Heyl Royster


Heyl Royster


App. Court Clarifies Section 8(a) Where Medical Expenses Are Paid at a Negotiated Rate


By: Brad Elward, belward@heylroyster.com

Under section 8(a) of the Illinois Workers’ Compensation Act, the employer is permitted to pay medical expenses at a lower amount negotiated and paid by a third-party insurance carrier, rather than the stipulated fee schedule amounts. According to Section 8(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.

820 ILCS 305/8(a).

In Perez v. Illinois Workers’ Compensation Comm’n, 2018 IL App (2d) 170086WC, the Commission awarded the claimant total temporary disability (TTD) benefits and medical expenses in accordance with sections 8(a) and 8.2(e) without the Commission having specified the amount of the medical expenses. At arbitration the claimant testified that her medical expenses were either paid by Cigna, her then husband’s medical insurance carrier, or paid out-of-pocket. The employer submitted an exhibit listing medical payments made by Cigna, showing payments of $17,597.96 and copayments of $260. The parties entered into a stipulation reflecting the fee schedule amounts for the medical services in question, which totaled $37,767.32, but with a caveat stating “[the employer] disputes the fee schedule is the appropriate basis for calculating [the] amount of medical, if compensable.” Perez, 2018 IL App (2d) 170086WC, ¶ 8.

On review, the circuit court remanded the matter back to the Commission to determine the amount owed for medical expenses. On remand, the Commission issued a new decision, ordering the employer to pay $17,857.96, which was the negotiated amount of medical expenses, and represented the amounts paid by Cigna and the claimant. In its ruling, the Commission, relying on Tower Automotive v. Illinois Workers’ Compensation Comm’n, 407 Ill. App. 3d 427 (1st Dist. 2011), found that section 8(a) “does not require the employer to be a party to the rate agreement in order to receive the benefit of the agreement.” Perez, 2018 IL App (2d) 170086WC, ¶ 12.

On appeal, the claimant argued that under section 8(a), the employer pays the negotiated rate only when the rate is negotiated by the employer or its own insurance carrier. The claimant argued that the negotiated rate in this case was accepted by the third-party carrier, Cigna, which was the then husband’s health insurer, not the workers’ compensation insurer.

The Appellate Court, Workers’ Compensation Commission Division, disagreed with the claimant and affirmed the Commission, finding that section 8(a) contained no language that required the employer to pay the negotiated rate only when it is negotiated by the employer or its own insurance carrier. According to the court, the statute is clear that the only concern is the negotiated rate, not who does the negotiating. The court said, “[h]ad 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.” Id. ¶ 19. The court further rejected any suggestion that the Commission guidelines on fee schedules limited the negotiations to those done by the employer or its carrier, stating that the guidelines “merely clarify that the fee schedule does not preclude a negotiated rate or agreement.” The court said the guidelines are “silent on the issue of who may actually pay or benefit from the negotiated rate.” Id. ¶ 20. In the end, the court noted, “[t]o award claimant any amount for medical expenses beyond the amount actually paid to the medical service providers would result in a windfall to claimant.” Id. ¶ 22.

The result of Perez is that employers can take advantage of any negotiated medical amounts, whether secured through the actions of the claimant, the group carrier, or the employer and its insurance carrier. We all need to keep this new decision and its interpretation of section 8(a) in mind as we value our cases.