Court Opinion

ID: 3143974
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:01:24.616459+00
Date Added: 2024-06-11T11:54:58.925195
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                   Appellate Court

 Health Alliance Medical Plans, Inc. v. Department of Healthcare & Family Services, 2011
                                  IL App (4th) 110495

Appellate Court        HEALTH ALLIANCE MEDICAL PLANS, INC., an Illinois Domestic
Caption                Stock Insurance Corporation, Plaintiff-Appellee, v. THE DEPARTMENT
                       OF HEALTHCARE AND FAMILY SERVICES; JULIE HAMOS, in Her
                       Official Capacity as Director of The Department of Healthcare and
                       Family Services; THE EXECUTIVE ETHICS COMMISSION; MATT
                       BROWN, in His Official Capacity as Chief Procurement Officer of The
                       Illinois Executive Ethics Commission; THE DEPARTMENT OF
                       CENTRAL MANAGEMENT SERVICES; and JAMES P. SLEDGE, in
                       His Official Capacity as Director of Central Management Services,
                       Defendants-Appellants, and HEALTH CARE SERVICE
                       CORPORATION, as Parent Company of BlueCross BlueShield of
                       Illinois; BLUECROSS BLUESHIELD OF ILLINOIS BLUE
                       ADVANTAGE; BLUECROSS BLUESHIELD OF ILLINOIS HMO
                       ILLINOIS; PERSONAL CARE INSURANCE OF ILLINOIS, INC.; and
                       HEALTHLINK HMO, INC., Defendants, and HUMANA HEALTH
                       PLAN, INC.; and HUMANA INSURANCE COMPANY, Defendants-
                       Appellees.–HEALTH ALLIANCE MEDICAL PLANS, INC., Plaintiff-
                       Appellee, v. PERSONAL CARE INSURANCE OF ILLINOIS, INC.,
                       THE DEPARTMENT OF HEALTHCARE AND FAMILY SERVICES;
                       JULIE HAMOS, in Her Official Capacity as Director of the Department
                       of Healthcare and Family Services; THE EXECUTIVE ETHICS
                       COMMISSION; MATT BROWN, in His Official Capacity as Chief
                       Procurement Officer of the Illinois Executive Ethics Commission; THE
                       DEPARTMENT OF CENTRAL MANAGEMENT SERVICES; JAMES
                       P. SLEDGE, in His Official Capacity as Director of Central Management
                       Services; and HEALTHLINK HMO, INC., Defendants-Appellants, and
                       HEALTH CARE SERVICE CORPORATION, as Parent Company of
                       BlueCross BlueShield of Illinois; BLUECROSS BLUESHIELD OF
                       ILLINOIS BLUE ADVANTAGE; and BLUECROSS BLUESHIELD OF
                       ILLINOIS HMO ILLINOIS, Defendants.
District & No.             Fourth District
                           Docket Nos. 4-11-0495, 4-11-0545 cons.

Filed                      August 3, 2011
Modified upon
denial of rehearing        September 12, 2011
Held                       The trial court properly entered an order staying the Department of
(Note: This syllabus       Healthcare and Family Services’ awards of contracts for open-access-plan
constitutes no part of     health insurance to state employees pending the ultimate determination
the opinion of the court   of plaintiff’s action for administrative review, since the trial court had
but has been prepared      jurisdiction under the Administrative Review Law and the findings that
by the Reporter of         a stay was appropriate, did not endanger the public, and was not contrary
Decisions for the          to public policy and that plaintiff would likely succeed on the merits were
convenience of the         not an abuse of discretion.
reader.)

Decision Under             Appeal from the Circuit Court of Sangamon County, No. 11-MR-250; the
Review                     Hon. Brian T. Otwell, Judge, presiding.

Judgment                   Affirmed.

Counsel on                 Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro,
Appeal                     Solicitor General, and Paul Racette, Assistant Attorney General, of
                           counsel), for appellants.

                           Scott T. Schutte, Gregory T. Fouts, and Tedd M. Warden, all of Morgan,
                           Lewis & Bockius LLP, of Chicago, and Neal F. Perryman and David W.
                           Gearhart, both of Lewis, Rice & Fingersh, L.C., of St. Louis, Missouri,
                           for appellants Personal Care Insurance of Illinois, Inc., and Healthlink
                           HMO, Inc.

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                           R. Mark Mifflin, David A. Herman, Christopher E. Sherer, and Melissa
                           G. Steward, all of Giffin, Winning, Cohen & Bodewes, P.C., of
                           Springfield, for appellee Health Alliance Medical Plans, Inc.

                           William A. Chittenden III, David J. Novotny, and Craig M. Bargher, all
                           of Chittenden, Murday & Novotny LLC, of Chicago, and Steve W.
                           Kinion, of Zack Stamp, Ltd., of Springfield, for appellees Humana Health
                           Plan, Inc., and Humana Insurance Company.

Panel                      JUSTICE STEIGMANN delivered the judgment of the court, with
                           opinion.
                           Presiding Justice Knecht and Justice Cook concurred in the judgment and
                           opinion.

                                             OPINION

¶1          On June 6, 2011, Health Alliance Medical Plans, Inc. (Health Alliance), filed a complaint
        (1) challenging the decision by the director of the Department of Healthcare and Family
        Services (DHFS) not to renew its contract to provide open-access-plan (OAP) health
        insurance to state employees and (2) requesting a stay pending the outcome of its challenge.
        On June 10, 2011, the circuit court entered an order staying the awards of the OAP contracts
        “pending the ultimate determination” of this action for administrative review.
¶2          DHFS (No. 4-11-0495) and PersonalCare Insurance of Illinois, Inc. (PersonalCare) (No.
        4-11-0545) (collectively appellants), appeal, arguing that the circuit court erred by granting
        Health Alliance’s motion for stay pending administrative review. We disagree and affirm.

¶3                                       I. BACKGROUND
¶4                        A. State Employees Group Insurance Act of 1971
¶5          The State Employees Group Insurance Act of 1971 (Insurance Act) (5 ILCS 375/1
        through 17 (West 2010)) provides that it is the State’s policy to assure “quality benefits” for
        state employees. See 5 ILCS 375/5 (West 2010). To effectuate that policy, the Insurance Act
        requires the director of the Department of Central Management (CMS) to contract for–or
        otherwise make available–health benefits for those employees. 5 ILCS 375/5 (West 2010).
        (In April 2005, however, the Governor signed an executive order, transferring the
        responsibilities related to state health-care purchasing under the Insurance Act from the

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       director of CMS to the director of DHFS.) The Insurance Act further provides that with
       respect to self-insurance, the director must seek the “advice and consent” of the Commission
       on Government Forecasting and Accountability (COGFA). 5 ILCS 375/6.2 (West 2010).
       COGFA is a legislative support services agency, the membership of which consists of a
       bipartisan group of 12 members of the General Assembly appointed by the leadership of the
       General Assembly as provided by statute (25 ILCS 130/1-5(3) (West 2008) (as amended by
       Pub. Act 96-959 (eff. July 1, 2010))). Among its many duties, COGFA is charged with
       studying and providing the General Assembly with information on economic development
       and fiscal trends in Illinois and on the operations of state government, recommending state
       fiscal and economic policies to improve the functioning of state government, and developing
       a three-year budget forecast for the State, including opportunities and threats concerning
       anticipated revenues and expenditures (25 ILCS 155/3(1) through (3), (12), (14) (West 2010)
       (as amended by Pub. Act 96-958 (eff. July 1, 2010))). COGFA is also charged with
       overseeing the administration of the State Employees’ Group Insurance Program. See 5 ILCS
       375/4, 5 (West 2010).

¶6                      B. The Types of Health Insurance the State Provides
¶7         The State provides health insurance benefits in two ways: (1) through managed-care
       plans, which include (a) health maintenance organizations (HMOs) and (b) OAPs, and (2)
       through preferred provider organizations (PPOs). The State self-insures the OAPs and the
       PPOs, which means that the State contracts with the OAPs and PPOs to administer the plans
       but otherwise (1) assumes all the risks and (2) pays the claims made under those plans. In
       contrast to the OAPs and PPOs, the State fully insures the HMOs, which means that the State
       pays each HMO a fixed fee, including a risk premium, and the HMO administers the plans
       and assumes all the risks and pays the claims made under each plan.

¶8                           C. The Procedural History of This Case
¶9                                 1. The Underlying Contracts
¶ 10       Beginning in September 2010, DHFS issued requests for insurance proposals, seeking
       proposals from organizations to administer OAPs and/or HMOs beginning July 1, 2011.
       Health Alliance and Humana Health Plan, Inc. (Humana)–organizations that were
       administering plans for the State at that time–submitted bids to continue to administer OAPs
       and HMOs.
¶ 11       In April 2011, DHFS issued a notice of intent to award (1) OAP contracts to HealthLink
       HMO, Inc. (HealthLink), and PersonalCare Insurance of Illinois, Inc. (PersonalCare), and (2)
       HMO contracts to organizations owned by BlueCross BlueShield of Illinois (BlueCross). As
       unsuccessful bidders, Health Alliance and Humana filed protests with the State’s chief
       procurement officer, and the contract awards were stayed pursuant to the Administrative
       Code (44 Ill. Adm. Code 1.5550(d) (2011)) until their protests were resolved.
¶ 12       While those protests were pending, COGFA, in response to the changes in health
       insurance administrators, held a series of hearings on the subject of whether the State should
       allow self-insurance plans. In conjunction with those hearings, COGFA’s co-chairpersons

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       requested an opinion from the Illinois Attorney General regarding the extent of authority
       granted COGFA under the Insurance Act. Specifically, the co-chairpersons requested the
       Attorney General’s opinion regarding the phrase contained in section 6.2 of the Insurance Act
       that when the director, “with advice and consent of [COGFA],” determines that it would be
       in the best interests of the State and its employees, the program of health benefits may be
       administered with the State as a self-insurer in whole or in part. Shortly thereafter, the
       Attorney General responded that the phrase “with advice and consent of [COGFA]” confers
       upon COGFA “the authority to review and approve or disapprove the recommendation that
       the State act as a self-insurer, in whole or in part, for health benefits.”
¶ 13        On May 24, 2011, six days later, the State’s chief procurement officer denied the protests
       of Health Alliance and Humana.
¶ 14        The next day, COGFA declined to approve the expansion and continuation of self-
       insurance by the State through the OAPs in PersonalCare and HealthLink. Shortly thereafter,
       DHFS nevertheless awarded the OAP contracts to PersonalCare and HealthLink, as outlined
       in its notice of intent to award.

¶ 15                2. Health Alliance’s Complaint and the Proceedings Below
¶ 16       On June 6, 2011, Health Alliance filed (1) a verified complaint, naming DHFS; Julie
       Hamos, in her official capacity as director of DHFS; the Executive Ethics Commission (the
       Commission); Matt Brown, in his official capacity as chief procurement officer of the
       Commission; CMS; James P. Sledge, in his official capacity as director of CMS; Health Care
       Service Corporation as Parent Company of BlueCross; Bluecross Blueshield of Illinois Blue
       Advantage; Bluecross Blueshield of Illinois HMO Illinois; Humana; Humana Insurance
       Company; PersonalCare; and Healthlink, seeking mandamus relief, administrative review,
       declaratory judgment, and review of the procurement officer’s denial, and (2) a motion for
       stay or temporary restraining order (Sangamon County case No. 11-MR-250). The next day,
       Humana, like Health Alliance, filed a complaint, raising similar issues but also seeking an
       order to force DHFS to award it OAP and HMO contracts (Sangamon County case No. 11-
       MR-259). (Humana later voluntarily dismissed its complaint.)
¶ 17       On June 10, 2011, the circuit court issued a seven-page written order staying the awards
       of the OAP contracts “pending the ultimate determination of [p]laintiffs’ actions *** for
       administrative review,” finding, in pertinent part, as follows:
                “The action of COGFA on May 25, 2011, in deciding to refuse advice and consent
           for DHFS to continue the award of self-insurance contracts provides more than sufficient
           basis for predicting success on the merits. COGFA is charged by law with overseeing the
           administration of the State Insurance Program. ***
                Prior to its ruling on May 25, 2011, COGFA sought the opinion of the Attorney
           General as to the extent of its authority under [Illinois law]. The Attorney General
           responded by opinion letter dated May 18, 2011, *** which clearly supports the position
           of *** [p]laintiffs that the determination by DHFS to proceed after May 25, 2011, with
           the award of self-insurance contracts violates [the Insurance Act].”
       As part of its order, the court denied all of the other relief requested.

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¶ 18      Shortly thereafter, DHFS and PersonalCare filed separate interlocutory appeals (Nos. 4-
       11-0495 and 4-11-0545, respectively), which this court later consolidated.

¶ 19                                      II. ANALYSIS
¶ 20        Appellants argue that the circuit court erred by granting Health Alliance’s motion for
       stay pending administrative review. We disagree.

¶ 21                             A. The Circuit Court’s Jurisdiction
¶ 22       Initially, we note that as part of its argument, DHFS contends that the circuit court lacked
       jurisdiction to grant the stay under section 3-111(a)(1) of the Administrative Review Law
       (Review Law) (735 ILCS 5/3-111(a)(1) (West 2010)) because the Review Law does not
       apply to state contract awards. Specifically, DHFS asserts that because the chief procurement
       officer, rather than the director of DHFS, took the action complained of, no “administrative
       decision” was made that would merit review under the Review Law. We are not persuaded.
¶ 23       The Review Law applies to “every action to review judicially a final decision of any
       administrative agency where the Act *** conferring power on such agency, by express
       reference, adopts the provisions of [a]rticle III of [the Review Law] or its predecessor, the
       Administrative Review Act.” 735 ILCS 5/3-102 (West 2010). As previously stated, the
       Insurance Act confers upon the DHFS director the power to “contract or otherwise make
       available group life insurance, health benefits and other employee benefits.” 5 ILCS 375/5
       (West 2010). Moreover, the Insurance Act expressly adopts the Review Law, as follows:
           “Any final order, decision or other determination made, issued or executed by the
           Director under the provisions of this Act whereby any contractor or person is aggrieved
           shall be subject to review in accordance with the provisions of the [Review Law] and all
           amendments and modifications thereof, and the rules adopted pursuant thereto, shall
           apply to and govern all proceedings for the judicial review of final administrative
           decisions of the Director.” 5 ILCS 375/15(h) (West 2010).
¶ 24       Although the State’s chief procurement officer denied Health Alliance’s protest, the
       Insurance Act confers upon the DHFS director the power to make the final
       determination–with the advice and consent of COGFA–as to which insurance providers the
       OAP contracts should be awarded–which is precisely what the DHFS director did in this
       case. We further note that the circuit court denied all relief other than the stay pending
       administrative review of the director’s decision regarding self-insurance, which was made
       in disregard of COGFA’s explicit decision to withhold its “advice and consent.” Thus, the
       decision of the State’s chief procurement officer is not before us in this appeal. Accordingly,
       we conclude the circuit court properly exercised jurisdiction under the Review Law.

¶ 25                      B. Appellants’ Claim That the Circuit Court
                             Erred by Granting the Motion for Stay
¶ 26       Having concluded that the circuit court properly exercised jurisdiction in this case, we
       turn to appellants’ contention that the circuit court erred by granting Health Alliance’s

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       motion for stay pending administrative review.

¶ 27                        1. The Circuit Court’s Power To Issue a Stay
                                     and the Standard of Review
¶ 28        Section 3-111(a)(1) of the Review Law (735 ILCS 5/3-111(a)(1) (West 2010)) outlines
       the power of the circuit court to stay the decision of an administrative agency, pending
       administrative review, as follows:
               “(a) The Circuit Court has power:
                    (1) with or without requiring bond ***, and before or after answer filed, upon
               notice to the agency and good cause shown, to stay the decision of the administrative
               agency in whole or in part pending the final disposition of the case. For the purpose
               of this subsection, ‘good cause’ requires the applicant to show (i) that an immediate
               stay is required in order to preserve the status quo without endangering the public,
               (ii) that it is not contrary to public policy, and (iii) that there exists a reasonable
               likelihood of success on the merits[.]”
¶ 29        “Section 3-111(a)(1) of the [Review Law] gives the circuit court broad discretion to stay
       an administrative decision pending review.” Metz v. Department of Professional Regulation,
       332 Ill. App. 3d 1033, 1035, 773 N.E.2d 1234, 1236 (2002). Thus, our standard of review
       is highly deferential, and the circuit court’s decision to grant a stay will be reversed only
       upon a finding of an abuse of discretion. Metz, 332 Ill. App. 3d at 1035, 773 N.E.2d at 1236
       (citing Marsh v. Illinois Racing Board, 179 Ill. 2d 488, 498, 689 N.E.2d 1113, 1119 (1997)).

¶ 30                     2. The Circuit Court’s Order To Stay in This Case
¶ 31                                a. Preserving the Status Quo
¶ 32       As previously outlined, section 3-111(a)(1)(i) of the Review Law requires that the circuit
       court find that an immediate stay is necessary to preserve the status quo without endangering
       the public. 735 ILCS 5/3-111(a)(1)(i) (West 2010). The status quo is “the last actual,
       peaceful, non-contested status which preceded the pending controversy.” (Internal quotations
       marks omitted.) Markert v. Ryan, 247 Ill. App. 3d 915, 918, 617 N.E.2d 1373, 1376 (1993).
¶ 33       Here, the circuit court found that preserving the status quo at the time of Health
       Alliance’s lawsuit–which sought to have the health benefits to state employees continue to
       be administered as they had been to that point–was appropriate and did not endanger the
       public. Our review of the record shows that the court’s finding in that regard was not an
       abuse of discretion.

¶ 34                                 b. Protecting Public Policy
¶ 35       Next, section 3-111(a)(1)(ii) of the Review Law requires that the circuit court find that
       a stay is not contrary to public policy. 735 ILCS 5/3-111(a)(1)(ii) (West 2010). “Questions
       of public policy *** are ultimately left for resolution by the courts.” American Federation
       of State, County & Municipal Employees v. Department of Central Management Services,

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       173 Ill. 2d 299, 318, 671 N.E.2d 668, 678 (1996). “Illinois courts have recognized our state’s
       public policy of protecting the physical health and safety of its citizens.” Metz, 332 Ill. App.
       3d at 1036, 773 N.E.2d at 1237.
¶ 36       Given the facts of this case, we conclude that the circuit court did not abuse its discretion
       by finding that the stay was not contrary to public policy. Indeed, preserving the status quo
       pending the outcome of this litigation supports the public policy of ensuring that state
       employees affected by DHFS’s decision would (1) understand the scope of their health
       insurance coverage and (2) be assured coverage in all 102 Illinois counties.

¶ 37                         c. The Likelihood of Success on the Merits
¶ 38       Finally, section 3-111(a)(1)(iii) of the Review Law requires that the trial court find “that
       there exists a reasonable likelihood of success on the merits.” 735 ILCS 5/3-111(a)(1)(iii)
       (West 2010).
¶ 39       Here, as the trial court pointed out, DHFS ignored COGFA’s decision to deny the
       expansion and continuation of self-insurance by the State through PersonalCare and
       HealthLink. We agree with the Attorney General’s opinion that COGFA possesses the
       authority to make that determination. DHFS asserts that “COGFA *** is not authorized to
       pick and choose [which health insurance providers to contract with] *** because the statute
       limits its authority to making general determinations.” DHFS’s position, however, would
       render merely hortatory the “advice and consent” language of section 6.2 of the Insurance
       Act. We note that the phrase “advice and consent” has long been understood as allowing
       legislative bodies the power to reject executive actions, such as appointing judges or high
       ranking officers in the executive branch of government. See, for example, Edmond v. United
       States, 520 U.S. 651, 659-60 (1997) (explaining that the advice and consent language of
       article II of the United States Constitution (U.S. Const., art. II, § 2, cl. 2) vests the President
       with the power to make appointments to such positions but reserves for the Senate the power
       to reject individual appointees).
¶ 40       Accordingly, we conclude that the circuit court did not abuse its discretion by finding that
       Health Alliance would likely succeed on the merits on administrative review.
¶ 41       In closing, we commend the circuit court for its thoughtful written order, which we found
       very helpful.

¶ 42                                   III. CONCLUSION
¶ 43       For the reasons stated, we affirm the circuit court’s judgment.

¶ 44       Affirmed.

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