2018 IL App (1st) 163350
Ill. App. Ct.2019Background
- Marque Medicos Archer, LLC and Medicos Pain & Surgical Specialists treated Ernesto Martinez (employee of Morse Automotive) for work-related injuries and billed Liberty Mutual (Morse’s insurer).
- Martinez settled his IWCC claim with Morse Automotive in December 2011; the settlement allocated a lump sum including $41,751 for future medical expenses and provided that respondent would pay necessary/related medical expenses submitted before approval. Liberty was identified in the settlement as the respondent’s insurance/service company.
- As of the settlement’s approval, providers’ bills were unpaid; Liberty later made partial payments but roughly $39,000 remained outstanding and ~$36,000 in interest had accrued.
- A 2013 Illinois Department of Insurance market conduct review found Liberty failed to pay statutorily required interest on untimely provider bills; Liberty entered a stipulation promising to institute procedures to pay such interest.
- Providers obtained an assignment from Martinez to pursue rights under the settlement and sued Liberty and Morse, alleging breach of contract (as third‑party beneficiaries), violation of 820 ILCS 305/8.2(d)(3) (interest on untimely medical payments), and Consumer Fraud Act violations; trial court dismissed claims against Liberty and dismissed the Consumer Fraud Act claim as to both defendants. Providers appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether providers stated a breach of contract claim against Liberty as a party to the IWCC settlement | Providers: Liberty is effectively a party/disclosed agent (it was named as insurer and made payments), so it breached the settlement by failing to pay providers | Liberty: Settlement names Morse as respondent; providers did not plead Liberty signed or was a contracting party | Court: Dismissed breach claim against Liberty—complaint lacked allegations that Liberty was a party to the settlement |
| Whether §8.2(d)(3) of the Workers’ Compensation Act implies a private right of action in favor of medical providers for interest on untimely payments | Providers: Statute’s interest provision was intended to benefit providers and thus implies a private right of action | Liberty: Statute does not create a private cause of action for providers; Act protects employees primarily | Court: No private right—providers are not in the class the Act principally protects; claim dismissed (court follows Marque Medicos Fullerton v. Zurich) |
| Whether Martinez could assign his rights under the Act/settlement so providers could assert a Consumer Fraud Act claim | Providers: Assignment of Martinez’s rights permits them to sue under the Consumer Fraud Act for deceptive practices | Liberty: The Act forbids assignment of payment/awards; assignment is barred and Consumer Fraud Act claim fails; also, an unmet promise alone is not consumer fraud | Court: Assignment barred by §21 of the Act; even if assignment were allowed, mere unfulfilled promises do not state a Consumer Fraud Act violation—claim dismissed |
Key Cases Cited
- Fisher v. Lexington Health Care, Inc., 188 Ill. 2d 455 (1999) (framework for implying private right of action and analysis of statutory beneficiaries)
- Kelsay v. Motorola, Inc., 74 Ill. 2d 172 (1978) (Workers’ Compensation Act’s primary purpose is to protect employees with prompt compensation)
- McMahan v. Industrial Comm’n, 183 Ill. 2d 499 (1998) (nonpayment of medical expenses undermines the purposes of the Act)
- Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100 (2005) (mere breach of contract does not alone establish a Consumer Fraud Act violation)