The opinion of the court was delivered by: Getzendanner, District Judge:
MEMORANDUM OPINION AND ORDER
Michael and Sheri Langendorf, plaintiffs, have brought this
six-count diversity action challenging the refusal by its
insurer, Travelers State Insurance Company ("Travelers") to pay
health insurance benefits under a group insurance policy.
Travelers is alleged to be organized under the laws of
Connecticut, where it has its principal place of business. The
Langendorfs are alleged to be residents of Illinois. The amount
in controversy, exclusive of interest and costs, exceeds
Plaintiffs have alleged the following facts which, for purposes
of the present motion to dismiss, the court accepts as true. On
September 16, 1983, Travelers issued a group insurance policy to
the Oak Park Therapeutic School, Inc. Sheri Langendorf was a
member of the group covered by this plan. On September 16, 1983,
Sheri Langendorf gave birth to a daughter. Shortly thereafter she
suffered severe complications due to her pregnancy which required
extensive medical treatment. She was rehospitalized for
approximately six months, incurring hospital and medical expenses
of approximately $115,000.00. Pursuant to the insurance policy
which provided for unlimited medical and hospital care benefits,
the Langendorfs requested that Travelers pay the expenses of the
stay. Travelers stated they would pay only $50,000 of the
expenses incurred, claiming there was a $50,000 limit on the
benefits payable. The Langendorfs made further demands on
Travelers for payment of the $65,000 balance, all of which have
remained unfulfilled. Presently before the court is Travelers'
motion to dismiss Counts II, V and VI of the complaint.
In Count II, the Langendorfs claim that Travelers' refusal to
pay was an "improper claims practice" proscribed by Section 154.6
of the Illinois Insurance Code, Ill.Rev.Stat. ch. 73, ¶ 766.6.
The Langendorfs urge that any conduct in violation of the
practices described in § 154.6 entitles them to recover for
their damages, costs, attorneys' fees and receive any other
appropriate relief. In relevant part, the statute provides that:
Any of the following acts by a company, if committed
without just cause and [committed knowingly or
frequently,] constitutes an improper claims practice:
(d) Not attempting in good faith to effectuate
prompt, fair and equitable settlement of claims
submitted in which liability has become
(h) refusing to pay claims without conducting a
reasonable investigation based on all available
Ill.Rev.Stat. ch. 73, ¶ 766.6.
Travelers argues that this count should be dismissed because §
154.6 provides no private right of action but simply defines
those practices for which the Illinois Director of Insurance may
issue a cease and desist order under § 154.8 of the Insurance
Code, Ill.Rev.Stat. ch. 73, ¶ 766.8. The Illinois Supreme Court
has not yet decided this issue. Under Erie Railroad Co. v.
Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), in a
diversity action, when the highest state court has not yet spoken
on an issue, a federal district court is obligated to predict
what that court would do if presented with the issue. See White
v. United States, 680 F.2d 1156, 1161 (7th Cir. 1982); McKenna v.
Ortho Pharmaceutical Corp., 622 F.2d 657, 661 (3rd Cir.) cert.
denied, 449 U.S. 976, 101 S.Ct. 387, 66 L.Ed.2d 237 (1980); Barr
Co. v. Safeco Insurance Co., 583 F. Supp. 248, 252 (N.D.Ill.
1984). Accordingly, the court observes that all Illinois
appellate courts agree that § 154.6 provides no private right of
action. It is a public remedy to be pursued only by the Director
of Insurance. See, e.g., Tobolt v. Allstate Insurance Co.,
75 Ill. App.3d 57, 30 Ill.Dec. 824, 393 N.E.2d 1171 (1st Dist. 1979);
Hamilton v. Safeway Insurance Co., 104 Ill.App.3d 353, 60 Ill.
Dec. 97, 432 N.E.2d 996 (1st Dist. 1982); Hoffman v. Allstate
Insurance Co., 85 Ill.App.3d 631, 40 Ill.Dec. 925,
407 N.E.2d 156, appeal denied, 81 Ill.2d 602 (1980); Van Vleck v. Ohio
Casualty Insurance Co., 128 Ill.App.3d 959, 84 Ill.Dec. 159,
471 N.E.2d 925 (3d Dist. 1984). Under these circumstances, the court
finds itself compelled to adopt this view as it assumes the
Illinois Supreme Court would follow the approach consistently
taken by its appellate courts. See West v. American Telephone and
Telegraph Co., 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85 L.Ed. 139
(1940) (Federal courts should not disregard uniform state
appellate court results absent persuasive data that the highest
state court would decide otherwise.)
The Langendorfs argue that this court should not conclude that
the Illinois Supreme Court would in fact approve of the approach
that its appellate courts have repeatedly taken. They argue that
an implied private cause of action is maintainable under Sawyer
Realty Group Inc. v. Jarvis Corp., 89 Ill.2d 379, 59 Ill.Dec.
905, 432 N.E.2d 849 (1982). In Sawyer, the Illinois Supreme Court
recognized an implied private right of action for violations of
the Brokers Licensing Act, Ill.Rev.Stat. ch. 111, ¶ 5701 et seq.
Specifically, the court stated that Illinois "courts have
continuously demonstrated a willingness to imply a private remedy
where there exists a clear need to effectuate the purpose of an
act." 89 Ill.2d 379, 389, 59 Ill.Dec. 905, 432 N.E.2d 849.
Sawyer, however, is inapposite to the case here. As Sawyer itself
stated, Illinois courts will imply a private
right of action only where it is necessary to achieve the aims of
the statute. Since the Insurance Code, in § 154.8, empowers the
Director of Insurance to issue cease and desist orders against
any insurer that commits an act proscribed by § 154.6, an implied
private right of action is not necessary. See Abbott Laboratories
v. Granite State Insurance Co., 573 F. Supp. 193, 196 (N.D.Ill.
1983); UNR Industries Inc. v. Continental Insurance Co.,
607 F. Supp. 855 (N.D.Ill. 1984). The Langendorfs' suggestion that, to
their knowledge, there are no reported cases brought by the
Director of Insurance against insurers does not in itself suggest
the public remedy is inadequate. Even if this lack of prosecution
were true and without justification, it would seem to this court
that the proper solution would be to replace the lax Insurance
Director. While it might be easier on plaintiffs to ask this
court to imply a private cause of action than to seek replacement
of the director, the court has no power to do this in light of
the consistent holdings of the Illinois appellate courts denying
the private claim and the absence of any evidence that the
Illinois legislature wanted the "private attorney general"
concept extended to the Insurance Code. Accordingly, the court
dismisses Count II.
Count V is somewhat difficult to evaluate on this motion to
dismiss because of the way it is drafted and the way the parties
have argued it. Taken at face value, the count alleges that
Travelers' refusal to pay resulted in "numerous and repeated
demands for payment from health providers" and caused the
Langendorfs severe and extreme emotional distress and
humiliation. Furthermore, Travelers' refusal to pay was "extreme
and outrageous in that it was reasonably calculated to cause" the
Langendorfs severe distress. As a result of the distress, the
Langendorfs have suffered "loss of sleep, appetite, anxiety and
The court perceives three possible interpretations of this
count and will therefore assess the count's ability to survive
the motion to dismiss under each interpretation. The first
interpretation is simple: Travelers breached its contract with
the Langendorfs by refusing to pay benefits when it was supposed
to; the damages that the Langendorfs suffered include not merely
the denial of the $65,000 contractual benefits, but also the
consequential injury of emotional distress. The court does not
now decide whether, under Illinois law, the consequential injury
of emotional distress is compensable on an insurance contract
claim. At this point, the court simply considers the
contract-based consequential injury of emotional distress to have
been well pled by the ...