Rosenstengel denies insurers' motion to dismiss class action over unpaid interest

By Glenn Minnis | Mar 29, 2019

BENTON -- For the second time in less than a year, district judge Nancy Rosenstengel has denied a group of defendants’ motion to reject a class action suit accusing insurance companies of illegally withholding interest on payments for services covered through workers’ compensation.

In a case that first came before the court in September 2017, Rosenstengel of the U.S. District Court for the Southern District of Illinois entered her latest ruling March 18.

Dr. Michael Beatty filed a putative class action suit in 2017 asserting “Illinois physicians who render services to patients covered under the Illinois Workers’ Compensation Act (IWCA) are entitled to receive statutory interest on their unpaid medical bills.”

As part of his filing, Beatty, a plastic surgeon from Edwardsville, also alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), arguing that the defendants tried to cover their tracks by passing along erroneous information to doctors in hopes that the statute of limitations binding their dealings would expire.

Judge Nancy Rosenstengel  

In seeking to have the first verdict reconsidered or a certification of the court’s order, defendants Accident Fund General Insurance Group and Tristar Insurance Group, argued that not only do they not have to pay interest in accordance with state law but that the action also failed to state a claim.

The defendants also argued that the court erred in its first ruling. They relied on a number of recent court decisions, including a ruling where an appellate court rejected a plaintiffs attempt to sue an insurance company under the ICFA.

“The court noted that the providers’ ICFA claim was premised on the validity of the employee’s assignment of his right, title, and interest in the settlement contract to the medical providers,” the defendants argued. “Because the IWCA forbids assignment of any payment, claim, award or decision, the court found the claim could not survive.”

In her latest verdict, Rosenstengel ruled, “There is nothing novel about the appellate court’s finding that warrants reconsideration. Furthermore, Dr. Beatty is alleging more than a simple breach of contract. He is alleging defendants, as part of a common scheme or conspiracy to deprive Illinois physicians of statutory interest, have engaged in unfair practices and omitted material information during commercial transactions by: concealing their failure to pay interest due; failing to provide EOBs, conspiring to avoid paying interest; and tendering payment without including required interest. The court stands by its earlier conclusion that Dr. Beatty has stated a claim for unfair practices under the ICFA.”

As part of her original, 32-page ruling, Rosenstengel concluded that “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 health care, by doctors who choose to participate in the workers’ compensation system, at uninflated prices.”

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