Alliance Health v. National Presto Indus., 26,836.

• Citation: 2007 NMCA 157,173 P.3d 55
• Decision Date: 25 October 2007
• Docket Number: No. 26,836.,26,836.
• Parties: ALLIANCE HEALTH OF SANTA TERESA, INC. d/b/a Alliance Hospital of Santa Teresa and Alliance Behavioral Health Services of Southern New Mexico, Inc. d/b/a The Adolescent Pointe, ARTC, Plaintiffs-Appellants, v. NATIONAL PRESTO INDUSTRIES, INC. and The Araz Group, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

173 P.3d 55

2007 NMCA 157

ALLIANCE HEALTH OF SANTA TERESA, INC. d/b/a Alliance Hospital of Santa Teresa and Alliance Behavioral Health Services of Southern New Mexico, Inc. d/b/a The Adolescent Pointe, ARTC, Plaintiffs-Appellants, v. NATIONAL PRESTO INDUSTRIES, INC. and The Araz Group, Defendants-Appellees.

No. 26,836.

Court of Appeals of New Mexico.

October 25, 2007.

Guevara, Rebe, Baumann, Coldwell & Reedman, LLP, Colbert N. Coldwell, El Paso, TX, for Appellants.

Miller Stratvert, P.A., Alice Tomlinson Lorenz, Albuquerque, NM, for Appellee, National Presto Industries, Inc.

Sandenaw & Anderson, P.C., CaraLyn Banks, Las Cruces, NM, for Appellee, The Araz Group.

OPINION

KENNEDY, Judge.

{1} This is the second time this case has come before us for review. Alliance Health of Santa Teresa, Inc. (Alliance) brought suit against National Presto Industries (National Presto) and The Araz Group (Araz) (collectively Defendants) for promissory estoppel, fraud, breach of contract, and ERISA benefits. This case was originally before us for review based on a dismissal of Alliance's state law claims by the district court. Alliance Health of Santa Teresa, Inc. v. Nat'l Presto Indus., Inc., 2005-NMCA-053, 137 N.M. 537, 113 P.3d 360. We reversed the district court and remanded for further proceedings. Id. ¶ 62. Alliance now appeals from a grant of summary judgment in favor of Defendants. Alliance argues that the district court erred in three ways: (1) in denying Alliance's motion for leave to amend its complaint, (2) in granting summary judgment on an unpled defense and based on insufficient documentation, and (3) by dismissing the case with prejudice.

FACTS

{2} On April 21, 1999, John Doe No. 2 (Doe No. 2), a minor dependent of John Doe No. 1, was admitted to the inpatient psychiatric hospital operated by Alliance. Doe No. 2 was covered through a self-insured plan (ERISA plan) offered by National Presto to its employees and was also covered by the New Mexico Medicaid program (Medicaid). As a beneficiary of the ERISA plan, Doe No. 2 was eligible for inpatient hospital psychiatric services, which were billed to and paid by National Presto. On May 11, 1999, National Presto authorized Araz, an independent contractor hired to perform case management for its ERISA plan, to provide case management for Doe No. 2. It was determined that Doe No. 2 met the medical necessities for living in a residential treatment center. On May 17, 1999, Doe No. 2 was transferred from the hospital to Adolescent Pointe, an accredited residential treatment center run by Alliance.

{3} At one point after treatment commenced, Araz provided notice to Alliance that Doe No. 2 might not be covered for residential treatment. Araz recommended that Alliance bill National Presto, and upon the receipt of a denial, that Alliance bill Medicaid. On October 26, 1999, Araz determined that Doe No. 2 was no longer eligible for residential treatment and informed Alliance. Alliance provided Doe No. 2's residential treatment until December 1, 1999. Alliance billed Medicaid and was paid for dates of service ranging from June 1, 1999, through November 26, 1999.

PROCEDURAL HISTORY

{4} Alliance filed its original complaint against Defendants on September 12, 2000. Alliance filed three state law claims: for promissory estoppel, fraud, and breach of contract. Alliance also filed a claim under ERISA and claims against two John Doe defendants. Alliance requested damages and attorney fees. The state law claims were based on a purported guarantee or representation by Araz that National Presto would pay for all the residential treatment services provided to Doe No. 2.

{5} On October 20, 2000, National Presto responded to the complaint with a motion to dismiss, claiming that the state law claims were preempted by ERISA. Araz answered the complaint on October 24, 2000. On February 26, 2001, the district court granted the motion to dismiss, concluding that the state law claims were preempted by ERISA. National Presto then filed a motion for summary judgment on the ERISA claim, which Araz joined. On May 23, 2002, the district court granted the motion for summary judgment and dismissed the ERISA claim. Alliance requested a new trial on June 7, 2002, but did not include any new claims or amendments. Alliance appealed the district court's dismissal on June 26, 2002. This Court reversed the district court's decision that ERISA preempted Alliance's state law claims on March 29, 2005, and remanded the case to the district court for further proceedings.

{6} After remand, the parties engaged in discovery and Alliance filed a motion for summary judgment. Araz filed a countermotion for summary judgment. National Presto's response in opposition to Alliance's motion for summary judgment indicated that Alliance had sought out and accepted payment from Medicaid. On January 23, 2006, Alliance filed a motion for leave to file an amended complaint to recover on an "open account." In Araz's objections to Alliance's motion to amend, Araz addressed the Medicaid regulations that barred Alliance from collecting from National Presto after it had requested and accepted payment from Medicaid. With its objections, Araz attached business records documenting the payments, with no objection from Alliance. On April 10, 2006, Defendants filed a joint motion for summary judgment (alternatively requesting an order dismissing Alliance's complaint with prejudice) based on Alliance's acceptance of Medicaid payments, again attaching the same business records documenting the Medicaid payments. On May 31, 2006, the district court entered orders denying Alliance's leave to amend and granting summary judgment to Defendants. This appeal resulted.

DISCUSSION

District Court's Grant of Summary Judgment

{7} We review the district court's grant of summary judgment de novo. Sedillo v. N.M. Dep't of Pub. Safety, 2007-NMCA-002, ¶ 7, 140 N.M. 858, 149 P.3d 955. "Summary judgment is proper where there is no evidence raising a reasonable doubt that a genuine issue of material fact exists." Matrix Prod. Co. v. Ricks Exploration, Inc., 2004-NMCA-135, ¶ 9, 136 N.M. 593, 102 P.3d 1285.

{8} Alliance argues that Defendants should be estopped from using Alliance's acceptance of payment from Medicaid as an affirmative defense because it is "impalpable, unfair and unjust." Alliance claims that Defendants' reliance on the Medicaid payment amounts to an affirmative, unpled defense. Alliance's cited authority does little to clarify why Defendants could not use Alliance's acceptance of payment from Medicaid in its motion for summary judgment.

{9} Defendants did not plead payment as a defense, nor did they move to amend their defense. Rather, after this case was initially remanded from this Court to the district court, the parties went forward with discovery. It was at this time that Defendants discovered, through Alliance's own pleadings, and discovery materials, that Alliance had accepted payment from Medicaid, and Defendants brought the motion for summary judgment on that ground: that Alliance was statutorily estopped from seeking payment from an additional party. The district court granted summary judgment to Defendants on that ground. Alliance did not object at that time to Defendants' use of a statute barring payment being used as a defense.

{10} On appeal, Alliance mainly relies on two New Mexico cases to support its position that Defendants should be estopped from using the Medicaid payment as a defense. First, Alliance relies on Bendorf v. Volkswagenwerk Aktiengeselischaft, 88 N.M. 355, 540 P.2d 835 (Ct.App.1975), for the proposition that Defendants' use of the Medicaid "payment in full" is an unpled, affirmative defense. We fail to see the similarities between Bendorf and Alliance's claim. In Bendorf, during trial, an automobile manufacturer attributed fault to the plaintiff based on inattentive driving and received a jury instruction to that effect. Id. at 356-57, 540 P.2d at 836-37. This Court, in Bendorf, defined an affirmative defense as the "state of facts provable by defendant which will bar plaintiff's recovery once plaintiff's right to recover is otherwise established," and held that the jury instruction was improper because it did not reflect a true affirmative defense. Id. at 357-58, 540 P.2d at 837-38. Bendorf was silent on the issue of whether the affirmative defense was properly raised prior to trial, which is the issue in this case. See generally Bendorf, 88 N.M. 355, 540 P.2d 835.

{11} Alliance also cites to Lindberg v. Ferguson Trucking Co., 74 N.M. 246, 392 P.2d 586 (1964) for the proposition that payment is considered an affirmative defense. Lindberg does indeed describe payment as an affirmative defense; however, Lindberg describes a situation in which the defendant pled payment as an affirmative defense. Id. at 248, 392 P.2d at 587-88. The plaintiffs disagreed with the court's assessment of the payment, arguing that defendants did not carry their burden of proof. Id. at 249, 392 P.2d at 588. Lindberg discussed whether the defendants carried their burden of proof, not whether payment as an affirmative defense was properly before the court. These points do not help us in our analysis of this case, in which Alliance argues that by not pleading payment as an affirmative defense, Defendants should be estopped from using it as a basis for summary judgment. We note that National Presto does not argue that it paid Alliance, but that Alliance's acceptance of the Medicaid payment precludes National Presto's obligation entirely. This makes for a different situation, because here, "payment" is not that National Presto paid, but that another party did, statutorily discharging National Presto's obligation to Alliance.

{12} Regardless, the issue of Medicaid payment as an affirmative defense was properly litigated even if it was not affirmatively pled. See Gallup Gamerco Coal Co. v. Irwin, 85 N.M. 673, 677, 515 P.2d...