WCLA MCLE Medical Bills: How Much Does the Respondent Owe When Another Source Pays? Guest Speaker: Richard E. Aleksy; Corti, Aleksy & Castaneda Wednesday February 23, 2011 from 12:00 pm to 1:00 pm James R. Thompson Center Auditorium, Chicago, IL 1 Hour General MCLE Credit

WCA PA , eff , applies to services rendered after “Sec. 8. The amount of compensation which shall be paid to the employee for an accidental injury not resulting in death is: (a) 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. If the employer does not dispute payment of first aid, medical, surgical, and hospital services, the employer shall make such payment to the provider on behalf of the employee.” “Sec Fee schedule. (a) Except as provided for in subsection (c), on and after February 1, 2006, the maximum allowable payment for procedures, treatments, or services covered under this Act shall be 90% of the 80th percentile of charges and fees…”

Arthur v. Catour, 216 Ill.2d 72 (2005) Personal injury plaintiff was charged $19k for medical treatment, but BC/BS paid $13k in full because of contractual agreements Circuit Court ruled that Plaintiff was limited to seeking what was actually paid by BC/BS but Appellate Court held that Plaintiff is not limited to the amount paid by BC/BS and can seek entire amount billed as long as it is reasonable (Holdridge dissents) Supreme Court: “Plaintiff may present to the jury the amount that her health care providers initially billed for services rendered,” but she must establish the reasonable cost by other means Wills v. Foster, 229 Ill.2d 393 (2008): Applied to Medicare/aid reductions: “We follow the reasonable value approach…Plaintiff may place the entire billed amount into evidence, provided that the Plaintiff establishes the proper foundational requirements to show the bill’s reasonableness. …Trial court erred in reducing award to the amount paid by Medicare/aid.”

Commission Cases Emerson v. Ingalls, 08 IWCC 0410: Commission affirms award $131K in medical bills even though Petitioner’s husband’s health insurance paid only $75K due to negotiated reductions and “balances written off”; dissent refers to “substantial windfall” Bush v. Charles McDuffee Co., 08 IWCC 0641: Commission affirms award of $100K in medical bills based on finding by Arbitrator: “Respondent is liable for the amounts billed, not the amounts paid by Petitioner’s husband’s union insurance. Arthur v. Catour”

Commission Cases Otero v. Khatib Financial, 09 IWCC 0235 : “The Commission thererefore finds that the Arbitrator correctly found Respondent to be liable for the full amount of Petitioner’s medical expenses and not just the amount paid by the Illinois Department of Public Aid.” ($106K v. $25K); citing Arthur and Willis Echols v. Methodist Medical, 09 IWCC 0827 : Commission affirms award for $34K in medical expenses even though “Respondent’s group health plan” paid only $30K

Young v. Pace, No WC Rule 23 Order April 15, WC056446, Arbitrator Carlson, 1/19/06: “Petitioner’s Exhibit #1 is an itemized bill totaling $26, from Accelerated Rehab Centers (for treatment in 2005). The Arbitrator notes that the bill has a zero balance…The Arbitrator notes that $17, of this bill has been paid and the remainder ($8,684.72) has been adjusted/written off.” Arbitrator Carlson says no balance billing. 06IWCC0703, Basurto & DeMunno, 8/23/06: “The Commission further modifies the Decision by awarding Petitioner reasonable and necessary medical expenses in the amount of $27, pursuant to Section 8(a). This award includes the Accelerated Physical Therapy bill in the amount of $26,384.16…Respondent is to receive credit for any amounts paid toward said bills.”

Young v. Pace (cont.) Petitioner files 19(g) to recover $8, balance(?) to Accelerated Circuit Court grants summary judgment in favor of Respondent: “Pace has paid the award of the Commission in full.” Appellate Court reverses and instructs Circuit Court to enter judgment: “Pace bore the burden of proving entitlement to a Section 8(j) credit (What?)…We are not unmindful that our resolution of this appeal will result in a windfall to the claimant.”

Robert Nawrot v. Tower Automotive 06WC025132; 09 IWCC 0210 DA year old forklift operator; neck injury due to repetitive trauma Dr. Schiable does 2 level cervical fusion and revision 1-06 Paid group disability benefits RTW 5-07 Respondent disputed accident & causation

Robert Nawrot v. Tower Automo tive 06WC025132; 09 IWCC 0210 Arbitrator’s Award Accident & causation based on Dr. Schiable’s testimony AWW includes overtime which was mandatory TTD & 35% loss of MAW Penalties denied Medical Expenses: “Medical expenses totaling $ 165, were offered into evidence on behalf of Petitioner. (Px 10) Based upon the testimony of Petitioner as well as all the medical records offered on his behalf, the Arbitrator finds that Petitioner is entitled to an award of $ 165, or an amount as permitted by the medical fee schedule as promulgated pursuant to Section 8(a). No evidence was offered on behalf of Respondent to determine that these amounts were not, in fact, in keeping with the guidelines of the medical fee schedule and the Arbitrator finds that the case of Hill Freight Lines…36 Ill.2d 419 (1967) would cover this situation and determines that the amount as stated in the exhibit is appropriate to be awarded.”Hill Freight Lines…36 Ill.2d 419 (1967)

Robert Nawrot v. Tower Automotive 06WC025132; 09 IWCC 0210 Commission Decision Cross Reviews filed by both Petitioner & Respondent Affirm & adopt; dissents on penalties and causation; medical bills not specifically addressed Circuit Court of Cook County confirms , Judge Tolmaire, 09 L 50296

Tower Automotive v. IWCC No WC, filed Tower asserts that of the $165, that was billed for medical services rendered to the claimant, his wife's group health insurance carrier paid $52,671.82, he paid $1,183.27, and the health care providers wrote off $111, of their charges. We address Tower's argument that the Commission's award of $165, to the claimant under section 8(a) of the Act for reasonable and necessary medical services is erroneous as a matter of law. The amount awarded to the claimant is the total amount that he was billed for medical services, not the amount that the medical service providers were actually paid. According to Tower, the claimant's wife's group health insurance carrier paid $52, of the charges, the claimant paid $1,183.27, and the medical service providers wrote off the $111, balance of their charges. Tower contends that the maximum that it can be required to reimburse the claimant for medical expenses is the amount that was actually paid to the service providers. We agree.section 8(a)

Tower Automotive v. IWCC No WC, filed Section 8(a) requires an employer to "provide and pay" for all first aid, medical, surgical, and hospital services necessary to cure or relieve an injured employee from the effects a work-related accidental injury. By paying, or reimbursing an injured employee, for the amount actually paid to the medical service providers, the plain language of the statute is satisfied. Relying upon the "collateral source rule,“ Petitioner argues that Tower is not entitled to a reduction in the amount which it is required to pay for his medical expenses by reason of discounts 'or write-off‘s of the medical providers' charges which were secured by his wife's group health insurance carrier, as Tower did not contribute to the payment of the premiums for that group health insurance policy. However, the flaw in the claimant's argument is exposed by an understanding of the rational underlying the collateral source rule as compared to the purpose of the Act.

Tower Automotive v. IWCC No WC, filed By limiting an employer's obligation under section 8(a) of the Act to the amount actually paid to the providers of the first aid, medical, surgical, and hospital services necessary to cure or relieve an injured employee from the effects of an accidental injury, the purpose of the Act has been satisfied; that is to say, both he and his family have been relieved of the cost and burdens of that care. It is for this reason that we now hold that the collateral source rule is not applicable to the right to recover under the Act.section 8(a) Although our resolution of this issue is one of first impression, it is of limited future significance, as the legislature has seen fit to amend section 8(a) of the Act to provide that employers are obligated to 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 necessary to cure or relieve from the effects of the accidental injury.“section 8(a)Section 8.2

Tower Automotive v. IWCC No WC, filed This amendatory change to section 8(a) of the Act is applicable to claims for accidental injuries that occur on or after February 1, P.A (eff. July 20, 2005) (amending 820 ILCS 305/8(a) (West 2004)). ??section 8(a)820 ILCS 305/8(a) For the foregoing reasons, we: reverse that portion of the circuit court's judgment which confirmed the Commission award to the claimant of $165, for reasonable and necessary medical expenses; affirm the circuit court's judgment in all other respects; vacate the Commission award to the claimant of $165, for reasonable and necessary medical expenses; and remand this matter to the Commission with directions to award the claimant the amount actually paid to the providers of medical services rendered to him as a result of his injuries of June 30, 2005, and to require Tower to pay and hold the claimant harmless from the payment of any reasonable future medical expenses necessary to cure or relieve him from the effect of his accidental injury of June 30, 2005.

Tower Automotive v. IWCC Dissent Although the majority treats this as a matter of first impression, it is my belief that our supreme court has addressed this issue. In Hill Freight Lines 36 Ill. 2d 419 (1967), the claimant's medical bills had been paid through a union Health and Welfare Fund which operated a medical and hospital benefit plan for its members. The employer argued that it should not be required to "reimburse an employee for medical bills which have never been tendered to him for payment and which are not shown to be his debts.“… The supreme court held as follows: "It is our opinion that the reasonable value of the medical services rendered to an employee are recoverable against the party causing the injury, regardless of whether the employee pays for the medical services by cash, credit or some insurance or benefit plan. As he did not receive the insurance benefits gratuitously and the reasonable value of the medical and hospital services rendered herein were proven, the employer's contention is without merit.”Hill Freight Lines 36 Ill. 2d 419 (1967)

Tower Automotive v. IWCC Dissent The Act contains no provision which prevents the application of the collateral source rule to workers' compensation claims. Although the legislature has amended the Act on numerous occasions, it has not expressly restricted the application of the collateral source rule in claims under the Act, despite having done so in other areas… Further, as the majority points out, when section 8(a) was amended in 2005, the legislature expressly required that the employer pay the lesser of the health care provider's actual charges or the amount set forth in the fee schedule. 820 ILCS 305/8 (a) (West 2006). No provision was made for a reduction of the amount billed to the amount paid to the medical provider through a third party health insurance contract.section 8(a)820 ILCS 305/8 (a)

Negotiated Rate? Leady v. Millenium Rail 10 IWCC 0964 Michael Leady v. Millenium Rail, 08WC009978, 10 IWCC 0964 Majority: “Finally, we award a credit of $ 23, to Respondent under section 8(j) of the Act, for all amounts paid by Blue Cross Blue Shield, as well as all PPO discounts. The Blue Cross Blue Shield group health insurance plan was provided to Petitioner by Respondent. Respondent shall hold Petitioner harmless from any claims and demands by any providers of the benefits for which Respondent is receiving credit under this order.” Dissent: “Section 8(j) was not changed when Section 8.2 was enacted in 2005, to be effective February 1, Prior to February 1, 2006, it was well settled and generally accepted that where a case is compensable under the Act, medical providers were entitled to the reasonable charge for services rendered, and the claimant was not required to bear any expense for necessary and causally related medical treatment.”

Negotiated Rate? Leady v. Millenium Rail Dissent (cont): It is also generally recognized that a reasonable charge prior to February 1, 2006, the fee schedule allowable charge under the Workers' Compensation Act, a negotiated rate by a workers' compensation insurance carrier, and a negotiated rate under a group insurance policy that is not intended to cover expenses incurred under and subject to the Act, may be and almost always are different amounts. Stated differently, medical providers were entitled to be paid different amounts if their services were covered by the Act than if they were not covered by the Act. Generally speaking, the negotiated rate under a group insurance policy is less than either the reasonable charges prior to the 2005 amendments, or the amount allowed under the Workers' Compensation Commission's fee schedule. Prior to the amendments, it was clear that if bills were paid under a group insurance policy contributed to by the employer, and the services underlying those bills were later found to be compensable under the Workers' Compensation Act, the employer was entitled to credit in accordance with Section 8(j) for the amounts paid under the group policy, and remained liable to pay to the employee the reasonable charge under the Act for the services rendered, and the employee remained liable to pay that amount to the medical provider. It is unclear to me from the majority's opinion if they believe that, for medical services rendered after February 1, 2006, once group insurance has paid a medical provider for services which are subsequently determined to be covered by the Act, the provider has no recourse recover the charge allowed under the Act, and the employee has no recourse to recover co-pays, deductibles, and co-insurance payments, expenses that the employee would not incur for medical treatment under the Act. For all of the foregoing reasons, I dissent from that part of the majority's opinion that includes PPO discounts in the credits to which Respondent is entitled pursuant to Section 8(j).