Grauer v. Clare Oaks, et al, 2019 IL App (1st) 180835, is noteworthy to all counsel who regularly encounter fee-shifting statutes in their practice. Grauer was borne out of a verdict against a nursing home, but the court’s analysis as to the reasonableness of attorney’s fees and what constitutes “costs” in the context of the Illinois Nursing Home Care Act is important to all practitioners.
The Nursing Home Act provides that “the licensee shall pay the actual damages and costs and attorney’s fees to a facility resident whose rights” under the Act are violated. 210 ILCS 45/3-602. The rationale for the fee-shifting provision of the Illinois Nursing Home Care Act is not dissimilar from the rationale of employee and consumer protection statutes with fee-shifting provisions. Specifically, the Nursing Home Act’s fee shifting provision was intended to encourage residents to bring their cases and to incentivize attorneys to take such claims, even when such recoveries may be modest or even minimal. See Grauer v. Clare Oaks, 2019 IL App (1st) 180835, ¶ 126. Indeed, under the Act, it is mandatory for a court to award a prevailing party their attorney’s fees and costs, even if the recovery is minimal. Berlak v. Villa Scalabrini Home of the Aged, Inc., 284 Ill.App.3d 231 (1st Dist. 1996). Nor is there any requirement that requires an award of attorneys’ fees to have a reasonable relationship to the ultimate damages awards. Berlak, 284 Ill.App.3d at 237-238.
While the fee-shifting provision of the Nursing Home Act serves important purposes, for reasons as discussed in prior versions of this blog, the provision is also of some concern. See Susan Wagener, Fee Shifting Provision of Illinois Nursing Home Care Act: Insight into Appellate Court’s Potential Interpretations, HB Blog (July 18, 2019), www.heplerbroom.com/blog/; see also Gary Meadows, Shifting Attorney’s Fees Under Illinois’ Nursing Home Care Act: Another Form of Abuse, HB Blog (May 16, 2019), www.heplerbroom.com/blog/.
Pertinent here, as described in the Grauer opinion, the plaintiff prevailed in the trial court against the defendant nursing home. The plaintiff received a total verdict of $4,111,477.66. Pursuant to the Nursing Home Act’s fee shifting provision, counsel sought $1,370,492.55 (that represented one-third of the recovery) and $151,694.40 in costs. Grauer, 2019 WL 4187586, ¶ 49. While two of the Grauer court’s holdings related to award of fees and costs under the Nursing Home Act’s fee shifting provisions, this blog focuses on the court’s holding that vastly expanded the meaning of “costs” under its terms.
Regarding the award of “costs,” the trial court’s cost award of $147,475.55 reimbursed the plaintiff’s attorneys for “testifying expert’s fees, trial exhibits, trial technology and video editing, obtaining medical records, court costs, fees of court reporters and videographers for depositions, fees of court reporters at trial, production expenses for a day-in-the video,” and travel expenses for attending an expert deposition. Grauer, 2019 IL App (1st) 180835, ¶ 143. Such an award certainly departs from what is generally considered and accepted as taxable costs under 735 ILCS 5/5-108.
The issue the question of costs under the Nursing Home Act presents is whether the cost is a “court cost” or a “litigation cost,” as the Illinois Supreme Court has made clear that “litigation costs” may be taxed as a cost only if authorized by a another statute or supreme court rule. Id. at ¶147 (citing Vicencio v. Lincoln-Way Builders, Inc., 789 N.E.2d 290, 302 (2003)). Further, “costs” had been thought to have a “fixed and technical meaning as allowances to reimburse the prevailing party for the ‘experiences necessarily incurred in the assertion of his right in court” and not to reimburse the party for ordinary expenses of litigation. Id.
The nursing home in Grauer argued that the “costs” referred to in the Nursing Home Act fee-shifting statute has the same meaning as that found in section 5-108. The nursing home argued that because the “cost” language in the Nursing Home Act was enacted after the meaning of the term “costs” was defined, that term had the same meaning as “costs” under section 5-108. The nursing home also noted that when the legislature intended for “costs” to be more expansive, it would have used broader terminology.
Indeed, the term “costs” has generally been interpreted to mean “court costs” – filing fees, subpoena fees, and witness fees. DiFranco v. Kusar, 90 N.E.3d 556 (1st Dist. 2017). Indeed, if a deposition is indispensable at trial, it may be considered such a cost. Boehm v. Ramey, 771 N.E.2d 492 (4th Dist. 2002). In contrast, fees for a court reporter and the transcript fee are not taxable costs. Ruddy v. McDonald, 91 N.E. 651 (1910); Boyle v. Manley, 635 N.E.2d 1014 (1st Dist. 1994).
The plaintiffs disagreed and noted that if the terms meant the same thing, then the use of the word “costs” in the Nursing Home Act would be superfluous. They further argued a more expansive reading is consistent with the Act’s purposes.
Ultimately, the Grauer court determined that “costs” under the Nursing Home Act is broader than “costs” in section 5-108. The court concluded that in Vicencio the supreme court was only interpreting “costs” within section 5-108 and recognized that another statute could authorize litigation costs. The Grauer court therefore found that to effectuate the purpose of the Act, “costs” had an expanded meaning under the Nursing Home Act. It also reasoned that to find otherwise would render the usage of the term superfluous. The court specifically found that if the shifting costs only included “court costs” under section 5-108, then the provision does far less “to reduce a nursing home resident’s financial disincentives to engage in litigation to enforce their rights and to discourage nursing homes from violating the rights of residents.” Id.
The Grauer court’s adoption of this flawed argument is interesting. Indeed, the court seems to indicate that the exact same words used in different statutes cannot mean the same thing where that could cause a redundancy between the two statutes. The court therefore decided the word “costs” under the Nursing Home Act must have a completely different meaning than the same word “costs” under 5-108, despite the fact that the legislature never enacted or amended the Nursing Home Act’s language to include the expansive meaning adopted by the court. Specifically, the legislature must have been aware of the differences between “court costs” and “litigation costs,” but included no language in the Act to suggest that it intended the shifting of all “litigation costs.” Presumably, if the legislature intended to greatly expand the categories of “costs” that are recoverable under the Act, it would have done so. Notwithstanding this legislative silence, the Grauer court opted to create an apparently unlimited right to any cost claimed by the plaintiff in a suit. Notably, Grauer did not indicate that the costs should be subject to a reasonableness test or that they had to be associated with items that were indispensable at trial.
While the Grauer opinion arises in the context of the Nursing Home Act, there is no reason why its logic would be limited to this Act. All defense practitioners should therefore be alert to this holding in dealing with other fee and cost-shifting statutes. With respect to cases under the Nursing Home Act, however, it again raises concerns about what drives these cases and their resolution and how nursing home facilities are becoming increasingly suffocated by litigation under the Act.