## Facts

- Sheila Jones and her infant daughter, Shawndale, were enrolled in a health maintenance organization (HMO) that provided coverage through a public assistance program and assigned members to a primary care physician.
- The HMO assigned Shawndale to Dr. Robert A. Jordan, a contract physician, and required members to contact the assigned physician before obtaining care, including in situations potentially requiring emergency treatment.
- On January 18, 1991, when Shawndale was three months old, Jones called Dr. Jordan’s office reporting that the infant was ill, constipated, crying, and felt very warm; she was advised to give castor oil and told Dr. Jordan would return the call.
- Dr. Jordan later returned the call and again advised giving castor oil; Shawndale’s condition did not improve.
- On January 19, 1991, Jones took Shawndale to an emergency room; the HMO authorized hospital admission.
- Shawndale was diagnosed with bacterial meningitis secondary to bilateral otitis media and was left permanently disabled.
- Jones sued the HMO on three theories: (1) institutional negligence based on the HMO’s own policies and administration of care, including assigning an allegedly overloaded physician and requiring pre-authorization/phone contact before care; (2) vicarious liability for the physician’s negligence under apparent authority; and (3) breach of contract based on alleged plan obligations to provide appropriate medical care.

## Issues

1. Whether an HMO may be held directly liable in tort for institutional (corporate) negligence based on its own policies, procedures, and control of access to care.
2. Whether plan documents and related materials created enforceable contractual promises supporting a breach-of-contract claim distinct from malpractice-based tort theories.

## Decision

- The Illinois Supreme Court reversed summary judgment for the HMO on the institutional negligence claim and remanded, holding that an HMO can be directly liable for its own institutional negligence.
- The court affirmed summary judgment for the HMO on the breach-of-contract claim, concluding the allegations sounded in tort rather than contract and did not identify specific contractual guarantees.
- The vicarious liability (apparent authority) claim was not before the court because it was not challenged in the appeal, leaving the appellate court’s remand of that claim intact.
- The court applied de novo review of summary judgment and viewed the record in the light most favorable to the nonmovant.

## Legal Principles

- A health care organization that organizes and controls access to medical services may owe direct duties, independent of any physician’s negligence, to exercise reasonable care in its own systems for providing care.
- Institutional (corporate) negligence can include negligent selection and monitoring of physicians and negligent design or administration of access, referral, utilization, or triage policies that foreseeably delay needed diagnosis or treatment.
- An HMO is not treated solely as a passive insurer when it functions as a gatekeeper and manager of medical care; it may be directly liable for harm caused by negligent operational policies.
- A breach-of-contract claim in the medical care setting requires more than relabeling negligence as a contract action; generalized statements of coverage or care obligations that mirror tort duties do not create a distinct contractual claim for injury-causing medical negligence.

## Conclusion

The court recognized that an HMO may be sued for institutional negligence based on its own care-management policies and member-access rules, but it rejected a contract theory that merely repackaged alleged malpractice and care-system negligence as breach of contract.


Jones v. Chi. HMO Ltd. of Ill., 730 N.E.2d 1119 (Ill. 2000)