Center Athl. Med. v. Indepen. Med. Billers

889 N.E.2d 750
CourtAppellate Court of Illinois
DecidedMay 28, 2008
Docket1-07-1594
StatusPublished
Cited by2 cases

This text of 889 N.E.2d 750 (Center Athl. Med. v. Indepen. Med. Billers) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Center Athl. Med. v. Indepen. Med. Billers, 889 N.E.2d 750 (Ill. Ct. App. 2008).

Opinion

889 N.E.2d 750 (2008)

CENTER FOR ATHLETIC MEDICINE, LTD., an Illinois Corporation, Plaintiff-Appellant,
v.
INDEPENDENT MEDICAL BILLERS OF ILLINOIS, INC., an Illinois Corporation, and Medorizon, Inc., an Illinois Corporation, Defendants-Appellees.

No. 1-07-1594.

Appellate Court of Illinois, First District, Third Division.

May 28, 2008.

*752 Chuhak & Tecson, P.C., of Chicago (David S. Argentar and Kendale E. Woods, of counsel).

Adler, Murphy & McQuillen, LLP, of Chicago (Lawrence S. Gosewisch and Austin W. Bartlett, of counsel).

Presiding Justice QUINN delivered the opinion of the court:

Plaintiff Center for Athletic Medicine, Ltd. (CAM), filed a two-count amended complaint against defendants Independent Medical Billers of Illinois, Inc. (IMB), and Medorizon, Inc. (Medorizon), alleging that defendants breached their agreement with plaintiff to perform medical billing services and, in the alternative, alleging that defendants' retention of payments without providing promised services resulted in unjust enrichment. Defendants moved for summary judgment and the circuit court granted defendants' motion, finding that the agreement between plaintiff and defendants was void where it constituted improper fee sharing in violation of the Medical Practice Act of 1987 (Medical Practice Act) (225 ILCS 60/22(A)(14) (West 2004)). Plaintiff now appeals. For the following reasons, we affirm.

I. BACKGROUND

On August 23, 2005, plaintiff filed its two-count amended complaint against defendants. Plaintiff is a professional corporation of physicians in the business of providing medical care and services, focusing on sports medicine, in Illinois. Defendant IMB is an Illinois corporation in the business of providing billing, accounts receivable, and collection services for health care providers. Defendant Medorizon is the parent company of IMB. Plaintiff and IMB entered into an agreement on May 2, 1995, in which IMB agreed to provide medical billing services to plaintiff. Plaintiff alleged that at some point after the agreement was executed, Medorizon became the parent company of IMB.

The agreement provided in pertinent part:

"(IMB) will provide the following services for * * * (CAM):
Process all approved charges, payment posting, and follow up on all commercial insurance, * * * Medicare, HMO's, Commercial, Work Comp. and self pay accounts for service dates to commence approximately on or around April 17, 1995. Our primary focus will be that of maximizing CAM reimbursements and minimize your day[s] outstanding from all payors.
* * *
The fee for the above process will be:
-4.50% on all reimbursements.
-6.25% on all claims not originally processed by IMB."

In count I of plaintiff's complaint, plaintiff alleged that defendants breached the contract, inter alia, by failing to maximize plaintiff's reimbursements, handle plaintiff's debt in a timely manner, and properly encode charge documents. Plaintiff alleged that as a direct and proximate result of defendants' breaches of the agreement, approximately 24% of plaintiff's total charges during the term of the agreement had been identified as lost and unrecoverable. Plaintiff alleged that from January 1, 2000, to March 31, 2004, plaintiff suffered damages in excess of $4.4 million as a result of defendants' alleged breaches. In count II of the complaint, plaintiff alleged, in the alternative, that defendants were unjustly enriched by failing to provide *753 agreed-upon services notwithstanding receiving payments from plaintiff for such services.

On September 21, 2006, IMB filed a separate complaint, seeking to recover unpaid fees allegedly owed by plaintiff for IMB's medical billing services. On November 13, 2006, IMB's suit against plaintiff was consolidated with the instant case.

On December 26, 2006, defendants filed a motion for summary judgment on the grounds that plaintiff's breach of contract and unjust enrichment claims were invalid because the agreement was void where it violated the fee-splitting prohibition of section 22(A)(14) of the Medical Practice Act. 225 ILCS 60/22(A)(14) (West 2004). Plaintiff filed a response to defendants' motion for summary judgment, in which plaintiff argued that the agreement did not violate the fee-splitting prohibition of section 22(A)(14) of the Medical Practice Act. Plaintiff also argued that the public policy considerations behind the fee-splitting prohibition were to prevent influencing referral and patient-care decisions based on motivations unrelated to professional judgment and proper treatment. Plaintiff asserted that such public policy concerns were not implicated by the agreement because defendants provided medical billing services, dealing primarily with insurance companies, to maximize reimbursements after medical decisions had been made and treatment rendered. Plaintiff also attached the affidavit of Rebecca Busch in support of its opposition to defendants' motion for summary judgment.

In her affidavit, Rebecca Busch stated that she is the president and chief executive officer of Medical Business Associates and that she has extensive experience, inter alia, with all matters related to this litigation. Busch attested that she was retained by plaintiff to audit accounts receivable and to analyze plaintiff's relationship with defendants. Busch attested that defendants' contractual obligations with plaintiff were composed primarily of activities to ensure the processing of claims and denial management. Busch explained that denial management comprises activities utilized to have medical bills paid by insurance companies and patients. Busch stated that denial management is a "back end service" that is entirely focused on maximizing payment of medical bills by insurance companies and patients. Busch attested that the billing company is a "back end" operational function that has no impact on utilization of services by the patient. Busch also attested that the billing company has no impact on the referral of patients to the provider.

Busch attested that denial management for health providers is necessary due to the complex nature of medical billing. The health-care reimbursement market is complicated by multiple-party contracts, fragmented in the relationships between the patient, the payer, and the plan sponsor. Busch also attested that the practice of billing a percentage of amounts collected for the submission of bills, denial management, and advocacy for the consumer has long been established as the most appropriate protocol. The typical business contract between a billing agent and a provider is based on a percentage fee basis on the actual collections. Busch further attested that the percentage fee basis is consistent with market practices between the payer and the employer, and between the provider and collection services.

Following a hearing on defendants' motion for summary judgment, the circuit court granted defendants' motion and dismissed both counts of plaintiff's complaint. In doing so, the circuit court found that the agreement between the parties was void as against the fee-sharing prohibition of section 22(A)(14) of the Medical Practice *754 Act.

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Bluebook (online)
889 N.E.2d 750, Counsel Stack Legal Research, https://law.counselstack.com/opinion/center-athl-med-v-indepen-med-billers-illappct-2008.