Marque Medicos Fullerton, LLC v. Zurich Am. Ins. Co., Am. Zurich Ins. Co., Assurance Co. of Am.,

• Decision Date: 30 June 2017
• Docket Number: Nos. 1-16-0756, 1-16-0954, 1-16-0955, & 1-16-0956, consolidated.,s. 1-16-0756, 1-16-0954, 1-16-0955, & 1-16-0956, consolidated.
• Citation: 83 N.E.3d 1027,2017 IL App (1st) 160756
• Parties: MARQUE MEDICOS FULLERTON, LLC; Medicos Pain & Surgical Specialists, S.C.; Ambulatory Surgical Care Facility, LLC; and Marque Medicos Kedzie, LLC, for Themselves and All Others Similarly Situated, Plaintiffs-Appellants, v. ZURICH AMERICAN INSURANCE COMPANY, American Zurich Insurance Company, Assurance Company of America, and Maryland Casualty Company, Defendants-Appellees. Marque Medicos Fullerton, LLC; Medicos Pain & Surgical Specialists, S.C.; and Ambulatory Surgical Care Facility, LLC, for Themselves and All Others Similarly Situated, Plaintiffs-Appellants, v. Travelers Property Casualty Company of America, Travelers Indemnity Company of America, Travelers Casualty Insurance Company of America, Travelers Casualty and Surety Company of America, the Phoenix Insurance Company, Farmington Casualty Company, the Standard Fire Insurance Company, and the Charter Oak Fire Insurance Company, Defendants-Appellees. Marque Medicos Fullerton, LLC; Medicos Pain & Surgical Specialists, S.C.; and Ambulatory Surgical Care Facility, LLC, for Themselves and All Others Similarly Situated, Plaintiffs-Appellants, v. Hartford Underwriters Insurance Company ; Hartford Insurance Company of the Midwest; Hartford Accident and Indemnity Company; Hartford Insurance Company of Illinois; Hartford Fire Insurance Company; Hartford Casualty Insurance Company; Twin City Fire Insurance Company; Trumbull Insurance Company ; and Sentinel Insurance Company, Ltd., Defendants-Appellees. Marque Medicos Fullerton, LLC; Medicos Pain & Surgical Specialists, S.C.; and Ambulatory Surgical Care Facility, LLC, for Themselves and All Others Similarly Situated, Plaintiffs-Appellants, v. Aig Insurance Company, f/k/a Chartis Casualty Company ; National Union Fire Insurance Company of Pittsburgh ; Illinois National Insurance Company; Commerce & Industry Insurance Company; New Hampshire Insurance Company; Insurance Company of the State of Pennsylvania; American Home Assurance Company; and AIG Property Casualty Company, f/k/a Chartis Property Casualty Company, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

2017 IL App (1st) 160756

83 N.E.3d 1027

MARQUE MEDICOS FULLERTON, LLC; Medicos Pain & Surgical Specialists, S.C.; Ambulatory Surgical Care Facility, LLC; and Marque Medicos Kedzie, LLC, for Themselves and All Others Similarly Situated, Plaintiffs-Appellants,

v.ZURICH AMERICAN INSURANCE COMPANY, American Zurich Insurance Company, Assurance Company of America, and Maryland Casualty Company, Defendants-Appellees.

Marque Medicos Fullerton, LLC; Medicos Pain & Surgical Specialists, S.C.; and Ambulatory Surgical Care Facility, LLC, for Themselves and All Others Similarly Situated, Plaintiffs-Appellants,

v.Travelers Property Casualty Company of America, Travelers Indemnity Company of America, Travelers Casualty Insurance Company of America, Travelers Casualty and Surety Company of America, the Phoenix Insurance Company, Farmington Casualty Company, the Standard Fire Insurance Company, and the Charter Oak Fire Insurance Company, Defendants-Appellees.

Marque Medicos Fullerton, LLC; Medicos Pain & Surgical Specialists, S.C.; and Ambulatory Surgical Care Facility, LLC, for Themselves and All Others Similarly Situated, Plaintiffs-Appellants,

v.Hartford Underwriters Insurance Company ; Hartford Insurance Company of the Midwest; Hartford Accident and Indemnity Company; Hartford Insurance Company of Illinois; Hartford Fire Insurance Company; Hartford Casualty Insurance Company; Twin City Fire Insurance Company; Trumbull Insurance Company ; and Sentinel Insurance Company, Ltd., Defendants-Appellees.

Marque Medicos Fullerton, LLC; Medicos Pain & Surgical Specialists, S.C.; and Ambulatory Surgical Care Facility, LLC, for Themselves and All Others Similarly Situated, Plaintiffs-Appellants,

v.Aig Insurance Company, f/k/a Chartis Casualty Company ; National Union Fire Insurance Company of Pittsburgh ; Illinois National Insurance Company; Commerce & Industry Insurance Company; New Hampshire Insurance Company; Insurance Company of the State of Pennsylvania; American Home Assurance Company; and AIG Property Casualty Company, f/k/a Chartis Property Casualty Company, Defendants-Appellees.

Nos. 1-16-0756, 1-16-0954, 1-16-0955, & 1-16-0956, consolidated.

Appellate Court of Illinois, First District, SIXTH DIVISION.

Opinion filed: June 30, 2017

Sperling & Slater, P.C. (Bruce S. Sperling, Harvey J. Barnett, Mitchell H. Macknin, and Daniel A. Shmikler, of counsel), and The Pace Law Firm, LLC (Randall F. Pace, of counsel), both of Chicago, and Alan J. Mandel, Ltd., of Skokie (Alan J. Mandel, of counsel), for appellants.

Dentons US LLP (Steven M. Levy and Richard L. Fenton, of Chicago, Sarah E.S. Carlson, of St. Louis, Missouri, and Laura Geist (pro hoc vice), of San Francisco, California, of counsel), DLA Piper LLP (US) (Raja Gaddipati and Joseph A. Roselius, of counsel), Winston & Strawn, LLP (Timothy J. Rooney, Shane W. Blackstone, and Kathryn Wendel Bayer, of counsel), both of Chicago, and Alston & Bird LLP, of New York, New York (Adam Kaiser (pro hoc vice), of counsel), for appellees.

OPINION

JUSTICE ROCHFORD delivered the judgment of the court, with opinion.

¶ 1 In these consolidated appeals, plaintiffs-appellants¹ appeal from the dismissal, with prejudice, of four separate putative class-action lawsuits filed against defendants-appellees.² For the following reasons, we conclude that the circuit court had subject-matter jurisdiction to consider plaintiffs' claims and that those claims were properly dismissed with prejudice.

¶ 2 I. BACKGROUND

¶ 3 In March 2015, plaintiffs filed four putative class-action lawsuits, one each against the Zurich, Travelers, Hartford, and AIG defendants (collectively, defendants). On June 16, 2015, the suits against the Travelers, Hartford, and AIG defendants were reassigned, as related cases, to the courtroom where the initially-filed suit against the Zurich defendants was pending. The complaints filed in each lawsuit generally seek redress for defendants' alleged failure to comply with requirements contained in the Workers' Compensation Act (Act). 820 ILCS 305/1, et seq. (West 2014).

¶ 4 More specifically, plaintiffs allege that they—and a class of similarly situated others—had provided medical services to employees for work-related injuries. Pursuant to the Act, the employers of those employees had the responsibility to timely pay for those medical services, with those employers being insured for that responsibility by identical workers' compensation insurance policies issued by defendants. Noting that the Act requires that late payments to providers, such as plaintiffs, "shall incur interest at a rate of 1% per month payable to the provider" ( 820 ILCS 305/8.2(d)(3) (West 2014)), contending that this statutory provision was incorporated into the standard policies issued by defendants, and further contending that defendants had in fact made "many" untimely payments for such services without also paying interest, plaintiffs' complaints sought relief in four counts.

¶ 5 In each complaint, count I contends that plaintiffs were third-party beneficiaries of the standard policies defendants issued to employers and that plaintiffs were therefore entitled to recover for defendants' breach of those policies. Count II alleges that plaintiffs had an implied private right of action to recover for defendants' violation of section 8.2(d)(3) of the Act. Count III asserts that defendants had breached contracts with plaintiffs that were implied-in-fact. Finally, count IV seeks an award of attorney fees and statutory damages for defendants' vexatious and unreasonable refusal to pay accrued interest for late payments, pursuant to section 155 of the Illinois Insurance Code (Insurance Code) ( 215 ILCS 5/155 (West 2014) ). The complaints seek "the statutory interest that accrued and is payable to them on bills that were paid by Defendants but after the Due Date, for services covered by the Act," attorney fees, prejudgment interest, and injunctive relief mandating that defendants "institute, maintain and follow" procedures that will ensure that, in the future, defendants will timely comply with the requirements of section 8.2(d)(3) of the Act.

¶ 6 Motions to dismiss each suit for failure to state claims were filed by defendants, pursuant to section 2-615 of the Code of Civil Procedure (Code). 735 ILCS 5/2-615 (West 2014). The motion to dismiss filed by the Travelers' defendants asserted, inter alia , that the circuit court lacked subject-matter jurisdiction over plaintiffs' claims because the Act vested exclusive jurisdiction to consider those claims with the Illinois Workers' Compensation Commission (Commission). The Hartford defendants had additionally sought to strike the class allegations, pursuant to section 2-619 of the Code. 735 ILCS 5/2-619 (West 2014).

¶ 7 On February 19, 2016, following a prior hearing on the motions, the circuit court entered a memorandum opinion and order in which it dismissed each of the plaintiffs' lawsuits with prejudice. In reaching that result, the circuit court concluded (1) plaintiffs were not third-party beneficiaries of the policies, (2) plaintiffs had no implied private right of action for a violation of section 8.2(d)(3) of the Act, (3) the facts alleged in plaintiffs' complaints did not support the imposition of an implied-in-fact contract, and (4) the remedies contained in section 155 of the Insurance Code do not extend to purported third parties such as plaintiffs. The circuit court's order did not specifically address the Travelers defendants' challenge to the court's subject-matter jurisdiction or the Hartford defendants' challenge to the class allegations.

¶ 8 Plaintiffs filed timely notices of appeal from the dismissal of each of the four lawsuits on March 15, 2016. This court consolidated the appeals in an order entered on May 11, 2016.

¶ 9 II. ANALYSIS

¶ 10 On appeal, plaintiffs contend that the circuit court improperly dismissed their lawsuits, with prejudice, for failure to state claims. Before we can address the substantive merits of the circuit court's dismissal of plaintiffs' complaints, however, we must first address defendants' contention that the circuit court lacked subject-matter jurisdiction to consider plaintiffs' claims because the Act "vests exclusive jurisdiction in the Commission to hear and determine direct claims under the Act."

¶ 11 A. History and Scope of the Act

¶ 12 We first provide some context with respect to the history and scope of the Act, which will guide both our jurisdictional analysis and our subsequent discussion of the merits of the circuit court's dismissal of plaintiffs' claims.

¶ 13 In general terms, the Act:

"substitutes an entirely new system of rights, remedies, and procedure for all previously existing common law rights and liabilities between employers and employees subject to the Act for accidental injuries or death of employees arising out of and in the course of the employment. [Citation.] Pursuant to the statutory scheme implemented by the Act, the employee gave up his common law rights to sue his employer in tort, but recovery for injuries arising out of and in the course of his employment became automatic without regard to any fault on his part. The employer, who gave up the right to plead the numerous common law defenses, was compelled to pay, but his liability became fixed under a strict and comprehensive statutory scheme, and was not subjected to the sympathies of jurors whose compassion for fellow employees often led to high recovery. [Citation.] This trade-off between employer and employee promoted the fundamental purpose of the Act, which was to afford protection to employees by providing them with prompt and equitable compensation for their injuries." Kelsay v. Motorola, Inc ., 74 Ill.2d 172, 180-81, 23 Ill.Dec. 559, 384 N.E.2d 353 (1978).

¶ 14 These purposes and goals have been effectuated in the various provisions of the Act, which when taken together represent a "comprehensive statutory administrative scheme." Bradley v. City of Marion, Illinois , ...