Beatty v. Accident Fund Gen. Ins. Co., Case No. 3:17-CV-01001-NJR-DGW
| Decision Date | 02 July 2018 |
| Docket Number | Case No. 3:17-CV-01001-NJR-DGW |
| Court | United States District Courts. 7th Circuit. Southern District of Illinois |
| Parties | MICHAEL E. BEATTY, M.D., d/b/a THE SOUTHWESTERN ILLINOIS PLASTIC & HAND SURGERY ASSOCIATES, individually and as the Representative of a class of similarly situated persons, Plaintiff, v. ACCIDENT FUND GENERAL INSURANCE COMPANY, et al., Defendants. |
Defendants in this matter have jointly filed a motion to dismiss the complaint for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure (Doc. 223). Defendant Tristar Insurance Group, Inc. ("Tristar") joined in that motion, while also moving to dismiss the complaint as to Tristar specifically because no examples of the offending conduct were alleged against it (Doc. 239). Certain Defendants also filed a motion to dismiss based on the statute of limitations, as well as supplemental briefs explaining how the statute of limitations applies to claims asserted against them (Docs. 217, 218, 220, 221, 222, 226, 227, 228, 230, 231, 232, 233, 238). On March 5, 2018, the Court stayed discovery pending resolution of the motions to dismiss (see Doc. 260). For the reasons set forth below, the joint motion to dismiss for failure to state a claim is denied, while the motion to dismiss based on the statute of limitations is granted in part and denied in part. Defendant Tristar's motion to dismiss is also denied.
Plaintiff Michael Beatty, M.D., is an Illinois plastic surgeon who provides medical services to patients for work-related injuries (Doc. 1, ¶ 10). Defendants in this matter are insurance companies that have issued workers' compensation insurance policies covering Illinois workers, third party administrators (TPAs) employed by Illinois employers to administer workers' compensation claims, or claims adjusting companies (CACs) employed by insurance carriers or TPAs to administer workers' compensation claims (Id., ¶ 11).
Dr. Beatty filed this putative class action on September 19, 2017, pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILL. COMP. STAT. 505.1 Dr. Beatty alleges Defendants violated the ICFA by engaging in unfair practices related to the payment of interest due under the Illinois Workers' Compensation Act (IWCA), 820 ILL. COMP. STAT. 305 (Doc. 1). Specifically, Dr. Beatty claims Illinois physicians who render services to patients covered under the IWCA are entitled to receive statutory interest on their unpaid medical bills as set forth in 820 ILL. COMP. STAT. 305/8.2(d)(1-3) (Id., ¶ 4). Yet, Dr. Beatty alleges, Defendants routinely fail and refuse to pay statutory interest (Id., ¶ 5). Dr. Beatty claims these actions are part of a common scheme and conspiracy to deprive Illinois physicians of the payments to which they are entitled (Id., ¶ 111). To achieve this objective, Dr. Beatty claims Defendants (1) send reimbursements for medical charges without including interest or an Explanation of Benefits (EOB) from which the physician can determine whether the payment includes interest; (2) send EOBs to physicians containing false information about when the request for reimbursement was received; (3) participate intrade associations that develop common industry standards and practices or act as vehicles for the exchange of sensitive business information; and (4) deliberately purchase software that does not recognize or calculate interest due (Id., ¶¶ 112).
What's more, Defendants allegedly fraudulently concealed their requirement to pay interest by giving medical providers false and misleading information, thereby tolling the statute of limitations. To that end, Dr. Beatty asserts Defendants: (1) provide false or misleading information concerning the identity of the insurance carrier for the injured employee; (2) transmit EOBs containing false information regarding when Defendants received the request for reimbursement from a provider to make it look like the payment was timely; and/or (3) fail to give providers EOBs for claims concluded by settlement or a decision of an arbitrator or the Workers' Compensation Commission in an effort to keep providers from determining whether the payment is timely (Doc. 1, ¶ 139).
Dr. Beatty proposes a class defined as: "All Illinois physicians who, from July 20, 2005 to present, rendered medical services to an employee covered by the provisions of the Illinois Workers' Compensation Act and who were not paid interest as required by as 820 ILCS 305/8.2 (d)(1-3)." He seeks compensatory damages, punitive damages, declaratory or injunctive relief, pre- and post-judgment interest, and attorneys' fees and costs.
On December 15, 2017, Defendants moved to dismiss the complaint. Dr. Beatty filed timely responses in opposition to the motions to dismiss (Docs. 247, 248), and Defendants jointly filed reply briefs in support of their positions (Docs. 251, 252). Defendants also filed a notice of supplemental authority, to which Dr. Beatty responded (Docs. 263, 264). The Court heard oral argument on Defendants' motions to dismiss on April 11, 2018. Defendants filed a second notice of supplemental authority on May 1, 2018 (Doc. 267), and Dr. Beattyresponded to that too (Doc. 268). The Court has thoroughly considered all of the above in reaching its conclusions.
Defendants argue Dr. Beatty has failed to state a claim for four reasons. First, insurers and TPAs have no duty to pay interest under the IWCA. Second, medical providers lack standing under the IWCA to sue insurers or TPAs. Third, Dr. Beatty cannot use the ICFA to circumvent the IWCA. And fourth, Dr. Beatty has not adequately pleaded the elements of an ICFA claim.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is meant to "test the sufficiency of the complaint, not to decide the merits" of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990) (citation omitted). In evaluating a motion to dismiss, the Court must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901, 903 (7th Cir. 2011); Thompson v. Ill. Dep't. of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). Pursuant to Federal Rule of Civil Procedure 8(a)(2), a complaint must include a short and plain statement of the claim, showing that the pleader is entitled to relief. FED. R. CIV. P. 8(a)(2). Accordingly, the Court may grant a motion to dismiss under Rule 12(b)(6) only if a complaint lacks "enough facts to state a claim [for] relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 697, 129 S. Ct. 1937, 1960 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007)); Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010).
"A claim has facial plausibility when the plaintiff pleads factual content that allowsthe court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556, 127 S. Ct. at 1955). While a complaint need not include detailed factual allegations, there "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556, 127 S. Ct. at 1955). These requirements ensure that "the defendant [receives] fair notice of what the . . . claim is and the grounds upon which it rests . . . ." Twombly, 550 U.S. at 556, 127 S. Ct. at 1964 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103 (2007)).
Dr. Beatty's ICFA claim presumes Defendants have a duty to pay interest under Section 8.2(d) of the IWCA, an obligation he claims they unfairly skirt. Defendants' first argument in opposition lays the foundation for many their arguments in support of dismissing the complaint. They claim the plain language of the IWCA simply does not require them to pay interest. If they are not required to pay interest, then Dr. Beatty cannot plausibly base a claim for violation of the ICFA on the alleged failure to do so.
Section 8.2(d) of the IWCA states:
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