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12/08/89 T.J. Kennedy, D.C., Et Al. v. Deere & Company

December 8, 1989

T.J. KENNEDY, D.C., ET AL., PLAINTIFFS-APPELLANTS

v.

DEERE & COMPANY, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

548 N.E.2d 610, 192 Ill. App. 3d 18, 139 Ill. Dec. 225 1989.IL.1911

Appeal from the Circuit Court of Rock Island County; the Hon. John Donald O'Shea, Judge, presiding.

APPELLATE Judges:

JUSTICE BARRY delivered the opinion of the court. WOMBACHER, P.J., and HEIPLE, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BARRY

This action was initiated in 1983 and is before us on its second tour of appellate review. Plaintiff chiropractors sued defendant Deere & Co. to recover health insurance benefits assigned to them by their patients, employees of the defendant manufacturer. Defendant is the plan administrator of its employees' health benefit plan, which plan is subject to the Federal Employee Retirement Income and Security Act (29 U.S.C. 1001 et seq. (1982)). In the first appeal we held that plaintiffs, as assignees of their patients, had standing to claim benefits pursuant to sections 1132(a)(1)and 1132(e)(1) of the Act. (Kennedy v. Deere & Co. (1986), 142 Ill. App. 3d 781, 492 N.E.2d 199.) That decision was affirmed by the supreme court (118 Ill. 2d 69, 514 N.E.2d 171), and the parties thereafter resumed pre-trial litigation in the circuit court.

Plaintiffs filed a fourth amended complaint in three counts. The court granted defendant's motion to dismiss counts I and III, sounding in discrimination, on December 30, 1988. Both parties then moved for summary judgment on count II, in which plaintiffs claimed breach of contract. The circuit court ultimately denied plaintiffs' motion and allowed partial summary judgment in favor of defendant on March 16, 1989. The circuit court ruled that plaintiffs' claims for outpatient physical therapy benefits were properly denied by Deere because Deere, qua plan administrator, had not arbitrarily or capriciously construed the relevant terms of the health benefit plan to deny coverage for physical therapy performed by chiropractors in their offices. Plaintiffs perfected this interlocutory appeal from that order.

Plaintiffs contend in this appeal that the circuit court applied the wrong standard in reviewing the plan administrator's decision, and that if the correct standard is applied, plaintiffs' claims would be covered by defendant's health benefit plan. Defendant contends that its health benefit plan has been consistently interpreted by the plan administrator to exclude coverage for physical therapy administered by the patient's treating physician in his own office; and that Deere and the United Auto Workers' Union confirmed this understanding in writing on March 5, 1985, and incorporated a letter to this effect in their collective bargaining agreement. Defendant posits that the circuit court's determination must be sustained under any appropriate standard of review.

The relevant section of defendant's health benefit plan provides as follows:

"Outpatient physical therapy benefits will be payable for services performed for a period of 60 treatment days when prescribed by a physician for a specified condition resulting from disease or injury or prescribed immediately following surgery related to the condition and when the physical therapy is performed in a nursing home or other facilities such as rehabilitation centers having comprehensive physical therapy facilities. Such services must be performed by a physician or a qualified physical therapist according to prescription from a physician concerning the nature, frequency and duration of treatment."

Defendant has taken the position that this section requires two licensed health care providers -- one physician to write a prescription, and a second physician or physical therapist to administer the treatment. Accordingly, treating physicians' offices, including offices of osteopaths and chiropractors, have never been approved by Deere as "other facilities . . . having comprehensive physical therapy facilities."

Plaintiffs contend that as chiropractors they are "physicians" by virtue of section 2(10) of the Medical Practice Act of 1987 (Ill. Rev. Stat. 1987, ch. 111, par. 4400-2(10)). They are qualified to both prescribe and perform physical therapy using equipment on the premises of their offices. By requiring them to refer their patients to outside therapists, they argue, Deere rewrites the health benefit plan.

Obviously, before considering the plan's language, we must determine the appropriate standard of review. That question was resolved by a decision handed down by the Supreme Court of the United States on February 21, 1989. (Firestone Tire & Rubber Co. v. Bruch (1989), 489 U.S. 101, 103 L. Ed. 2d 80, 109 S. Ct. 948.) Although neither the parties nor the circuit court had the benefit of the Supreme Court's decision when the parties' arguments on their motions for ...


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