MOUNT VERNON – Former Madison County Circuit Judge Daniel Stack abused his discretion when he certified a LakinChapman class action against Travelers Casualty and Surety, Fifth District appellate court judges ruled on March 14.
Justices Stephen Spomer, Bruce Stewart and James Wexstten reversed Stack, who certified a class of health care providers claiming breach of contract, consumer fraud and unjust enrichment.
"Because the plaintiffs have not stated a valid claim for relief against Travelers, the circuit court abused its discretion in certifying the class," Spomer wrote.
Local chiropractors Richard Coy and Frank Bemis alleged that Travelers discounted their workers' compensation bills under a preferred provider plan without steering patients to them.
"Despite their deposition testimony that they expected that every patient for whom discounts would be taken would be steered to them by the payor by the use of financial incentives, no such promise was contained in the preferred provider agreements," Spomer wrote.
Though Coy and Bemis alleged breaches of contracts, they signed preferred provider agreements with a management company, First Health, not with Travelers.
They persuaded Stack to link their First Health agreements to a payor contract between First Health and Travelers, but they didn't persuade Spomer.
"Even if it could be said that the plaintiffs are third party beneficiaries to the payor agreement, the payor agreement does not contain any language mandating that Travelers provide financial incentives to a patient in order to take a preferred provider discount," Spomer wrote.
"The simple fact is that neither the preferred provider agreements nor the payor agreement make financial incentives a prerequisite to accessing the network."
He rejected the consumer fraud claim, writing that it realleged the breach of contract claim.
"To the extent that the plaintiffs are alleging that Travelers misrepresented the fact that it belonged to the First Health workers' compensation network, it is clear from the record that Travelers did belong to that network," he wrote.
He rejected the unjust enrichment claim, finding Coy and Bemis promised to accept discounted reimbursements from any payor in the network.
He wrote that to the extent they assert a right to coverage by Travelers, they are bound to exclusive remedies at the Illinois Workers' Compensation Commission.
The former Lakin Law Firm sued Travelers in 2005.
Stack certified a class action in 2008.
Travelers petitioned the Fifth District for review, and judges there denied the petition.
Travelers petitioned the Illinois Supreme Court for review, and in 2009 the Justices directed the Fifth District to accept the appeal.
Troy Bozarth and Jill Sundberg, both of Hepler Broom in Edwardsville, represented Travelers.
So did Robert Johnson, Jeffrey Lenard and Steven Levy, all of Sonnenschein, Nath and Rosenthal in Chicago, and Lisa Lilly of Chicago.
Robert Schmieder, Jonathan Piper and Andrew Kuhlmann of LakinChapman represented Coy and Bemis, along with Timothy Campbell of Godfrey.
Stack retired last December.