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New Legislation Allows More Comp Litigation 1.

December 2018

By: Francis M. Brady

Hornets! Nine hundred and four!
We scream as we race for the door.
Though the swarm's now arising
Is that really surprising?
Its nest had been built long before.

Medical care rendered after November 27, 2018, for work-related injuries, imposes additional responsibilities on Business. 2.

Previously, it was obligated to timely pay the cost of the worker's reasonable and necessary medical expenses pursuant to the pricing guidelines of the Illinois Fee Schedule. If it delayed payment, Business risked a proceeding by the worker under Section 8(a) of the Comp Act at the Illinois Workers' Compensation Commission to force payment of the bill's principal and interest, and possibly to collect penalties, including attorney's fees.

Healthcare providers felt victimized by this system. While the injured worker was afforded relief when bills went unsatisfied, they were accorded no similar protection. In the May 2018 Practice Alert, BCM cautioned that a Circuit Court Judge in Cook County had encouraged the Illinois General Assembly to grant to providers the right to sue Business directly regarding Comp bills (Read Here). The article went on to advise that, in fact, the legislature had acted on the Court's urging, drafting a measure, Senate Bill 904, that allowed a cause of action to providers to recover interest on unpaid work comp bills and in the Circuit Court, not at the Commission.

The hue and cry on SB 904 was again raised at the Firm's Fall Seminar in October 2018 (Read Here). Featured was a fuller explication of the Bill, its pitfalls for Business, and its progress through the legislature. BCM exhorted Business to make its vote heard in Springfield. The Firm's November Practice Alert added to the topic and emphasized the likelihood SB 904 would shortly become law (Read Here). So while SB 904 is currently garnering intense interest, it is good to recall the limerick above: though the hornets may now be stinging, they've been gathering the attack for some time.

Just Pay the Bills

It is important to bear in mind what SB 904 actually does. It allows a provider to sue Business not for the principal of a medical bill, but "for the sole purpose of seeking" interest at 1% that begins running 30 days after Business gets the bill. This limited purpose was clarified and confirmed by another bill, HB 3452. 3.

Three other things to think about are: (a) practically, how many providers are going to want to commence lawsuits for damages capped at 1% of a bill's principal; (b) how receptive are the Circuit Courts going to be to a slew of activity from Doctors looking to get an additional 1% on bills they've already been paid for; and, (c) note in "(b)" the notion that the providers can't sue for interest until the underlying bill is paid. Admittedly, it's oddly phrased but the right to sue in both SB 904, as verified in HB 3452, is not triggered until 30 days after the charges are satisfied. Following through on this logic would appear to prohibit a provider ever suing for interest if the underlying bill goes unpaid.

But regardless of what it will cost them, or the way they'll be viewed, or perhaps the tenuousness of the whole enterprise, a provider now has the right to litigate. Business can avoid the risk, first and foremost, by simply paying all bills for care within 30 days of their receipt, subject to the Fee Schedule, of course. Does "all" mean bills from chiropractors, physical therapists, and pharmacies, as well as from doctors and hospitals? Yes. There are no carve outs to the broadly referenced "providers" that seek payment for "treatment, procedure, or service."

Getting these providers timely paid will likely require a close review of the systems in place to process medical expense. Business will have to determine where the bills are received: by the employer, the carrier, a TPA, or a vendor? Regardless of their point of intake, how often are the bills reviewed and discussed? What protocols govern their consideration and how many "eyes" are on the process? Are the bills being checked not only for descriptive codes but also for whether they are payable under Comp in the first instance? The situation to avoid is one where different actors possess different knowledge and do not communicate. For example, does one department, whether claims, risk management, or operations, contest the propriety of the comp claim in the first instance while the vendor paying the bills looks only for accurate codes.

Every component of Businesses' bill payment systems should keep two concepts distinct: an individual bill is under review, but it grows out of a workers' compensation claim. The question of whether, and how, the bill is paid must be answered on multiple levels.

What If We Don't Owe Them?

SB 904 allows for non-payment of a medical bill by Business in two circumstances. The first is where the statement of charges does not "(contain) substantially all the required data elements necessary to adjudicate the bill." The legislation does not define "data elements" nor does it indicate the pieces necessary for adjudication.

Information gleaned from carriers indicates that "data elements" are generally regarded as documents (a) substantiating the subject care in fact occurred; and, (b) necessary to apply the Fee Schedule.

To this end, the bill must include at the very least diagnoses (ICD) and procedure (CPT) codes as well as the petitioner's demographics like zip code. The bill must also be accompanied by chart notes, tests and operative reports, and like documentation customarily generated where treatment is provided.

The other permitted basis for non-payment arises where Business disputes "the claim." This particular construction seems to contemplate that regardless of the data elements present (or not present) relative to the bill's content, payment is not required where the claim from which it stems is "denied for any reason, in whole or in part."

Business, however, has a threshold condition to fulfill if it expects to forego payment without consequence. It must, within 30 days of receiving the bill, serve on the provider a written explanation of why the charge(s) won't be satisfied. 4. Whether because "data elements" are missing or because the underlying claim is denied, Business must let the provider know.

What information, specifically, must the EOB relay? SB 904 does not really say. It does, though, indicate that the Commission will enact rules "detailing requirements." Contact with Commission personnel reflects the hope that such rules will be in place by March 2019.

What should Business work up in the meantime? Situations where data elements are missing may be relatively easy. Business currently sends notice of these omissions to providers and there is no reason to think these notices won't continue to suffice. Per SB 904 where the EOB denies the bill for missing data, there must be a description of the elements needed.

Likewise, Business routinely sends messages to the workers regarding the denial of the claim and the content from those notices can be imported into the explanation to a provider.

Even though guidance as to their exact content is lacking, the EOBs should reference "evidence." For example, "the evidence reflects the injury is not compensable under the Illinois Workers' Compensation Act."

However, sometimes the basis for denial is not that the claim is non-compensable but that the subject care is neither reasonable nor necessary. Denying payment on these grounds presupposes that supporting medical evidence exists, whether an Independent Medical Examination or Utilization Review, or both. And that presupposition leads to another concern for business. Given that SB 904 provides only 30 days from receipt for Business to pay the bill before interest begins to run, will there ever be enough time for full protection?

Where there is such immediate care, Business may have only 60, or even 45 days, subsequent to the accident to pay bills or issue the requisite EOB. Nothing in the language of SB 904 indicates that the running of the 30-day time limit can be tolled.

And not only is the time period for business to pay the bill, or supply an EOB, breathtakingly short, the legislation adds to the burden by making it harder to get at information needed to effectively decide the validity of petitioner's claim, the reasonableness and necessity of his care, and the sufficiency of the bill on its face.

In a later section of SB 904 dealing with electronic billing and bill payment, providers are specifically allowed to produce for Business only the records "minimally necessary under the Federal Health Insurance Portability and Accountability Act of 1996." BCM has long argued that HIPAA does not apply to workers' compensation claims so that the disclosure of a claimant's medical records cannot be tied up by its terms. The available authority supports that position though there is an indication that, where a state by the language of its statute, brings HIPAA into its application, its restrictive provisions may well choke off the search for the truth. With SB 904, there is an argument that the limiting impact of HIPAA relates only to the "provider's own claims"; that is, its search to get bills paid and interest awarded. To the extent, however, that Business denies those claims, HIPAA may now have been introduced into our practice. This language, apparently drafted by the Medical Society, may significantly impair the rights of Business.

What If We Deny a Case, But Ultimately Settle on a Disputed Basis?

It is a truism that most Comp claims are ultimately settled. Before the settlements, however, many bills for the worker's treatment have, for any number of completely valid reasons, gone unpaid. Quite often, Business will agree to pay some or all of them to close out litigation.

How should Business ensure that the provider, being paid as part of a lump sum settlement, will not also file a Circuit Court action seeking to recover the 1% interest that has been running on the bill during the pendency of litigation? Business is going to have to consider interacting directly with such providers to ensure no litigation will ensue after the principal on the bill is received. It is possible that the provider could be made a part of the Lump Sum Settlement Contract by language showing that there has been agreement not only between the Business and the injured worker, but also between Business and care providers showing specifically the amount accepted by the latter and that its rights to sue for interest are waived. Of course, Business should also consider specifying in the terms of the LSSC that the worker has fully disclosed the identities of all providers and that he assumes liability for any charges that are asserted after the contracts are approved regardless of the dates of care.

While obligating the worker on bills surfacing after contract approval fails to match the protection afforded by liquidating the bills directly with the providers, it does give Business a fallback position in the form of a third-party action against the worker should some provider later come looking for interest.

Businesses' Plan
  • Make its voice heard in Springfield, write letters, and call representatives, senators, and the Governor
  • Pay or say nay by the 30th day.
  • Review the bill payment processes in place. Ensure all the parts understand the system and are communicating.
  • Enhance EOBS.
    • Specify missing data elements and note why they are needed.
    • Where there is any doubt at all about liability, whether based on overall Comp defenses like accident and causation, or more focused problems like the reasonableness and necessity of the subject care, make that indication and demand that the provider turn over all records it has on the petitioner.
    • And, since HB 200 will, when it goes into law, require that the petitioner and his designee (most likely his lawyer) be copied on the EOB, include a HIPAA release with the EOB and make sure there is language insisting the form be properly executed and returned. A self-addressed, stamped envelope should be supplied for that purpose.
  • How soon should the changes be implemented: now is not too soon.
  1. As used here, "Comp" refers to the Illinois Workers' Compensation Act, 820 ILCS 305 et seq. and practice at the Illinois Workers' Compensation Commission generally.
  2. Business" in this article refers collectively to employers and their representatives in the Illinois Workers' Compensation system, including insurers and third-party administrators.
  3. HB 3412 passed both chambers on November 29, 2018. Unlike SB 904 which went into office on November 27, 2018, it is not yet law but given that its support in the House and Senate was overwhelming, there's no reason to believe it won't become law shortly.
  4. SB 904 terms these notices "Explanation of Benefits." They are herein referenced as EOBs. Another bill, HB 200, provides that Business serve the EOB not only on the care provider, but also on the worker or his/her designee.
  • Chicago Bar Association
  • Workers' Compensation Lawyers Association
  • DRI
  • The Illinois Association of Defense Trial Counsel
  • Illinois Self-Insurers' Association
  • Chicago Bar Association
  • Workers' Compensation Lawyers Association
  • DRI
  • The Illinois Association of Defense Trial Counsel
  • Illinois Self-Insurers' Association
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