THOMAS L. PERKINS, United States Bankruptcy Judge.
This matter is before the Court on cross motions for summary judgment. At issue is the Trustee's ability to avoid, under 11 U.S.C. § 545, a statutory hospital lien where the Trustee questions the validity of the lien of the Defendant, TRINITY MEDICAL CENTER (TRINITY), claimed pursuant to Section 1 of the Hospital Lien Act. 770 ILCS 35/1. The case turns, however, on what rights, if any, the TRUSTEE has as a hypothetical bona fide purchaser of a personal injury claim.
The facts are simple and undisputed for the most part. On June 9, 1996, James Stotler, the Debtor (DEBTOR) suffered serious injuries when he was hit by a truck while walking and was treated at TRINITY. On Dec. 3, 1996, TRINITY prepared a notice of lien which contained the following information: the name and address of the DEBTOR, as the injured person; October 28, 1996 as the date of the injury; TRINITY's name and address as the hospital; and Donald W. Nelson as the party allegedly liable to make compensation.
TRINITY mailed the notice by certified mail to the DEBTOR and to Country Mutual Insurance Company, the tortfeasor's insurance carrier.
The TRUSTEE does not concede that the notice of lien was properly served. The TRUSTEE asserts that it is not clear from an examination of return receipts attached to TRINITY'S answer that the notice was served on the DEBTOR. CREDIT BUREAU argues that the Hospital Lien Act only requires that the notice be served and not that it actually be received. Because the matter is decided on other grounds, this issue is not addressed.
The DEBTOR and his spouse filed a Chapter 7 petition on June 18, 1999. On the Statement of Financial Affairs, filed with their petition, the DEBTOR disclosed a pending state court lawsuit against Donald Nelson. The Chapter 7 Trustee (TRUSTEE) settled the claim arising from the personal injury on behalf of the bankruptcy estate. The TRUSTEE filed this adversary proceeding to avoid the lien claimed by TRINITY asserting the Trustee's avoiding powers under 11 U.S.C. § 545(2). The TRUSTEE and CREDIT BUREAU ENTERPRISES, INC. (CREDIT BUREAU), as assignee of TRINITY, have filed cross motions for summary judgment. A hearing was held and the matter was taken under advisement.
The lien claimed by TRINITY arises under the Illinois Hospital Lien Act. Section 1 of the Act, which governs creation of the lien, provides:
Every hospital rendering service in the treatment, care, and maintenance, of an injured person shall have a lien upon all claims and causes of action of the injured person for the amount of its reasonable charges up to the date of payment of damages.
No judgment, award, settlement or compromise secured by or on behalf of an injured person shall be satisfied without the injured person or his or her authorized representative first giving the hospital that rendered the service in the treatment, care, and maintenance of the injured person notice of the judgment, award, settlement, or compromise. The hospital shall have a period of 30 calendar days to perfect and satisfy its lien. The notice shall be in writing and served upon the hospital's registered agent or, in the event of a hospital operated entirely by a unit of local government, upon the individual or entity authorized to receive service pursuant to Section 2-211 of the Code of Civil Procedure.
Provided, however, that the total amount of all liens under this Act shall not exceed one-third of the verdict, judgment, award, settlement, or compromise secured by or on behalf of the injured person on his or her claim or right of action, and provided further, that the lien shall in addition include a notice in writing containing the name and address of the injured person, the date of the injury, the name and address of the hospital, and the name of the party alleged to be liable to make compensation to the injured person for the injuries received. The lien notice shall be served on both the injured person and the party against whom such claim or right of action exists.
Service shall be made by registered or certified mail or in person.
The TRUSTEE contends that TRINITY'S lien is avoidable because its notice of lien incorrectly states the date of the accident. The TRUSTEE relies upon Rafool v. Higgins Chiropractic Sports Clinic, Adv. No. 98-8193 (J. Altenberger, Jan. 29, 1999) (In re Marteness, No. 98-81628), a decision of Judge Altenberger, this Court's predecessor, holding that strict compliance with the statutory requirements is necessary in the bankruptcy arena.
Acknowledging the deficiency in TRINITY'S notice of lien, CREDIT BUREAU claims that TRINITY'S lack of strict compliance with the statute does not render the lien unenforceable, particularly in light of the fact that no one was prejudiced by the mistake. CREDIT BUREAU argues that the ruling of the Illinois Supreme Court in Cirrincione v. Johnson, 184 Ill.2d 109, 703 N.E.2d 67, 234 Ill Dec. 455 (1998), that a technical deficiency will not necessarily defeat the lien, is dispositive here and that this Court should depart from Higgins. This Court will examine the issue anew.
The validity of a lien that arises under a state statute is unaffected by bankruptcy unless it is invalidated by some provision of the Bankruptcy Code. In re Simmons, 765 F.2d 547 (5th Cir. 1985). Section 545 of the Bankruptcy Code sets forth the circumstances in which a trustee may avoid a statutory lien. Section 545(2), which is applicable here, provides:
The trustee may avoid the fixing of a statutory lien on property of the debtor to the extent that such lien —
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(2) is not perfected or enforceable at the time of the commencement of the case against a bona fide purchaser that purchases such property at the time of the commencement of the case, whether or not such a purchaser exists.
11 U.S.C. § 545(2). The proper inquiry is whether the statutory lien is enforceable against a bona fide purchaser as of the date the petition is filed. In re Walter,
45 F.3d 1023, 1029 (6th Cir. 1995). Where the statutory lien is created by state law, state law governs in determining whether the lien can be avoided by a bona fide purchaser. Id. Thus, the viability of TRINITY'S lien depends upon whether, on the date the petition was filed, TRINITY'S lien against the DEBTOR'S personal injury action would be enforceable, under Illinois law, against the TRUSTEE, standing in the shoes of a hypothetical bona fide purchaser of the cause of action. For reasons not raised in the prior cases, this Court finds that it would be, and that the TRUSTEE cannot prevail on his complaint.
A claim for personal injuries, unlike most other assets of a debtor, is too personal in nature to be assignable. The prohibition against assignment of a claim for personal injuries is firmly rooted in Illinois common law. Recognizing this rule early on, the court in Cameron v. Illinois Steel Co., 162 Ill. App. 461 (1st Dist. 1911), stated:
We regard the law in this state as settled that a cause of action to recover damages for injury to the person is not assignable. North Chicago Street Ry. Co. v. Ackley,
171 Ill. 100 [1897]. Beginning on page 108 the court in their opinion says:
On grounds of public policy the sale or assignment of actions for injuries to the person are void. The law will not consider the injuries of a citizen, whereby he is injured in his person, to be, as a cause of action, a commodity of sale.
Illinois courts, without exception, continue to apply this principle of non-assignability.
Illinois Farmers Ins. Co. v. Makovsky, 293 Ill. App.3d 77, 689 N.E.2d 618, 228 Ill. Dec. 559, (1st Dist. 1997); Town Country Bank of Springfield v. Country Mut. Ins. Co., 121 Ill. App.3d 216, 459 N.E.2d 639, 76 Ill. Dec. 724 (4th Dist. 1984); Remsen v. Midway Liquors, Inc., 30 Ill. App.2d 13, 174 N.E.2d 7 (2nd Dist. 1961).
Public Act 89-404, which included within the Act all hospitals operated by a unit of local government and, in addition to adding the second paragraph, made other nonsubstantive changes to Section 1, was declared unconstitutional in People v. Reedy, 186 Ill.2d 1, 708 N.E.2d 1114, 237 Ill.Dec. 74 (1999). Those changes have no effect upon this Court's ruling.
Thus, under Illinois law, a "purchaser" could not acquire an interest in a cause of action to recover for personal injuries, and a statutory hospital lien is enforceable against a hypothetical bona fide purchaser of such a claim. TRINITY'S lien may not be avoided by the TRUSTEE pursuant to Section 545(2).
Prior to issuing its decision, the Court had requested the parties submit additional briefs addressing the impact of certain state court decisions expressing that a hospital lien does not come into existence until a recovery is made, upon the TRUSTEE'S right to avoid the lien. Given the basis of this Court's ruling, those decisions have no impact.
What then is to be made of TRINITY'S error in stating the wrong date for the accident on the notice of the lien, and, if determined to be true, of its failure to serve the notice of its lien on the DEBTOR? The Supreme Court's decision in Cirrincione, holding that technical deficiencies in the notice of lien will not invalidate the lien of a health care provider where the rights of the parties have not been prejudiced thereby, is applicable here. Upon the filing of the bankruptcy, the TRUSTEE succeeded to the DEBTOR'S cause of action, which was awaiting trial in state court. The TRUSTEE does not contend that he had no notice of TRINITY'S claim of a hospital lien prior to settling the case and, given his statutory duties and well as his considerable expertise, he would have inquired of and been apprised of TRINITY'S claim by the defendant's insurance company. In fact, the TRUSTEE'S report, filed two weeks after the order approving the compromise, made note of the possible need to file complaints to avoid the medical liens. Similarly, the record is devoid of any prejudice resulting from the naming of the erroneous date of the accident on the notice of lien and this Court can conceive of no detriment that mistake could have caused.
Judgment will be entered for the Defendant, TRINITY, by separate Order. This Opinion constitutes this Court's findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052.
ORDER
For the reasons stated in an Opinion entered this day, the DEFENDANT'S Motion for Summary Judgment is GRANTED and the PLAINTIFF'S Motion for Summary Judgment is DENIED. Judgment is entered in FAVOR of the DEFENDANT and AGAINST the PLAINTIFF. Each party shall bear their own costs.