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Coy Chiropractic Health Center, Inc., Richard Coy v. Travelers Casualty and Surety

March 14, 2011

COY CHIROPRACTIC HEALTH CENTER, INC., RICHARD COY, D.C., AND FRANK C. BEMIS & ASSOCIATES, D/B/A BEMIS CHIROPRACTIC, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED,
PLAINTIFFS-APPELLEES,
v.
TRAVELERS CASUALTY AND SURETY
COMPANY AND THE TRAVELERS INDEMNITY COMPANY, DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Madison County. No. 05-L-151 Honorable Daniel J. Stack, Judge, presiding.

The opinion of the court was delivered by: Justice Spomer

NOTICE

The text of

this decision m ay be changed or corrected prior to the filing of a Petition for Rehearing or the disposition of the same.

JUSTICE SPOMER delivered the judgment of the court, with opinion. Justices Stewart and Wexstten concurred in the judgment and opinion.

OPINION

The defendants, Travelers Casualty and Surety Company and The Travelers Indemnity Company (Travelers), appeal the October 14, 2008, order of the circuit court of Madison County that granted the motion for a class certification filed by the plaintiffs, Coy Chiropractic Health Center, Inc., Richard Coy, D.C., and Frank C. Bemis & Associates, doing business as Bemis Chiropractic, individually and on behalf of others similarly situated. In its order, the circuit court certified the following class:

"All licensed healthcare providers in Illinois whose reimbursement for medical services covered by a workers' compensation policy was reduced by Travelers pursuant to a PPO discount since February 11, 2005."

For the following reasons, we reverse and remand for further proceedings not inconsistent with this opinion.

FACTS

According to the plaintiffs' first amended complaint, the plaintiffs entered into contracts with First Health and its predecessor, Community Care Network (CCN), under which the plaintiffs agreed to participate in a preferred provider network. Pursuant to these preferred provider agreements, the plaintiffs agreed to accept discounted reimbursements from payor insurance companies, health care plans, or claims administrators with whom First Health and CCN had contracted. According to the plaintiffs, Travelers discounted bills from the plaintiffs without steering patients to the plaintiffs by offering financial incentives to their insureds for utilizing the plaintiffs as their provider. The plaintiffs' theory is that because, in the context of workers' compensation, insurance companies cannot provide financial incentives to patients to steer them toward a network provider and the use of financial incentives is the only true method of steering patients, Travelers is not entitled to take preferred provider organization (PPO) discounts on bills for workers' compensation patients submitted by network providers such as the plaintiffs.

In count I, the plaintiffs alleged that this practice of discounting bills without providing financial incentives amounted to a violation of Illinois's Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2004)) because Travelers misrepresented to the plaintiffs that they were entitled to a PPO discount. In count II, the plaintiffs alleged unjust enrichment by Travelers as a result of this practice. In count III, the plaintiffs alleged an alternative cause of action for a breach of contract. Finally, in count IV, the plaintiffs alleged a civil conspiracy based on Travelers' practice of entering into PPO networks with no intention to provide financial incentives to its insureds for utilizing the network. The circuit court dismissed count IV prior to ruling on the motion for a class certification. The order dismissing count IV is not a subject of this appeal.

Exhibit A to the first amended complaint is a preferred provider agreement entered into between First Health and Richard Coy, one of the named plaintiffs in this action, dated August 1, 2007. In section 1.5 of the preferred provider agreement, Dr. Coy agrees to the following:

"Provider understands that by execution of this Agreement, Provider agrees to participate in a Preferred Provider Panel (PPO Plan) being created by First Health. Provider further understands that First Health will offer to certain Payors the opportunity to contract with First Health to utilize the services of the health care providers participating in the Preferred Provider Panel. Payors may elect to use some or all of the providers participating in First Health's PPO plan. First Health will ...


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