Fairness hearing in disputed class action settlement restarts July 15

Amelia Flood Jul. 10, 2009, 8:22am


A class action fairness hearing that was halted in May by Madison County Circuit Judge Daniel Stack because his "brain hurt," will resume Wednesday as a class member in a competing suit attempts to block the settlement.

Stack will hear more arguments over the settlement in Coy and Shipley et.al. vs. First Health Insurance Co. et. al.

The hearing will begin at 10 a.m. The last fairness hearing took place May 26. That hearing lasted over three hours in the late afternoon until Stack continued it.

Granite City chiropractor Lawrence Shipley and Glen Carbon chiropractor Richard Coy are class representatives in a suit filed against First Health over its Preferred Provider Organization (PPO) network. The 2004 class action suit claims that First Health cheated physicians in the PPO out of moneys they were owed with wrong claims adjustments.

The case settled in January but a class member has since brought an objection. Swansea chiropractor Kathleen Roche objected to the suit, claiming that class members were not compensated by the settlement and that it is unfair.

Roche is the lead plaintiff in a nearly identical class action case pending in St. Clair County against First Health.

The disputed settlement terms include a payment of $1.25 million that First Health would pay to various non-profit groups for continuing medical education. Under the payment plan submitted by the plaintiffs, the money would be split by at least seven institutions such as the Southern Illinois University School of Law's Center for Health Law and Policy, the Illinois State Medical Society and Illinois Chiropractic Society Inc.

Lead plaintiff's counsel Robert Schmieder III and the LakinChapman law firm of Wood River would receive costs of $650,000 and each class representative would receive $10,000 under the settlement.

At the May hearing, Schmieder cited the lack of objection to the settlement from 95 percent of the class members and argued that the settlement and discovery in the suit had been properly executed.
Roche's attorney, Richard Burke of St. Louis, countered that class members in the suit did not stand to gain from the $1.2 million charitable contribution. Burke further alleged that a settlement in the Madison County class action would scuttle the St. Clair suit brought by Roche.

Burke also argued that First Health had engaged in deceptive settlement talks with Roche while concluding the Shipley-Coy case.

First Health attorney Eric Brandfonbrener denied Burke's charge. He echoed Schmieder's arguments for the settlement.

The dispute is another battle between Burke and his former firm. The firm and its ex-member have clashed over several suits since their split in 2007.

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

The Roche suit in St. Clair County is St. Clair case number 07-L-224.

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