004048Memorandum in Support of Affirmative Defenses Fiduciary Relationship Estoppel and Mitigation by aI7K1f0b

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									    MEMORANDUM: FIDUCIARY RELATIONSHIP, ESTOPPEL AND MITIGATION

        FIDUCIARY RELATIONSHIP BETWEEN HOSPITAL AND DEFENDANTS

           The Illinois Supreme Court, in defining a fiduciary relationship, stated in the case of

Seely v. Rowe, 370 Ill. 336, 18

N.E.2d (1938) that:

Courts of equity have refused to set any bounds to the circumstances out of which a fiduciary
relation may spring. It includes all legal relations, such as attorney and client, principal and
agent, guardian and ward, and the like, and also every case in which a fiduciary relation exists in
fact, where confidence is reposed on one side and dominion and influence result on the other.
(emphasis added) (cites omitted). The relation need not be legal, but it may be either moral,
social, domestic, or merely personal.

370 Ill. at 342, 18 N.E.2d at 877. Black's Legal Dictionary, 4th Ed., p. 753 describes a

fiduciary relation as "informal relations which exist whenever one man trusts and relies

upon another."

           The existence of a fiduciary relationship is not restricted only to such

traditional legal relationships as attorney/client, principal/agent, guardian/ward, board

member/corporation, etc., but may be found in other situations where trust and

confidence is established. In the instant case, defendants allege that they placed their

confidence in plaintiff based on its representation, statements, and actions, that their

MA-NG application would be speedily processed. Because of the hospital's expertise in

processing Medicaid applications and its day-to-day contact with IDPA, patients trust

and rely upon the hospital to timely submit its payment claims to IDPA. Defendant's

reliance on the hospital to process the Medicaid application was justified and

reasonable.

 Defendant's First Amended Affirmative Defense therefore alleges facts sufficient in

law to establish a fiduciary relationship
between plaintiff, a hospital, and defendants, its patients.

See Emmett v. Eastern Dispensary and Casualty Hospital, 396 F.2d 931, 935 (D.C.

Dist. 1967).

                  EQUITABLE ESTOPPEL DEFENSE

           Equitable estoppel, also known as the doctrine of detrimental reliance, is a

long-recognized doctrine which "preclude[s] a party from asserting a right which might

otherwise have existed as against another person when the other person relies in good

faith on the party's conduct and is led thereby to change his position for the worst."

Hartford Accident & Indemnity Co. v. D.F. Bast, Inc., 56 Ill. App. 3d 960, 962, 372

N.E.2d 829, 832 (1st Dist. 1977).

           Defendants' Second Amended Affirmative Defense as alleged, clearly sets

forth facts sufficient in law to establish the defense of equitable estoppel. The amended

affirmative defense alleges that the plaintiff assisted defendant with his MA-NG

application, that plaintiff represented that his MA-NG application would be properly

processed, and that defendant reasonably relied to his detriment on such representations

in not reapply for MA-NG. All the elements for an equitable estoppel defense are

present.


   A DUTY TO MITIGATE DAMAGES ALWAYS EXISTS WHERE THE
   COMPLAINING PARTY IS ASSERTING A BREACH OF CONTRACT
           Where one party has committed a tort, breach of contract, or other legal wrong

against another, it is incumbent upon the latter to use such means as are reasonable under

the circumstances to mitigate or minimize the resulting damages. Kelly v. Chicago Park

District, 409 Ill. 91, 98 N.E.2d 738 (1951).      Plaintiff is not entitled to recover for a

loss to the extent that it has been increased by its own failure to take affirmative steps to

minimize the loss. Corydon & Ohlrich v. Kusper Bros. Co., 345 Ill. App. 224, 102

N.E.2d 672 (1st Dist. 1951).

           The caselaw clearly establishes that a party alleging a breach of contract has a

duty to mitigate its damages before proceedings to suit. In the instant case, the plaintiff

alleges a breach of contract. Defendants' Fourth Affirmative Defense alleges that

plaintiff failed to exercise reasonable care to mitigate its damages by failing to timely

submit its payment claim to IDPA. A timely submittal would have reduced its damages

by the sum of $2,761.61.

								
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