury would not have occurred but for the injured

       party’s justifiable reliance on the apparent agency.” Id. at 524. Specifically, in the hospital

       context:

              “ ‘For a hospital to be liable under the doctrine of apparent authority, a plaintiff must

              show that: (1) the hospital, or its agent, acted in a manner that would lead a reasonable

              person to conclude that the individual who was alleged to be negligent was an employee

              or agent of the hospital; (2) where the acts of the agent create the appearance of authority,

              the plaintiff must also prove that the hospital had knowledge of and acquiesced in them;

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       No. 1-18-0160

               and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent,

               consistent with ordinary care and prudence.’ ” Id. at 525 (quoting Pamperin v. Trinity

               Memorial Hospital, 423 N.W.2d 848, 856 (Wis. 1988)).

       But the court also cautioned that “[i]f a patient knows, or should have known, that the treating

       physician is an independent contractor, then the hospital will not be liable.” Id. at 522.

¶ 21           Although our supreme court has reaffirmed Gilbert on multiple occasions (see Petrovich

       v. Share Health Plan of Illinois, Inc., 188 Ill. 2d 17, 33 (1999) (HMO may be held vicariously

       liable for the negligence of its independent-contractor physicians under doctrine of apparent

       authority); York, 222 Ill. 2d at 195 (plaintiff presented sufficient evidence of apparent authority

       to support verdict finding hospital vicariously liable for malpractice of independent-contractor

       anesthesiologist)), the court also recently limited Gilbert in Yarbrough, 2017 IL 121367, the

       facts of which are notably similar to the present case.

¶ 22           Yarbrough received prenatal care at the Erie Family Health Center. Erie staff members

       told her that she would likely deliver her baby at Northwestern Memorial Hospital (NMH) and

       gave her informational materials about NMH’s facilities and services. As a result, Yarbrough

       incorrectly believed Erie and NMH to be the same entity. Id. ¶ 6.

¶ 23           After delivering her baby prematurely, Yarbrough brought a medical negligence suit

       against NMH, alleging that Erie’s employees, as the apparent agents of NMH, were negligent in

       providing prenatal care. Id. ¶ 11. NMH moved for summary judgment on grounds that it neither

       owned nor operated Erie. The trial court certified a question to our supreme court: “Can a

       hospital be held vicariously liable under the doctrine of apparent agency set forth in [Gilbert] and

       its progeny for the acts of the employees of an unrelated, independent clinic that is not a party to

       the present litigation?” Id. ¶ 1.

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       No. 1-18-0160

¶ 24          Our supreme court answered this question in the negative, finding that Yarbrough’s

       situation did not implicate the policy considerations that informed Gilbert, Petrovich, and York.

       Id. ¶¶ 43, 49. The court explained:

              “Here, Yarbrough sought treatment at Erie but looks to impose liability on NMH. Erie is

              neither owned nor operated by NMH. While Erie receives some charitable financial and

              technical assistance from NMH, Erie is [a federally qualified health center] that relies

              heavily on federal grants and Medicaid reimbursement to provide underserved

              communities with primary and preventative care regardless of an individual’s ability to

              pay. *** Erie does not utilize the Northwestern name. There is no Northwestern-related

              branding or the use of Northwestern’s trademark purple color by Erie.” Id. ¶ 44.

       Under these facts, the court stated: “We refuse to read Gilbert and its progeny so broadly as to

       impose vicarious liability under the doctrine of apparent authority on a hospital for the care given

       by employees of an unrelated, independently owned and operated clinic like Erie.” Id. ¶ 47.

¶ 25          We find the present action analogous to Yarbrough rather than Gilbert. Michelet sought

       treatment at a facility neither owned nor operated by the Countryside defendants, but operated by

       Symphony, an unrelated, independent entity. Under such circumstances, there is no vicarious

       liability under the doctrine of apparent agency. As in Yarbrough, the realities of modern hospital

       care referenced in Gilbert, Petrovich, and York do not apply here. These cases rely on the

       premise that hospitals and HMOs are “ ‘big business’ ” (Gilbert, 156 Ill. 2d at 520 (quoting

       Kashishian, 481 N.W.2d at 282)), marketing themselves to people in need of medical services

       and thereby profiting. But after 2011, the Countryside defendants had no financial or operational

       interest in the home; they did not publish advertisements “ ‘extolling the medical virtues’ ” of the

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       No. 1-18-0160

       home (id. (quoting Kashishian, 481 N.W.2d at 282)), nor did they profit from the nursing

       home’s operations.

¶ 26          Moreover, while a patient at a medical facility might reasonably believe the professionals

       working there are employees of the facility (id. at 521), it is not similarly reasonable to believe

       they are employees of a separate, independent entity. We are not persuaded by Harris’s argument

       that such belief is made reasonable by Symphony’s use of the name “Countryside Care Centre.”

       It is common for a purchaser of a business to also purchase rights to the business’s trade name

       and goodwill. See, e.g., Phillips v. Cox, 261 Ill. App. 3d 78, 79 (1994) (plaintiffs bought the

       defendant’s sign-making business along with the right to use the name “David Cox Signs”);

       Thompson v. Spring-Green Lawn Care Corp., 126 Ill. App. 3d 99, 109 (1984) (“When plaintiff

       purchased the business ***, he purchased the good will of the business and the use of the

       business’ name which he continued to use, continuously used, and continues to use.”); Smith v.

       Burkitt, 342 Ill. App. 3d 365, 370 (2003) (“[G]oodwill is generally transferred as an incident to

       the sale of a business.”). Harris cites no law for the proposition that, by transferring these

       intangible assets, the original business owner may be subjected to liability in perpetuity under a

       theory of apparent agency. On the contrary, it is a longstanding principle that “[t]he use of a

       trade name by the purchaser of the right to use same is not a representation that the purchaser is

       the identical person who formerly used it, but merely that he has the right to do business under

       that name.” Klintz v. Marx, 205 Ill. App. 376, 377 (1917) (abstract of opinion). As the trial judge

       aptly observed, under Harris’s proposed expansion of Gilbert, no business would allow a

       subsequent owner to continue using the business’s existing trade name for fear of liability.

¶ 27          Additionally, we observe that despite retaining the facility name, there is no evidence that

       Symphony ever purported to be an agent of Countryside Care Centre, Inc., or Countryside Care,

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       No. 1-18-0160

       LLC. On the contrary, every page of the home’s website states that it is “A MEMBER OF THE

       SYMPHONY POST ACUTE NETWORK.”

¶ 28          Finally, it is a matter of public record that Symphony operated the nursing home for years

       before Michelet’s admission. See Gilbert, 156 Ill. 2d at 522 (“If a patient knows, or should have

       known, that the treating physician is an independent contractor, then the hospital will not be

       liable.”). This case is therefore distinguishable from Gilbert, in which patients had no way of

       knowing the private contractual agreements between the hospital and its physicians. Id. at 521.

       For all these reasons, we agree with the trial court that Harris did not create an issue of material

       fact as to the Countryside defendants’ “holding out” of Symphony as an apparent agent and

       summary judgment for the Countryside defendants was appropriate.

¶ 29          Affirmed.

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