On October 14, 2025, the Appellate Court of Illinois, Fifth District, in Midwest Neurosurgeons v. F.W. Electric, Inc., considered whether a medical provider could recover the costs of services it had rendered to an injured employee directly from an employer under the terms of a workers compensation (WC) settlement agreement.
In this case, an employee who suffered compensable injuries entered into a WC settlement agreement with the employer, where the employer agreed to "pay the reasonable, necessary, and causally related medical expenses." The medical provider, seeking to recover the costs of medical services it had provided to the employee, subsequently filed a breach of contract action against the employer alleging that it was a third-party beneficiary to the agreement.
The appellate court reasoned that whether someone is a third-party beneficiary depends on the contracting parties' intent, as shown by an express contractual provision that identifies the third-party beneficiary by name or by description of a class to which that third party belongs. Upon reviewing the settlement agreement, the court determined that the medical provider was neither named nor included as an identifiable class. As a result, the court found that the medical provider was not a third-party beneficiary and could not recover from the employer.
However, the court noted that Illinois statute 820 ILCS 305/8.2(e-20) permits healthcare providers to seek payment directly from the employee after a settlement is reached with the employer. The employee, in turn, can rely on various methods set forth by the Workers' Compensation Act to enforce the employer's obligation to pay for such expenses.
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