The Firm Defeats Marque Medicos’ Claim for Interest

May 2018

On May 4, 2018, Brady Connolly & Masuda, P.C. Attorney, W. Scott Trench, obtained a dismissal with prejudice in a lawsuit filed by Marque Medicos against a workers’ compensation insurer and its insured employer seeking recovery of statutory interest under Section 8.2(d) of the Illinois Workers’ Compensation Act for late payment of medical bills. Soon after the lawsuit was filed, the Illinois Appellate Court issued a decision in a putative class action lawsuit filed by Marque Medicos against numerous insurance companies for unpaid statutory interest. Marque Medicos v. Zurich, et al., 2017 Il.App. (1st) 160756. In the class action lawsuit, the appellate court held that Section 8.2(d) of the Act provided no private cause of action and affirmed dismissal of the lawsuit with prejudice.

In an effort to side step the Appellate Court’s decision in the class action lawsuit, Marque Medicos amended its complaint, asserting entitlement to recover statutory interest under the equitable theory of unjust enrichment – a cause of action which was not at issue in the class action lawsuit. In response, the defendants filed motions to dismiss the amended complaint. The motions argued that Marque Medicos’ clever pleading should not change the end result. Since the statute affords no private cause of action, Marque Medicos’ complaint should be dismissed no matter what label was placed on its cause of action.

The trial court was inclined to allow Marque Medicos to pursue its unjust enrichment claim, but recognized its ruling was subject to binding precedent from the Appellate Court in the class action decision, as well as another Appellate Court decision which, coincidentally, was issued on April 26, 2018, only days before the trial court’s ruling: Medicos Pain & Surgical Spec. v. Travelers, 2018 Il.App. (1st) 162591. In that case, too, Marque Medicos attempted creative pleading to get around the prohibition recently imposed by the Appellate Court relative to interest. Marque argued that Travelers had promised to pay for surgery in two faxes and, therefore, had no excuse for failure to timely pay. But the Court adhered to the legal authority that regardless of the theory asserted against Travelers, Marque possessed no private cause of action for the interest under Section 8.2(d).

Given these recent Appellate Court decisions, while Section 8.2(d) expressly provides for the payment of statutory interest, the statute affords no enforcement mechanism as against insurers, employers or third-party claim administrators. The trial court was clearly troubled by this dichotomy and had difficulty reconciling a statute which expressly provides for payment of statutory interest, but grants providers no private cause of action by which to collect it. If a private cause of action is to exist in the future, it may require the involvement of the legislature in the form of an amendment to the Act.

The Legislature has now, in fact, taken action. House Amendment 2 to Senate Bill 904, proposes to amend Section 8.2(d) by requiring that the employer or its designee prepare a new form styled “Explanation of Benefits” specifying the basis for the denial of medical bills. This “Explanation of Benefits” must go out within 30 days of receipt of the subject Bill. If it does not, the bill’s principal (subject to the Fee Schedule) shall accrue interest at a rate of 2% per month. If the employer or it’s designee fails to pay such interest, the amendment affords the provider a cause of action in the Circuit Court to obtain interest. This Amendment also compels an employer or its representative to comply with electronic billing systems. Failure might result in a fine levied by the Department of Insurance.

SB 904, with House Amendment 2 was, on 5/23/18, voted out of the House Labor & Commerce Committee with a “Do- Pass” recommendation.