Schmieder
Ruth
Dueling summary judgment moves in a seven-year old class action suit against Liberty Mutual Insurance Co. are under a Madison County judge's review after a long hearing earlier this month.
In a hearing that lasted nearly six hours Feb. 4, Madison County Circuit Judge Dennis Ruth and the attorneys for a plaintiff class of health care providers and defendant Liberty Mutual Insurance Company mulled over breaches of contract, Illinois' workers compensation law and the definition of the word "direct."
Ruth, who is a former chairman of the Illinois Workers' Compensation Commission, currently has the motions under advisement after entering an order that required parties to submit additional materials by Feb. 18.
Ruth referenced his experience often in questioning class counsel Robert Schmieder II about how the state's workers' compensation laws play into claims that Liberty Mutual failed to send clients to providers in the First Health Network.
His counterpart, attorney Thomas Keefe Jr., pointed to the state's workers' compensation law that prohibits Liberty Mutual or any other insurer from dictating a worker's choice of health care provider.
At the end of the Feb. 4 hearing, Ruth took the matters under advisement.
Chiropractor Thomas Kaltenbronn and his fellow lead plaintiffs sued Liberty Mutual in one of a series of class actions over allegedly improper Preferred Provider Organization (PPO) discounts.
The plaintiffs claim that Liberty Mutual, using a PPO now known as First Health, did not steer workers' compensation injuries to them for treatment but that the insurers took the PPO discounts anyway.
Liberty Mutual class action linked to First Health class action
The class action is one of a series of PPO cases filed in the early part of the last decade by Schmieder's firm, then called the Lakin Law Firm and the Chicago firm of Freed & Weiss. That partnership dissolved in 2007.
Chiropractor Richard Coy was one of the lead of the plaintiffs in a PPO class action against First Health that settled in 2009.
Together with chiropractor Lawrence Shipley, Coy sued First Health on behalf of Illinois health care providers on nearly identical claims.
The First Health suit settled for $1.25 million in 2009.
Under that settlement, Coy and Shipley took home $10,000 each.
Schmieder II was the class counsel in the suit. He and his team got $650,000 in legal fees.
The remainder of the settlement went to continuing medical education for health care providers.
One class member, Kathleen Roche, objected to the settlement.
Her attorney, Richard Burke, argued it did not adequately represent the interests of the class.
After then-Madison County Circuit Judge Daniel Stack discounted the objection and approved the settlement, Roche appealed.
The issue is currently before the Fifth District Appellate Court in Mount Vernon.
First Health settlement claim release issue
First Health and its settlement with the Shipley-Coy class played a role in the Feb. 4 hearing as Ruth questioned whether plaintiffs had not already given Liberty Mutual a way out.
Under the 2009 First Health settlement, some of the claims Kaltenbronn and the Liberty Mutual class raised were dropped.
Among those were financial incentive issues that Schmieder II would discuss with Ruth in his argument that Liberty Mutual breached a contract with his clients.
Schmieder II also represented the Shipley-Coy class and advocated for its settlement.
Ruth questioned Schmieder II on that subject, noting that he had "nosed around" in the First Health case to understand its relation to the Liberty Mutual suit.
Liberty Mutual cited the Shipley-Coy settlement in its response to the plaintiffs' summary judgment move.
Liberty Mutual pointed to that settlement's release of the financial incentives claims as further evidence that it could not send clients specifically to the PPO members.
Judge and attorneys argue meaning of 'direct'
Ruth and Schmieder debated the meaning of "direct" for much of the hearing.
According to Schmieder II, the insurance companies had a duty to send clients to the providers who signed on to the First Health network.
"I think when you read the word 'direct,' 'access,' 'make available,' 'utilize,' and 'use,' and when you read them all in conjunction, it's the only meaning that can exist," Schmieder II said.
Ruth drew on his experience heading the IWCC and noted that, in his view, Schmieder II seemed to leave out the section of the state's workers' compensation statute that forbids employers from dictating what doctor an injured worker may choose.
The judge also noted that in the contracts he'd seen in the case there was not a clear definition of "direct" listed.
"But if it's not in the contract, the contract language, then you go secondarily to case law or state law," the judge said. "Statutory law."
"I don't think [Liberty Mutual] they say it's never a requirement," Ruth said. "I think they are saying it's permissive. They point out the 'may' portion of the statute.
Schmieder II countered that the state's PPO statute uses language like "shall" to require incentives for consumers such as injured workers to use PPO members.
"There's nothing permissive about the word 'shall,'" Schmieder II said.
Schmieder II said his clients' contention is that Liberty Mutual admits it didn't make good on incentives promised to its First Health PPO members because it didn't send more workers' compensation cases their way.
Ruth returned to the workers' compensation statute and its prohibition on directing injury treatment.
"Are you saying the contracts are all illegal that both sides entered into?" the judge asked.
"No, no, no, no," Schmieder II replied. "What I'm saying is, we are talking about financial incentives. I think the Court's biting on sort of a red herring that Liberty has thrown out there. We've never said anything about co-pays and deductibles. We've talked about financial incentives. Just like the statute says, incentives, incentives, incentives."
Schmieder II told the judge that Liberty Mutual was using many of the same arguments it had tried when it sought to defeat the class's certification.
Later in the hearing Ruth again returned to the meaning of the word "direct," after Schmieder II showed clips of depositions with Liberty Mutual employees and presented evidence from First Health.
"I guess that's leading to some confusion as – that to me you keep saying that the definition of the word direct is obvious. I'm not so sure it is. That is, has different meanings in different contexts," Ruth added. "I'm not so sure that the meaning of the word 'direct' is quite as direct as everybody says it is."
Ruth noted the differing viewpoints on the matter at play in Schmieder's presentation and in the filings that led up to the hearing.
He also noted that although Schmieder II relied heavily on the language found in the state's PPO Act, the contracts in the case referenced state laws like the workers' compensation statute.
"So why is the plaintiff just dug in on the fact that there has to be this financial direction versus when they say, they – Liberty Mutual – says we did do all this informational stuff, and you say, 'No, they didn't," the judge wondered.
Judge's work comp law background comes to fore
Before becoming a judge, Ruth headed the Illinois Workers Compensation Commission and heard more than 400 arbitration cases before becoming one of the panel's commissioners.
The judge returned many times in the hearing to that background.
At one point, Ruth even confronted Schmieder II about his own familiarity with workers' compensation practice.
"I guess what I'm suggesting is this," the judge said as the discussion continued as to Liberty Mutual's ability to "direct" clients to the PPO members, "it's not so clear what the meaning of the word direct is, and I would suggest that if you talk – when you keep talking context, context isn't just PPO. In this case context is also workers' comp, and you are obviously not a workers' compensation lawyer or you would know that when people start using those words they are talking about a choice of doctor. Even though the word 'direct' isn't in the Workers' Compensation Act, but the choice of doctor is."
Ruth also chided Schmieder II for going back and forth between examples of how a PPO works in states without employee choice in workers' compensation injury cases and Illinois.
"I mean, you bounce back and forth between the country and specifically Illinois," Ruth said. "Illinois is almost unique in this, and I hope they remain unique in this, in allowing free choice of doctor to the injured citizens of the state. Because there's some assaults being made upon that right now in Springfield, which is neither here nor there to our discussion here today. But it's unique to Illinois that – so when you talk about these things direct, you know – across the river in Missouri when they say 'direct' they mean 'you go to Joe Blow or you are on your own.'"
Schmieder II stuck to his contention that the insurer had not complied with the state's PPO Act.
"Liberty Mutual is flat-out ignoring Illinois law and the regulation that says there shall be incentives for them to utilitize," Schmieder II said.
Liberty Mutual responds and hearing concludes as judge takes issues under advisement
In its filings and arguments at the Feb. 4 hearing, Liberty Mutual returned several times to the wording of the state's workers' compensation law.
For Liberty Mutual, Keefe agreed that parts of the law were cumbersome but argued his client had acted as best it could to fulfill its obligations to health care providers such as Kaltenbronn and his class.
Keefe stressed Liberty Mutual's efforts to send clients to the class members through directories, its Web page and workplace postings.
Keefe noted that, in his view, the case was clearly about breach of contract.
Keefe drew on his family's experience with workers' compensation law and his own in discussing how the case fit in the context of that area of law.
And he took issue with Schmieder II's reading of "direct."
"The reason that I'm in this case honestly is because, you know, I come from a [workers' compensation] family. I have a deep meaning about workers' comp and to do what he is asking you to do, to take this term and to apply it into the contract, it's the first step in an emasculating or attempt to emasculate the most inviolate rule that I believe exists and makes our state so unique, which is the worker's right to choose his or her own doctor," Keefe said.
Keefe said during the hearing that he practiced workers' compensation law between 1979 and 1995 and that his father had also been a workers' compensation attorney.
Ruth pointed out that workers' compensation law doesn't necessarily free Liberty Mutual from all of the obligations Schmieder II stressed.
Keefe acknowledged the judge's point.
Ruth noted that "both sides are kind of wanting to cling to the statute that most helps their particular cause."
Keefe continued to stress that the PPO statute was permissive in its language rather than mandatory of how Liberty Mutual was to send more workers' compensation claims to the PPO member providers.
"The statute doesn't require what Rob says it requires," Keefe said.
Keefe also suggested there might be a case of estoppel going on in the suit.
He noted that Schmieder II represents the class at hand and had represented the Shipley-Coy class.
Richard Coy is one of the lead plaintiffs in the Kaltenbronn case.
And, according to Keefe's arguments Feb. 4, the claims were virtually the same.
Keefe also questioned how lead plaintiffs and class members who spent large amounts of time dealing with workers' compensation claims in Illinois would be unaware that workers had a choice in what doctor to see.
Keefe and Liberty Mutual attorney Carol Rudder presented parts of the lead plaintiffs' depositions where they admitted to understanding employee choice of doctor.
Keefe also had Liberty Mutual's technical support pull up the Web site of Schmieder's firm, LakinChapman LLC of Wood River, and go to its workers' compensation law page.
"I'm not trying to be a smart aleck," Keefe said of the gesture. He pointed to statements on the firm's page noting employee choice of doctor. "It says right here, 'Do you have to receive treatment from the company doctor? The answer is no . . . Under the Illinois [Workers' Compensation Act] you are allowed to see two doctors of your choice and any doctors they refer you to see . . . I'm not trying to be a smart aleck with LakinChapman. They're a great plaintiff's firm and has a great history."
Ruth gave the parties deadlines for filing added materials and proposed orders before ending the hearing.
He required both sides to submit orders but warned he likely wouldn't enter either in the form he received them.
"I'm going to cut and paste and I probably won't be using either side's proposed order," the judge said. I don't know that anybody is particularly happy with all my opinions here today."
The case is Madison case number 04-L-1416.