Appellate Court Rejects Zurich's Attempt to Piggyback on CCN
The Illinois Appellate Court, Fifth District, affirmed a decision of the trial court that rejected Zurich's attempt to dismiss the suit or to compel arbitration of the suit's allegations based on a contract between the plaintiffs and CCN Managed Care for a preferred provider network. The case may now move forward.
In the lawsuit, our clients, allege that Zurich improperly discounted payments to them. More specifically, it is alleged that Zurich has engaged in a silent Preferred Provider Organization scheme.
In a PPO, insurance companies provide financial incentives to encourage patients to seek treatment from the preferred or in-network providers. A "silent PPO" occurs when an insurance company breaches its obligation to refer patients, through the use of financial incentives, to medical providers but still takes the discounts on the medical providers' bills. As a result, the medical providers lose revenue without gaining patients, receiving nothing in exchange for the reduced bills.
Our client entered into a contract with CCN Managed Care, a "provider agreement," to participate in a Preferred Provider Organization network. It is alleged, however, that CCN did not enter into a "payor agreement" with Zurich. Zurich is alleged to have taken discounts anyway without directing patients, through the use of financial incentives, to our clients. Furthermore, Zurich claimed, in its attempt to compel arbitration, that it was a third-party beneficiary of the "provider agreement," which contains an arbitration provision. As such, it wanted to arbitrate instead of litigate.
Proceedings in the trial court showed that there was no payor agreement between CCN and Zurich from 2001 to 2004. Zurich claimed that a 2001 "letter of intent" with CCN constituted a payor agreement but after hearing testimony of CCN and Zurich witnesses, the trial court rejected that argument, concluding that there was no payor agreement in effect from 2001 to 2004. The Illinois Appellate Court agreed. As such, there was no payor agreement and no third-party beneficiary status under the provider agreement for Zurich, and our clients avoided dismissal and arbitration.
The decision of the Illinois Appellate Court is actually the second decision it has made on related matters of this same issue. The case may now proceed before the trial court.
LakinChapman, LLC regularly represents medical providers and consumers in class action litigation. Those seeking more information may contact the firm at medicalbillreview@lakinchapman.com (medical providers) or classaction@lakinchapman.com (consumers), or call (800) 851-5523.
