Keefe, Campbell & Associates, LLC

Editor’s comment: We received this thought from a reader—we consider it a brilliant and simple idea. He indicated one of the biggest problems with Illinois WC claims is with the billing from medical providers. In most states, the medical provider is required by law to directly bill the insurance company/TPA and not send the bills to the injured worker or the employer. The medical provider is also required to send the medical records with any and all bills.

Failure to do so, means their bill won’t be repriced/paid until the records are received by the insurance company/TPA. The reader noted many of insureds hold onto bills, fail to get them coded or bills get lost and/or misplaced with personnel changes.

He also indicated many injured workers receive medical bills (i.e. ambulance bills, emergency room bills) and not turn them in thinking the insurance company/TPA also received the bill which in many cases isn’t the case. By enacting this change:

· Medical bills would get paid timely;

· Providers would get paid or their bills denied quicker;

· Pricing of medical bills would be optimized;

· Penalty and fee petitions might end or significantly drop and

· There might be less unnecessary litigation and controversy.

We would love to hear your thoughts on this simple systemic change.

Editor’s comment: We are chagrined to see a zealot Plaintiff law firm in Michigan filed a federal RICO case against an Illinois trucking company, an IME doctor and a TPA. Plaintiffs allege these “conspirators” committed fraud and are “racketeers” by conniving to “intentionally deny” WC benefits to six claimants. This month, the matter reached the U.S. Supreme Court that allowed the matter to return to the District Court to proceed to a jury trial. For the first time we can remember, a group of traditional workers’ compensation claims will be litigated before a federal jury. At stake will be triple damages and attorney’s fees against the employer, IME doctor and insurance carrier—you can imagine how happy they are with the prospect of such litigation going forward.

This new facet of workers’ compensation law and practice is simply stunning to the entire WC defense industry. Please understand Defendants have not lost the claim or paid a penny—the matter is simply going to proceed to hearing before a jury. What is stunning about the ruling is the clear statutory mandate in the laws of almost every state in the union which provides the measure of compensation is to be ascertained as a result of state-run administrative hearings only. Workers’ comp benefits in Michigan and almost every state are statutory only—you don’t have common law or federal rights to sue to recover such benefits. Well, thanks to this weird and unprecedented ruling, now lots of workers’ comp issues may be determined in the federal courts.

We again point out to the Plaintiff/Petitioner bar we feel such litigation is an overt attack on the system of litigation in work comp benefits. We truly feel highly publicized cases such as this point away from a litigation system because claimant attorneys never seem to want to just win cases, they apparently want to destroy anyone in their path who doesn’t immediately and totally agree with their every demand or wish. We truly feel systemic attacks on otherwise routine and innocuous claims handling actions may point U.S. business away from continuing to use traditional workers’ comp litigation as a bona fide means to resolve work injury disputes because once Plaintiff lawyers become involved, they now can’t seem to stay within the state systems they already dominate—now they have to go federal and seek triple damages and their fees and costs. Our quiet vote for the Plaintiff lawyers bringing this case and those who counsel with them is be very careful what you wish for; we suggest you stand down from the potentially explosive federal battle and just win the respective WC cases if you can and get what you get before the Michigan WC board.

As it would appears the federal courts are making up the law in the work comp arena as they go along, we will have to await direction and guidance on any number of new and strange legal standards such as:

What is the level of assistance and cooperation between IME doctor, the insurance carrier/TPA and the employer which may cause the right to bring a RICO action?

Will rights under the RICO statute lie if these parties supposedly cooperate in two cases? Three cases?

How can a licensed and possibly board-certified IME doctor ever deny a claim or dispute surgery and not be at least arguably called a “fraud.”

Do the rights to bring the federal action depend on the kind of questioning, support and responses being provided between the IME doctor and the workers comp carrier or TPA?”

What we feel is most disgusting about this ruling is what we call “character assassination” of defense IME doctors. We feel the plaintiff bar and many Arbitrators and hearing officers across the United States love to vilify and castigate defense IME providers who may otherwise be amazing surgeons, caregivers and medical researchers and/or professors. What drives us nuts is some hearing officers and many Plaintiff lawyers don’t see the cases where the defense IME physician accepts causal connection and/or finds surgery or other treatment necessary. Those cases don’t result in retention of counsel or, if they do, the insurance carrier/TPA may not let the dispute reach litigation and consideration by a hearing officer.

So we always laugh when we hear an Arbitrator say “Dr. Jones—oh, every time I see one of his reports, he denies claimant’s case.” Well, duh, if he didn’t deny the case, you wouldn’t see it. We are told there are many Illinois Arbitrators who immediately “disqualify” even the best IME doctors from valid consideration in a pretrial or trial and openly announce to both sides their perspective. We truly feel such Arbitrators should disqualify themselves from hearing cases where such physicians are involved because they cannot possibly be fair and impartial. And on the contrary, we have never seen an Illinois Arbitrator similarly toss out of consideration the opinions and recommendations of some of the worst treating doctors or surgeons in the state—they never view treaters with the same derogation reserved solely for the defense IME doctor.

So you tell us the difference between “fraud” and a doctor’s honest belief in his or her medical assessment which is offered for consideration by all sides within a reasonable degree of medical and surgical certainty. Please remember doctors don’t “state facts,” they are medical experts and scientists. If a doctor can truthfully testify that it is his/her medical opinion to deny a claim or return someone to work, please tell us how it can be intentionally dishonest? It is an opinion and in a free country, everyone is entitled to their opinion. The Plaintiff lawyer and even the hearing officer doesn’t have to like or accept their opinion—that is why they are involved in the case! And most important, there are workers’ compensation commissions and boards across the country whose job it is to cull out the good opinions from the less reliable ones—we hate to see this decision now being left to folks on a federal jury who know absolutely nothing about trying and fighting the fight both sides routinely wage in heretofore administrative workers’ comp litigation.

So where does this new and weird twist in WC law and practice evolve from here? Well, if it is sauce for the goose, it should be sauce for the gander. How about the defense industry considering RICO actions against:

Doctors who hook up with Plaintiff lawyers to “exchange” or cross-refer each other patients and/or clients and regularly create questionable WC claims?

Surgeons who are pals and cross-refer numerous patients to each other and always agree with their buddies’ surgical recommendation?

The many “clinics” that obviously and wildly overbill in all of their WC claims? Couldn’t a federal jury find routine and regular medical overbilling to be “fraud?”

Hospitals that wildly overbill for “implants” to intentionally take advantage of gaps in the medical fee schedule? Wouldn’t it appear to be fraud to bill over $150K for a surgical implant in a WC surgery when they bill a fraction of that same cost for surgeries conducted in the group health setting?

We appreciate your thoughts and comments. Please do not hesitate to post them on our blog, for details, see below.

Editor’s comment: While looking up other things, we found this stunning new twist on workers’ compensation fraud that our readers should be aware of. We are not sure what to make of it or how to best prevent it.

The Los Angeles Times recently reported some California employers, including Walt Disney Co., were taking a new approach to fighting work comp medical billing fraud. Turns out they started to receive medical billing and were paying it to later learn their injured workers had never been inside the phony clinics of the scammer. In response, the insurance carriers/TPAs for these organizations plan to send notices to injured workers to check if they in fact received medial services that were being billed for.

The fraud is being perpetrated by con artists that obtain state reporting data on injured workers and then set up fake medical labs or clinics to then bill insurers/TPAs for treatment that never occurred. The Times reports fraudulent medical billing scams cost hundreds of millions of dollars in California.

The Los Angeles Times story focuses on how insurers/TPAs killed legislation that would have required them to send notices to injured employees to check if they received treatment billed for. Insurers say the effort would cost too much and better ways exist to fight the fraud. Such notices are standard practice in health insurance but generally are not used for workers’ compensation insurance. The insurance companies opposed the proposal because they said sending notices would be overly expensive. The American Insurance Association did not offer an estimate for the cost of the mailings.

Regardless of the cost, Disney reportedly will mail notices next year to 20,000 employees when work comp medical bills get paid. Companies such as Disney have been at the forefront of successfully reducing work comp costs for years.

We ask your thoughts. Obviously, assigning a wily nurse case manager may create a check on such practices—all you would have to do is cross-check all medical billing against the NCM’s reports. If the NCM isn’t aware of and otherwise advising the adjuster of such care, the billing should be very carefully scrutinized. We urge the top nurse case management companies to let their clients know of this further benefit to using a nurse case manager on major claims.

Editor’s comment: After an earlier article about what we thought were wildly high costs for artificial discs, we are now learning of a very strange new pricing practice hitting our defense clients. Turns out anything that is arguably “implanted” as part of a workers’ compensation surgery is being wildly overpriced to the point of gouging. We cannot prove it but our sources tell us the hospitals aren’t billing the same amounts for non-work-related surgeries of precisely the same nature.

We are told the “implant” community fought and lobbied and donated monies to Illinois politicians to keep their products out of the limitations imposed by the Illinois workers’ compensation medical fee schedule. We know our readers are stunned to hear Illinois politicians from the prior administration might actually succumb to such things!! As the implants are not on the schedule, we are seeing bills where less than a pound of screws, cages or rods are now being billed at $100,000-200,000 in costs to Illinois business.

For example, we have a hospital bill for a cervical fusion that is $280,000. It is from a small hospital in southern Illinois. Please note that staggering amount for a surgery that takes about 45 minutes—if you are doing the math that is about $6,200 per minute for a clean, well-lit room and instruments. The surgeon and post-surgical care are all extra.

The bump in costs is the hospital is charging $10,000-20,000 for each “implant” like screws or cages. Please understand the actual cost of a titanium screw is fractionally lower. The only justification for the claimed cost is the absence of such products on the fee schedule and the hospital is willing to accept 76% of the billed cost under Illinois law.

We are battling this and hope we can get an Arbitrator from that area to stop the gouging. We are told many Illinois Arbitrators are hearing more and more complaints about the practice and they are using common sense to stop it. We applaud them for doing so.

But we truly hope the Governor, Illinois Attorney General and the Workers’ Compensation Medical Fee Schedule Advisory Board and that “Commission” itself start to investigate this practice. If the perpetrators are only pricing things in this fashion for workers’ compensation claims, it clearly is gouging Illinois employers and must be administratively stopped. If that isn’t enough to get it to end, we urge our administrators to make recommendations to the legislature to make it end.

We appreciate your thoughts and comments.

Editor’s comment: First, we were asked if balance billing is “legal” in Illinois and what to do about the practice, when and if it appears. Balance billing is the practice of having the medical provider accept a lower amount for a WC medical service from the insurance provider and then continue to dun the patient/injured worker for the balance.

We had a concerned client tell us a claimant attorney and unnamed Arbitrator both advised during a pretrial that they would not take steps to stop balance billing. The Arbitrator indicated he/she was going to award the bills despite the fact the healthcare giver already accepted a lower payment.

In our view, some claimant attorneys and a few arbitrators are always going to tell you to do what is easiest for them, regardless of the cost to the insurance carrier or self-insured employer. Claimant attorneys in Illinois sometimes “side” with the chiropractors and overtreaters because some of them send attorneys new clients and help build attorneys’ claims. If an insurance carrier will grudgingly pay something, it is easier for the claimant lawyer than getting five hundred phone calls from a whining client about a chiropractor or overtreater’s bills.

The bigger picture is balance billing is a violation of Illinois law. Effective July 20, 2005, “balance billing” is no longer legal. (Sec. 8.2e). Please note while the practice is proscribed, there is no specific penalty for continuing to balance bill a patient or the employer.

When we have authority from a client, what we are doing when balance bills are received is to write the medical care provider and confirm we will sue them to force them to stop sending collection notices or taking collection action against the worker. The letters typically work—we haven’t actually sued anyone yet. If we had to sue, we are not sure what a circuit court judge would do with such a lawsuit but we are confident they would enforce the law as written. And actions to block credit collection are much more common than they used to be.

Second, last week, we again reported the ruling in Carter v. Tennant Company that allows an Illinois employer to ask a prospective employee if they:

•         Ever had any occupational injuries, accidents or illnesses.

•         Lost time from work for a work-related injury or illness.

•         Saw a doctor for any work-related injury or illness.

We had a number of claimant attorneys tell us the ruling is wrong and doesn’t follow ADA. We replied to tell all of them the questions are quoted out of a federal appellate court ruling. The members of the court state current law. The ruling in Carter v. Tennant Company is limited to the court’s review of Illinois law only. It may be illustrative on what they may rule in considering the laws of other states but we would suggest any of our readers check with us or your own counsel before you seek to apply the ruling to the law of other states.

Please understand we do NOT recommend our readers fire or refuse to hire anyone who answers “yes” to the three permissible questions outlined in Carter v. Tennant Company. We do not recommend you have a blanket rule not to hire anyone who ever had a prior work injury. That strategy will eventually lead to litigation you don’t want and may have trouble defending.

It is our legal opinion you can always ask all three questions. If an employee lied and you have a clear and open policy to fire someone for lying on your employment applications, you should be able to fire them for lying but not for answering in the affirmative to the questions or for having a prior work injury or being treated for one.

If they were to tell the truth, you have to carefully use the information you receive in response to the questions. If a prospective employee answers yes to any of the three questions, you should investigate further. You have to ask more questions and seek out nature of the injury or illness, the course of care and the status of recovery from the accident, injury or illness.

If the prospective employee had a hang-nail at work, you might still want to complete the process of hiring them for a truck-driving job. If they had seven-level spinal fusion surgery with implanted rodding, you might not want to hire them as a truck driver if the job requires heavy lifting. You might want to consider them for sedentary job, if such work were available. All of it requires further inquiry and accommodation when and where possible. If you have specific questions about such hiring practices, send a reply.

Third, we recently reviewed an appellate court ruling in a matter entitled Grabs, et. als. v. Safeway, Inc. and Dominick’s Finer Foods, LLC, (No. 1-08-3007 June 17, 2009). In their ruling, the Illinois Appellate Court addressed a certified question on an interlocutory appeal on this narrow issue of alleged retaliatory discharge. Plaintiffs filed a joint complaint alleging Defendant terminated them in retaliation for filing workers’ compensation claims. Defendant responded to claim Plaintiffs had been terminated for violating a neutral attendance policy when they missed three consecutive days of work subsequent to being advised to return to work pursuant the opinions given by Defendant’s IME. A battle over the IME and ability of the employer to rely on the IME to terminate the workers went back and forth.

The Grabs ruling went over a much more cogent precedent that remains good law for all Illinois HR, safety and benefits folks to remember. The name of that ruling is Hartlein v. Illinois Power. If you need that cite, please advise. Hartlein v. Illinois Power held you can safely terminate injured workers who are on TTD if you have a valid, non-pretextual basis to do so. The best valid reason to terminate an injured worker is demonstrating you have a bona fide need to fill the position.

The best example of this principle is the school bus company that has six buses and thirty kids in each school bus. One driver is injured at work. Through no fault of their own, he or she will be off work for at least ninety days. You still need to get the kids to school on the bus. Hartlein v. Illinois Power ruled you do not have to hire a temporary bus driver and then fire that driver when and if the other driver becomes healthy and can return to full work.

The challenge created by the Hartlein ruling is to be sure you can document the termination is not due solely to the injury or the claim for workers’ comp benefits. You are much better off if you can demonstrate you did not just fire one worker—if there is a group being laid off or let go, it clearly appears to be outwardly “fairer” if an injured worker is also laid off at the same time.

Please also remember it is much harder to manage an Illinois workers’ compensation claim if the injured worker is let go while they are off work. They are much more likely to try for the two highest benefits in this state—wage loss differential or total and permanent disability benefits. Also if you let an injured employee go, you cannot bring them back to lower paying light work on a transitional basis.

Finally, we were asked by one of our sharpest clients about Social Networking Policies. They are asking for any of our readers willing to forward sample policies to send them along. The client is specifically worried about things like:

Twitter, Blogs, Facebook, Linkedin and similar sites.

We are asking what your organization does when you learn an employee is

• Disparaging the company or employees/clients related to the company’s operations;
• Seeking access to social networks during working hours on company equipment;
• Unauthorized posting of proprietary corporate information;
• Racy pix wearing company uniforms or readily identifiable corporate locations and then posting on a site;
• Lies about company’s finances, viability or other similar issues.

One interesting site to review as part of similar issues is http://en.wikipedia.org/wiki/Ellen_Simonetti. If you review it, you may note there is a lot of potential stress and litigation that may come from such policies.

All responses are appreciated and will be kept confidential.

Editor’s comment: We are somewhat amazed, dazed and confused by this ruling. There is nothing technically “wrong” with the ruling and it isn’t a sweeping new change but, as defense observers, we can only shake our heads at what the members of the Court may have been thinking. We have to caution everyone on the defense side of the industry to modify settlement contract boilerplate language to protect your claims from the possible impact of this ruling. As part of your Illinois lump sum settlement contracts, we now suggest claimants be required to expressly waive rights under Sections 8(a), 19(h) and 4(c).

In Burzic v. Illinois Workers Compensation Commission (No. 1-08-2303 April 28, 2009), the Workers’ Compensation Division of the Appellate Court considered a claim where a Section 4(c) Petition was filed by claimant. The battle was over termination of vocational rehabilitation. If you read the decision, we feel the vocational counselor did a generally below-average job of what we call a “Plan B” vocational effort. If you need want specifics or need our thoughts on Plan A and Plan B in Illinois vocational counseling, send a reply.

In response to termination of vocational counseling, the employee then filed a 4(c) Petition attacking the insurer’s right to insure Illinois WC claims. The Section 4(c) Petition went to a full hearing with witnesses. The matter later settled for a lot of money. Settlement contracts were approved, probably by the same Commissioner who conducted the 4(c) hearing. Everyone in the Illinois defense industry would assume all pending workers’ compensation issues were over, right? Well, not so fast—remember this is Illinois!

Claimant continued to press the 4(c) Petition and actually demanded a ruling from the same Commissioner who approved the settlement contracts. The Commission panel contradictorily ruled they didn’t have jurisdiction due to approval of the settlement contracts and also denied the Petition. If you have any idea what “jurisdiction” means, you can’t do both. Claimant then appealed—we can imagine how happy the claims manager was to receive notice of appeal of the otherwise “settled” claim and the need to reserve legal fees to continue to manage an otherwise “closed” file.

Thereafter, the Cook County Circuit Court also demonstrated an unusual level of legal largesse by effectively doing the same thing the Commission did—the judge ruled the Commission didn’t have jurisdiction and affirmed the ruling the Commission didn’t have jurisdiction to enter.

The Appellate Court, Workers’ Compensation Division unanimously ruled the Commission retained jurisdiction of the Section 4(c) Petition despite the global settlement of all workers’ compensation rights. As we indicate above, we have no idea why they made such a ruling. The problem we all face is settlements in Illinois are traditionally supposed to bring complete closure to pending workers’ compensation claims. With respect to all of the august members of the Appellate Court, they keep sporadically leaving rights open and issues unanswered after settlements are approved.

In February 2009, another division of our Appellate Court ruled in Hagene v Derek Polling Construction, if one checks a box that “all medical bills are paid” by Respondent, Petitioner can eternally return to seek payment of medical bills that were otherwise unsubmitted and which the employer or the insurance carrier may have had no prior knowledge. We know the claims manager who got hit with that one and she is still hopping mad about it and we completely agree with her. So, ooops!—don’t check that box.

In this case, having found the settlement didn’t deprive the Commission of jurisdiction, the Court ruled dismissal of the petition was not against the manifest weight of the evidence because Section 4(c) petitions require proof of unfair handling of more than one claim. The Act requires demonstration of a “policy” of unfair handling so several claims have to be shown to be handled unfairly. As there was only one claim involved, the Petition was meritless.

However, the practical impact of the ruling the Commission retained jurisdiction of the Section 4(c) Petition despite the settlement means we now have to address such Petitions and be certain they are addressed in settlement contracts. One never knows when a zealous claimant files a 4(c) Petition. No one wants to pay to litigate such claims after settlement contracts are approved. So, our word to the wise is to be certain to address the issue in all settlement contracts moving forward.

One of our partners asked another obvious question—can one ever settle a claim to include the right to bring or join in a Section 4(c) Petition? Can the Arbitrators or Commission approve settlement contracts and close their files but then consider such petitions complaining of the actions of employers or insurance carriers in advance of the settlement? Our answer is no one knows—the decision in Burzic outlined above implies the Commission may always have “jurisdiction” to consider 4(c) petitions even if they settle and close the case. We assure our readers this sort of administrative confusion, unending litigation and uncertainty is a glaring reason Illinois is considered so anti-business in many circles.

If you have thoughts and comments, please send a reply. If you need the web site of the ruling, let us know.

Editor’s comment: While most medical providers in this state are upset over the reduction of their fees for patient care, like the theory of “one bad apple spoiling the bunch”, many suffer due to the sins of others. However, between cases of excessive treatment and attempts to circumvent or manipulate the Fee Schedule, we believe providers will continue to see bills reduced until they begin to police themselves.

In Martis v. Grinnell Mutual Reinsurance Company, No. 3-08-0004 Illinois Appellate Court Third District (March 27, 2009), Plaintiff—a chiropractor—filed a class action complaint against Defendant, Grinnell Mutual Reinsurance Company, alleging conspiracy, unjust enrichment, violation of the Illinois Consumer Fraud Act and breach of contract. The trial court dismissed all but Defendant’s breach of contract claim. The trial court then granted Plaintiff’s motion to certify a class. On appeal, Defendant argued

(1) Plaintiff does not have a valid breach of contract claim, and

(2) The trial court abused its discretion by certifying a class.

The Appellate Court Third District held Plaintiff cannot state a claim for breach of contract against defendant and thus, reversed and remanded.

Plaintiff chiropractor began treating an employee of Water Management Corp. of Illinois who was injured while working. Water Management had a workers’ compensation insurance policy from Defendant Grinnell Mutual Reinsurance Company. That policy listed Water Management Corp. of Illinois, employer, as the insured. The policy stated: “We [Grinnell] will pay promptly when due the benefits required by you [employer] by the workers compensation law.” Another provision of the policy stated: “We [Grinnell] are directly and primarily liable to any person entitled to benefits payable by this insurance. Those persons may enforce our duties; so may an agency authorized by law. Enforcement may be against us or against you [employer] and us.”

After Plaintiff provided medical treatment to the Water Management employee, Plaintiff submitted bills to Defendant for payment. Plaintiff’s bills were reviewed by a third-party medical invoice review firm, which applied PPO discounts to Plaintiff’s bills even though Plaintiff did not have a PPO agreement with Defendant. Defendant paid Plaintiff the discounted amounts.

In response, Plaintiff filed a seven-count complaint against Defendant, seeking to represent a class of Illinois health care providers who submitted bills to Defendant under workers’ compensation insurance and had bills reduced because of a PPO discount even though the providers did not have a PPO contract with Defendant. Defendant filed a motion to dismiss Plaintiff’s complaint.

The trial court granted the motion in part and denied it in part. The court then ruled on Plaintiff’s motion to certify a class action. The trial court concluded Plaintiff, as a class representative, could not prevail on his consumer fraud count, but could potentially prevail on his breach of contract claim, as a third-party beneficiary of the workers’ compensation policy. As to count IV, the court certified the following class: “All licensed Illinois healthcare providers who: (a) submitted claims for medical expenses pursuant to a Grinnell workers’ compensation policy; (b) received or were tendered payment between October 20, 1996 and October 20, 2006 in which Grinnell took a PPO discount; and (c) did not have a PPO contract with Grinnell.” Defendant filed a petition for leave to appeal pursuant to Supreme Court Rule 306(a)(8) (210 Ill. 2d R. 306(a)(8) (2006)), which was granted.

The Court noted the need to first show an actual cause of action before any class could be certified. The Court further noted Plaintiff was not a party to the contract which would be a prerequisite for maintaining a breach of contract claim. Here, the provision relied upon by Plaintiff, which makes Defendant liable to “any person entitled to benefits payable by this insurance” did not identify any third parties and Plaintiff was not a “person entitled to benefits” pursuant to the Illinois Workers’ Compensation Act. See 820 ILCS 305/4(g) (West 2004) (only “the employee, his or her personal representative or beneficiary” are entitled to benefits under a workers’ compensation policy and have standing to sue an insurer to enforce such a policy). Plaintiff failed to identify any provision in the policy which referenced him or “medical providers,” the class to which he belongs. He did not sustain his burden of proving he was a third party beneficiary of the workers’ compensation policy and because he was not a third party beneficiary of the workers’ compensation policy, he had no right to enforce it. Thus, Plaintiff’s breach of contract action was dismissed. Since Plaintiff’s breach of contract claim is the only cause of action upon which his class action was allowed, Plaintiff’s class action against Defendant was also dismissed.

Plaintiff asked for the other dismissed counts to be reconsidered, but the Court noted he had not filed a cross-appeal and therefore was not allowed to challenge those decisions. The Court nevertheless noted they would also have found the other counts were properly dismissed due to the failure to state a cause of action because he could not meet the standard of unjust enrichment or show Defendant owed him any duty.

This case is also an example of the increasing trend of medical providers moving into the courts in what appear to be attempts to circumvent the workers’ compensation system by either refusing to abide by the Medical Fee Schedule, refusing to bill within reasonable guidelines or in many cases, refusing to participate in the IWCC process to attempt to justify their charges.

Your author spoke to two different Petitioner attorneys who noted they didn’t mind the providers suing the insurance companies because it was a welcome change from their point of view of the refusal of some medical providers to attend a hearing to justify their charges and instead attempting to pursue injured workers for unpaid balances in clear violation of the Illinois Workers’ Compensation Act. One attorney suggested a similar provider had already indicated he would spend more in legal fees in other venues trying to find an alternative method to collect his balances rather than appear before an Arbitrator who would discount the charges on almost every occasion. This article was researched and written by Shawn R. Biery, J.D. If you have thoughts and comments or need the case citation, please send a reply to sbiery@keefe-law.com.

Editor’s comment: After last week’s KC&A Update article about what appears to be intentional overbilling for implants, we got the following responses from you and provide our thoughts:

1.  Who was the surgeon? I ask because Dr. X did an IME on a claim I recently received. He is recommending a “hybrid procedure” which is a 1 level disc replacement and a 1 level fusion directly below. According to his office he charged a patient for a similar procedure in December $137,000 for the surgeon fees. The assistant fee would be 20% of the surgeon fee. Between the doctor and his assistant we would be looking at $164,400! That does not include the hospital or anesthesia or anything else. Of course now my injured worker would like to treat will Dr. X. The only good thing in all this is that I can tell him no.

From our perspective, surgeon’s bills are coded and covered by the Illinois Medical Fee Schedule and they can’t charge whatever they want. The assistant’s participation and fee should be a subject of UR.

2. One strong overall suggestion was for major self-insured employers to try to find a way to pay/process WC medical bills under group coverages and then have WC reimburse your group people. We will bet major self-insured employers are effectively self-insured for both workers’ comp and group health care payments. No group carrier would ever pay what you are being asked to pay for WC care in this goofy state—they would straighten the hospital out and pay a much lower cost. Trust me, it isn’t happening by mistake that hospitals and doctors are billing so much money when they know it is a WC claim—they are opening playing to the system that treats employers in this state so poorly.

From our perspective, we are looking for any major self-insured employer to provide input on this concept. Is it “legal” to do so? Wouldn’t the savings be enormous? What if they gave a Medical Fee Schedule and no one showed up?

3. Three of the major “benefits” that were to accrue to the employer community as a result of the adoption of the medical fee schedule were that:

(1) It would set a baseline (capped) price;

(2) It would limit the growth in expense to CPI-U; and

(3) Price increases would be limited to one per year.

It greatly surprised (and dismayed) the employer community when the Commission announced via the rulemaking process that certain “carved-out” revenue codes* would be paid at 65% of billed charges. Clearly, a percentage based payment with no controls does not comport with the statutory intent—providers may raise prices as often and as much as they wish to meet their then current revenue goal. Under these circumstances, nothing prevents a provider from targeting a revenue goal that makes up for any perceived slights in the rest of the fee schedule.

The hospital fee schedules were created using Illinois Department of Public Health data. At the time the schedules were created, the Commission said that it removed charges related to the carved-out revenue codes from the data to insure that there was not a duplication of expense.  Thus, we know that the Commission has the capacity, using IDPH data, to determine whether there have been wholesale and/or egregious increases in the carved-out revenue codes. Further, the IDPH data is at a level where the individual hospitals can be identified (not by the public, but by the Commission).

What prevents the Commission from examining this issue as part of the report to the Governor and General Assembly that is due by January 1, 2010?

Are hospitals taking advantage of this provision in the rules? What have price increases in these revenue codes been since the implementation of the schedule? Is this a flaw in the implementation of the statute that needs to be corrected?

This comment came to us from one of Illinois’ most knowledgeable experts on the Medical Fee Schedule. To answer her questions:

A. What prevents the Commission from examining this issue as part of the report to the Governor and General Assembly that is due by January 1, 2010? We still feel the IWCC is not run by people who care about the Medical Fee Schedule and saving money for Illinois business—it is run by the other side of the bar who are trying to make as much money as possible in a tough economy. In our view, they aren’t going to care about this issue or want to report it to the Governor and legislature. We will have to see.

B. Are hospitals taking advantage of this provision in the rules? Some hospitals clearly appear to be doing so—you can’t hide the fact the many bills we received were charging amounts like $166,000 for “implants” when the rest of the bill was a third of the cost. Even paying at 65%, this markup is wildly high.

C. What have price increases in these revenue codes been since the implementation of the schedule? To our knowledge, “implant” makers kept their products out of the codes.

D. Is this a flaw in the implementation of the statute that needs to be corrected? Yes, it is one of a number of flaws that no one appears to be addressing in any way. We are writing this article hoping someone takes notice and does something to close the gaps. Illinois also needs a prescription medical fee schedule.

Editor’s comment: One of our clients sent us not one but two separate hospital bills for a similar lumbar surgery. Two different patients underwent a comparable lumbar procedure at a well-known hospital in the western suburbs of Chicago. The surgeon is well-known to the workers’ compensation community.

We would ask all of our readers to provide your idea of what you would think would be a high hospital bill for a surgery that takes about 45 minutes to perform. As part of preparation for this article, we asked about two-dozen people from Illinois’ medical, claims and legal community their thoughts. Most of the folks we asked figured $50,000 would be a high amount for a hospital or outpatient surgical center to provide a surgical suite, recovery room and related goods and services. So we then asked them to figure a truly high amount and most of them doubled the amount to $100,000. From our perspective, $100K is a lot of money for most surgical interventions.

Well the two bills were approximately $217,000 and $221,000! We are still shaking our heads. Please understand this is not the only cost—there are the surgeon’s fees along with post-surgical physical therapy and other modalities. We would conservatively estimate the total cost will easily exceed $300,000 for each surgery. With any complications, the cost could easily pass one-half million dollars for one surgery.

So what bomb went off? Well, we like to call it LARD but they actually named it LADR for lumbar artificial disc replacement. The basic concept is to replace a worn out or blown out lumbar or cervical disc with a new foam rubber or similar disc of the same height, weight and size. Artificial disks, which were introduced in Europe 25 years ago, promised the same or better pain relief as spinal fusions. The concept of a spinal fusion is to protect degenerating natural disks from pressure by joining the vertebrae above and below the disk into a single immobile segment of bone. The advantage of a LADR is patients recover more quickly from insertion of disks, retain far more flexibility and were less likely to need further surgery than spinal fusion patients.

The first LADR was named Charité after the hospital in Berlin, where the first version of the device was created 20 years ago by Dr. Karen Buttner-Janz, a former East German Olympic medalist in gymnastics. Some of the anecdotal evidence for the Charité was impressive. The first European recipient of a Charité disk claims to be playing tennis 20 years later. Jeffrey Lee Gibson, a 46-year-old stunt man who received a disk as part of a trial of Charité in the United States, said he left the hospital the day of the surgery and was able to perform a four-story stomach-first fall for the television show “Third Watch” 12 weeks later.

The LADR device received FDA approval for use in 2004 and there are a number of similar products out there. The use of the artificial disc has engendered mixed results in the world medical community. What you may not know is the makers of implants and their end-sellers, the hospital community fought to keep all implants out of the Illinois medical fee schedule when it was first enacted in 2005. Now, you can start to see what all the lobbying and partying may have been about.

The two bills we outline charged approximately $156,000 for two LADR implants and $177,000 for three LADR implants. The bills were from the same institution and the same billing department and the surgeries were performed within three months of each other. We have no idea why the first bill charged $78,000 for each of two LADR implants and then $59,000 each for the three implants. Please note the Charité disc was listed for sale on the open market at $11,500 which is a load of money for foam and metal. If that number remains the invoice cost for these implants, the markup to sell them at $78,000 is a cool 6,800 per cent!

We don’t really know what to tell our readers about this situation other than to say we consider it borderline insanity to allow anyone in this state to perform such surgery at those costs. You would save thousands to provide round-trip airplane tickets, hotels and food in Paris, France for claimant and their entire family for a month than have the surgery performed in this state! We saw a different IWCC decision where the same surgeon who performed this surgery indicated in a deposition their opinion artificial discs might last only ten years!!

We assure our readers you are not going to get a break from the IWCC on any award of PPD following LADR surgery. Our lengthy research indicates the permanency award you can expect is in the 25-45% range. If you need case law, please send a reply.

For our clients and all of our readers, we note the Commission’s decision in Hawkins v. Apostolic Christian Home, 05 IL.W.C. 15078, No. 08 I.W.C.C. 1359 (November 24, 2008), lumbar disc replacement surgery cost $78,000. The bill wasn’t paid by the employer or a workers’ compensation carrier; the cost went through BC/BS. We truly seek everyone’s thoughts and comments on how you would handle such a staggering bill.

One of the people we talked to thought the bills should be sent to Attorney General Lisa Madigan for further investigation. We ask our readers to provide your thoughts and comments on this truly extraordinary billing and what the Illinois workers’ compensation community should do to address it.

Editor’s Comment: Understanding we are defense lawyers, we find it hard to disagree with this ruling. We always salute the Illinois courts when they follow the “plain English language” version of our laws and rules. While that sounds unusual to say, trust us, they don’t always follow such construction. If you want examples, send a reply. This case follows the simple meaning of a simple document.

We also caution all Illinois claims handlers and adjusters against what we consider the very silly claims practice of settling a claim without advice of defense counsel and then having Petitioners’ attorneys draft settlement contracts for you with the assumption Petitioner’s counsel will somehow “protect” you in doing so—their ethical demands are to protect their clients and not you. We assure you all knowledgeable claimant attorneys who are allowed to draft your settlement contracts will now check the “magic box” to insure they can always submit unpaid medical bills to you and claim payment is due.

In Thomas Hagene v Derek Polling Construction, (No. 5-07-0225 February 24, 2009), the Illinois Appellate Court was faced with a claim under Section 19(g) for enforcement of settlement contracts alleged to require payment of substantial medical bills that remained unpaid after settlement. The record indicates some of the bills were not paid and remained in dispute after closure of the claim. It appears the front of the contracts had the box checked to indicate “all medical bills” were paid and the back said the settlement was a compromise of all benefits owed under the Act. In contrast, the claim for TTD said it was disputed on the front and to refer to the reverse of the document for settlement terms.

This case involved an apparent stipulation by Respondent the unpaid medical bills in question were causally related to the work injury. Unfortunately, there was a presumption all medical bills had been forwarded to Respondent for payment by the time of settlement as well.  This decision raises concern for the defense industry that, upon indicating in settlement contracts the employer has paid all medical expenses incurred prior to contract approval, such an indication will include bills not yet submitted for payment as well. In light of this ruling, whether a settlement involves disputed bills or not, we recommend against checking the box to make a blanket statement in approved contracts “Respondent has paid all medical bills.” Respondents simply have no way of knowing the full extent of treatment sought by any given claimant.

The facts of this case are relatively simple. Petitioner settled his claim pro se or without advice of counsel. Respondent’s attorneys drafted the settlement contract. On the reverse page, the terms of the contract state Petitioner would receive $20,036.10, representing only permanency benefits valued at 30% of his injured arm. The first page of the contract indicates Respondent paid all medical bills without further elaboration. Under Terms of Settlement on the second page of the contract, Petitioner accepted $20,036.10 or 30% of the arm as the full measure of compensation for all issues, including TTD and all past, present and future medical expenses. Obviously, the document had conflicting language.

Sometime after settlement Petitioner learned $19,977.25 in medical expenses incurred prior to settlement remained unpaid by Respondent or anyone else. Roughly 18 months after settlement was approved by the Arbitrator, Petitioner brought suit in Circuit Court under Section 19(g) seeking to hold Respondent liable for these unpaid medical bills. Respondent defended on the position Petitioner was barred from seeking payment of medical expenses based on the terms of the settlement. As we indicate above, Respondent apparently raised no defense to causal connection of the medical charges to the work injury, and according to the decision Respondent agreed during oral argument the medical charges incurred and disputed were causally connected to the work injury.

The Circuit Court entered an order dismissing the complaint pursuant to Respondent’s motion, finding Respondent’s obligation had been satisfied through payment of the settlement proceeds. Following denial of Petitioner’s motion to vacate and reconsider, Petitioner appealed to the Appellate Court, Fifth District. Please note this is not the Appellate Court, Workers’ Compensation Division.

On appeal, Petitioner argued

• The settlement did not preclude his 19(g) petition for reimbursement in the amount of the medical bills,
• The contract did not relieve Respondent of its obligation to pay causally related medical expenses, and
• If the contract was deemed ambiguous, such ambiguity weighs in his favor because Respondent drafted the contract.

Respondent defended on the position the settlement contract unambiguously addressed Respondent’s obligation for payment of past, present and future medical benefits and because there was no ambiguity there was no need to resort to the rule of construction holding ambiguities to the detriment of the party which drafted the contract.

In analyzing the arguments of the parties, the Fifth District Appellate Court noted Respondent’s obligation to pay Petitioner’s medical bills stemmed not from the settlement contract but from Section 8 of the Act. Acknowledging parties can and do waive statutory rights in reaching settlement, the Court noted waiver of an important statutory right must be explicit. Respondent argued Petitioner explicitly waived his right to compensation for medical expenses related to the work injury according to the Terms of Settlement provision, agreeing to $20,036.10 as the full measure of compensation for all benefits including past, present and future medical expenses.

Refusing to consider the Terms of Settlement without consideration of all relevant contract language, the Court found the parties did not intend to discharge Respondent’s statutory obligation to pay Petitioner’s past medical expenses, as Petitioner accepted $20,036.10 as the full measure of compensation for all benefits under the presumption Respondent had already paid all past medical expenses incurred. Noting Petitioner’s agreement to settle his case for $20,036.10 was premised upon his belief Respondent had already paid all past medical expenses incurred, the Court stated relieving Respondent of its statutory obligation to pay the medical expenses it claimed it already paid would result in a windfall to Respondent by absolving Respondent of its Section 8 obligation without any consideration to Petitioner; terms to which Petitioner had not agreed nor had the parties intended. The Fifth District Appellate Court reversed the Circuit Court and remanded the case to the Circuit Court for entry of an order consistent with its ruling. We have to assume the defense firm now may face legal malpractice concerns for their drafting gaffe.

One can only wonder what would have happened if boxes on the front of the settlement contracts that mention medical bill payment had been left blank or said “disputed” see reverse. However, we suggest the better path to avoid this confusion would be to leave the boxes blank and put “disputed, see reverse” in that part of the contracts. In the alternative, the Terms of Settlement should clearly state, all medical bills submitted have been paid and any other medical bills are fully disputed, denied and will not be paid. The more certainty you can provide on the front and back of the contracts, the better chance the courts will apply the contracts as approved.

In handling/drafting lump sum settlement contracts, we suggest one of two approaches be taken. The easiest approach is to say on the front and the back of the document, all medical bills are disputed and denied and the settlement is a compromise to produce peace. If the Arbitrator approves such a contract, we feel the courts would enforce them.

The more complex issue is to close medical rights by agreeing to pay the applicable medical fee schedule amount of all reasonable, necessary and related medical bills submitted prior to settlement or of which Respondent or its insurance carrier/TPA has notice at or prior to settlement. This language, if approved by the Arbitrator, should protect both sides. Petitioner simply has to be sure Respondent is aware of medical care and billing; the employer or its representatives should be protected from “surprise” bills for care it was not given notice.

This article was written by Joseph R. Needham, J.D. We would appreciate your thoughts and comments about this new ruling and handling of medical bills at the time of settlement.