Lakin files new 'silent PPO' class action in Madison County

Two Madison County chiropractors filed a class action complaint against Country Mutual Insurance Company and Country Casualty Insurance alleging the insurers lowered payments by claiming preferred provider organization (PPO) agreements, but without actually performing any of the associated obligations to those agreements.

According to the complaint filed July 20 Madison County Circuit Court, this "improper" practice is known in the insurance industry as a "silent PPO."

Richard Coy of Glen Carbon and Jason Talley of Granite City claim Country improperly withheld payments from them and the class for valid insurance claims, and that they are not entitled to retain the money, nor are they otherwise entitled to any PPO discounts.

Coy and Talley are represented by Brad Lakin, John Piper, Jeffrey Millar and Dennis Barton of the Lakin Law Firm in Wood River.

A PPO is a network of healthcare providers which agree to offer preferred pricing in return for receiving patient referrals. Preferred providers are also board certified and credentialed in the community where they live and work.

Country's alleged acts and omissions are in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act and similar laws of other states, as well as civil conspiracy and unjust enrichment, the four count complaint alleges.

"By operating a silent PPO, Country has illegally reaped huge savings while giving no consideration to healthcare providers," the complaint states.

The plaintiffs claim that they entered into a provider agreement with PPO administrator CorVel for the purpose of increasing the volume of insured people and other beneficiaries seeking services from him through referrals, channeling and steerage.

CorVel, in turn, entered into agreements with payors, including Country, pursuant to which the payors would have access to the CorVel and its discounts.

Coy claims he treated a patient in May 2000 who was insured for medical coverage through Country.

According to Coy, he submitted a bill for "reasonable charges" totaling $130 but was only paid $94.17.

Talley treated a patient from July 2004 through December 2004 and submitted a bill for medical services provided totaling $1,520 and was paid $1,292.

Both chiropractors claim their payments were reduced below the reasonable charge for the medical services they provided.

"Defendants had a duty to inform claimants they were operating a silent PPO," the complaint states.

Coy and Talley claim that the increased volume of patients resulting from referrals is an essential benefit of a PPO from their standpoint and claims that Country failed to fulfill its obligations and did not take the requisite steps to provide referrals, channeling and steerage. Instead, the insurance companies paid them and other class members at discounted rates.

They claim Country's alleged misconduct increased its profits, while they and other class members were injured by being paid discounted fees for their services without obtaining the expected benefits of an increased flow of patients.

They also claim the class has been economically damaged and has suffered monetary losses as a result of Country's conduct.

Coy and Talley claim the members of the class, being geographically dispersed and numbering in the thousands, are so numerous that a single action is impracticable.

They are seeking individually and on behalf of the class for the court to award them and the class members their individual damages and attorneys' fees and allowable costs, but in no event shall it exceed $75,000, exclusive of interest.

The case has yet to be assigned.

07 L 653