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Class Action Defense Cases-Ramirez v. Smart Corp.: Illinois State Court Affirms In Part And Reverses In Part Summary Judgment In Favor Of Defense In Class Action Against Hospital Record Retrieval/Copy Service

Voluntary Payment Doctrine did not Apply where Plaintiff Could only get Copies of Hospital Records through Service Company and Plaintiff is an Adequate Class Representative if her Agent Requests and Pays for Hospital Records Illinois Court Holds

Plaintiff filed a putative class action against Smart Corporation, a company which contracted with hospitals to place its own employees on site to retrieve and copy hospital medical records for patients, alleging that it overcharged hospital patients for such services in violation of common law, Illinois’ Inspection of Hospital Records Act and Consumer Fraud and Deceptive Business Practices Act, and claiming also unjust enrichment. Ramirez v. Smart Corp., ___ Ill.App.3d ___ (Ill.App. February 16, 2007). Plaintiff’s lawyer sought class certification, and defense attorneys moved for summary judgment. Slip Opn., at 1-2. The trial court granted the defense motion and denied class certification.

Plaintiff had suffered an injury and received treatment at a hospital. As part of her workers compensation claim, plaintiff’s lawyer sought her hospital records. Smart retrieved and copied the records – consisting of 6 pages – and sent a bill for $34.78 itemized as follows: a basic fee of $15 and a $1 per page copy fee bringing the total photocopy charge to $21, a retrieval/search fee of $10, and shipping/handling fee of $3.78. Ramirez, at 2. Plaintiff’s law firm paid the bill before plaintiff reviewed it. Id., at 3. The trial court denied class certification and granted the defense motion for summary judgment. The court refused to certify a class action because it found plaintiff to be an inadequate class representative in that her lawyer had reviewed and paid the bill, not the plaintiff. Id., at 4. The court granted summary judgment in favor of the defense holding that plaintiff’s claims were barred by the voluntary payment doctrine, and additionally finding that the charges were not deceptive or unfair within the meaning of the Consumer Fraud Act and that plaintiff could not seek damages under the Hospital Records Act because that statute allows a patient to compel production of hospital records. Id.

The Illinois appellate court affirmed in part and reversed in part. The appellate court first held that the voluntary payment doctrine did not apply because plaintiff had raised a triable issue of fact, sufficient to defeat summary judgment, that she would not have been able to obtain the medical records for her workers compensation action unless she paid the invoice. Ramirez, at 5-9. As the court summarized its holding at page 8, “viewing the evidence liberally in favor of [plaintiff], factual questions exist regarding the availability of reasonable alternative services.”

The appellate court next concluded that the trial court erred in finding that the charges did not violate the Consumer Fraud Act. Ramirez, at 14-17. Specifically, the court believed that the itemization of the fees charged was too vague and that a reasonable person would believe that the fees represented charges actually incurred. At the very least, a triable issue of fact had been raised sufficient to defeat summary judgment. As the court summarized at page 16, “The purpose of the basic fee, as well as the other charges, was not disclosed on the invoice, and Smart has offered no evidence to contradict [plaintiff’s] claim that the charges do not represent actual expenses. The mere recitation of the charges suggests that a reasonable jury could find that the invoice deceptively or confusingly caused consumers to pay these bills based on the reliance that they covered actual expenses.” This holding, the appellate court observed, “is consistent with the requirement that the Consumer Fraud Act be construed liberally to promote its purpose.” Id., at 16-17 (citations omitted).

The appellate court affirmed the trial court’s ruling in two respect. First, the appellate court concluded that the defense was entitled to summary judgment on the Hospital Records Act claim because “there is no implied right of action for damages under the Act,” id., at 19. Second, the appellate court concluded that the trial court properly granted summary judgment as to the unjust enrichment cause of action because in Illinois the doctrine of unjust enrichment is premised on an implied contract, id., at 19, but in this case “a specific agreement governed the relationship between the parties,” id., at 20.

Finally, the appellate court reversed the denial of class certification. The court held that plaintiff was an adequate class representative because she did not personally have to request or review her hospital records or the invoice; it was sufficient that her agent did so on her behalf. Ramirez, at 22-23. Plaintiff’s lack of personal knowledge thus did not defeat her ability to represent the class; in the end, the court concluded that plaintiff “has sufficient interest in the outcome to ensure vigorous advocacy of the claim.” Id., at 23. The appellate court also rejected defense arguments that the class action complaint did not present common questions of fact or law. Id., at 24-26. As the court explained at page 25,

The record reveals that the common consumer fraud question is whether Smart engaged in an unfair or deceptive scheme to charge hospital patients an excessive fee for copying their medical records. [Citation.] That claim is based on Smart’s uniform billing procedure and the standard or basic fee listed on all Smart invoices. If, at trial, it is found that Smart engaged in an unfair or deceptive practice of charging excessive fees with the intent that hospital patients rely on that deception, then Smart would have acted wrongfully in the same basic manner as to the entire class. The common question of liability will have been established, and the class members may recover a refund for their overpayment. The factual differences in overpayment and reliance by each patient do not present individual issues sufficient to bar class certification.

NOTE: The appellate court actually concluded that the voluntary payment doctrine did not apply for several reasons. We do not summarize the other grounds here as they are dicta.

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