Ala. Psychiatric Servs., P.C. v. A Ctr. for Eating Disorders, L.L.C.

• Decision Date: 24 January 2014
• Docket Number: 1110703.
• Citation: 148 So.3d 708
• Parties: ALABAMA PSYCHIATRIC SERVICES, P.C., and Managed Health Care Administration, Inc. v. A CENTER FOR EATING DISORDERS, L.L.C.
• Court: Alabama Supreme Court

148 So.3d 708

ALABAMA PSYCHIATRIC SERVICES, P.C., and Managed Health Care Administration, Inc.

v.A CENTER FOR EATING DISORDERS, L.L.C.

1110703.

Supreme Court of Alabama.

Jan. 24, 2014.

Thomas A. Kendrick and W.M. Bains Fleming III of Norman, Wood, Kendrick & Turner, Birmingham, for Alabama Psychiatric Services, P.C., and Managed Health Care Administration, Inc.; and Jack Criswell of Hare Clement & Duck, P.C., Birmingham, for Alabama Psychiatric Services, P.C.

Stephen D. Heninger of Heninger Garrison & Davis, LLC, Birmingham, for appellee.

Opinion

MAIN, Justice.

Alabama Psychiatric Services, P.C.(“APS”), and Managed Health Care Administration, Inc.(“MHCA”), the defendants in this action, appeal from the trial court's order denying their motions for a judgment as a matter of law(“JML”) made at the close of all the evidence.Although the jury entered a verdict for APS and MHCA, they nonetheless argue that the two claims that were ultimately tried should not have been submitted to a jury.APS and MHCA also appeal from the order entered by the trial court granting a motion for a new trial filed by A Center for Eating Disorders, L.L.C.(“ACED”), the plaintiff in this action.The trial court's order overturned the judgment entered on a jury verdict for APS and MHCA.We reverse and remand.

I.Factual Background and Procedural History

In its order granting in part the motions for a summary judgment filed by APS and MHCA, the trial court stated the facts as follows:

“Plaintiff A Center for Eating Disorders, L.L.C.(‘ACED’), opened on February 23, 2009, providing partial hospitalization treatment (‘PHP’) for individuals suffering from eating disorders.In a PHP program, patients come to the facility for various treatment sessions for five or six hours per day for five or six days per week.ACED is fully accredited by the Joint Commission.^[ [^1]

“Blue Cross Blue Shield of Alabama (‘BCBS') is in the health insurance business.BCBS does not have a preferred provider network for individual mental health providers.BCBS utilizes Managed Health [Care Administration], Inc. (‘MHCA’) to manage behavioral health networks for their members.MHCA is owned mainly by physicians who work for [Alabama] Psychiatric Services, P.C. (‘APS').Additionally, MHCA is managed by two non-physicians who are also employed by APS.Rusty Adams has been the Chief Operating Officer of APS for 20 years and the Chief Operating Officer of MHCA for 15 years.Similarly, Doyle Stewart has been the Chief Financial Officer of both APS and MHCA for the past 10 years.BCBS has testified that it was not aware of the overlapping ownership between MHCA and APS.

“APS entered into a contract with BCBS in 1986 to manage what is known as Expanded Psychiatric Services (‘EPS').In 1991, that contract was transferred from APS to MHCA.MHCA now manages a number of behavioral health networks for BCBS.BCBS contracts with members for health insurance and out of the premiums it receives, BCBS pays MHCA $3.10/month per member.MHCA is expected to arrange mental health services for these members for that monthly payment, and any leftover amount is profit to MHCA.Many BCBS group health insurance plans and self-funded group plans administered by MHCA provide mental health benefits for their members through three benefit designs that access certain preferred provider networks: (1) Expanded Psychiatric Services benefits; (2) Expanded Psychiatric Services Exclusive (‘EPX’) benefits; and (3) Blue Choice Behavioral benefits (‘Blue Choice’).

“The services of mental health professionals covered under BCBS are accessed through EPS and administered by MHCA.APS operates the [Eating Disorders Center of Alabama (‘the EDCA’) ], which provides treatment for patients through a partial hospitalization program.In a prior trademark suit filed by APS against ACED, APS alleged that the services provided by ACED were essentially identical to the services provided by the EDCA.BCBS members with EPS benefits in their health plan may obtain PHP services for eating disorders by accessing their EPS benefits.

“BCBS has stated that ACED is not an MHCA provider and that any claims submitted by ACED are paid as Out of Network benefits, regardless of whether or not the plan provides access to EPS benefits.As a result, BCBS members seeking behavioral health treatment receive no benefit whatsoever if they choose treatment at ACED.This places ACED at a clear competitive disadvantage, as BCBS members with EPS plans constitute 90–95% of the market.If members wanted any EPS benefits at all for behavioral health treatment, they were required to choose treatment at the EDCA, which is operated by APS and managed by the same individuals who manage MHCA.

“Before ACED opened, it contacted BCBS about seeking Individual Case Management (‘ICM’) agreements.Under an Individual Case Management agreement, BCBS and the provider work together to design an individual contract for services that are otherwise not covered under the member's health plan.Individual Case Management Agreements are discretionary and subject to the voluntary participation of BCBS, the member and the provider.On most occasions, BCBS declined to agree to an Individual Case Management Agreement with ACED.

“The contract between Blue Cross and MHCA requires that if MHCA subcontracts or otherwise delegates any of its health network functions it must be done by another contract authorized by BCBS.The contract also requires that MHCA must have contractual agreements with any providers it deems to be ‘in-network,’ and thus able to receive benefits from BCBS under the EPS network.APS is the only provider deemed by MHCA to be ‘in-network.’ ”

ACED opened its doors under the name Alabama Center for Eating Disorders and using the acronym ACED.Shortly thereafter, as the trial court noted, APS filed a trademark-infringement lawsuit against ACED, arguing that ACED's name infringed on the name of APS's eating-disorder center.ACED voluntarily changed its name to A Center for Eating Disorders so that it could continue to use the acronym ACED, and the trademark-infringement lawsuit was dismissed.After MHCA refused to allow ACED to apply as a services provider for the network of mental-health professionals treating patients insured by Blue Cross Blue Shield of Alabama (“Blue Cross”) with EPS benefits, ACED filed its own seven-count lawsuit against APS, MHCA, and Blue Cross.ACED alleged intentional interference with contractual or business relations (count I); defamation (count II); fraud, misrepresentation, and deceit (count III); breach of contract (count IV); interference with the health-care-provider/patient relationship (count V); civil conspiracy (count VI); and a count seeking declaratory relief (count VII), in which ACED sought to have the trial court“enjoin [APS and MHCA], separately and severally, from employing artificial and improper restrictions on [ACED's] business and patients seeking pre-certification or coverage/benefits; from engaging in conduct that disparages [ACED] and/or its staff; [and] from engaging in conduct that interferes with [ACED's] Health Care Provider/Patient relationship.”

APS, MHCA, and Blue Cross initially filed motions to dismiss ACED's complaint.The trial court denied those motions as to all counts except count III, which alleged fraud, misrepresentation, and deceit.As to count III, the trial court ordered ACED to file a more definite statement.When ACED filed nothing further, the trial court entered an order on January 6, 2010, dismissing count III as to all defendants with prejudice.

APS, MHCA, and Blue Cross then filed motions for a summary judgment; ACED opposed those motions.All parties filed evidence supporting their respective positions.The trial court heard what it described as “extensive oral arguments” on the summary-judgment motions on April 13, 2011.On April 19, 2011, the trial court entered a summary judgment for APS and MHCA as to count II (defamation).On June 29, 2011, the trial court entered detailed orders on the summary-judgment motions.As to Blue Cross, the trial court entered a summary judgment in its favor on all counts except count VII (seeking declaratory relief).As to APS and MHCA, the trial court entered a summary judgment in their favor as to counts IV (breach of contract) and V (interference with the health-care-provider/patient relationship).The trial court denied the summary-judgment motions as to count I (intentional interference with contractual/business relations) and count VI (conspiracy).The trial court made no ruling on count VII, the count seeking declaratory relief, in its June 29 order.

On October 13, 2011, the trial court entered an order finding that the evidence before it indicated that there was no justiciable controversy requiring declaratory relief in this case because, the court said, “a judgment of this Court would not affect [ACED's] legal position and would not provide [ACED] with any relief.Additionally, [ACED] lacks standing to obtain the requested relief.”The trial court then entered a summary judgment in favor of APS and MHCA as to count VII.It also entered a summary judgment in favor of Blue Cross as to count VII and, because no other claims remained pending against Blue Cross, dismissed Blue Cross as a defendant with prejudice.

The case then proceeded to trial against APS and MHCA on counts I and VI of ACED's complaint.Before trial, APS and MHCA filed an extensive motion in limine as to numerous items; ACED also filed a motion in limine.On November 9, 2011, the trial court entered an order responding to the items that were the subject of the motions in limine.The trial began on November 14 and concluded with a verdict in favor of APS and MHCA on November 18.The trial court had denied APS's and MHCA's motions for a JML made at the close of all the evidence.The trial court entered a judgment on the jury verdict on November 18.

ACED then filed a motion for a new trial....