In a recent case the Illinois Appellate Court, First District, significantly limited the Respondent’s liability for medical bills which have been satisfied by a group health carrier.  In Tower Automotive v. Worker’s Comp. Comm’n. (Robert Nawrot, Appellee), the Respondent appealed from a decision of the Commission and circuit court awarding medical bills in the amount of $165,289.16.  The Respondent, among other issues, contended that its liability should be limited to the $52,671.82 which was paid to the medical providers by the Petitioner’s group health insurance in full satisfaction of the medical charges.

In agreeing with the employer, the Court noted that the version of Section 8 in place at the time this treatment was rendered required the 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 of a work-related accidental injury.  The Court held that “[b]y paying, or reimbursing an injured employee, for the amount actually paid to the medical service providers, the plain language of the statute is satisfied.

In so holding, the Court rejected the employees argument that the Respondent should be prevented from realizing this “windfall” by operation of the “collateral source rule” stating that the employer should not be able to avail itself of the discount negotiated by the petitioner’s wife’s group health carrier as they did not contribute to the payment of the premiums of that policy.  Looking to the rationale underpinning the WC Act, the Court found that the justification for the collateral source rule – a tortfeasor should not benefit from the expenditures made on behalf of an injured party to which it did not contribute – did not apply in the WC setting.  They noted that the Act is a remedial statute which created a no-fault system and abrogated the employee’s common law right to sue as well as the employer’s right to raise common law defenses.  In other words, the Court noted that the collateral source rule should not apply in IL worker’s compensation claims because there is no tortfeasor.   As such, the Court held that the employer’s obligation is fulfilled  by relieving the employee and his family of the cost and burden of care.

The Court noted that this issue, though one of first impression, is of limited future significance as the 2006 amendments to Section 8(a) 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 in effect at the time the services were rendered.”

This Decision is not yet published and is, therefore, subject to revision.  It may also be appealed to the IL Supreme Court.  We will keep you posted.