1 

 2015 IL App (5th) 130402 

 NO. 5-13-0402 

 IN THE 

 APPELLATE COURT OF ILLINOIS 

 FIFTH DISTRICT 

________________________________________________________________________ 

FRANK C. BEMIS, D.C., d/b/a Frank Bemis & Associates, ) Appeal from the 

and DR. FRANK C. BEMIS & ASSOCIATES, ) Circuit Court of 

CHIROPRACTORS, S.C., Individually and on Behalf of ) Madison County.

Others Similarly Situated, ) 

 ) 

 Plaintiffs-Appellants, ) 

 ) 

v. ) No. 05-L-164 

 ) 

EMPLOYERS MUTUAL CASUALTY COMPANY and ) 

EMC PROPERTY & CASUALTY COMPANY, a Wholly ) 

Owned Subsidiary of Employers Mutual Casualty Company, ) 

 ) 

 Defendants-Appellees ) 

 ) 

(Employers Mutual Casualty Company and EMC Property ) 

& Casualty Company, a Wholly Owned Subsidiary of ) Honorable 

Employers Mutual Casualty Company, Third-Party Plaintiffs; ) William A. Mudge, 

and Fair Isaac Corporation, Third-Party Defendant). ) Judge, presiding. 

_______________________________________________________________________ 

 JUSTICE MOORE* delivered the judgment of the court, with opinion. 

 Justices Stewart and Schwarm concurred in the judgment and opinion. 

 *

Justice Spomer was originally assigned to participate in this case. Justice Moore 

was substituted on the panel subsequent to Justice Spomer's retirement and has read the 

briefs and listened to the tape of oral argument. 

NOTICE

Opinion filed May 6, 2015. 

Modified upon denial of 

rehearing July 14, 2015.
2 

OPINION 

¶ 1 The plaintiffs, Frank C. Bemis, D.C., doing business as Frank Bemis & 

Associates, and Dr. Frank C. Bemis & Associates, Chiropractors, S.C. (Bemis), appeal 

the July 18, 2013, judgment of the circuit court of Madison County, which dismissed 

their class action claims against the defendants, Employers Mutual Casualty Company 

and EMC Property & Casualty Company, a wholly owned subsidiary of Employers 

Mutual Casualty Company (Employers Mutual), after the circuit court, on April 5, 2012, 

decertified the following class based on this court's decision in Coy Chiropractic Health 

Center, Inc. v. Travelers Casualty & Surety Co., 409 Ill. App. 3d 1114 (2011): 

"All healthcare providers in Illinois whose reimbursement for medical services 

to an Illinois workers' compensation claimant were [sic] paid at a reduced rate by 

Defendants pursuant to a First Health PPO discount from February 1, 2004 

through [August 16, 2010]." 

For the following reasons, we affirm. 

¶ 2 FACTS 

¶ 3 On August 22, 2007, Bemis filed a motion for class certification regarding claims 

Bemis previously made against Employers Mutual, which were restated in a first 

amended class action complaint filed on July 15, 2008. Many of the facts of this case 

mirror those in Coy, although there are some important differences. As in Coy (id. at 

1115), Bemis entered into contracts with First Health and its predecessor, Community 

Care Network (CCN), to participate in a preferred provider agreement under which 

Bemis agreed to accept discounted reimbursements from payor insurance companies, 
3 

health care plans, or claims administrators with whom First Health and CCN had 

contracted. Like Coy (id.), Bemis alleges that Employers Mutual discounted bills it 

received from Bemis without steering patients to him because Employers Mutual did not 

offer financial incentives to its insureds for utilizing Bemis as their provider. As in Coy 

(id.), the allegations in the first amended complaint arise in the context of workers' 

compensation insurance, where insurance companies could not, by law, require 

employees to treat with a specific provider, except in very limited circumstances.1

 

¶ 4 The first amended complaint in the instant case contains the same theories of 

liability as the complaint in the Coy case. In count I, Bemis alleged that Employers 

Mutual's practice of discounting bills without providing financial incentives amounted to 

a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (the 

Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2008)) because Employers Mutual 

misrepresented to Bemis and the class that they were entitled to a preferred provider 

organization (PPO) discount. See Coy, 409 Ill. App. 3d at 1116. In count II, Bemis 

alleged unjust enrichment by Employers Mutual as a result of this practice. See id. In 

count III, Bemis alleged an alternative cause of action for a breach of contract. See id. 

Finally, in count IV, Bemis alleged a civil conspiracy based on Employers Mutual's 

 1

Effective June 28, 2011, the Workers' Compensation Act was amended to permit 

employers to use a preferred provider program approved by the Illinois Department of 

Insurance, and to require an injured employee to be treated from a preferred provider 

network. 820 ILCS 305/8.1a (West 2012). 
4 

practice of entering into PPO networks with no intention to provide financial incentives 

to its insureds for utilizing the network. See id. 

¶ 5 Exhibit A to the first amended complaint is a document entitled "Community Care 

Network Professional Care Provider Agreement" (provider agreement) entered into 

between First Health's predecessor, CCN, and Bemis, dated April 28, 1998. This 

provider agreement differs somewhat from the provider agreements involved in the Coy

case, in that the provider agreement in the instant case does not specifically refer to a 

workers' compensation program or workers' compensation services. See id. at 1116-17. 

However, the provider agreement also does not exclude workers' compensation programs 

or services. Section 2.01 of the provider agreement reads as follows: 

"Provider hereby agrees to provide Health Care Services or Benefits to 

Beneficiaries or Claimants as set forth in Insuring Agreements, at the 

Reimbursement Amounts determined and established through Payor Agreements 

with Payors, which Payor Agreements are incorporated herein by reference. Such 

Reimbursement Amounts are set forth in Exhibit A attached hereto and 

incorporated herein." 

¶ 6 In section 1.06, the provider agreement defines "Payor Agreement" as "an 

instrument between a Payor and CCN or its authorized representative which provides for 

CCN providers, including Provider pursuant to this Agreement, to render Health Care 

Services or Benefits at Reimbursement Amounts determined and established by CCN and 

such Payor." In section 2.02, the provider agrees to accept the reimbursement amounts in 

Exhibit A as payment in full for health care services or benefits provided to beneficiaries 
5 

or claimants. In section 4.01, "Provider authorizes CCN to act on its behalf to contract 

for the provision of Health Care Services or Benefits, at Reimbursement Amounts set 

forth in Exhibit A." 

¶ 7 Section 5 of the provider agreement, entitled "Covenants of Provider," contains 

several provisions relevant to the issues on appeal. In section 5.07, the provider agrees 

that: 

"Except in an emergency and/or when medical necessity dictates, to admit 

Beneficiaries or Claimants, in each instance where hospitalization is required, to a 

hospital contracting with CCN unless a Beneficiary or Claimant specifically 

requests otherwise after having been notified by Provider that the requested 

hospital is not a CCN hospital." 

In section 5.09, the provider agrees as follows: 

"To refer Beneficiaries or Claimants, in each instance in which referral is required, 

to other CCN providers, unless Provider, in his/her professional judgment, 

determines that the Beneficiary's or Claimant's needs require otherwise and 

Beneficiary or Claimant so agrees after being notified by Provider that the 

proposed provider is not a CCN Provider." 

As in Coy, there is no provision in the preferred provider agreement promising Bemis 

that patients would be steered to him via the use of financial incentives. See id.

¶ 8 A document was appended to the first amended class action complaint containing 

similar information as was contained in the "Explanation of Reimbursement" that was 

attached to the complaint in Coy. See id. at 1117. According to this document, Bemis 
6 

billed Employers Mutual for two chiropractic manipulations that were performed on a 

workers' compensation claimant in September of 2004. Bemis charged $31 for each 

manipulation, and according to the document, Employers Mutual discounted each charge 

by $7. A notation after the itemization of the discounts states, "Preferred Provider 

Organization: FIRST HEALTH." 

¶ 9 The remaining facts of the instant case deviate from the facts in Coy. Unlike Coy, 

where the payor agreement between First Health's predecessor, CCN, and Travelers 

appeared of record, no payor agreement between First Health or CCN and Employers 

Mutual appears of record in the case at bar, and as will be set forth in more detail below, 

no such payor agreement exists. On November 13, 2008, Employers Mutual filed an 

amended third-party complaint against Fair Isaac Corporation (Fair Isaac), stating claims 

against Fair Isaac for contractual and common law indemnity, as well as unjust 

enrichment. According to the third-party complaint, on or about June 26, 1998, 

Employers Mutual entered into a software license agreement with Fair Isaac's 

predecessor corporation, CompReview, Inc., and on or about November 13, 2003, an 

additional services addendum to the software license agreement with Fair Isaac itself. 

Both agreements were attached to the third-party complaint.

¶ 10 Pursuant to the software license agreement and its addendum, Fair Isaac provided 

computer software to Employers Mutual which provided electronic access to preferred 

provider networks such that the preferred provider networks would review bills received 

by Employers Mutual in order to determine whether the bills were subject to a PPO 

agreement. After the software determined the applicability of a PPO reduction, Fair Isaac 
7 

then advised Employers Mutual of the amount of said reduction by providing Employers 

Mutual with an explanation of benefits. According to the third-party complaint, 

Employers Mutual relied on Fair Isaac to properly advise it as to whether a PPO 

reduction could be taken in any particular case and Employers Mutual paid Fair Isaac a 

fee based, in part, on the percentage of the PPO reductions taken. 

¶ 11 Following a period of class certification discovery, Bemis filed a "Memorandum 

in Support of Class Certification." In the memorandum, with citation to the deposition of 

Employers Mutual's employees, further detailed below, Bemis explains the procedure 

Employers Mutual used to apply PPO discounts to medical bills submitted for payment 

on workers' compensation claims. According to Bemis's memorandum, Employers 

Mutual's claims processors enter information from the bills into a computer program 

called Smart Advisor, which is a program that Employers Mutual contracted with Fair 

Isaac to use to provide access to PPO networks. After the bills have been entered into 

Smart Advisor, "they are sent through the software to the PPO network administrators 

who then apply the PPO network discounts." The bills are then sent back to Employers 

Mutual through the Smart Advisor program. 

¶ 12 Sometime later, it appears that Bemis filed a "First Amended Memorandum in 

Support of Class Certification." Although there are exhibits to this first amended 

memorandum in the record, as well as responses from Employers Mutual and Fair Isaac, 

this court is unable to locate the memorandum itself. Interestingly, in its brief on appeal, 

Employers Mutual argues that Bemis has conceded that First Health authorized Fair Isaac 

to enter into an agreement with Employers Mutual giving it access to the First Health 
8 

network, and in support thereof, provides the following quote from the description of the 

bill discounting process contained within Bemis's first amended memorandum, but states 

that "citation to the record is omitted": 

"After the bills have been entered into Smart Advisor, they are sent through the 

software to First Health who then applies the PPO network discounts. Comp 

Review [now known as Fair Isaac] only provides the electronic bridge between 

Employers and First Health." 

Bemis's reply brief does not address this argument or explain the absence of its "First 

Amended Memorandum in Support of Class Certification." 

¶ 13 The exhibits to Bemis's "First Amended Memorandum in Support of Class 

Certification" contain, inter alia, the relevant contracts between Employers Mutual and 

Fair Isaac and its predecessor corporation, CompReview, Inc. (CompReview). 

Employers Mutual entered into a software license agreement with CompReview on June 

26, 1998, in which CompReview granted Employers Mutual a license to use 

CompReview's "bill review and repricing computer program" for certain designated 

states, including Illinois, for a monthly fee. The software license agreement contains 

provisions for the "selection, implementation, and placement of *** PPO Networks" to 

be automated within the software. The software license agreement provides that, whether 

initiated by Employers Mutual or CompReview, all PPO networks are to be directed 

through CompReview, which has the right to accept or deny a PPO network based on the 

ability to automate the network, or by the "inability for [CompReview] to recognize 

benefit by automating such said network." 
9 

¶ 14 In the software license agreement, Employers Mutual agrees that if more than one 

PPO network is utilized, priority as to which network would be used to discount any 

given bill would be given "in a predetermined order agreed to between [CompReview] 

and the PPO Networks that provide [CompReview] access to the names of their Providers 

and Contract Rates." As alleged in Employers Mutual's amended third-party complaint, 

the software license agreement contains provisions for indemnification of Employers 

Mutual. The scope of these indemnification provisions and the merit of Employers 

Mutual's third-party complaint against Fair Isaac are not at issue in this appeal. 

¶ 15 It does not appear from the exhibits to the initial software license agreement that 

CCN or First Health were included in the software package. However, in 2004, 

Employers Mutual and Fair Isaac, as a successor corporation of CompReview, entered 

into a "Change Request to Services," in which Employers Mutual elected to "receive" 

First Health as "an additional PPO Network" and agreed to pay all associated fees. 

According to this document, Employers Mutual would have access to the First Health 

network in several states, including Illinois, as of February 1, 2004. It appears from this 

document that First Health was considered a network for repricing workers' 

compensation bills, and that Fair Isaac's fee for providing this electronic access to First 

Health's network was to be 25% of any discounts that Employers Mutual received as a 

result of this access. 

¶ 16 Exhibit A to the "Change Request to Services," entitled "Requirements," contains 

terms that Employers Mutual agreed to follow in reference to "First Health PPO Network 

Services." Noteworthy in terms of the disposition of this appeal, Employers Mutual 
10 

agreed to "offer the First Health Network to its eligible workers within specified 

geographic areas" and to "encourage claimants to use services of contract Providers 

through use of work place posters, provision of directories and educational material" or 

other means "unless prohibited by law." 

¶ 17 On September 12, 2006, Employers Mutual and Fair Isaac entered into an 

"Application Service Provider Agreement" (2006 Agreement), whereby Employers 

Mutual gave Fair Isaac a license to use its bills, claim, and medical information, content, 

and data, and Fair Isaac granted Employers Mutual a license to use its bill processing 

services. With regard to any "third[-]party products" provided by Fair Isaac, Employers 

Mutual agreed to comply with the terms and conditions of any contractual obligations to 

use or access such products, which Fair Isaac promised to provide to Employers Mutual. 

In the 2006 Agreement, Fair Isaac promised as follows: 

 "4.4 PPO Network Obligations. [Fair Isaac] warrants to make reasonably 

commercial efforts to ensure that [Employers Mutual's] use of the Services, 

including but not limited to Bill repricing, does not violate any federal, state or 

local statutes, laws or regulations or the contractual rights and/or obligations 

imposed on PPO Networks and Providers by the contractual arrangements 

between the PPO Network and the Providers, and that based on [Fair Isaac's] 

agreements with PPO Networks and Providers, [Employers Mutual] had the right 

to apply the Contract Rate to a properly submitted bill. 

 * * * 
11 

 5.1 [Fair Isaac] Indemnification. [Fair Isaac] agrees to indemnify 

[Employers Mutual] and its directors, officers and employees and shall hold it and 

such persons harmless against any and all claims (including third[-]party claims), 

losses, costs, damages, liabilities and expenses, including without limitation, legal 

fees and costs incurred by [Employers Mutual,] arising out of or in connection 

with a determination that [Employers Mutual] was not entitled to access the PPO 

Networks or Contract Rates and apply such to Bills submitted to [Fair Isaac] by 

[Employers Mutual]." 

¶ 18 Exhibit A-1 to the 2006 Agreement is an "Order Form: SmartAdvisor with 

Capstone Decision Manager." This form "describes the Hosting Services and certain 

other Services provided to [Employers Mutual] under the terms and conditions of the 

[2006 Agreement]." Paragraph 9 of the order form states that Fair Isaac will provide 

Employers Mutual with access to the PPO networks designated therein. This paragraph 

states that Employers Mutual is to be bound, to the same extent as Fair Isaac, by all PPO 

network-imposed contractual obligations required for access to such PPO network, and 

that the 2006 Agreement is subject to any PPO network-imposed obligation or any other 

form of requirement imposed by a PPO network. With regard to First Health, the order 

form contained the same requirements as the 2004 "Change Request to Services." 

Sample First Health network contracts were also attached to the 2006 Agreement 

between Employers Mutual and Fair Isaac. However, these samples were provider 

agreements. There were no sample payor agreements attached to the 2006 Agreement, at 

least as it is contained within the record on appeal submitted to this court. 
12 

¶ 19 The depositions of, inter alia, Employers Mutual's medical management 

employee, Mary Jane Allgood, and its medical claims service manager, Kathleen 

Knutsen, are contained in the record on appeal. Both of these employees testified that the 

Fair Isaac software that Employers Mutual purchased provides an "electronic bridge" 

which "exports" the bills submitted to Employers Mutual to First Health, and that First 

Health "re-prices" the bills according to the "contract rates" and sends them back to 

Employers Mutual for payment. 

¶ 20 On April 27, 2010, a hearing was held before the Honorable Daniel J. Stack on 

Bemis's amended motion for class certification. On August 16, 2010, Judge Stack issued 

a detailed order in which he analyzed the prerequisites for a class action as set forth in 

section 2-801 of the Illinois Code of Civil Procedure (the Code) (735 ILCS 5/2-801 

(West 2010)) and certified the class. On September 15, 2010, Employers Mutual filed a 

petition for leave to appeal Judge Stack's order certifying the class in this court pursuant 

to Illinois Supreme Court Rule 306(a)(8) (eff. Feb. 26, 2010), which this court denied on 

November 12, 2010. Bemis v. Employers Mutual Casualty Co., No. 5-10-0449 (2010) 

(unpublished order). On December 20, 2010, Employers Mutual filed a petition for leave 

to appeal the order certifying the class to the Illinois Supreme Court pursuant to Illinois 

Supreme Court Rule 315 (eff. Feb. 26, 2010), which was denied on March 30, 2011. 

Bemis v. Employers Mutual Casualty Co., No. 111595 (Ill. Mar. 30, 2011). 

¶ 21 On March 14, 2011, this court issued its opinion in Coy Chiropractic Health 

Center, Inc. v. Travelers Casualty & Surety Co., 409 Ill. App. 3d 1114 (2011) (modified 

upon denial of rehearing May 9, 2011). On April 25, 2011, Employers Mutual filed a 
13 

motion for reconsideration and to decertify the class in the instant case on the basis of the 

Coy opinion. On April 5, 2012, the Honorable William A. Mudge, who had been 

assigned the case following Judge Stack's retirement, entered an order granting the 

motion for reconsideration and decertifying the class. On April 12, 2012, Bemis filed a 

motion for reconsideration or clarification of Judge Mudge's order, which he denied on 

May 1, 2012. On May 9, 2012, Bemis filed a petition for leave to appeal the 

decertification order in this court pursuant to Illinois Supreme Court Rule 306(a)(8) (eff. 

Feb. 26, 2010), which this court denied on June 5, 2012. Bemis v. Employers Mutual 

Casualty Co., No. 5-12-0200 (2012) (unpublished order). Bemis then filed a petition for 

leave to appeal the decertification order to the Illinois Supreme Court, pursuant to Illinois 

Supreme Court Rule 315 (eff. Feb. 26, 2010), and that petition was denied on September 

26, 2012. Bemis v. Employers Mutual Casualty Co., No. 114576 (Ill. Sept. 26, 2012). 

On October 31, 2012, Employers Mutual filed a motion in the circuit court for the entry 

of judgment in its favor, which Judge Mudge granted on July 18, 2013. On August 14, 

2013, Bemis filed a notice of appeal from the judgment. 

¶ 22 On May 6, 2015, this court issued its original opinion affirming the circuit court's 

entry of judgment in favor of Employers Mutual. On May 26, 2015, Bemis filed a 

petition for rehearing. After consideration of the petition for rehearing, we issue this 

modified opinion upon denial of rehearing to address the issues Bemis raises therein. 

¶ 23 ANALYSIS 

¶ 24 As we set forth in Coy, " '[t]he decision regarding class certification is within the 

discretion of the trial court and will not be disturbed on appeal unless the trial court 
14 

abused its discretion or applied impermissible legal criteria.' " 409 Ill. App. 3d at 1118 

(quoting Cruz v. Unilock Chicago, Inc., 383 Ill. App. 3d 752, 761 (2008), citing Smith v. 

Illinois Central R.R. Co., 223 Ill. 2d 441, 447 (2006)). Although the decision of whether 

to certify a class typically rests upon the factors set forth in section 2-801 of the Code 

(735 ILCS 5/2-801 (West 2012)), in Coy, this court followed the Illinois Supreme Court's 

analysis in Barbara's Sales, Inc. v. Intel Corp., 227 Ill. 2d 45, 72 (2007), finding that 

"there is no need to determine whether the prerequisites of the class action are satisfied if, 

as a threshold matter, the record establishes that the plaintiffs have not stated an 

actionable claim." Coy, 409 Ill. App. 3d at 1118. Here, Judge Mudge based his order 

decertifying the class on his finding that, based on our opinion in Coy, Bemis did not 

establish an actionable claim against Employers Mutual. On appeal, Bemis first argues 

that our decision in Coy was wrongly decided. Second, Bemis argues that this case can 

be distinguished from Coy because there is no payor agreement between First Health and 

Employers Mutual, and there is no evidence in the record to show that First Health 

authorized Fair Isaac to act as its representative in granting Employers Mutual access to 

the network. We will address each of these arguments in turn. 

¶ 25 We first address Bemis's argument that this court's decision in Coy was made in 

error. In Coy, we held that because the plaintiffs' provider agreements with First Health 

did not contain provisions promising any particular steerage or financial incentives, the 

plaintiffs could not state a cause of action against the insurance company for a breach of 

contract. Id. at 1119. For the same reasons, we found that the insurance company's 

statement to the plaintiffs, that they were entitled to take a discount in accordance with 
15 

the First Health network, was not an actionable misrepresentation under the Consumer 

Fraud Act. Id. at 1122. Bemis argues that these findings were made in ignorance of clear 

Illinois Supreme Court precedent, which holds that the laws in operation at the time of an 

agreement become part of the contract by operation of law. See, e.g., Schiro v. W.E. 

Gould & Co., 18 Ill. 2d 538, 544-45 (1960). According to Bemis, because section 370i of 

the Illinois Insurance Code (215 ILCS 5/370i (West 2008)) defines a PPO as an 

arrangement requiring incentives, and because administrative regulations governing PPO 

networks (see 50 Ill. Adm. Code 2051.55(c)(1)(A), amended at 22 Ill. Reg. 5126 (eff. 

Dec. 9, 1997), and repealed at 34 Ill. Reg. 161 (eff. Dec. 16, 2009); and 50 Ill. Adm.

Code 2051.280(a), adopted at 34 Ill. Reg. 163, 177 (eff. Dec. 16, 2009)) require that 

incentives be provided to insureds or beneficiaries for utilizing a network provider, such a 

requirement must be read into any purported payor agreement as an implied term. This 

argument fails for the following reasons. 

¶ 26 First, we disagree that section 370i of the Illinois Insurance Code (215 ILCS 

5/370i (West 2008)) defines a PPO as an arrangement requiring incentives. That section, 

entitled "Policies, agreements or arrangements with incentives or limits on reimbursement

authorized" (emphasis added), provides, in subsection (b), as follows: 

 "(b) An insurer or administrator may: 

 (1) enter into agreements with certain providers of its choice relating to health 

care services which may be rendered to insureds or beneficiaries of the insurer or 

administrator, including agreements relating to the amounts to be charged the 

insureds or beneficiaries for services rendered; 
16 

 (2) issue or administer programs, policies or subscriber contracts in this State 

that include incentives for the insured or beneficiary to utilize the services of a 

provider which has entered into an agreement with the insurer or administrator 

pursuant to paragraph (1) above." (Emphasis added.) 215 ILCS 5/370i(b) (West 

2008). 

¶ 27 The above-cited statutory provision does not purport to define a PPO and does not 

require incentives to be a provision of a provider contract. Even if we were to adopt 

Bemis's characterization of the statute as one defining a PPO, our reading of the 

permissive language of the statute reveals that it provides insurers and administrators 

with the flexibility to contract with providers to limit reimbursement amounts, to require 

incentives, or both. Subsection (c) provides specific disclosures in the event that an 

insurer "arranges, contracts with, or administers contracts with a provider whereby 

beneficiaries are provided an incentive to use the services of such provider" as authorized 

by subsection (b)(2). 215 ILCS 5/370i(c) (West 2008). These disclosures are not 

required in situations authorized by (b)(1), wherein the contract is merely a contract to 

limit reimbursement amounts. We see no way to read subsection (b)(2) as one defining a 

PPO, without reading (b)(1) in the same way. 

¶ 28 Turning to the administrative regulations, cited above, we find that such 

regulations govern PPO administrators, such as First Health, and set forth provisions that 

are required of payor agreements. In Coy, we based our holding that the plaintiffs could 

not state a claim for a breach of contract against the insurance company on the fact that 

the plaintiffs were not promised financial incentives in their provider agreements, which 
17 

were the only contracts to which they were a party. 409 Ill. App. 3d at 1119. Our 

discussion of the promises made in the payor agreement at issue was a secondary 

discussion pointing out that, "[e]ven if it could be said that the plaintiffs are third-party 

beneficiaries to the payor agreement," the insurance company only promised to direct 

patients to network providers "as permitted by applicable law." Id. The first amended 

class action complaint does not state a cause of action for a breach of contract based on 

Bemis's purported status as a third-party beneficiary, but instead, its allegations presume 

that the provider agreement between Bemis and First Health and the payor agreement 

between First Health and/or its authorized representative are to be considered one 

contract. There are many potential problems with that theory (see Walsh Chiropractic, 

Ltd. v. StrataCare, Inc., 752 F. Supp. 2d 896, 905-07 (S.D. Ill. 2010)), but this court need 

not make a determination of whether the two agreements could be considered one 

instrument, because, as detailed below, there are legal inconsistencies that are inherent in 

the proposition that any administrative regulation purporting to require financial 

incentives would be an implied term in this case. 

¶ 29 On rehearing in Coy, we briefly addressed the plaintiffs' argument that the 

regulations governing PPO administrators should be considered an implied term of the 

payor agreement, and thus, the provider agreement, by operation of law. 409 Ill. App. 3d 

at 1121. The payor agreement in Coy, and the software license agreement in the case at 

bar, both require the insurance company to provide steerage "as permitted by applicable 

law" in the case of the former, and "unless prohibited by law" in the case of the latter. 

During the relevant time period, in the context of workers' compensation, applicable 
18 

Illinois law did not allow for financial incentives for employers to steer injured workers 

to network providers. See 820 ILCS 305/8(a) (West 2010).2

 To imply financial 

incentives as a contractual term in workers' compensation cases would ignore the plain 

language of the Workers' Compensation Act that prohibits such incentives. This is a 

contradiction that negates Bemis's argument. 

¶ 30 The irreconcilable conflict that results from a fair application of the rule that 

Bemis advocates, that the law in effect at the time of a contract becomes part of the 

contract by operation of law, is a result of the incomplete nature of Bemis's statement of 

the applicable rule. A complete statement of this rule contains an important caveat, and 

that is, the rule applies only when the contract itself does not contradict application of the 

law to be implied as a term. See Illinois Bankers' Life Ass'n v. Collins, 341 Ill. 548, 553 

(1930); In re Estate of Savage, 73 Ill. App. 3d 656, 659 (1979); Larned v. First Chicago 

Corp., 264 Ill. App. 3d 697, 699 (1994); Lincoln Towers Insurance Agency, Inc. v. 

Boozell, 291 Ill. App. 3d 965, 969 (1997); Brandt v. Time Insurance Co., 302 Ill. App. 3d 

159, 170 (1998); Jewelers Mutual Insurance Co. v. Firstar Bank Illinois, 341 Ill. App. 3d 

14, 18-19 (2003). For example, in Schiro, where the Illinois Supreme Court held that a 

 2

Although the provider agreement in Coy specifically mentioned workers' 

compensation, Bemis's provider agreement required Bemis to accept reimbursement at 

contract rates from any First Health network payor, and nothing in the provider 

agreement, nor the administrative regulations Bemis cites, excludes workers' 

compensation patients. 
19 

building contract contained an implied term requiring compliance with applicable 

building ordinances, the contract left open the standards to which the building was to be 

built. Schiro v. W.E. Gould & Co., 18 Ill. 2d 538, 544 (1960). In fact, the Illinois 

Supreme Court reasoned that "the parties to the contract would have expressed that which 

the law implies 'had they not supposed that it was unnecessary to speak of it because the 

law provided for it.' (12 I.L.P., 399.)" Id. The court went on to explain that 

"[c]onsequently, the courts, in construing the existing law as part of the express contract, 

are not reading into the contract provisions different from those expressed and intended 

by the parties *** but are merely construing the contract in accordance with the intent of 

the parties." Id. The same is not true in the case at bar, where Bemis agreed to accept 

discounts from all First Health network payors, which would include those covering 

workers' compensation patients where, during the relevant time period, applicable law 

prevented financial incentives. We find that it is for this reason that the payor agreement 

in Coy, and the software license agreement in the case at bar, required payors to provide 

steerage in accordance with, or unless prohibited by, applicable law.3

 3

Nor do we find that such a caveat would violate fundamental Illinois public 

policy. See Larned v. First Chicago Corp., 264 Ill. App. 3d 697, 700 (1994) (the parties 

may only contradict application of a particular law within a contract if that law does not 

embody fundamental Illinois public policy). As stated before, subsection 370i(b) of the 

Illinois Insurance Code appears to permit, but not require, insurers or administrators to 

contract with providers simply to limit reimbursement amounts or to include a provision
20 

¶ 31 The foregoing analysis illustrates our statement in Coy that, assuming that the PPO 

arrangement at issue violated the above-cited administrative regulations due to the 

limiting language in the payor agreement, or in this case, software license agreement, 

requiring Employers Mutual to steer "unless prohibited by law," the remedy for that 

violation is not a cause of action for breach of contract against Employers Mutual 

because these regulations, which are set forth by the Department of Insurance, govern the 

PPO administrators, such as First Health.4

 409 Ill. App. 3d at 1121. "It is the province of 

the Department of Insurance, and not this court, to determine whether the payor 

agreements met the requirements of the regulations." Id. For the foregoing reasons, we 

reaffirm our holding in Coy.

¶ 32 Before we turn our attention to Bemis's argument that it was error to decertify the 

class based on Coy due to the absence of a contract in the record proving that Fair Isaac 

was an authorized representative of First Health, we will briefly address Bemis's 

argument that, assuming Fair Isaac was authorized to contract with Employers Mutual on 

behalf of First Health, Employers Mutual's payor agreement was per se invalid under the 

terms of the provider agreement. According to Bemis, because the recitals in the 

provider agreement state that "CCN [First Health's predecessor] intends to execute 

 

for incentives. We find no fundamental public policy favoring one type of contract over 

another. 

4

The record reflects that Bemis filed a class action against First Health, which was 

settled.
21 

contracts with Payor organizations which offer a preferred provider or exclusive provider 

health care coverage plan," and Employers Mutual did not offer such a plan, Bemis 

should have a cause of action against Employers Mutual for breach of contract, fraud, or 

unjust enrichment. We do not agree. There is no allegation in the complaint nor 

evidence in the record that Employers Mutual ever promised or represented to Bemis, or 

anyone, that it offered a "preferred provider or exclusive provider health care coverage 

plan," as was contemplated in the recitals to the provider agreement between Bemis and 

CCN (First Health). The actual terms of the provider agreement do not define "payor" as 

an entity that offers such a plan, but rather, define "payor" as an entity which has an 

obligation to provide benefits to a claimant and a "payor agreement" as an agreement 

between CCN (First Health) or its authorized representative and a "payor" which 

provides for providers such as Bemis to render health services to claimants at the agreed 

reimbursement amounts. For these reasons, we find no justification for imputing CCN 

(First Health's) intentions as stated in the recitals to the provider agreement onto 

Employers Mutual, a nonsignatory to the provider agreement. Accordingly, we will 

proceed to determine the merit of Bemis's arguments that this case is distinguishable from 

Coy on the basis that there is no proof that Fair Issac was an "authorized representative" 

of First Health. 

¶ 33 In order to assess the viability of Bemis's causes of action against Employers 

Mutual in light of the absence, in the record, of a contract that demonstrates Fair Isaac 

was an authorized representative of First Health, we must examine each cause of action 

in turn. First, we find that the absence of this contract between First Health and Fair 
22 

Isaac does not change our analysis of Bemis's claim for breach of contract against 

Employers Mutual. A breach of contract claim necessarily assumes that a contract did 

exist between these parties. If Fair Isaac was not an authorized representative of First 

Health, then in no case could it be said that a contract existed between Bemis and 

Employers Mutual, under either an incorporation-by-reference theory or a third-partybeneficiary theory, because the software license agreement could not be construed as a 

"payor agreement" as that term is defined in the provider agreement. Accordingly, the 

absence of a contract of record between First Health and Fair Isaac does not distinguish 

the breach of contract claim in the case at bar from the one in Coy, and the circuit court 

was correct in finding that Bemis cannot state a cause of action for breach of contract 

against Employers Mutual based on this record. 

¶ 34 We now turn to Bemis's cause of action for a violation of the Consumer Fraud Act 

(815 ILCS 505/1 et seq. (West 2008)). As we set forth in Coy: 

 "The elements of a Consumer Fraud Act action are as follows: 

'(1) a deceptive act or practice by the defendant, (2) the defendant's intent 

that the plaintiff rely on the deception, (3) the occurrence of the deception 

in the course of conduct involving trade or commerce, and (4) actual 

damage to the plaintiff (5) proximately caused by the deception.' " 409 Ill. 

App. 3d at 1122 (quoting Avery v. State Farm Mutual Automobile 

Insurance Co., 216 Ill. 2d 100, 180 (2005)).

¶ 35 The deceptive act or practice on the part of Employers Mutual that Bemis alleges 

is Employers Mutual's notation on the explanation of benefits it sent Bemis which stated 
23 

that the bill was being discounted based on "Preferred Provider Organization: FIRST 

HEALTH." In Coy, we found that it was clear from the record that there was no 

deceptive act or practice by the defendant, because the defendant did belong to the First 

Health network. Our finding was based on the fact that the payor agreement between 

First Health and the defendant, which provided the defendant access to the First Health 

network, was contained in the record. Id. Here, as Bemis aptly points out, there is no 

payor agreement between First Health and Employers Mutual. Instead, the record 

contains a software license agreement between Fair Isaac and Employers Mutual, 

purporting to grant access to the First Health network via the Smart Advisor software, 

and containing provisions substantially similar to those contained in the payor agreement 

in Coy. Bemis argues that this distinction raises a question regarding whether Employers 

Mutual's statement in the explanation of benefits it sent to Bemis, which suggested it had 

access to the First Health network, was deceptive. According to Bemis, although the 

provider agreement between Bemis and First Health defines "payor agreement" as "an 

instrument between a Payor and CCN or its authorized representative," absent a contract 

between First Health and Fair Isaac, there is no evidence in the record on which to base a 

determination that Fair Issac was an "authorized representative" of First Health. We 

disagree. 

¶ 36 We find evidence in the record to establish that First Health authorized Fair Isaac 

to provide access to its network. As detailed in Bemis's memorandum in support of class 

certification, and the deposition testimony of the claims handlers for Employers Mutual, 

and as reflected in the software license agreement itself, the Smart Advisor software 
24 

created a bridge to First Health, and First Health verified Employers Mutual's status as a 

First Health payor. We find that the fact that First Health accepted the transmission of 

Employers Mutual's bills over Fair Isaac's network, applied the PPO discount, and sent 

the bill back over Fair Isaac's network to Employers Mutual provides proof that Fair 

Isaac was an "authorized representative" of First Health. Even if First Health merely 

provided Fair Isaac access to its network provider database for use in its Smart Advisor 

software, such an act would constitute an authorization as well. Accordingly, the 

software license agreement is to be considered a "payor agreement" pursuant to the terms 

of Bemis's provider agreement, and any representation by Employers Mutual that it 

belonged to the First Health network is not actionable under the Consumer Fraud Act. 

¶ 37 With regard to Bemis's claim for unjust enrichment, we find that the analysis we 

employed in Coy applies and supports Judge Mudge's decision to decertify the class 

because no such cause of action can be stated as between the parties. 409 Ill. App. 3d at 

1122-23. Employers Mutual cannot be said to have retained a benefit to Bemis's 

detriment because the record establishes that it had a legitimate payor agreement with an 

authorized representative of First Health. See id. at 1123. Nor is this a case where Bemis 

rendered services to Employers Mutual such that a quasi-contract arose for the reasonable 

price of those services. See id. Rather Bemis's services were to the injured employee 

and/or his employer, who is obligated to pay for the injured employee's treatment by 

virtue of Illinois workers' compensation law. Id. For these reasons, Judge Mudge did not 

err in decertifying this class based on a theory of unjust enrichment. And because any 

claim for civil conspiracy requires wrongdoing on the part of Employers Mutual, that 
25 

claim would not give rise to a cause of action that would justify certification of the class. 

See Adcock v. Brakegate, Ltd., 164 Ill. 2d 54, 62 (1994) ("Civil conspiracy consists of a 

combination of two or more persons for the purpose of accomplishing by some concerted 

action either an unlawful purpose or a lawful purpose by unlawful means." (citing Smith 

v. Eli Lilly & Co., 137 Ill. 2d 222 (1990))). Thus, because we have determined that the 

record belies all of the legal theories Bemis pleads in his first amended class action 

complaint, the circuit court did not err in decertifying the class. See Coy, 409 Ill. App. 3d 

at 1118 (citing Barbara's Sales, Inc. v. Intel Corp., 227 Ill. 2d 45, 72 (2007)). 

¶ 38 CONCLUSION 

¶ 39 For the foregoing reasons, the judgment of the circuit court of Madison County in 

favor of Employers Mutual is affirmed. 

¶ 40 Affirmed. 
2015 IL App (5th) 130402 

NO. 5-13-0402 

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

FRANK C. BEMIS, D.C., d/b/a Frank Bemis & Associates, ) Appeal from the 

and DR. FRANK C. BEMIS & ASSOCIATES, ) Circuit Court of 

CHIROPRACTORS, S.C., Individually and on Behalf of ) Madison County. 

Others Similarly Situated, ) 

 ) 

Plaintiffs-Appellants, ) 

 ) 

v. ) No. 05-L-164 

 ) 

EMPLOYERS MUTUAL CASUALTY COMPANY and ) 

EMC PROPERTY & CASUALTY COMPANY, a Wholly ) 

Owned Subsidiary of Employers Mutual Casualty Company, ) 

 ) 

 Defendants-Appellees ) 

 ) 

(Employers Mutual Casualty Company and EMC Property ) 

& Casualty Company, a Wholly Owned Subsidiary of ) Honorable 

Employers Mutual Casualty Company, Third-Party Plaintiffs; ) William A. Mudge,

and Fair Isaac Corporation, Third-Party Defendant). ) Judge, presiding.

_____________________________________________________________________________________ 

Opinion Filed: May 6, 2015 

Modified Upon Denial of Rehearing: July 14, 2015 

_____________________________________________________________________________________ 

Justices: Honorable James R. Moore, J. 

 Honorable Bruce D. Stewart, J., and 

 Honorable S. Gene Schwarm, J., 

 Concur 

_____________________________________________________________________________________ 

Attorneys Timothy F. Campbell, Campbell & McGrady Law Office, 3017 Godfrey Road, 

for P.O. Box 505, Godfrey, IL 62035; Robert W. Schmieder II, Mark L. Brown, SL 

Appellants Chapman, LLC, 330 North Fourth Street, Suite 330, St. Louis, MO 63102 

_____________________________________________________________________________________ 

Attorney Thomas R. Pender, Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, 

for One North Franklin Street, 10th Floor, Chicago, IL 60606 

Appellees 

_____________________________________________________________________________________