Stack hears final arguments over Shipley-Coy class action settlement

Amelia Flood Aug. 25, 2009, 1:26pm


Madison County Circuit Judge Daniel Stack has heard the final arguments for and against the settlement of a class action suit over Preferred Provider Organization (PPO) discounts.

A class member in Madison County's Shipley, Coy v. First Health suit objected to what she claims is an unfair settlement that does not compensate class members.

Attorneys for the class and First Health contend that the settlement is similar to other such settlements including the so-called "Concentra" settlement and that it adequately addresses the class through a $1.25 million donation to non-profits to further medical education in Illinois.

Stack had first heard arguments in the case in late May.

He told the attorneys present to prepare proposed orders for approval and denial of the settlement to help speed his decision.

While he would not give the attorneys a deadline or say when he would come to a decision, Stack said it would not take him long to make a decision.

The class action was brought by chiropractors Lawrence Shipley and Richard Coy as lead plaintiffs on behalf of healthcare providers across the state. The pair contends that First Health used improper PPO discounts to take monies from the health care providers and that it failed to steer patients to the PPO's members.

The suit claims grounds of unjust enrichment, breach of contract and other charges.

The proposed settlement would give $10,000 to each lead plaintiff and about $650,000 in legal fees to the LakinChapman law firm, who represent the class. First Health would commit to improving steerage to PPO members and would dole out $1.25 million to non-profits across the state to improve medical education.

Swansea chiropractor Kathleen Roche filed an objection to the settlement, claiming that, as well not financially compensating the class it would scuttle a similar suit she has filed in St. Clair County against First Health.

Roche's attorney Richard Burke has also argued that First Health attorney Eric Brandfonbrener had engaged in collusive settlement talks with class counsel Robert Schmieder II while negotiating with Roche.

"He played both sides against each other," Burke said.

At Tuesday's hearing, Jeffrey Leon, one of Roche's attorneys called, called the settlement "one of the weakest settlements we've ever seen."

Leon and Burke argued that the settlement was not enforceable in terms of increasing steerage nor did it provide Stack with concrete numbers to determine the worth of the suit.

Brandfonbrener denied the collusion charge. He also took Stack through the similarities between the Shipley and Concentra settlements.

Brandfonbrener directly addressed the argument that the settlement would scuttle Roche's St. Clair County suit. He told Stack that just because Roche's complaint was not identical to Shipley-Coy didn't mean that it couldn't be attached to the settlement. According Brandfonbrener, Illinois law simply mandates that attached lawsuits arise out of the same facts and transactions, even if they have different theories.

Schmieder echoed many of Brandfonbrener's arguments and dismissed his former firm member's allegations of collusion to kill the Roche St. Clair suit.

"I hate to break it to them but they are the last thing on my mind when I'm prosecuting a case," Schmieder said. "I'm thinking about my clients and the class."

The hearing was the third fairness hearing in the suit. The second was rescheduled due to a jammed asbestos motion docket.

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

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