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Bemis v. Emplrs. Mut. Cas. Co.

Court of Appeals of Illinois, Fifth District

May 6, 2015

FRANK C. BEMIS, D.C., d/b/a Frank Bemis & Associates, and DR. FRANK C. BEMIS & ASSOCIATES, CHIROPRACTORS, S.C., Individually and on Behalf of Others Similarly Situated, Plaintiffs-Appellants,
EMPLOYERS MUTUAL CASUALTY COMPANY and EMC PROPERTY & CASUALTY COMPANY, a Wholly Owned Subsidiary of Employers Mutual Casualty Company, Defendants-Appellees (Employers Mutual Casualty Company and EMC Property & Casualty Company, a Wholly Owned Subsidiary of Employers Mutual Casualty Company, Third-Party Plaintiffs; and Fair Isaac Corporation, Third-Party Defendant)

Appeal from the Circuit Court of Madison County. No. 05-L-164. Honorable William A. Mudge, Judge, presiding.


MOORE[*], JUSTICE delivered the judgment of the court, with opinion. Justices Stewart and Schwarm concurred in the judgment and opinion.



[¶1] The plaintiffs, Frank C. Bemis, D.C., doing business as Frank Bemis & Associates, and Dr. Frank C. Bemis & Associates, Chiropractors, S.C. (Bemis), appeal the July 18, 2013, judgment of the circuit court of Madison County, which dismissed their class action claims against the defendants, Employers Mutual Casualty Company and EMC Property & Casualty Company, a wholly owned subsidiary of Employers Mutual Casualty Company (Employers Mutual), after the circuit court, on April 5, 2012, decertified the following class based on this court's decision in Coy Chiropractic Health Center, Inc. v. Travelers Casualty & Surety Co., 409 Ill.App.3d 1114, 957 N.E.2d 1174, 354 Ill.Dec. 381 (2011):

" All healthcare providers in Illinois whose reimbursement for medical services to an Illinois workers' compensation claimant were [sic] paid at a reduced rate by Defendants pursuant to a First Health PPO discount from February 1, 2004 through [August 16, 2010]."

For the following reasons, we affirm.

[¶2] FACTS

[¶3] On August 22, 2007, Bemis filed a motion for class certification regarding claims Bemis previously made against Employers Mutual, which were restated in a first amended class action complaint filed on July 15, 2008. Many of the facts of this case mirror those in Coy, although there are some important differences. As in Coy ( id. at 1115), Bemis entered into contracts with First Health and its predecessor, Community Care Network (CCN), to participate in a preferred provider agreement under which Bemis agreed to accept discounted reimbursements from payor insurance companies, health care plans, or claims administrators with whom First Health and CCN had contracted. Like Coy ( id. ), Bemis alleges that Employers Mutual discounted bills it received from Bemis without steering patients to him because Employers Mutual did not offer financial incentives to its insureds for utilizing Bemis as their provider. As in Coy (id. ), the allegations in the first amended complaint arise in the context of workers' compensation insurance, where insurance companies could not, by law, require employees to treat with a specific provider, except in very limited circumstances.[1]

[¶4] The first amended complaint in the instant case contains the same theories of liability as the complaint in the Coy case. In count I, Bemis alleged that Employers Mutual's practice of discounting bills without providing financial incentives amounted to a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2008)) because Employers Mutual misrepresented to Bemis and the class that they were entitled to a preferred provider organization (PPO) discount. See Coy, 409 Ill.App.3d at 1116. In count II, Bemis alleged unjust enrichment by Employers Mutual as a result of this practice. See id. In count III, Bemis alleged an alternative cause of action for a breach of contract. See id. Finally, in count IV, Bemis alleged a civil conspiracy based on Employers Mutual's practice of entering into PPO networks with no intention to provide financial incentives to its insureds for utilizing the network. See id.

[¶5] Exhibit A to the first amended complaint is a document entitled " Community Care Network Professional Care Provider Agreement" (provider agreement) entered into between First Health's predecessor, CCN, and Bemis, dated April 28, 1998. This provider agreement differs somewhat from the provider agreements involved in the Coy case, in that the provider agreement in the instant case does not specifically refer to a workers' compensation program or workers' compensation services. See id. at 1116-17. However, the provider agreement also does not exclude workers' compensation programs or services. Section 2.01 of the provider agreement reads as follows:

" Provider hereby agrees to provide Health Care Services or Benefits to Beneficiaries or Claimants as set forth in Insuring Agreements, at the Reimbursement Amounts determined and established through Payor Agreements with Payors, which Payor Agreements are incorporated herein by reference. Such Reimbursement Amounts are set forth in Exhibit A attached hereto and incorporated herein."

[¶6] In section 1.06, the provider agreement defines " Payor Agreement" as " an instrument between a Payor and CCN or its authorized representative which provides for CCN providers, including Provider pursuant to this Agreement, to render Health Care Services or Benefits at Reimbursement Amounts determined and established by CCN and such Payor." In section 2.02, the provider agrees to accept the reimbursement amounts in Exhibit A as payment in full for health care services or benefits provided to beneficiaries or claimants. In section 4.01, " Provider authorizes CCN to act on its behalf to contract for the provision of Health Care Services or Benefits, at Reimbursement Amounts set forth in Exhibit A."

[¶7] Section 5 of the provider agreement, entitled " Covenants of Provider," contains several provisions relevant to the issues on appeal. In section 5.07, the provider agrees that:

" Except in an emergency and/or when medical necessity dictates, to admit Beneficiaries or Claimants, in each instance where hospitalization is required, to a hospital contracting with CCN unless a Beneficiary or Claimant specifically requests otherwise after having been notified by ...

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