The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge
This cause is before the Court on Liberty Mutual's Motion to Dismiss Plaintiff's Counts II -- IV of the First Amended Complaint (Motion) (d/e 19) and Liberty Mutual's Memorandum of Law in Support of its Motion to Dismiss Plaintiff's Counts II -- IV of the First Amended Complaint (d/e 20). Defendant has filed Richard McNay, Inc.'s Response to Liberty Mutual's Motion to Dismiss (d/e 23) and Richard McNay, Inc.'s Memorandum of Law in Support of its Response to Liberty Mutual's Motion to Dismiss (Response) (d/e 24). This is a consolidated action. In Case No. 10-3016, Liberty Mutual Fire Insurance Company and Liberty Mutual Insurance Company (collectively Liberty Mutual) are Plaintiffs, and Richard Mc Nay, Inc. (McNay) is Defendant. In Case No. 10-3042, McNay is Plaintiff and Liberty Mutual is Defendant.
This matter is fully briefed and ripe for adjudication. For the reasons described below, the Motion is granted in part, and denied in part.
Accordingly to McNay's Plaintiff's First Amended Complaint (McNay Complaint) (d/e 10), McNay is a Delaware corporation with its principal place of business in Quincy, Illinois. Liberty Mutual Fire Insurance Company and Liberty Mutual Insurance Company are Massachusetts corporations conducting insurance business in the State of Illinois. Liberty Mutual issued various workers' compensation insurance policies to McNay. These policies contained retrospective premium endorsements, meaning that the final earned premiums under the policies were based, in part, on losses incurred under the policies. Liberty Mutual managed, handled, and disposed of all claims under the policies on McNay's behalf.
Terry Wulf, a former McNay employee, claimed that on December 26, 2007, he suffered an injury while on the job. Wulf alleged that he slipped and fell, injuring his lower back. Three Liberty Mutual claims adjusters investigated Wulf's claim before Liberty Mutual referred investigation to its in-house counsel and an outside law firm. On January 18, 2008, Wulf's chiropractor released Wulf to return to work. McNay faxed a copy of this release to Liberty Mutual. Wulf did not return to work, however, and on January 25, 2008, McNay terminated his employment. Liberty Mutual stopped paying temporary total disability (TTD) benefits to Wulf on that date.
Then, on March 20, 2008, McNay received a letter from Wulf's attorney. The letter stated that Wulf's injury had temporarily disabled him and that he was still unable to work. McNay forwarded this information to Liberty Mutual, which then re-opened Wulf's claim without consulting McNay. On June 8, 2008, Wulf had surgery on his back, and Liberty Mutual reinstated his TTD benefits. Those benefits continued until September 28, 2008, when Wulf had recovered from his surgery and returned to work with a different employer. In addition to the TTD benefits, Liberty Mutual paid for Wulf's surgery, physical therapy, and all other medical bills and expenses from June 16, 2008, through September 28, 2008.
In the interim, McNay learned that Wulf had taken a new job with a different trucking line on January 8, 2008, prior to being released back to work by his chiropractor. McNay requested that Liberty Mutual conduct an investigation to determine whether Wulf was truly disabled. Liberty Mutual told McNay that its investigation had not turned up any information indicating that Wulf had been employed between January 8, 2008, and June 6, 2008. Liberty Mutual turned the file over to a special investigative unit and continued to monitor the claim.
McNay, dissatisfied with Liberty Mutual's response, decided to conduct its own investigation. McNay discovered that Wulf had received a speeding ticket in Wyoming on March 12, 2008, while driving a truck for VandeKamp Trucking, one of McNay's competitors. McNay requested payroll records from VandeKamp. The records revealed that Wulf worked as an over-the-road truck driver, and that his first day of work with VandeKamp was January 8, 2008. Wulf had worked for VandeKamp through June 20, 2008, collecting $21,256.57 and logging 62,452 miles. Liberty Mutual did not discover any of this information during the course of its investigation.
McNay communicated this information to Liberty Mutual, and told the insurer that it was not authorized to make any settlement with Wulf or his attorney. McNay wanted to proceed with a fraud action against Wulf. Nonetheless, Liberty Mutual kept reserves in excess of $160,000 on the Wulf claim. McNay continued to insist that Liberty Mutual deny Wulf's claim, subrogate the claim, or file a fraud action against Wulf. On July 1, 2009, Margaret Matlock, a Liberty Mutual employee, informed McNay that it had settled the Wulf claim for one lump-sum payment of $100,000.
Settling the claim "directly affected the retrospective adjustments and the amount claimed due and owing to [Liberty Mutual] from McNay under the workers' compensation policies." McNay Complaint, ¶ 20. McNay subsequently obtained workers' compensation insurance policies from a different carrier, but alleges that, due to the way the insurance industry calculates premiums, settling the Wulf claim has caused McNay's premiums to go up.
McNay also alleges that Liberty Mutual owes it $65,266 under automobile liability/fleet policies that Liberty Mutual issued to McNay in March 2004. McNay alleges that it posted an $82,600 line of credit in order to obtain the fleet policies, and that the balance due for all claims under the policies was $56,184 as of December 2009. McNay further states that Liberty Mutual refuses to refund a $38,850 loss deposit that McNay paid, despite the fact that all claims on the fleet policies are closed. McNay claims that Liberty Mutual owes it the loss deposit amount plus the difference between the line of credit McNay posted and the actual losses sustained under the policies, for a grand total of $65,266.
On January 25, 2010, Liberty Mutual filed suit against McNay in this Court, alleging breaches of contract on various workers' compensation and fleet policies that McNay held with Liberty Mutual. Complaint (d/e 1). Previously, on January 14, 2010, McNay sued Liberty Mutual in the Circuit Court of Adams County, Illinois. Cent. Dist. of Ill. Case No. 10-3042, Notice of Removal (d/e 1), Ex. A, Complaint. McNay alleges breach of contract on the workers' compensation policies; violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act), 815 ILCS 505/1 et seq.; unjust enrichment; bad faith under § 155 of the Illinois Insurance Code; and breach of contract on the fleet policies. Liberty Mutual removed that action to ...