Fairness hearing continued in First Health class action settlement dispute

Amelia Flood May 2, 2009, 12:10am

After three hours of argument at a class action fairness hearing Tuesday, Madison Circuit Judge Daniel Stack had had enough.

"My brain hurts," Stack told the lawyers present. "I've had just about all I can take."

Stack was referring to the arguments over the settlement of a class action suit against First Health Insurance. While both parties reached a settlement last year, the settlement has yet to be approved due to an objection filed by a class member with a similar lawsuit pending in St. Clair County.

Stack continued the hearing in the case of Shipley and Coy et. al. vs. First Health et. al. until July 15 at 10 a.m. Stack will hear the remainder of the objector's arguments and responses from plaintiff and defense counsel.

The 2004 class action suit was brought by Granite City chiropractor Lawrence Shipley and Glen Carbon chiropractor Richard Coy. The pair, acting as lead plaintiffs, sued First Health over claims adjustments. Coy and Shipley contend that the insurance company cheated participating physicians in its PPO (Preferred Provider Organization) network out of moneys they were owed.

While the case settled in January, Swansea chiropractor Kathleen Roche objected to the settlement as unfair. She is the lead plaintiff in a nearly identical suit that was filed in St. Clair County in 2007.

The terms of the January settlement are at issue. Under the agreement, First Health would make a charitable contribution of over $1.2 million. It would pay attorneys' fees to LakinChapman and costs of $650,000 and a $10,000 award to each of the lead plaintiffs in the case.

Robert Schmieder II, acting as lead counsel for the plaintiff, argued that the parties had taken the appropriate discovery time and negotiations to come to a fair settlement.

He denied any collusion with the defense as to attorneys' fees and other parts of the settlement. Schmieder cited the lack of objections from more than 95 percent of the more than 22,000 class members as a sign that the settlement was fair and acceptable.

Roche's objection is the only one that has been filed. Three other class members opted out of the suit.

Most of Schmieder's arguments were echoed by defense attorney Eric Brandfonbrener, who stressed the lack of objections from class members to the settlement and the greater good that would be done through the First Health charitable donation.

"I don't think one objector can amount to any sort of objective measure of a successful settlement," Brandfonbrener said.

Richard Burke, acting as Roche's attorney, disputed that the settlement was fair. He and fellow attorney Jeffrey Leon argued that the settlement was not specific in its language nor did it spell out what financial gains were to be had for class members.

Futhermore, Leon said, the plaintiff and defense counsels were trying to argue that the Shipley settlement was like other class action settlements against health companies like Concentra.

Although Schmieder cited those settlements, he failed to mention that the Lakin firm had objected to a 2007 settlement against Concentra, Leon argued. He likened the Lakin approach to seeing a wax figure of President Barack Obama.

"From a distance it looks like President Obama but as you get closer, you see that it's not," Leon said.

Burke and Leon argued that the settlement in the Shipley matter would scuttle the Roche suit. Burke contended that First Health was being deceptive in offering to settle with Roche while concluding settlement talks with Shipley. Brandfonbrener denied the charge.

At the end of the court's business day, Stack stopped Burke in the middle of his arguments, saying that there was no way to conclude Tuesday's hearing in one day.

Stack continued the hearing to July, setting aside an entire day for the remainder of the arguments and responses.

The settlement dispute once again pits the Lakin firm against former member Burke. The Lakin firm, of Wood River, represents Shipley and Coy while St. Louis attorney Burke represents Roche. The two have sparred in several suits since going their separate ways in 2007.

The case is Madison case number 04-L-1055.

The St. Clair suit is St. Clair case number 07-L-224.,/i.

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