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Marque Medicos Archer, LLC v. Liberty Mutual Insurance Co.

Court of Appeals of Illinois, First District, Second Division

June 26, 2018


          Appeal from the Circuit Court of Cook County, Illinois. No. 13 L 13456 Honorable Patrick J. Sherlock, Judge Presiding.

          PRESIDING JUSTICE MASON delivered the judgment of the court, with opinion. Justices Pucinski and Hyman concurred in the judgment and opinion.



         ¶ 1 This case arises out of defendant-appellant Liberty Mutual Insurance Company's (Liberty) alleged failure to fully pay plaintiffs-appellees, Marque Medicos Archer, LLC and Medicos Pain & Surgical Specialists, SC (collectively, the providers), for services they rendered to an injured employee of codefendant-appellant, Morse Automotive Corporation (Morse Automotive).[1] The trial court dismissed with prejudice the providers' claims for breach of contract and violation of section 8.2(d)(3) of the Workers' Compensation Act (Act) (820 ILCS 305/8.2(d)(3) (West 2012)) against Liberty and violation of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2012)) against both defendants, and the providers appeal. Because we conclude that the providers have no direct cause of action against Liberty for its delay in paying medical bills, we affirm.

         ¶ 2 BACKGROUND

         ¶ 3 The providers first filed suit against Liberty and Morse Automotive on November 15, 2013. In their second amended complaint, at issue here, they alleged that between August 29, 2009 and November 17, 2011, they treated Ernesto Martinez for injuries he suffered while employed by Morse Automotive. At the outset of Martinez's treatment, he authorized payment to be made directly to the providers for insurance benefits payable to him. The providers billed Morse Automotive for the services they rendered to Martinez by submitting claims to Liberty, who issued Morse Automotive's workers' compensation insurance policy. The medical providers alleged that Liberty was the disclosed agent for Morse Automotive.

         ¶ 4 The providers alleged that all workers' compensation policies issued in Illinois include a promise by the insurer to pay "promptly" the benefits required of the employer under the Act as well as "interest on a judgment as required by law until [the insurer] offer[s] the amount due under this insurance." All policies further include a provision that the insurer is "directly and primarily liable to any person entitled to the benefits payable by this insurance," and those persons "may enforce our duties *** against us or against [the employer] and us."

         ¶ 5 Notwithstanding this policy language, the complaint alleged that Liberty failed to promptly pay bills for medical services rendered to Martinez or, to a large extent, at all. The providers alleged that a market conduct examination conducted by the Illinois Department of Insurance in 2013 of Liberty's claim payment history between July 1, 2011 to June 30, 2012, found that Liberty failed to pay interest on adequately documented medical provider bills not paid within 30 days of receipt and was in violation of section 8.2(d)(3) of the Act.

         ¶ 6 As a result of the market conduct examination, on December 12, 2013, Liberty entered into a stipulation and consent order in which it warranted to the DOI in relevant part that it would "[i]nstitute and maintain procedures whereby [Liberty] pays interest on adequately documented health care provider bills not paid within thirty (30) days of receipt as required by 820 ILCS 305/8.2(d)(3)."

         ¶ 7 In the meantime, in September 2009, Martinez timely filed a claim before the Illinois Workers' Compensation Commission (IWCC) for disability benefits and medical expenses. A little over two years later, on December 14, 2011, Martinez entered into a settlement agreement with Morse Automotive. The settlement agreement names Martinez as petitioner, Morse Automotive as respondent, and Liberty as "[r]espondent's insurance or service company." The terms of the settlement provided that respondent would pay petitioner $163, 000 in a lump sum for "full and final settlement of all claims for benefits past, present and future based on injuries arising out of an accident on or about August 4, 2009"; the lump sum included $41, 751 for future medical expenses. The settlement further provided "[r]espondent will pay all necessary and related medical expenses pursuant to the fee schedule or negotiated rate, whichever is less, that have been submitted to [r]espondent prior to contract approval and that contain all the required data elements necessary to adjudicate the bills pursuant to Section 8.2(d)." The settlement agreement was silent on the amount of medical bills outstanding as of the date of its execution. The complaint did not allege, and the record does not disclose, that prior to the settlement, Liberty ever took the position that all or any portion of the medical expenses reflected in the bills sent to it were not necessary or related to Martinez's injuries or that the documentation in the bills was insufficient.

         ¶ 8 As of the date of the settlement agreement, neither Morse nor Liberty had paid any of the providers' bills, but approximately six months after the settlement was approved by the IWCC, Liberty made partial payments to the providers for bills it received between 2009 and 2011. Approximately $39, 000 in bills is still outstanding. And as of the date of the complaint, over $36, 000 of interest had accrued on the unpaid bills as well as the bills paid after the statutory grace period had elapsed.

         ¶ 9 On June 5, 2014, Martinez executed a specific assignment in favor of the providers to pursue any and all of his rights and claims arising out of the settlement agreement.

         ¶ 10 Based on these allegations, the second amended complaint alleged four counts against both defendants: (1) breach of contract (based on the settlement agreement), (2) breach of contract implied in fact (in the alternative), (3) violation of section 8.2(d)(3) of the Act (820 ILCS 305/8.2(d)(3) (West 2012)), and (4) violation of the Consumer Fraud Act (815 ILCS 505/1 et seq. (West 2012)); one count was alleged only against Liberty, namely, violation of section 155 of the Illinois Insurance Code (215 ILCS 5/155 (West 2012)).

         ¶ 11 The defendants filed a motion to dismiss the complaint pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2012)). Ultimately, the trial court dismissed with prejudice the providers' claims for (1) breach of contract against Liberty based on the fact that the providers failed to allege that Liberty was a party to the settlement agreement, (2) violation of section 8.2(d) against Liberty only, and (3) violation of the Consumer Fraud Act ...

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