Brad Lakin pushes parallel PPO class in Madison County

By Steve Korris | Jan 18, 2008



Brad Lakin wants Madison County Circuit Judge David Hylla to hear a class action suit against Country Mutual Insurance and Country Casualty Insurance while Lakin's former class action teammates pursue the same claim in St. Clair County.

"This is new to me," Hylla told Lakin at a Dec. 21 hearing.

"I have not had a case in front of me where we had battling class actions," he said.

Lakin sued last year on behalf of chiropractors Richard Coy and Jason Talley, claiming the insurers improperly reduced payments for treatment of accident victims.

At Hylla's hearing, Country Mutual attorney Lisa Lilly moved to dismiss the suit as an improper copy of one that former Lakin attorney Richard Burke filed in St. Clair County.

"The allegations are parallel, sometimes identical," Lilly said.

Hylla asked who was plaintiff in the other case.

"Doctor Kathleen Roche," Lilly said. "She is a chiropractor."

She said Coy and Talley brought a previous suit in 2005.

At that time, Lakin teamed with Freed and Weiss of Chicago in class actions.

Lilly said the suit was removed to federal court and the plaintiffs dismissed it.

"So then some of their counsel filed the Roche case in St. Clair and a few months later the Lakin firm filed this here before your honor," she said.

"We have essentially the same two cases pending, just different plaintiff's counsel," she said.

Hylla said, "Okay, Mr. Lakin."

Lakin said, "We are dealing with a purported class that has not been certified yet. So number one, the parties are different.

"The plaintiffs in the case are no different – are different – than the plaintiffs in the other case.

"Country Casualty Insurance Company is not even a defendant in that case and is in this case."

The 2005 case was not limited to Illinois, he said, so he dismissed it and refiled it as a state only case.

"Until it is certified as a class action there would be no basis for dismissing this case," Lakin said.

"Our clients, as anybody else, would have the option to opt out."

He said his suit involved a "PPO" - preferred provider organization – and Roche had a claim through a third party administrator.

"There was a kind of satellite PPO out there who assigned the rights to Corvel, who then allegedly contracted with Country Companies to take these discounts from Dr. Roche," Lakin said.

"In our case," he said, "Dr. Coy has a direct contractual contractual relationship with Corvel rather than through this third party."

Hylla said, "Who was the third party?"

Lakin said, "I can't remember the exact name of it.

"Why that is relevant is, if and when that case is certified – and ours may be first, you know. I don't know.

"But if and when that case was certified, we don't even know what the class definition was. It doesn't affect the same parties.

"The scope of the class definition is limited to third party administrator contracts versus direct contracts with Coy, so we are dealing with situations where the named plaintiffs' constitutional rights could be affected."

Hylla asked if any case law said that who files a class action first should be given the right to proceed.

"It doesn't make any sense that there is all this discovery going on in Madison County and St. Clair County on the same issues," Hylla said.

"That just doesn't make a lot of sense," he said, "why this defendant would have to be subjected to that.

"We shouldn't have duplicative proceedings."

Lakin said, "That's not the motion, number one.

"Number two, we did conduct some discovery in the prior case that will be used in this case.

"If it turns out that that case is certified and it affects Dr. Coy's claim, at that point in time I can see the defendants coming in on a motion to stay the class.

"We are seeking to have it certified as a class and whether that happens or not is for a different day."

Hylla asked Lilly to address Lakin's points.

Lilly said the case did not limit the class to those with direct Corvel contracts.

She said Talley had a Corvel contract through a chiropractic association.

She said numerous courts have dismissed cases due to prior pending actions where the named plaintiffs were different.

Hylla asked Lakin if Coy and Talley had direct contracts with Corvel.

Coy did, Lakin said, and Talley had a contract with Midwest Chiropractic Association which the association assigned to Corvel.

Hylla said he thought Corvel was third party administrator in these cases.

"It is confusing," Lakin said, "because you have Corvel as the third party administrator. You have Country Companies who is the payor."

Hylla asked if Corvel subcontracted the work.

"They have the right under their contract," Lakin said, "to assign the interest in the contract to payors like Country Companies."

In Talley's case, he said, the association contracted with Corvel.

Hylla said, "They are a subcontractor."

Lakin said, "They really assign the contractual stuff to – at least that's what we believe, okay – to Corvel, and then Corvel does the same thing as what they do with Dr. Coy."

Hylla asked Lilly if it was significant that the Madison County suit claimed breach of contract and the St. Clair County suit did not.

"It's not, your honor. The case law is clear," she told Hylla.

"Differences in legal theories of recovery don't defeat the same cause if they are based on the same types of factual allegations and the same conduct," Lilly said.

Hylla said he would not rule from the bench on something new to him.

That didn't end the hearing, for Lilly also moved to dismiss the case in its entirety.

Don't blame my client

"Plaintiffs are unhappy with the deal they made with Corvel," she said, "and they are trying to avoid the consequences of that deal by suing my client Country Mutual."

"They say that they were entitled, in exchange for the discounts, to have patients steered or referred to them, particularly through financial incentives."

She said they attached to their complaint a contract between Coy and Corvel.

"That contract with Corvel doesn't mention Country Mutual," she said.

"It doesn't say that Corvel would require the payors to steer or refer patients," she said, "and it doesn't say anything about financial incentives."

She said Coy and Talley did not allege deception or plead that Country Mutual ever said it would provide incentives or steer patients.

She said they did not allege that they terminated their Corvel contracts.

She said increased fees would benefit plaintiffs but not their patients.

"At some point, if Country Mutual has to retroactively pay these discounts back, it's going to affect premiums," she said.

"That won't affect plaintiffs," she said. "They are not paying the premiums."

A class could never be certified, she declared.

She cited an order of U.S. District Judge David Herndon, denying certification of a Lakin class action because there were too many differences among contracts.

Herndon is the former law partner of Brad Lakin's father, Tom Lakin.

Hylla asked Brad Lakin to respond to Lilly's argument.

Lakin said, "They don't have the right to take PPO discounts from Dr. Coy and Dr. Talley and they did it anyway."

He said their argument was that, "We want to be assigned none of the obligations in the contract but all the benefits."

He said there clearly were deceptive and unfair practices.

"Specifically with respect to the argument of the defendants that this doesn't affect the consumers, it does," he said, "because what you're going to have as a result of this is, people who have contracts or contractual rights with PPO providers who don't meet their end of the bargain want all the benefits but none of the obligations.

"Medical providers are going to withdraw from that, and that is going to jack up medical costs."

He said Country Mutual was "unjustly enriched" at the detriment of his clients by taking discounts without a contractual right to do so.

"We don't know whether there is a contract," he said. "At this stage we should be able to conduct discovery to determine whether there is."

Lilly said, "This is a motion to dismiss. The defendant doesn't have a burden to come forward with evidence."

Stephen Mudge, for Country Mutual, said the benefit to a doctor is that he gets rapid payment of 80 percent of his bill.

Hylla said, "Where is the contract that says that?"

Mudge said, "The contract that Country Mutual enters into is the contract they enter into with their insureds."

Hylla said, "That is the contract with the patient."

Mudge said, "Right."

Lilly said, "Right."

Mudge said, "Corvel went out and entered into this deal where the doctors get 80 percent quickly -"

Lakin interrupted: "And got no steerage."

Mudge said, "They didn't get any steerage, Brad, because you can't find anything signed by Country Mutuial or any agreement to Country Mutual to provide steerage, because the steerage was to be provided by Corvel."

Mudge told Lakin he should sue Corvel.

"Hold it, guys," Hylla said. "Let's argue to me."

Lilly said, "There is no allegation that Corvel assigned anything to Country."

She said nothing in the contract between Corvel and Coy said Corvel would tell its payors to steer.

Hylla said he would take it under advisement and stay discovery, with one exception.

He said Lakin could make a request for any contract between Corvel and Country Mutual covering the situation with Coy or Talley.

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