Appeals panel: Neck, back clinic 'incidental recipient,' no right to interest on worker comp claims

By Scott Holland | Jul 7, 2017

A state appeals panel has sided with several insurance companies facing class action complaints from a Chicago-based medical practice specializing in treating neck and back injuries as part of worker compensation claims, saying the clinic has no right under the law to demand insurers pay interest on slow-arriving reimbursements.

In an opinion issued June 30, Illinois First District Appellate Court justices Mary K. Rochford, Thomas E. Hoffman and Mathias W. Delort said a Cook County judge was correct to dismiss the complaints of Marque Medicos, a practice that provides care to patients at several locations in Chicago and west suburban Aurora. According to published reports about the practice, Marque Medicos specializes in neck and back injuries, generally payable under workers compensation claims. The practice also was described in at least one report as catering particularly to Hispanic patients.

The appellate panel was considering four actions consolidated from the courtroom of Cook County Circuit Judge Rita M. Novak. Defendants in the actions represented Zurich Insurance Company, Travelers Property Casualty Company of America, Hartford Underwriters Insurance Company and AIG Insurance Company.

Marque Medicos filed its complaints in March 2015, saying the insurance companies failed to comply with Workers Compensation Act requirements by not paying interest on late payments. The insurers moved to dismiss the complaints for failure to state a claim. In addition, Travelers argued the circuit court did not have jurisdiction, but rather the argument was the domain of the Illinois Workers’ Compensation Commission. 

On Feb. 19, 2016, Novak dismissed each of the four complaints with prejudice, finding Marque Medicos was not a third-party beneficiary of the policies, had no implied private right of action and was not entitled to remedies under the Insurance Code. Marque Medicos appealed March 15, 2016; the appeals were consolidated in May 2016.

Rochford wrote the Commission was not authorized to resolve the common law and statutory claims in the complaints, rejecting Travelers’ jurisdictional argument. However, the panel sided with the insurers in finding Marque Medicos to be, “at best, incidental and not direct beneficiaries” of the worker compensation policies. The law, the panel wrote, requires employers to be timely in compensating employees, but the provision does not extend to medical providers.

“While providers might receive some benefit from the specific interest provision” in the worker compensation law, “that benefit is at most incidental and was provided solely in an effort to serve the legislature’s primary goal of compensating employees completely and promptly.”

The practice also argued the insurers breached an implied contract, but Rochford said its complaints conceded the insurers’ “purported consideration for any asserted implied-in-fact contracts was to be performed pursuant to preexisting legal duties,” an arrangement that precludes the type of consideration essential for formation of a contract.

Finally, the justices determined third parties such as Marque Medicos are not entitled to recovery under the Illinois Insurance Code, which negated its challenge of dismissal of a request for legal fees and statutory damages.

Marque Medicos was represented in the action by the firm of Sperling & Slater PC, of Chicago.

The insurers have been represented in the action by attorneys with the firms of Dentons US, DLA Piper and Winston & Strawn, according to Cook County court records.

These complaints are unrelated to an Aug. 17, 2016, complaint a group of insurers, including Liberty Mutual, brought against Marque Medicos, in which the insurers accused the clinic of billing for procedures and therapy it didn’t perform and billed at inflated rates under worker compensation claims.  That case remains pending in Cook County court.

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Organizations in this Story

Dentons - Chicago DLA Piper Illinois First District Appellate Court Sperling and Slater, P.C. Winston and Strawn LLP

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