Chiropractor fights to keep three class actions in line

Amelia Flood Mar. 4, 2010, 5:50am



Belleville area chiropractor Kathleen Roche is attempting to adjust three class action suits filed in two counties to her favor, despite settlement of one, the potential dismissal of a second and a motion to dismiss a third.

Roche is the sole class member who wants a $1.25 million settlement of a Madison County class action case against First Health Insurance Group overturned.

Her objection has played out dramatically in court against a backdrop of sparring attorneys who used to work together -- Richard Burke of St. Louis and Brad Lakin and his band of lawyers from Wood River. Since parting ways, they have become foes in this case and others.

Roche objected in part to the settlement of the Madison County First Health suit because she wants a St. Clair County class action suit she leads against First Health – with virtually identical claims -- to continue.

However, under the settlement judgment entered by Madison County Circuit Judge Daniel Stack in January, Roche's St. Clair County suit could be nullified because, as a class member, she would be barred from pursuing the same claims as were litigated in the prevailing case led by fellow area chiropractors Lawrence Shipley and Richard Coy.

And in the middle of her objections to the Shipley-Coy settlement, Roche filed another class action against Zenith Insurance Company with similar claims made by Shipley-Coy.

Shipley-Coy attorneys at LakinChapman argue that Roche's suit against Zenith is evidence that Roche doesn't believe her own "objection" arguments. They say it undermines Roche's argument that the Shipley-Coy settlement is unfair to the class.

Zenith is seeking to dismiss Roche's case.

While Roche has filed to appeal the $1.25 million Madison County Shipley-Coy settlement, the other parties have filed a cross appeal asking an upper court to throw out her attorney, Richard Burke, for alleged conflicts of interest.

The suit that started it all

The case that ties all three class actions together was filed in 2004 by lead plaintiffs Shipley and Coy, who have led several other class action suits filed in Madison County against insurance companies.

In their class action against First Health, the two have alleged that they and a state-wide class of health care providers were gypped out of money they were owed by a so-called "silent PPO."

Under a normal PPO, insurance companies are given discounts by the providers in their network in exchange for steering additional patients and clients to the health care provider. Volume then makes up for the discounts.

In a silent PPO, the insurer takes the discounts but does not steer more patients to providers.

The parties in the 2004 Shipley-Coy case against First Health announced the suit's settlement in early 2009. Roche moved to intervene in April of that year.

Not surprisingly, a spat erupted between Burke and his former colleagues from the Lakin firm, who filed to have Burke thrown out of the case.

Burke was fired from the Lakin Law Firm, since renamed LakinChapman, in 2007. After his departure, Burke sued Brad Lakin at U.S. district court in East St. Louis, claiming Lakin owed him fees from class action settlements.

In a counter suit, Lakin answered that he fired Burke for plotting to steal clients.

During the course of their contentious litigation, a federal magistrate had to cancel Burke's deposition of Brad Lakin two minutes after it had begun.

"It sounded like the Ambassador Hotel after Bobby Kennedy was shot," said U.S. Magistrate Judge Philip Frazier, who listened to the deposition by telephone in 2008.

In the Shipley-Coy case, LakinChapman attorney Robert Schmieder II alleged that Burke was representing an interest adverse to that of a former client.

Burke had worked on the First Health litigation prior to his departure from the Lakin firm.

Stack allowed Burke to continue after hearing arguments on the matter last April, although he cautioned Burke at the time about the potential ethics issues.

The Shipley-Coy suit's first settlement hearing in May 2009 dragged on over three hours until Stack cut the attorneys off claiming, "My brain hurts."

The suit's final fairness hearing took place last August.

Throughout the hearings, Roche has alleged the $1.25 million settlement reached between the class and First Health did not financially compensate the class.

Under the settlement agreement, the $1.25 million is to go to continuing medical education for health care providers. Attorneys at LakinChapman will receive $650,000 in fees and the lead plaintiffs, Shipley and Coy, will get $10,000 each.

Burke also has alleged that First Health's counsel, Eric Brandfonbrener of Chicago, engaged in bad faith settlement talks with Roche in her 2007 St. Clair County case while concluding the Madison County settlement talks.

Brandfonbrener denied Burke's charges.

St. Clair County First Health suit in limbo

In St. Clair County, Associate Judge Andrew Gleeson signed an order March 1 setting a status conference eight months from now -- in November — in Roche's case against First Health.

In the St. Clair County suit, Roche wants to lead a class of health care providers seeking to recover damages for a silent PPO, just as Shipley and Coy did in Madison County. She claims her case is superior in that it will provide better compensation for class members.

The suit's fate rests on the Madison County case because Stack's settlement approval order bars Roche from pursuing litigation arising from the same claims.

One of First Health's most recent attempts to have the St. Clair County suit dismissed or stayed was shot down by the appellate court in Mount Vernon in April 2009.

Zenith moves to dismiss

Roche proposes to lead a class action against Zenith Insurance Company, a worker's compensations carrier, over allegations of improper PPO reduction claims similar to the other two class actions.

According to filings by the defendant, it is the fourth time Roche has attempted to bring a class action against Zenith, the first being in California three years ago.

The St. Clair County filing has not been certified. Prior attempts have either failed to meet class certification standards or have been dismissed, according to Zenith's Nov. 9 motion to dismiss.

Zenith argues it was not under any obligation to steer clients to Roche because it did contract with her to do so. It alleges that Roche's dispute is with First Health Insurance Group. Zenith argues it is merely one of First Health's payors and that Roche's own attorneys had conceded the two were separate parties in fairness hearings in a First Health class action that was brought in Madison County.

Zenith alleges that it did not enter into a contract with Roche. It entered into a contract with First Health.

"It is incomprehensible why Roche would sue Zenith for complying with its Payor Agreement with First Health, particularly when the core allegation is that First Health 'failed' to require Zenith to 'steer' patients to Roche and other providers," the defense motion to dismiss reads. "She does not explain how Zenith breached a contract to which it is not a party."

The insurer goes on to argue that Roche cannot sue because worker's compensation carriers and disputes are under the oversight of the Illinois Industrial Commission. The motion argues that as a medical provider, Roche must go through the commission, not the courts.

In her response, Roche dismisses the defense arguments about where the suit can be brought and argues that Zenith does have a contractual relationship to her.

Roche argues that Zenith is a third party beneficiary of her contract with First Health as a payor and that it took the discounts.

"This reduction is the center of the litigation," Roche's Dec. 9, 2009 reply to the motion to dismiss states.

Until the Madison County settlement issues are decided, all three suits remain ongoing.

Briefs in the Madison County appeal and cross appeal are due in April in Mount Vernon.

The Shipley-Coy class action in Madison County is case number 04-L-1055.

Roche's competing First Health class action is St. Clair case number 07-L-224.

The class action against Zenith is St. Clair case number 09-L-452.

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