EAST ST. LOUIS – A federal judge refused to dismiss a class-action lawsuit alleging insurance companies unlawfully withheld interest on payments for services provided through workers' compensation.
U.S. District Judge Nancy J. Rosenstengel of the Southern District of Illinois released her ruling on July 2.
Dr. Michael Beatty of Edwardsville leads the class action against the various insurance companies, alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA).
Beatty, a plastic surgeon, claims the insurance companies routinely failed to pay the interest due under the Illinois Workers' Compensation Act (IWCA). In addition, he alleges the companies give doctors inaccurate information in an effort to wait out the statute of limitations.
Nancy J. Rosenstengel
The defendants, including Accident Fund General Insurance Company and Tristar Insurance Group, asked Rosenstengel to dismiss the action for failure to state a claim. The insurance companies argued they do not have to pay interest under the state’s workers’ compensation law.
Although state laws on the issue seemed “ambiguous,” Rosenstengel wrote, the IWCA intended to timely compensate employees for injuries on the job.
“An insurance company that believes only the employer is responsible for paying interest has no motivation to pay on time, thereby defeating the purpose of the IWCA and rendering the interest provision inconsequential,” she wrote in the 32-page ruling.
Rosenstengel also granted Beatty’s request for injunctive relief and declined to throw out all claims outside the three-year statute of limitations.
“Requiring insurance companies pay on time – or else pay the interest mandated by statute – will encourage physicians to continue treating injured Illinois workers, ensuring consumers across Illinois have access to quality healthcare, by doctors who choose to participate in the workers’ compensation system, at uninflated prices,” she wrote.
However, Rosenstengel did take issue with Beatty’s claims of fraud against all the defendants and gave him time to amend the original complaint.