Credit Bureau Enterprises, Inc. v. Pelo

Restitution Credit Bureau Enterprises, Inc. v. Pelo, 608 N.W. 2d 20 (2000) Supreme Court of Iowa Plaintiff: Credit Bureau Enterprises, collection agency contracted by the Hospital Defendant: Pelo, patient Cause of Action: small claims decision Relief Sought: payment of bill, $2, 775.79 Basis for Dispute: Restitution Facts: - Pelo was admitted to the hospital after making threats of self-harm and purchasing a handgun. He was taken to Ellsowrth Municipal Hospital by the police who had been advised of his risks - The magistrate found probable cause that Pelo was seriously mentally impaired and likely to physically injure himself and so the magistrate entered emergency hospitalization on Jan. 8 requiring that he be detained in the hospitals psychiatrist unit for examination and for a period not to exceed 48 hours. - Pelo was given a hospital release form that he refused to sign because he wanted his insurance company to be responsible for the bill. - The nurse demanded that he sign the form or the hospital could not insure the safety or return of his personal items. He eventually signed the form that said that Pelo was liable for any charges not covered by insurance. - Pelo’s wife filed another application for involuntary hospitalization. - He was determined that he suffered from bipolar disorder and that although he was in clear need and would benefit from treatment, he did not meet the elements for involuntary hospitalization. - He was released from the hospital on Jan. 13. - The hospital tried to get payment but Pelo refused to pay himself and refused to authorize his insurance to pay the bill. - Hospital turned the bill into Credit Bureau Enterprises for collection. Pelo’s Argument: - He made no agreement to pay for services provided to him - He signed the form under duress and did not agree to pay for medical services provided. - He has no duty to pay for those services because he did not ask to be hospitalized and derived no benefit from his hospitalization o After commitment, hearing that further hospitalization was not authorized, he derived no benefit from the hospitalization. Eaton’s Argument: Procedural History: - District ct concluded that there was no statutory requirement for the county to pay for the services because he went to a private hospital and not a state hospital. - As a matter of public policy, mentally ill support statutes could not be permitted to receive courtordered services and then choose to ignore his responsibility to pay for those services. - Entered judgment in favor of Credit Bureau for $2,775.79+ interest. - Pelo appealed to a district court judge the district associate court’s decision that he was personally liable for the bill and the court affirmed. Restitution o ∏ had entered into a valid enforceable k by signing the form. Did not believe that he signed under duress. o Found that he was liable for the bill under implied in law or quasi-k because he benefited from his hospitalization which eh should pay. Issue1: Who pays for mental health medical services provided to a patient who is involuntarily committed to a private hospital? (why didn’t they just take him to a public one? Haha shouldn’t that be like their duty or something?). Rule: A contract implied in law is an obligation imposed by the law without regard to either party’s expression of assent by words or acts. Such contracts do not arise from the traditional bargaining process, but rather rest on a legal fiction arising from considerations of justice and the equitable principles of unjust enrichment. As such, they are not real k’s and the general rules of k’s therefore do not apply to them. More specifically, the k’s clause of article I, section 10 of the US Const. does not apply to quasi-k’s. Where a person acts to confer benefits on another in a setting in which the actor is not acting officiously, the benefited party may be required to make restitution to the actor. Thus, where a person performs services for another which are known to and accepted by the latter, the law implies a promise to pay for those services. GENERAL RULE: where one renders services of value to another with his knowledge and consent, the presumption is that the one rendering the services expects to be compensated, and that the one to whom the services are rendered intends to pay for the same, and so the law implies a promise to pay. Application: - The hospitalization referee’s final decision is not relevant to Pelo’s duty to pay for services previously rendered to him by the hospital. - Pelo’s opinion as to whether he needed or consented to medical services provided to him during his hospitalization is essentially irrelevant. This is because the emergency hospitalization order establishes that Pelo lacked sufficient judgment to make responsible decisions concerning hospitalization and lacked the ability to consent to treatment - The hospital provided services to Pelo from Jan. 8 – Jan 13 in good faith and not gratuitously. Such services were provided for Pelo’s benefit pursuant to ct orders based on probable cause findings that Pelo was seriously mentally impaired and likely to injure himself or others if not immediately detained in the hospital. Conclusion: Credit Union allowed to recover the value of those medical services provided to Pelo – the district ct properly determined that Pelo was legally obligated to pay for those services on an implied in law k theory. Court’s Holding(s): Affirmed. Notes - Rest. 1st of Restitution §116 – provides for restitution in favor of one furnishing emergency services in a situation where serious bodily harm or pain will otherwise result, provided the ∏ acted “inofficiously” There can be no question of real assent in such a case – to talk about implied k is clearly a legal fiction. Death – it is impossible that the services ultimately benefited her but the restitutionary obligation presumably lie anyway, however, based on the reasonable value of the services received. Restitution - Even if price term in agreement between patient and hospital is too indefinite for k to be enforceable, patient can be liable for the reasonable value of services rendered, based on the costs of the hospital’s operation and the prices charged for similar services by other hospitals in the area. - Rest. 1st of Rest. §116 – the more general restitutionary principle that one who receives services, with the knowledge that the person furnishing them reasonable expects to be paid, will be liable for the reasonable value of those services.