A Cook County judge has said the owner of a group of neck and back pain clinics can't yet end an insurer’s worker compensation fraud lawsuit.
Liberty Mutual filed a $17 million fraud lawsuit in August 2016, against Marque Medicos, a practice specializing in neck and back injuries with several locations in Chicago and west suburban Aurora, saying it billed for procedures and therapy it didn’t perform on worker’s comp patients and billed at inflated rates. The lawsuit also named as defendants Marque Medicos owner Derrick Wallery, as well as all of Marque Medicos’ various other associated corporate entities. Liberty Mutual was joined in the lawsuit by 17 other affiliate insurance companies.
In December 2017, Judge Jerry A. Esrig denied a motion from Marque Medicos to dismiss the complaint, broadly rejecting their claim of protection based on statutory limitations. In an opinion issued Dec. 7, 2018, he also denied a motion to dismiss from Wallery, who argued the plaintiffs didn’t adequately allege he acted knowingly and with intent, or that he specifically knew the billings were inflated.
Liberty Mutual said the company billed at higher rates for procedures like “attended electrical stimulation when unattended electrical stimulation was actually performed” and billing for “multiple units per visit of direct one-on-one” physical therapy, when they actually allegedly performed “single-unit-per-visit group therapy.” The lawsuit alleged the practice also billed for “hands-on therapy” when it was never actually performed.
Esrig also addressed lack of specificity claims in refusing to dismiss Marque Medicos last year. In refusing to dismiss Wallery from the complaint, Esrig pointed to several instances in the complaint that support the plaintiffs’ position.
“The complaint specifically alleges … specific fraudulent practices that inevitably led to overbilling of those claims,” Esrig wrote. “The complaint further alleges that Wallery established the ‘charge master’; determined the amounts billed; determined the CPT codes used; determined the methodology for billing and coding procedures; determined and authorized defendants’ business practices and charges, and specifically billing and coding procedures; and directed that bills be submitted to, and demands for payment be made upon, defendants.”
Although the complaint didn’t use the words “know,” “knew” or “knowledge,” Erisg noted, “the allegations that Wallery developed and employed specific wrongful practices that inevitably resulted in over-billing, and employed these practices to fraudulent ends sufficiently implies knowledge to withstand the motion to dismiss.”
Esrig further explained Wallery’s status as a corporate officer doesn’t automatically grant immunity from being held individually liable for the company’s conduct so long as the plaintiff sufficiently argues the individual is an active participant in the allegedly fraudulent scheme. He further said Wallery was wrong to pursue a motion to dismiss by saying the plaintiffs can’t prove their material allegations, noting the proper course was a motion for summary judgment.
Regardless, he continued, there isn’t concern over whether the complaint effectively argued Wallery actively participated in the alleged scheme or whether they are seeking to hold him responsible only vicariously.
“More likely,” Esrig concluded, “plaintiffs mention Wallery’s position as president because it gave him the authority to perform the wrongful acts plaintiffs allege he performed and to direct others to perform acts that furthered the fraud.”
Esrig scheduled a case management conference for March 9.
Liberty Mutual is represented in the action by attorneys John F. Boyle and Michael D. Spinazzola, of the Law Offices of Meachum, Starck, Boyle & Trafman, of Chicago.
Wallery is represented by the firm of Murphy & Hourihane LLC, of Chicago, according to Cook County court records.