The Illinois Appellate Court affirmed a ruling that a treatment provider could not pursue a claim for payment against an employer as a third-party beneficiary of a settlement.
Michael Sullivan suffered injuries in 2010 while working for F. W. Electric, and while his workers compensation claim was pending, Mr. Sullivan received medical care from Midwest Neurosurgeons, according to the ruling in Midwest Neurosurgeons LLC v. F.W. Electric Inc., filed Oct. 14. In July 2016, Mr. Sullivan agreed to settle his claim with F. W. Electric. The settlement provided that the company would pay the reasonable, necessary and causally related medical expenses for Mr. Sullivan’s injuries.
The agreement also provided that any unpaid bills as of the date of settlement approval would be paid according to the Illinois Medical Fee Schedule. An arbitrator for the Workers’ Compensation Commission approved the settlement in July 2016.
In 2023, Midwest filed a breach-of-contract action against F. W. Electric to recover the costs of the medical services and treatment it provided to Mr. Sullivan in 2010 and 2011.
Midwest alleged that it was an intended third-party beneficiary of the settlement contract, wherein F.W. Electric agreed to pay the reasonable, necessary and causally related medical expenses arising from Mr. Sullivan’s work injuries, and that F.W. Electric breached the contract by not paying $87,204.33 in bills.
F. W. Electric sought a dismissal, contending that the state Workers’ Compensation Act does not allow a medical provider to maintain a private cause of action against an employer for medical services provided to an injured employee. F.W. Electric also alleged that Midwest was not a third-party beneficiary of the settlement contract.
A trial court judge granted the motion to dismiss, finding that Midwest was not a third-party beneficiary.
The Illinois Appellate Court said that whether an entity is a third-party beneficiary of a contract depends on the intent of the parties, as evidenced by the contract language.
The court also said the Workers’ Compensation Act permits a provider to collect unpaid medical expenses from an employee, not an employer, and sets forth various methods by which an employee may enforce an employer’s obligation to pay, but they “must be undertaken by the employee for whose benefit these provisions were enacted.”
This article was first published in Business Insurance
