Medicos Pain & Surgical Specialists, S.C. v. Travelers Indemnity Company of America
Medicos Pain & Surgical Specialists, S.C. v. Travelers Indemnity Company of America
Opinion
¶ 1 Medicos Pain & Surgical Specialists, S.C. (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).
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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
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, 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.
,
¶ 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.
,
¶ 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
,
¶ 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 *969 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 employer and the payor of the bill.
Was that bill accompanied by all of the necessary data elements for adjudication of the bill. Was that bill paid, in this case, within 60 days of receipt, and if not, was interest paid within 30 days after payment of the bill.
What you'll hear in this trial, Judge, is a series of dates. You'll hear about the date of services provided for two surgeries were performed in September 2010 and February 2011.
Shortly after those surgical procedures were performed at my client's facilities, facility bills were sent to Travelers, one of the defendants in this case. There's really no dispute about the fact that the bills were sent, that they were received. You will hear about the dates when those things happen because the dates are what really matter under the statute. When was something received, if it wasn't paid within 60 days after receipt, interest begins to accrue at 1 percent per month."
¶ 8 The only witnesses at the one-day bench trial were the sole owner of Medicos and Ambulatory (Dr. Derrick Wallery) and a Travelers claims case manager who was called as an adverse witness (Deborah Nerad). Their testimony established the billing dates, that the bills were presented in detail in an industry-standard format known as UB-04 and were accompanied by detailed medical records, and that the bills *970 were not paid until required by the Commission. At no point in the trial did Medicos or Ambulatory attempt to introduce the approval faxes or argue that they were relevant.
¶ 9 After the witnesses testified, the parties filed written closing arguments. Travelers and Blackhawk also tendered Circuit Court Judge Rita M. Novak's ruling issued just six days prior in four consolidated proposed class actions known as Marque Medicos LLC v. Zurich American Insurance Co. , Nos. 2015 CH 1580, 15 CH 4946, 15 CH 4949, and 15 CH 4951, in which a group of medical service providers sued a group of workers' compensation insurers alleging they were in violation of section 8.2(d)(3). 820 ILCS 305/8.2(d)(3) (West 2014). Judge Novak had ruled that the medical service providers, which included Medicos and Ambulatory, could not pursue their statutory interest claims under theories of an implied-in-fact contract, an implied private right of action under the Act, or as third-party beneficiaries of various workers' compensation insurance policies, and she dismissed the proposed class actions with prejudice. Medicos and Ambulatory objected to the presentation, without leave of court, of Judge Novak's new ruling, and further contended that the promissory estoppel action they were asserting against Travelers and Blackhawk was factually and legally different from the issues that had been addressed by Judge Novak.
¶ 10 At a hearing on March 11, 2016, the trial judge acknowledged Judge Novak's ruling but awarded the full amount of interest claimed by Medicos and Ambulatory.
¶ 11 Travelers and Blackhawk sought reconsideration, arguing that the promissory estoppel claim as to underlying bills became moot once the Commission entered its award and that it was inappropriate for the court to proceed solely on the statutory interest claim. They also contended the award of prejudgment interest was unwarranted. The trial judge ruled that the elements of promissory estoppel had been satisfied, but she deducted the prejudgment interest from the award and entered an amended judgment for only section 8.2(d) interest. 820 ILCS 305/8.2(d)(3) (West 2010). That judgment is now on appeal.
¶ 12 Travelers and Blackhawk first argue that the award should be reversed because the medical service providers failed to prove promissory estoppel as alleged in their complaint, because they did not introduce into evidence or even mention the preauthorization faxes on which they purportedly relied to their detriment, and because they further failed to present any testimony regarding any of the elements of a promissory estoppel claim. The appellants contend Medicos and Ambulatory instead pursued a statutory interest claim based solely on their billing history and that a judgment on the unproven promissory estoppel allegations is reversible error. They point out that in the case that proceeded before Judge Novak, she rejected all of Medicos and Ambulatory's statutory interest claims and dismissed the case with prejudice. We add that while the current parties were briefing their arguments, another panel of this appellate court affirmed Judge Novak's judgment against the medical service providers and that the Illinois Supreme Court denied a petition for leave to appeal.
Marque Medicos
,
¶ 13 Medicos and Ambulatory respond that the theory of promissory estoppel became irrelevant when the Commission upheld the arbitrator's award for medical service fees and the parties returned to the circuit court to address the issue of interest and that the trial evidence showed late payment, which, under the Act, entitled Medicos and Ambulatory to section 8.2(d) interest. 820 ILCS 305/8.2(d) (West 2010). Medicos and Ambulatory contend the appellants' main argument is an attempt to distract this court from the real issue at hand, which is that Medicos and Ambulatory were entitled to statutory interest, "not by [promissory estoppel or] quasi-contract, but by the plain language of the Act." Medicos and Ambulatory cite
Marque Medicos
,
¶ 14 The appellees' contention that the common-law theory of promissory estoppel became irrelevant after the Commission awarded Mendoza compensation under the Act is a weak attempt to excuse the appellees' failure to prove the elements of their common-law claim. It cannot be seriously contended that the Commission's award to Mendoza, which was based entirely on his statutory right to compensation for a work-related injury, somehow established that (1) Traveler's presurgical faxes to Medicos and Ambulatory were an unambiguous promise to pay the surgical bills, (2) that Medicos and Ambulatory relied on that promise, (3) that the reliance was expected and foreseeable, and (4) that the reliance was detrimental to Medicos and Ambulatory.
Newton Tractor Sales
,
¶ 15 With or without the allegations that were intended to invoke the common-law theory of promissory estoppel, the plaintiffs' only basis for claiming interest was section 8.2(d) of the Act. The complaint made this limitation clear. This limitation was further confirmed by (1) counsel's introductory remarks at the one-day trial, (2) the fact that the trial evidence and testimony was limited to the bills and omitted even a mention of the approval faxes, (3) counsel's concluding remarks that interest should be awarded because "it took my client nearly four years to get paid," (4) and a posttrial brief in which the plaintiffs argued that by "prov[ing] all the elements required by 805 ILCS 305/8.2(d)(3) by a preponderance of the *972 evidence," they became entitled to judgment.
¶ 16 We conclude that
Marque Medicos
is controlling. Before reaching the merits of the appeal, the
Marque Medicos
court held that the circuit court properly exercised subject-matter jurisdiction over a complaint that purported to rely on a common-law theory.
Marque Medicos
,
"[the interest payment mandated] by section 8.2(d)(3) of the Act is but one of the many provisions in the Act designed to encourage the 'prompt' payment of compensation by an employer or insurer and to penalize any failure to make such prompt payment of compensation. [Citation.] While providers might receive some benefit from the specific interest provision contained in section 8.2(d)(3) of the Act, that benefit is at most incidental and was provided solely in an effort to serve the legislature's primary goal of compensating employees completely and promptly." (Emphases in original.) Marque Medicos ,2017 IL App (1st) 160756 , ¶ 60,416 Ill.Dec. 190 ,83 N.E.3d 1027 .
¶ 17 Accordingly, the court concluded that the medical service providers' claim for statutory interest failed as a matter of law, and it affirmed the circuit court's dismissal with prejudice.
Marque Medicos
,
¶ 18 Medicos and Ambulatory do not argue any grounds for reconsidering the analysis and holding in Marque Medicos .
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¶ 19 We find that regardless of whether Medicos and Ambulatory intended to proceed under the promissory estoppel theory or purely on a statutory basis, ultimately their only basis for claiming interest was section 8.2(d) of the Act and that the claim failed because medical service providers are not members of the class for whose benefit the Act was enacted.
Marque Medicos
,
¶ 20 Vacated.
Justice Ellis concurred in the judgment and opinion.
Justice Gordon specially concurred, with opinion.
¶ 21 JUSTICE GORDON, specially concurring:
¶ 22 I agree with the majority that the circuit court of Cook County must be reversed because the plaintiffs had no private right of action, but I believe that finding is based solely on the rule that the Workers' Compensation Act (Act) is the exclusive remedy for all provisions of the Act unless the Act says otherwise. 820 ILCS 305/5(a) (West 2010). The legislature has vested exclusive original jurisdiction in the Workers' Compensation Commission over matters involving an injured worker's rights to benefits under the Act and an employer's defenses to claims under the Act. 820 ILCS 305/1 et seq. (West 2010). The role of the trial court in workers' compensation proceedings is to act in an appellate capacity only on a properly filed matter governing a decision of the Workers' Compensation Commission. 820 ILCS 305/5(a) (West 2010). Section 8.2(d) of the Act 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). The injured worker did not request enforcement of section 8.2(d) in the proceedings before the Workers' Compensation Commission, and the plaintiffs were not parties in that proceeding. The circuit court of Cook County had no jurisdiction to decide the issue of interest and cannot decide any of the theories advanced by plaintiffs.
The parties' arguments before the trial court and this court have included a mixture of references to section 8.2(d) and section 8.2(d)(3). Section 8.2(d)(3) was added by 2011 amendments to the Act, which reorganized that subsection and shortened the grace period for the accrual of interest. Pub. Act. 97-0018 (eff. June 28, 2011) (recodifying and amending 820 ILCS 305/8.2(d) into 820 ILCS 305/8.2(d)(1)-(3) ). Mendoza's injuries and the billing events at issue in this case occurred prior to the effective date of the 2011 amendments, but the amendment to section 8.2(d) makes no impact on our disposition of this appeal. Here, we refer to section 8.2(d) (820 ILCS 305/8.2(d) (West 2010) ).
Case-law data current through December 31, 2025. Source: CourtListener bulk data.