Baylor University Medical Center v. Epoch Group

• Decision Date: 18 August 2004
• Docket Number: No. Civ.A.3:03-CV-2392-G.,Civ.A.3:03-CV-2392-G.
• Parties: BAYLOR UNIVERSITY MEDICAL CENTER, et al., Plaintiffs, v. EPOCH GROUP, L.C., Defendant.
• Court: U.S. District Court — Northern District of Texas

340 F.Supp.2d 749

BAYLOR UNIVERSITY MEDICAL CENTER, et al., Plaintiffs, v. EPOCH GROUP, L.C., Defendant.

No. Civ.A.3:03-CV-2392-G.

United States District Court, N.D. Texas, Dallas Division.

August 18, 2004.

COPYRIGHT MATERIAL OMITTED

Larry Hallman, Emanuela Prister, Burford & Ryburn, Dallas, TX, for Plaintiffs.

Elaine Cribbs Rizza, The Rizza Group, Washington, PA, Lee Foster Christie, Pope, Hardwicke, Christie, Harrell, Schell & Kelly, Fort Worth, TX, for Defendant.

MEMORANDUM ORDER

FISH, Chief Judge.

Before the court is the motion of the defendant Epoch Group, L.C. ("Epoch") for summary judgment against the plaintiffs Baylor University Medical Center, Our Children's House at Baylor, Baylor Medical Center at Grapevine, Baylor Medical Center — Irving, and Baylor All Saints Medical (collectively, "Baylor" or "the plaintiffs"), pursuant to FED. R. CIV. P. 56, or to dismiss the plaintiffs' claims, pursuant to FED. R. CIV. P. 12(b)(6). For the reasons set forth below, Epoch's motion is denied.

I. BACKGROUND

Baylor brought this breach of contract suit against Epoch to recover for medical services it provided to Efrain Delgado and Albertina Delgado ("the Delgados"). See Plaintiffs' First Amended Complaint ("Complaint") ¶¶ 4-5. The Delgados, who are participants in an employee welfare benefit plan ("the Plan") sponsored by Van Enterprises, Inc. ("Van Enterprises"), received medical services from Baylor during the period of December 2001 to June 2002. See Defendant's Brief in Support of Third Motion to Dismiss/For Summary Judgment ("Motion") at 3, 4. Epoch, who serves as the "Claims Supervisor for the Plan," id. at 3, has not paid Baylor for medical services rendered to the Delgados. See id. at 5; see also Plaintiffs' Brief in Support of Response to Epoch's Third Motion to Dismiss/For Summary Judgment ("Response") at 3; Complaint ¶¶ 4, 11-15.

Epoch entered into a contract, the Subscriber Services Agreement, with Private Healthcare Systems, Inc. ("PHCS"), effective January 24, 2001. See generally Subscriber Services Agreement, attached to Complaint as Exhibit C. Pursuant to that agreement, Epoch received financial incentives to encourage participants in the Plan to choose treatment from medical providers in the PHCS network of providers. See Motion at 4. Baylor became a part of the PHCS network of providers by signing a Hospital Services Agreement with PHCS, effective January 1, 2002. See Complaint ¶ 5; Motion at 4; see also Hospital Services Agreement at 1, attached to Complaint as Exhibit 2. Pursuant to this agreement, individuals participating in a PHCS-related health plan gain access to Baylor's hospitals and other health care services. See Complaint ¶ 5; Motion at 4.

The Hospital Services Agreement, ¶ 2.2, requires that PHCS enter into Payor Acknowledgments with its "Payors,"¹ including Epoch,² for use of the PHCS provider network. See Complaint ¶ 6. The Hospital Services Agreement provides:

PHCS represents and warrants that it has entered into Payor Acknowledgments with Payors for the use of the PHCS provider network.... Each Payor Acknowledgment between PHCS and a Payor will obligate the Payor (or its designee) to comply with the duties and obligations of this Agreement, including, but not limited to, paying for Covered Services rendered to Members....

Hospital Services Agreement ¶ 2.2. This agreement also requires Payors to timely pay all clean claims within forty-five calendar days from receipt of the claim:

If Payor (directly or through its designee) does not pay within forty-five (45) days of receipt of a Clean Claim, Payor shall no longer be eligible for the rates set forth on Schedule 1 and shall be obligated to pay Hospital at Hospital's Normal Billed Charges and Hospital may elect to terminate this Agreement....

Id. ¶ 4.4(a); see also Complaint ¶¶ 8-9.

Epoch signed a Payor Acknowledgment on January 29, 2001. See Payor Acknowledgment, attached to Subscriber Services Agreement as Exhibit L. In doing so, Epoch contracted with PHCS "to: (i) pay or arrange to pay PHCS Preferred Providers in accordance with the PHCS Preferred Provider Agreement for such Preferred Provider; and (ii) comply with the applicable terms and conditions of the PHCS Preferred Providers Agreements...." Id. ¶ 1.2; see also Complaint ¶ 7.

Baylor alleges that despite submitting its claims to Epoch for the medical care it provided to the Delgados, Epoch has not paid the charges contractually due. See Complaint ¶ 10. Consequently, on September 11, 2003, Baylor University Medical Center and Our Children's House at Baylor (together, "the Original Plaintiffs") filed suit against Epoch in the County Court at Law No. 4 of Dallas County, Texas, asserting a claim for breach of contract. See Plaintiffs' Original Petition ("Original Petition"),³ attached to Amended Notice of Removal as Exhibit A-1.

On October 14, 2003, Epoch removed the case to this court pursuant to 28 U.S.C. § 1441. Epoch argues that the court has diversity jurisdiction under 28 U.S.C. § 1332(a), and that the court has federal question jurisdiction over Baylor's claims under 28 U.S.C. § 1331 because those claims are completely preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. See Amended Notice of Removal ¶¶ 3, 4. The plaintiffs concede that there is diversity jurisdiction, as each of the plaintiffs is a Texas non-profit corporation and Epoch is a foreign corporation, and the amount in controversy exceeds $75,000. Response at 2; see also Complaint ¶¶ 1-2. The plaintiffs contest, however, that this court has federal question jurisdiction. Response at 2.

On May 5, 2004, the Original Plaintiffs, now joined by the newly added plaintiffs Baylor Medical Center at Grapevine, Baylor Medical Center — Irving, and Baylor All Saints Medical, filed their first amended complaint, asserting claims for breach of contract and late payment of claims. See generally Complaint. Baylor seeks recovery of over $115,000 in damages. See id. ¶¶ 11-17. Summarizing its argument, Baylor asserts:

[b]ased upon its execution of the Payor Acknowledgment and the Subscriber Services Agreement, Epoch agreed to be bound by the terms and conditions of the Hospital Services Agreement between Baylor and [PHCS] ..., which included paying for health care services rendered to certain individuals on a timely basis.

Id. ¶ 4.

On May 24, 2004, Epoch filed the instant motion for summary judgment under FED. R. CIV. P. 56, arguing that, as a matter of law: (1) Baylor is not entitled to recover for breach of contract or for late payment of claims where Epoch was not a party to any contract with Baylor; and (2) ERISA completely preempts Baylor's breach of contract claims.⁴ See generally Motion; Docket Sheet.

II. ANALYSIS

A. Evidentiary Burdens on Motion for Summary Judgment

Summary judgment is proper when the pleadings and evidence before the court show that no genuine issue exists as to any material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); see also Celotex Corporation v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The disposition of a case through summary judgment "reinforces the purpose of the Rules, to achieve the just, speedy, and inexpensive determination of actions, and, when appropriate, affords a merciful end to litigation that would otherwise be lengthy and expensive." Fontenot v. Upjohn Company, 780 F.2d 1190, 1197 (5th Cir.1986). Nonetheless, summary judgment is a drastic remedy that should be used cautiously. Murrell v. Bennett, 615 F.2d 306, 309 (5th Cir.1980).

While all of the evidence must be viewed in a light most favorable to the nonmovant, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citing Adickes v. S.H. Kress & Company, 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)), neither conclusory allegations nor unsubstantiated assertions will satisfy the nonmovant's summary judgment burden. Calbillo v. Cavender Oldsmobile, Inc., 288 F.3d 721, 725 (5th Cir.2002) (citing Little v. Liquid Air Corporation, 37 F.3d 1069, 1075 (5th Cir.1994) (en banc)). Summary judgment in favor of the movant is proper if, after adequate time for discovery, the motion's opponent fails to establish the existence of an element essential to its case and as to which it will bear the burden of proof at trial. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548.

B. When Multiple Documents Comprise One Contract

Epoch argues that because there is no contractual relationship — i.e., no privity — between Baylor and Epoch, it is entitled to judgment as a matter of law. See Motion at 19-23; Defendant's Reply to Plaintiffs' Response to Epoch's Third Motion to Dismiss/For Summary Judgment and Brief in Support ("Reply") at 7-8. Baylor, on the other hand, argues that the Hospital Services Agreement provides a three-part contractual relationship among Baylor, PHCS, and Epoch. See Response at 14-15 (citing Hospital Services Agreement ¶¶ 2.2, 2.6(b), 4.1(a), and 4.4(a)). According to Baylor, the Payor Acknowledgment expressly obligates Epoch to comply with the Hospital Services Agreement and to timely pay for medical services rendered to participants in the Plan. See id. at 15 (citing Payor Acknowledgment ¶ 1.2). The court agrees with Baylor.

It is "well-established law [in Texas] that instruments pertaining to the same transaction may be read together to ascertain the parties' intent." Fort Worth Independent School District v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex.2000) ("Fort Worth ISD"); see also Miles v. Martin, 159 Tex. 336, 321 S.W.2d 62, 65 (1959). This is true "even if the parties executed the instruments at different times and the instruments do not expressly refer to each other," Fort Worth ISD, 22 S.W.3d at 840; see also Board of Insurance Commissioners v. Great Southern Life Insurance Company, 150 Tex. 258, 239 S.W.2d 803, 809 (1951); IP...