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May v. Smithkline Beecham Clinical Laboratories Inc.

April 14, 1999

MARTHA ANN MAY, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLEE,
v.
SMITHKLINE BEECHAM CLINICAL LABORATORIES, INC., DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Madison County. No. 97-L-1230 Honorable David R. Herndon, Judge, presiding.

The opinion of the court was delivered by: Justice Chapman

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Plaintiff, Martha Ann May, filed a putative class action lawsuit against defendant, SmithKline Beecham Clinical Laboratories, Inc. (SBCL), based upon SBCL's alleged improper billing for medical laboratory tests. SBCL sought to have plaintiff's case stayed pursuant to section 2-619(a)(3) of the Civil Practice Law (735 ILCS 5/2-619(a)(3) (West 1996)) because eight other putative class actions are pending against SBCL across the country. The trial court denied SBCL's motion to stay, and SBCL filed this interlocutory appeal pursuant to Supreme Court Rule 307(a)(1) (166 Ill. 2d R. 307(a)(1)). We affirm for the reasons set forth below.

BACKGROUND

In 1997, a settlement agreement between SBCL and the United States government was made public. The settlement agreement resulted from qui tam ("whistleblower") lawsuits filed on behalf of the government against SBCL. The agreement required SBCL to pay $325 million in restitution for improper medical claims submitted and paid under government health plans. The settlement agreement did not provide for restitution to be made to the following: members (i.e., patients) of the government health plans for co-payments made, private third-party payers or their members, or patients who directly paid for the medical services provided by SBCL. As a result of the settlement agreement, this case and eight other putative class action lawsuits, which claimed damages from improper billing practices, were filed on behalf of patients who paid SBCL either directly or under a co-payment agreement with their insurance. Additionally, two smaller putative class actions have been filed (one on behalf of certain employee benefit plans and the other on behalf of certain New York patients). Finally, in September 1997, a non-class action case, with 37 insurance companies as named plaintiffs, was filed against SBCL in a Federal district court in Connecticut.

This case was the sixth putative class action case to be filed. Out of the nine lawsuits filed, all but this case have been either filed in or transferred by the Judicial Panel on Multidistrict Litigation to the United States District Court for the District of Connecticut, where the cases have been consolidated and pretrial proceedings are being conducted under the designation of "MDL-1210," entitled "In re SmithKline Beecham Clinical Laboratories, Inc. Laboratory Test Billing Practices Litigation."

In each of the nine class action suits filed, the putative plaintiffs' lawsuits were based on SBCL's settlement agreement with the United States government, and most of the putative class actions filed recite the same "overall scheme" used by SBCL to implement the improper billing practices. SBCL's "scheme" allegedly involves the following improper billing practices: (1) add-ons, i.e., billing for tests not ordered by physicians, (2) unbundling, i.e., billing separately for tests that should have been billed at a single composite rate, (3) double billing, i.e., billing twice for the same test, (4) up-coding, i.e., performing and billing for more expensive tests than ordered, and (5) code-jamming, i.e., inserting fabricated diagnosis codes to obtain reimbursement from third-party payers.

The bases of the various causes of action stated in the complaints are as follows: violation of the Racketeering Influenced and Corrupt Organizations Act (18 U.S.C. §1961 et seq. (1994)), violation of the Employee Retirement Income Security Act (29 U.S.C §1001 et seq. (1994)), Federal and State common law claims for unjust enrichment and restitution, negligence, breach of contract, violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, conversion, fraud, violation of Illinois's Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1996)), and violation of Florida's Deceptive and Unfair Practices Act. The putative class actions filed primarily seek money damages for payments made by plaintiffs, although certain cases also seek injunctive relief. Plaintiff in this case claims that no Federal question is raised on her pleadings. However, the same claim was made by plaintiffs in two of the other pending cases, one of which was filed in Cook County, Illinois. These other two cases have been transferred to the Federal district court in Connecticut.

FACTS

Plaintiff filed this putative class action on December 27, 1997. Plaintiff asserted the following causes of action against SBCL: (1) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, (2) unjust enrichment or restitution, (3) fraud, and (4) breach of contract.

After plaintiff successfully defeated SBCL's attempt to remove this case to Federal court, SBCL filed a motion to dismiss for the failure to state a cause of action, pursuant to section 2-615 of the Civil Practice Law (735 ILCS 5/2-615 (West 1996)), and a motion to dismiss or stay pursuant to section 2-619(a)(3) of the Civil Practice Law (735 ILCS 5/2- 619(a)(3) (West 1996)). In support of SBCL's motion to dismiss or stay the proceedings, SBCL filed an affidavit and attached as exhibits the other pending complaints filed against it. Both parties filed two memoranda in support of their positions on these motions. On July 2, 1998, the trial court denied SBCL's motions. This interlocutory appeal followed.

ANALYSIS

SBCL contends that the trial court abused its discretion when it denied SBCL'S motion to stay proceedings pursuant to section 2- 619(a)(3). SBCL argues that it proved that duplicative actions were pending between the same parties for the same cause and that it proved that the other four factors to be considered when determining whether to grant a motion for a stay weighed heavily in its favor. These factors are comity; the prevention of multiplicity, vexation, and harassment; the likelihood of obtaining complete relief in the foreign jurisdiction; and the res judicata effect of a foreign judgment in the local forum.

Plaintiff argues that the court's ruling was proper because defendant has not overcome the substantial presumption of propriety afforded the trial court's discretion in ruling on the motion, because the record does not show that the court failed to consider the four factors which are to be weighed in determining defendant's motion to stay; that the four factors are not necessarily ...


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