Stack approves $1.25 million First Health settlement; lawyers get $650K

Amelia Flood Jan. 6, 2010, 7:51am

Madison County Circuit Judge Daniel Stack has ended months of limbo in the disputed settlement of a class action suit over improper Preferred Provider Organization (PPO) reductions.

Stack approved a $1.25 million settlement reached between First Health Insurance Group and a class of plaintiffs led by chiropractors Lawrence Shipley and Richard Coy.

Under the settlement's terms, First Health will pay for continuing medical education to Illinois non-profits.

Class attorneys Robert Schmieder III of LakinChapman in Wood River and and Eric Brandfonbrener of Perkins Coie in Chicago will be paid $650,000. Lead plaintiffs will be paid $10,000.

Stack heard the final of three fairness hearings on the settlement in late August.

His order approving the settlement was entered Jan. 4.

The 2004 class action alleged that First Health improperly discounted workers' compensation and other claims filed by members of its PPO network.

Schmieder and Brandfonbrener announced the settlement in December 2008. Stack gave it preliminary approval in January 2009.

Class member Kathleen Roche, a chiropractor with a nearly identical class action pending in neighboring St. Clair County, had objected to the settlement as unfair to class members.

Roche, through her attorney Richard Burke, said the settlement did not financially compensate class members. Roche's attorneys also expressed concerns that the Madison County settlement would cut the legs out from under Roche's pending case against First Health in St. Clair County.

Stack's order approving the settlement enjoins Roche and the other class members from filing any other suits against First Health related to the claims in the Shipley-Coy case.

Roche's objection was filed April 24, 2009.

Burke and Schmieder sparred in the suit's three fairness hearings that began in May 2009. Burke, a former Lakin firm member, has battled with his former colleagues in several class actions since he left Lakin three years ago.

Burke also said Brandfonbrener "played both sides," engaging in settlement talks with Roche over the St. Clair County matter while concluding settlement negotiations with Schmieder.

Both Schmieder and Brandfonbrener denied that charge, insisting that their negotiations were in good faith.

In the seven-page order, Stack acknowledged that Burke made "persuasive" arguments throughout the proceedings but that the settlement appropriately ended the long-running case.

Stack noted that aside from Roche – the settlement's only objector - only three other class members opted out of the suit's settlement.
Stack dismissed Burke's claims that Schmieder and Brandfonbrener conspired to scuttle Roche's case.

"The sole objector raised the accusation of collusion without any support, and the Court again finds that there was no collusion whatsoever between the parties," the order reads.

The case is one of the few still assigned to Stack that are unrelated to the asbestos docket.

Madison County Chief Judge Ann Callis began shifting cases from Stack in December 2009 due to his impending retirement this year.

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