Madison - St. Clair Record

Monday, April 6, 2020

Proposed class action of liens on lawsuits is grounded in federal law, Yandle says in denying remand

Federal Court

By The Madison County Record | Mar 23, 2020


BENTON – U.S. District Judge Staci Yandle denied a motion from former district judge Patrick Murphy for Jackson County jurisdiction over a potential class action about liens on lawsuits.  

On March 16, Yandle found Murphy’s complaint against Southern Illinois Hospital and payment contractor Claim Assist raised a federal question. 

Southern Illinois Hospital owns hospitals in Carbondale, Murphysboro, and Herrin. 

Murphy filed suit in Jackson County court at Murphysboro in February 2019, on behalf of Williamson County resident Richard Peck. 

Murphy’s suit claims that Southern Illinois Hospital engages in improper debt collection and that Claim Assist engaged in unauthorized practice of law. 

He alleges that Southern Illinois Hospital acknowledged Peck as a Medicare beneficiary but didn’t submit its charges to Medicare for payment. 

Instead, he wrote, Southern Illinois Hospital agreed with Claim Assist and assisted it in filing a lien in a personal injury suit Peck filed. 

Murphy’s lawsuit alleges that the lien was for the full amount of customary charges several times the amount Medicare authorized. 

He quoted the Illinois Health Care Services Lien Act, authorizing liens on claims and causes of action for reasonable charges of health professionals. 

He proposed that Peck represent Medicare beneficiaries with liens in civil suits greater than amounts Medicare authorized. 

The class definition would implicate more than 100 persons. 

According to the suit, actions of the defendants allegedly delayed settlement and caused Peck to pay a sum greater than Medicare authorizes. 

Claim Assist is not a law firm, yet it prepared and filed liens in Illinois courts, the suit says. 

The suit asks that Southern Illinois Hospital disgorge all money class members paid in excess of amounts Medicare authorized. It seeks a permanent injunction against Southern Illinois Hospital asserting liens in excess of amounts Medicare authorizes, and also declaratory judgment that Claim Assist routinely and systematically engages in the unauthorized practice of law. 

It also asks for a permanent injunction against Claim Assist preparing and filing liens in Illinois, and that it disgorge all fees paid by Southern Illinois Hospital. 

Murphy filed a separate motion for conditional class certification, “in order that the interests of said class be protected and preserved.” 

Southern Illinois Hospital retained Jeffrey Schultz and former Madison County associate judge Donald Flack, both of Armstrong Teasdale in Clayton, Mo. 

Schultz removed the action to district court last April, claiming it relied on interpretation of the Medicare Act and regulations. 

He argued that allegations based on state law didn’t negate federal jurisdiction. 

Claim Assist consented to removal. 

The court clerk assigned Chief Judge Nancy Rosenstengel, who recused herself. 

The clerk assigned Yandle. 

Murphy moved to remand the action to Jackson County, claiming the substantive basis for removal was not sound. 

He wrote that Peck’s allegation wasn’t important to the federal system since the federal government was never involved with the claim. 

“Indeed, the basis for his complaint is that Southern Illinois Hospital refused to involve Medicare but instead sought payment from his personal funds,” Murphy wrote. 

Claim Assist counsel Jonathan Mitchell of Carbondale opposed the motion in May. 

“The issues are squarely related to the proper interpretation of the Medicare Act as it relates to billing and collection practices of health care providers,” Mitchell wrote. 

He wrote that the complaint asserted no facts why mailing a notice of lien to Peck’s attorney constituted the unauthorized practice of law. 

Schultz opposed Murphy’s motion for Southern Illinois Hospital, stating Peck’s complaint necessarily depended on construction of federal law. 

He wrote that the interpretation of the Medicare Act demanded by Peck would have wider implications than just over the parties to this case. 

Yandle set trial for April 2021, but her current order takes it off her calendar. 

“While Peck’s complaint cites to Illinois state law only, his claim that defendants wrongfully placed a lien on his civil lawsuit is grounded in federal law,” Yandle wrote. 

“To prevail on his claim, he would need to show when and how payments are required by the Social Security act, in particular, the Medicare secondary payer provisions of that act. 

“He would then need to establish how federal regulations require reimbursement, either from the provider or from a liable party. 

“And while plaintiff cites to Illinois’ Health Care Services Lien Act and asserts a nominal claim for the unauthorized practice of law, the crux of his claim is that federal law requires defendants to seek reimbursement from Medicare, in the amount it dictates, prior to or in lieu of filing a lien in a civil lawsuit.” 

Murphy retired as district judge in 2013.


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Southern Illinois Hospital Services