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11/01/89 James Leeson Et Al., v. State Farm Mutual

November 1, 1989





546 N.E.2d 782, 190 Ill. App. 3d 359, 137 Ill. Dec. 837 1989.IL.1723

Appeal from the Circuit Court of Cook County; the Hon. Odas Nicholson, Judge, presiding.


JUSTICE QUINLAN delivered the opinion of the court. EGAN, P.J., and LaPORTA, J., concur.


Defendant, State Farm Mutual Automobile Insurance Company (State Farm), appeals a default judgment entered by the circuit court of Cook County which was entered as a discovery sanction. In its appeal, the defendant contends that the circuit court erroneously entered the default judgment because the discovery requests made by the plaintiffs were oppressive, were not relevant or material, and requested privileged information.

On October 11, 1985, James Leeson and Antoinette Heisman, the plaintiffs, were involved in an automobile accident when their vehicle was struck by a hit-and-run driver. As a result of the accident, Leeson was hospitalized at Thorek Hospital and Medical Center (Thorek) from October 12 to October 22, 1985, and Heisman was hospitalized at Thorek from October 12 to October 30, 1985. The plaintiffs, at the time of the accident, had maintained an automobile insurance policy with the defendant, State Farm. Plaintiffs' policy provided coverage for medical expenses, specifically stating, "[State Farm] will pay reasonable medical expenses, for bodily injury caused by accident . . . [including] expenses . . . for necessary medical, surgical, x-ray, dental, ambulance, hospital, professional nursing and funeral services, eyeglasses, hearing aids and prosthetic devices." On November 19, 1985, pursuant to this automobile policy, Leeson submitted a claim for $9,290.50 in medical expenses arising from the hit-and-run accident and Heisman submitted a claim for $12,954.50 in medical expenses.

Thereafter, plaintiffs periodically telephoned defendant's Des Plaines office to determine whether defendant intended to pay their claims and, receiving no response, plaintiffs retained an attorney in March 1986. Plaintiffs' attorney was informed that the defendant had not yet decided whether to pay those claims. Thereafter, on March 13, 1986, plaintiffs filed a two-count complaint at law against defendant. In count I, plaintiffs sought $22,245 plus costs, claiming that defendant had wrongfully breached its contract of automobile insurance with plaintiffs. In count II, plaintiffs sought $25,000 plus costs and attorney fees, alleging that defendant had unreasonably and vexatiously delayed in settling their claim in violation of the Illinois Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 613 et seq.). Defendant filed an answer denying that plaintiffs' medical treatments were covered under its automobile insurance policies because, it contended, the plaintiffs' expenses were not reasonable or necessary.

After defendant had obtained plaintiffs' medical records from the hit-and-run accident, it sent the records to INSPE Associates , a corporation consisting of physicians who review medical records on behalf of insurance companies. INSPE was asked to determine whether the medical treatment claimed by plaintiffs as medical expenses were reasonable and necessary. Dr. Daniel Samo, a partner in INSPE, reviewed plaintiffs' records and, on April 21, 1986, advised defendant that in his opinion certain expenses claimed by plaintiffs were inappropriate, excessive, unnecessary and unreasonable. Based on Dr. Samo's advice, defendant then refused to pay plaintiffs the full amounts they had submitted as medical expenses.

Plaintiffs subsequently filed interrogatories and a request for production of documents on July 2, 1986. On July 24, 1986, defendant filed objections to plaintiffs' interrogatories 4(a) through 4(g) and 4(l) through 4(r), claiming that those interrogatories were irrelevant and immaterial to the issues in the case. Those particular interrogatories requested information concerning all independent medical examinations conducted by defendant on claims for automobile medical payment benefits submitted to defendant's Des Plaines office between January 1, 1985, to December 31, 1985. *fn1 Defendant also objected to portions of plaintiffs' request for production, claiming that certain items sought by plaintiffs were irrelevant and immaterial. On July 25, 1986, defendant filed its answers to plaintiffs' interrogatories; however, defendant again refused to answer interrogatories 4(a) through 4(g) and 4(l) through 4(r).

On September 16, 1986, plaintiffs then filed a motion to compel discovery pursuant to Illinois Supreme Court Rules 201, 213, and 214, alleging that defendant had failed to comply with the rules by not completely answering plaintiffs' interrogatories and by not completely responding to plaintiffs' request for production. (107 Ill. 2d Rules 201, 213, 214.) Plaintiffs asserted that the information sought in their interrogatories was material and relevant to count II of their complaint, where they had alleged that defendant vexatiously and unreasonably delayed in paying their claim. Defendant asked that the motion be denied.

A hearing on plaintiffs' motion to compel was held on May 15, 1987. At that hearing, plaintiffs argued that their interrogatories were relevant and material in determining whether defendant unreasonably and arbitrarily used independent medical examinations *fn2 in order to delay timely payment of claims. Plaintiffs also claimed that their interrogatories sought to determine what was "reasonable and necessary" according to the terms of the insurance policy issued by the defendant, as well as what criteria were used to determine whether a claim should be subjected to an independent medical examination. In response, defendant argued that the interrogatories were burdensome and would likely involve "hundreds" of claims. Defendant further contended that the information sought was irrelevant because the present case concerned only two policy holders and one accident and, therefore, information about all other claims would be helpful in determining whether the defendant acted arbitrarily and unreasonably with regard to this claim. Consequently, on May 21, 1987, the circuit court entered its order granting plaintiffs' motion to compel answers to their interrogatories 4(a) through 4(g) and 4(l) through 4(q). Interrogatory 4(r) was stricken by the court as redundant.

On May 22, 1987, plaintiffs served a subpoena duces tecum on INSPE, commanding INSPE to produce "[p]hotocopies of any and all reports or Independent Medical Examinations, on Defendant's insureds' medical records performed, received, prepared or referred between May 22, 1985 and May 22, 1987." On June 17, 1987, defendant filed a motion to quash the subpoena duces tecum, again claiming that those documents which had been requested were also irrelevant and immaterial, were work product and/or subject to the attorney-client privilege. Defendant also filed, on June 22, 1987, a motion for rehearing of the circuit court's May 21, 1987, order granting plaintiffs' motion to compel discovery. In its motion for rehearing, defendant claimed that in order to comply with plaintiffs' interrogatories, it would need to process at least 2,000 to 2,500 claim files, which would involve hundreds of hours of work.

Pursuant to plaintiffs' motion to compel, defendant filed its answers to plaintiffs' interrogatories on September 30, 1987. In its response, defendant said that 2,124 claims for medical benefit payments were processed through its Des Plaines office in the year 1985, and specifically in answer to interrogatories 4(b) through ...

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