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Medicos Pain & Surgical Specialists, S.C. v. Travelers Indemnity Company of America

Court of Appeals of Illinois, First District, Fourth Division

April 26, 2018

MEDICOS PAIN & SURGICAL SPECIALISTS, S.C., and AMBULATORY SURGICAL CARE FACILTY, LLC, Plaintiffs-Appellees,
v.
TRAVELERS INDEMNITY COMPANY OF AMERICA, and BLACKHAWK STEEL CORP., Defendants-Appellants.

          Appeal from the Circuit Court of Cook County 12-L-04140 Honorable Brigid M. McGrath, Judge Presiding

          JUSTICE McBRIDE delivered the judgment of the court, with opinion. Justice Ellis concurred in the judgment and opinion. Justice Gordon specially concurred, with opinion.

          OPINION

          McBRIDE, JUSTICE

         ¶ 1 Medicos Pain & Surgical Specialists, SC (Medicos), and Ambulatory Surgical Care Facility, LLC (Ambulatory), provided surgical care to a machine operator who was injured at work, Javier Mendoza, but had to wait several years for payment from Mendoza's employer, Blackhawk Steel Corporation (Blackhawk), and Blackhawk's workers' compensation insurer, Travelers Indemnity Company of America (Travelers). Medicos and Ambulatory filed suit in the circuit court and were awarded statutory interest pursuant to section 8.2(d) of the Workers' Compensation Act (Act). 820 ILCS 305/8.2(d) (West 2010).[1] Section 8.2(d) states that late payments to a medical service provider "shall incur interest at a rate of 1% per month payable to the provider." 820 ILCS 305/8.2(d) (West 2010). In this appeal, Blackhawk and Travelers contend the interest award of $37, 229 entered against them in 2016 is flawed for multiple reasons, including that while this appeal was pending, this court determined in 2017 that Medicos, Ambulatory, and other medical service providers who sued for statutory interest in Marque Medicos do not have a private right of action for the failure of an employer or insurer to comply with the interest provision of the Act. Marque Medicos Fullerton, LLC v. Zurich American Insurance Co., 2017 IL App (1st) 160756, 83 N.E.3d 1027, pet. for leave to appeal denied, No. 122568 (Ill. Nov. 22, 2017). Medicos and Ambulatory respond that in this instance, however, they successfully proved the elements of their promissory estoppel claim seeking statutory interest. Although they make no attempt to distinguish Marque Medicos, the appellees also contend there are no grounds for reversing the trial court's decision. Marque Medicos, 2017 IL App (1st) 160756.

         ¶ 2 The pertinent facts and legal principles are as follows. Mendoza severely injured both of his shoulders and lacerated his nose while at work in mid-2010, when he fell off a truck from a height of approximately four feet and landed on his left side. Mendoza was treated in a hospital emergency room and put on work restrictions until cleared by a physician. Rest, physical therapy, and other conservative treatment did not improve Mendoza's mobility or decrease his pain. He underwent further diagnostic testing, which revealed the severity of his injuries, and came under the care of orthopedic surgeon Dr. Ellis Nam, who recommended immediate surgery on both shoulders. Medicos faxed a one-page surgery approval request form to Travelers and received its faxed response before Dr. Nam repaired Mendoza's left rotator cuff in late 2010. Ambulatory exchanged similar faxes with Travelers before Dr. Nam repaired Mendoza's right rotator cuff in early 2011. Medicos and Ambulatory share corporate offices and are owned by the same physician. The two one-page forms identified the procedures to be performed and contained a line for marking "Approved" or "Denied." Although Travelers ticked the approval line, the forms do not indicate the amounts that would be charged for the listed medical services.

         ¶ 3 About two years after Mendoza's accident, Medicos and Ambulatory attached the approval faxes and other exhibits to a complaint alleging they issued bills to Travelers and Blackhawk for $166, 944, but received only $1714. The medical care providers claimed the insurer and employer were liable for the remaining balance under the equitable theory of promissory estoppel, as well as statutory interest under section 8.2(d) of the Act. 820 ILCS 305/8.2(d) (West 2010). Under the legal theory of promissory estoppel, " 'a promise made without consideration may nonetheless be enforced to prevent injustice if the promisor should have reasonably expected the promisee to rely on the promise and if the promisee did actually rely on the promise to his or her detriment.' " Newton Tractor Sales, Inc. v. Kubota Tractor Corp., 233 Ill.2d 46, 51, 906 N.E.2d 520, 523 (2009) (quoting Black's Law Dictionary 591 (8th ed. 2004)); Centro Medico Panamericano, Ltd. v. Laborers' Welfare Fund of the Health & Welfare Department of the Construction & General Laborers' District Council, 2015 IL App (1st) 141690, ¶ 12, 33 N.E.3d 691 (setting out the elements the plaintiff must prove). The defendant's promise must be unambiguous. Newton Tractor Sales, 233 Ill.2d at 51; Centro Medico, 2015 IL App (1st) 141690, ¶ 12. According to Medicos and Ambulatory, the two approval faxes amounted to an unambiguous promise to pay Mendoza's surgical bills (even though the faxes did not specify an amount or percentage of any charges or refer to the Act's schedule of allowable medical fees). Although Medicos and Ambulatory sought the balance of the medical bills, the complaint suggests the purpose of their lawsuit was to collect statutory interest, not the underlying bills. Medicos and Ambulatory titled the first paragraph of their pleading "Nature of the Case, " and stated: "1. This suit seeks to recover statutory interest that has accrued and is immediately due and payable as a result of medical services provided by Plaintiffs. In addition, Defendants have damaged Plaintiffs by approving certain surgical procedures in advance, to induce Plaintiffs to allow those procedures to be performed in their facility[, ] and thereafter failing to pay for those procedures." Another indication that the lawsuit was about the statutory interest, not the underlying bills, is that it is well established by statute and precedent that compensation owed for an employee's accidental injuries, including "all the necessary first aid, medical and surgical services, and all necessary medical, surgical, and hospital services thereafter incurred" (820 ILCS 305/8(a) (West 2014)), is an issue over which the Illinois Workers' Compensation Commission (Commission) has exclusive jurisdiction and that the role of the circuit court in compensation proceedings is limited to review only of the Commission's determinations. Marque Medicos, 2017 IL App (1st) 160756, ¶ 18.

         ¶ 4 Amendments to the Act in 2005 limited the amount that providers could charge for covered medical services but added the interest provision of section 8.2(d) of the Act. Marque Medicos, 2017 IL App (1st) 160756, ¶¶ 19-20 (discussing the history of section 8.2(d)). The 2005 version of section 8.2(d) indicated, in relevant part, "In the case of nonpayment to a provider within 60 days of receipt of the bill which contained substantially all the required data elements necessary to adjudicate the bill or nonpayment *** [in accordance with] the fee schedule established in this Section, the bill, or portion of the bill, shall incur interest at a rate of 1% per month payable to the provider." Marque Medicos, 2017 IL App (1st) 160756, ¶ 20 (quoting Pub. Act 94-0277, § 10 (eff. July 20, 2005)). Further amendments to the Act in 2011 reduced the maximum medical fees by 30% but shortened the 60-day grace period to 30 days and, for the first time, mandated " '[a]ny required interest payments shall be made within 30 days after payment.' " Marque Medicos, 2017 IL App (1st) 160756 (quoting Pub. Act 97-0018, § 15 (eff. June 28, 2011)).

         ¶ 5 Consistent with the Act, Medicos and Ambulatory's action in the circuit court was stayed pending arbitration of Mendoza's claim before the Commission. There was no dispute as to the necessity of Mendoza's two surgeries. The arbitration proceedings focused on the types of medical service charges and the amounts, whether penalties and attorney fees should be imposed, and whether Mendoza, who was 44 when the accident occurred, had been permanently injured. Mendoza did not seek interest on any of the medical service charges.

         ¶ 6 In February 2013, the arbitrator issued a ruling based on the testimony, the documentary evidence, and the medical fee schedule contained in the Act. Travelers had made interim payments for Mendoza's two surgeries and reduced the bills by roughly half. The arbitrator determined the remaining charges were "reasonable and necessary" and awarded Medico an additional $29, 708 and Ambulatory an additional $38, 554. The arbitrator rejected Mendoza's contention that, because the surgeries were preauthorized, all the bills should have been paid and that he was entitled to penalties pursuant to sections 19(k) and 19(l) of the Act and attorney fees pursuant to section 16 of the Act (820 ILCS 305/16, 19(k), 19(l) (West 2012). The arbitrator found that although the need for the surgeries had not been in contention, "there was clearly a disagreement as to whether all the charges stemming from those surgeries were reasonable and whether the outstanding fee schedule charges were accurately calculated [or had been double billed in error]." The arbitrator also found that Mendoza was entitled to permanent partial disability benefits. When Mendoza received the award payment, he remitted it to Medicos and Ambulatory.

         ¶ 7 The parties to the circuit court case (the employer, the insurer, and the two surgical care providers) returned to court and prepared for a bench trial limited to the issue of interest. Medicos and Ambulatory sought section 8.2(d) interest totaling $17, 927 for the first surgery, section 8.2(d) interest totaling $19, 303 for the second surgery, and $2208 in 5% prejudgment interest. 820 ILCS 305/8.2(d) (West 2010). During opening arguments, counsel for Medicos and Ambulatory made clear that his clients were asserting a statutory claim only:

"What remains here is purely a claim for interest under Section [8.2(d)(3)] of the Illinois Workers' Compensation Act. There are very few factual matters that go into an analysis of what my clients [are] owed under that statute, and that's all that's at issue in this trial, Judge.
* * *
Judge, as a brief opening, a couple of remarks. [This is a] case about payment of interest on late paid medical bills. There's a provision of the Illinois Workers' Compensation Act that we've already mentioned, Section 8.2(d)(3)[, ] that sets forth the circumstances under which a provider of medical services is entitled to the payment of interest at 1 percent per month on late paid medical bills.
Under Section 8.2(d)(3), the facts that are relevant are: Was there a medical bill, was that medical bill sent and received by the ...

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