Medical Providers Just Can’t Stand It in Recent Third District Appellate Case

3.8.2022 Blog

Medical bills are often the ugliest part of a workers’ compensation settlement.  The parties to an agreement have a façade of compromise after discussing PPD, only to realize that claims for reimbursement from the group carrier have surfaced, Medicaid was involved, the hospital stay included six different categories of billing, the ambulance ride was forgotten about, and petitioner wants the acupuncture bills to be paid.   The petitioner’s attorney will ask for all related medical bills to be paid as part of settlement, and the respondent worries that unclear medical bill terms will come back to haunt them for years after contract approval.

The Illinois workers’ compensation settlement contract template can also be confusing.  If the respondent indicates on the front of the contract that medical bills have been paid, this generally means that if a loose bill surfaces, respondent will be liable for such bill.  However, if respondent represents that all bills have been paid as part of settlement, why should the respondent be liable for anything more?  Many settlement contracts indicate that bills will be paid by the respondent but also indicate that disputes regarding past medical expenses are closed out.  Every word of a contract, and especially the expression of every word, matters.

In OSF Healthcare System v. Great Dane, 2022 Ill. App. 3d 210227-U (February 24, 2022), the Appellate Court discussed statutory construction of the medical bill provisions in the Act. The underlying workers’ compensation case involved a petitioner who underwent years of disputed medical treatment and eventually collected a settlement for $150,000.00.

Regarding medical bills, the contract indicated that:

  • Respondent was liable for all reasonable, necessary and related medical expenses incurred through the date of contract approval and petitioner would be held harmless regarding those bills.
  • The Respondent denied and disputed the compensability of certain (unidentified) medical and hospital expenses.
  • The employer retained “all rights that it may have or may have had to assert any dispute for such claims for reimbursement on any and all grounds including but not limited to, the grounds of liability, reasonableness, necessity of medical treatment and causal connection between the benefits for [which] reimbursement is being sought and the Workers’ Compensation Claims of [Petitioner].”

After settlement, the insurance company for the employer cut a check for $43,486.99 to OSF Medical Group, and OSF cashed the check.

OSF then filed a Complaint in the Rock Island Circuit Court alleging that the employer still owed a balance of $92,631.31.  The employer filed a Motion to Dismiss, arguing that OSF had no standing to sue due to lack of contractual relationship, and that the Illinois Workers’ Compensation Act did not create a private right of action for benefits to medical providers.  The trial court granted the Motion to Dismiss.  OSF appealed, but the Appellate Court agreed with the employer on all issues and affirmed the Circuit Court’s decision.

In oral argument, OSF’s attorney argued that there were three parties to a workers’ compensation case:  the injured worker, the employer and the medical providers.  The attorney also argued the Act was designed to protect the injured worker, and by denying payments to OSF from the employer, the medical provider would need to go after the employee, which would be unjust for the injured worker.

The attorney for the employer argued that creating a private right of action would defeat the purpose of the Act, which is a no-fault system that allows all parties to resolve disputes within the administrative agency.  Also, there was never any showing by OSF to a right to reimbursement throughout the life of the claim.

Curiously, it is unknown how the insurer calculated the $43,486.99 amount, whether the amounts paid were for disputed or undisputed treatment, and/or whether the payments comported with the fee schedule amount.  OSF argued that the employer paid amounts below fee schedule for related treatment (which, pursuant to the settlement contract would have been owed) and the Appellate Court never commented on this issue.  Since OSF had no standing to sue, the details of the partial payments made to OSF and whether the payments related to disputed or undisputed medical treatment remain a mystery.

The Appellate Court applied a four-pronged analysis to determine whether an implied private right of action existed for OSF, and OSF failed to make this showing based on two of the four factors. First, the Appellate Court agreed with the employer that OSF was not a member of the class for whose benefit the Illinois Workers’ Compensation Act was enacted. The Act, the Court stated, was designed to provide financial protection to injured workers, not medical providers.  Citing to Marque Medicos Fullerton LLC v. Zurich American Insurance, 2017 Ill. App. 1st 16056, the Appellate Court determined that the Act did not create a private right of action for benefits to medical providers, and any benefit a medical provider obtained was incidental to the Act’s purpose.

OSF also failed to show that an implied right of action was necessary to provide an adequate remedy for violations of the Act.  The Court specifically pointed out that OSF could pursue payment from the employee after settlement, as outlined in Section 8.2 (e-20) of the Act.

Despite OSF’s argument that the direct payment obligations created by the 2005 and 2011 amendments to the Act entitled them to benefits under the Act, the Appellate Court disagreed.  This argument was also shut down by the Appellate Court in the Marque Medicos case.

OSF has not yet filed an appeal to the Supreme Court, but we believe the Appellate Court arrived at the right conclusion.  The initial workers’ compensation case was disputed for years, and a medical provider jumping onboard to claim special protection via private right of action would create an unjust and costly result for the employer.

Regardless of whether a private right of action exists for OSF to sue the employer, the case gives good insight into the importance of clear contract language.  The settlement contract at issue never mentioned OSF.  Had the settlement contract specifically listed providers to be paid, the disputes between the parties may never have surfaced.  Since a private right of action does not exist between an employer and a medical provider, the parties (including the petitioner, petitioner’s attorney and medical providers) must make sure to identify and resolve both disputed and undisputed balances prior to contract approval.  If the parties do not take such precautions prior to settlement contract approval, the employer should not take the (heavily disputed/denied) fall.


The NBKL blog is provided for informational purposes; we are not giving legal advice or creating an attorney/client relationship by providing this information.  Before relying on any legal information of a general nature, you may consider consulting legal counsel as to your particular facts and applications of the law.