MONTHLY QUIZ: Manager of fast-food restaurant slips and falls on a wet floor while working and undergoes surgery for a lateral meniscal tear in her left knee. Manager's medical expenses are paid either by Manager's husband's insurance company, or out-of-pocket. Prior to the hearing, Manager and Employer enter into a stipulation reflecting the fee schedule of amounts billed for Manager's medical services, totaling $37,767.32, but with the caveat that Employer disputes that the schedule is the proper method for calculating the amount of medical. On remand before the Commission to determine the amount owed for medical expenses, Employer submits an exhibit listing $17,597.96 in medical payments made by the husband's insurer and $260 in copayments made by Manager. Employer argues that it only owes the amount of the Manager's co-payment and the amounts actually paid by the husband's insurer. Manager argues that she is entitled to $37,767.32, for the billed amounts, especially because Employer's insurer did not negotiate the reduced rates, her husband's insurance company (i.e. a third-party) negotiated the reduced rates. Who is right? How much is Manager entitled to for her medical expenses? You be the judge. (Answer below).
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INSURANCE COVERAGE / BAD FAITH - INSURED'S SETTLEMENT WITHOUT INSURER'S CONSENT WAS PERMISSIBLE: Plaintiff-Insured, in the business of hauling toxic and hazardous materials, was named in two EPA Superfund lawsuits alleging Insured operated truck terminals and truck washing facilities from which hazardous substances were released into the environment, contributing to over $30 million in incurred cleanup costs at two EPA Superfund sites. Insured tendered its defense to its insurer under various policies issued to the insured beginning in the 1960s with combined limits of $7.3 million. Insurer agreed to defend Insured subject to a reservation of rights. Insurer later disputed coverage and advised that Insured could not engage in settlement negotiations without Insurer's consent at a time when Insured was engaged in settlement negotiations and had obtained a demand to settle within policy limits. Ultimately, Insured settled the lawsuits for $7.5 million without Insurer's consent. Of the $7.5 million, Insured agreed to pay $50,000 and promised to seek indemnification from Insurer for the balance. Insured then sued Insurer seeking a declaration as to coverage and for bad faith. Following the trial court's grant of summary judgment in Insured's favor, Insurer appealed. On appeal, the Court affirmed the trial court's ruling that Insurer breached its duty to defend by refusing to settle within policy limits and by attempting to prevent Insured from negotiating a settlement. Going further, the Court found Insurer's conduct, in attempting to intimidate Insured from settling, was vexatious and unreasonable, constituting bad faith under Illinois law. Rogers Cartage Co. v. Travelers Indemnity Co., 2018 IL App. (5th) 160098 (5th Dist. Apr. 5, 2018) (J. Cates dissenting).
CONTRIBUTION ACTION - STRICT APPLICATION DESPITE HARSH RESULTS: Insured, a sperm bank, sold a sperm sample, advertised to be free of a mutation for cystic fibrosis, to purchasers. The sperm sample resulted in the birth of a child with cystic fibrosis, and the parents filed suit in Oklahoma against the insured. A settlement was reached between the parents and insured, with Lloyd's, the insurer, paying the settlement proceeds. Subsequently, Lloyd's filed a contribution action in Illinois against Reproductive Genetics Institute, who had performed the genetic testing, to recover the settlement proceeds that had been paid. Reproductive Genetics Institute filed a motion to dismiss, which was granted by the trial court on the basis that claims for contribution must be asserted in the underlying lawsuit. On appeal, Lloyd's argued that the court in Oklahoma did not have personal jurisdiction over Reproductive Genetics Institute, and therefore the court could have denied its claim for contribution. As such, Lloyd's argued, it was entitled to file its contribution claim as a separate action. The Appellate Court held that Section 5 of the Contribution Act strictly requires a party to file a claim for contribution in the underlying action, and that the rule does not deviate, even when the original court denies the claim seeking contribution. Certain Underwriters at Lloyd's, London v. Reproductive Genetics Institute, 2018 IL App (1st) 170923 (Mar. 9, 2018).
ANSWER TO QUIZ: Employer is correct. Manager is only entitled to $17,857.96. Section 8(a) of the Act provides, in pertinent part, as follows: "The employer shall provide and pay the negotiated rate, if applicable, or the lesser of the health care provider's actual charges or according to a fee schedule, subject to Section 8.2, in effect at the time the service was rendered for all the necessary first aid, medical and surgical services, and all necessary medical, surgical and hospital services thereafter incurred, limited, however, to that which is reasonably required to cure or relieve from the effects of the accidental injury. " Though Manager argued to the contrary, under Section 8(a), the employer pays the negotiated rate even if that rate is negotiated by someone other than the employer's own insurance carrier. Had the legislature intended to limit negotiated rates and agreements to those between the employer or the employer's own insurance carrier, it could have included this restriction; however, the legislature declined to do so. Perez v. Illinois Workers' Compensation Comm'n, 2017 IL App (2d) 170086WC (Jan. 9, 2017).