Crutcher v. Multiplan, Inc., Case No. 6:15-CV-03484-MDH

Decision Date04 August 2020
Docket NumberCase No. 6:15-CV-03484-MDH
PartiesKRIS CRUTCHER, et al., Plaintiffs, v. MULTIPLAN, INC., et al., Defendants.
CourtU.S. District Court — Western District of Missouri

Before the Court are Defendants Multiplan, Inc. and Private Healthcare Systems, Inc.'s Motions for Summary Judgment. (Docs. 294 and 370) and Plaintiffs Kris Crutcher and Tri-Lake Diagnostic Imaging, LLC's Motions for Summary Judgment. (Docs. 300 and 379). Plaintiffs have sued Defendants for violations of the Racketeer Influenced and Corrupt Organization Act ("RICO"), Unjust Enrichment, Civil Conspiracy, Common Law Fraud, and Breach of Contract.1 (Doc. 33). Plaintiffs, who provide diagnostic medical imaging services to patients, allege that Defendants, who operate a preferred provider organization ("PPO"), engaged in a "Silent PPO" scheme to deprive them of substantial revenues to which Plaintiffs were entitled. Defendants in their Motions ask the Court to hold that (1) Plaintiffs cannot establish the essential elements of its RICO claims; (2) Plaintiffs' unjust enrichment claim fails as a matter of law and for lack of evidence; (3) Plaintiffs' civil conspiracy claim fails a matter of law; (4) Plaintiffs cannot establish a claim of fraud; and (5) Plaintiffs' breach of contract claim fails as a matter of law. Plaintiffs, in their Motions for Summary Judgment, ask for judgment on their six claims. For the reasonsexplained below, the Court will grant Defendants' Motion as to Plaintiffs' RICO claims, unjust enrichment claim, civil conspiracy claim, and fraud claim, but deny it in part as to Plaintiffs' breach of contract claims. The Court will grant Plaintiffs' Motion for Summary Judgment as to its breach of contract claim in part but deny the balance of their motions.


Plaintiff Tri-Lakes Diagnostic Imaging ("TLDI"), a company owned by Plaintiff Kris Crutcher, provides diagnostic imaging services to patients in Branson, Missouri. Defendants operate a PPO, which is an intermediary between health care providers and payors, including health insurance companies, that pay providers on behalf of their clients. When an insured patient uses TLDI's services, it is the insurance company, not the patient, who pays TLDI, excluding any co-payment or deductible borne by the patient. PPOs create relationships between payors, like insurance companies, and providers whereby the payors steer patients to providers in the PPO network. In exchange for the increase in business as a result of being in-network, the provider agrees to charge the payors a discounted rate. In theory, providers benefit despite receiving lower payments because they receive an increased volume of customers. Payors, meanwhile benefit from being able to pay at a discounted rate. The role of the PPO operator is to create and maintain these networks, determine which patients are in and out of network, and to notify payors of available discounts they can apply to payments to in-network providers so that payors may pay the provider the discounted rate.

In this case, Plaintiffs allege that no PPO agreement existed between them and Defendants. Plaintiffs also allege that Defendants were involved in a silent PPO scheme. A silent PPO scheme is an illicit payment scheme whereby the payor rents out their negotiated PPO discount to other payors who are not entitled to that discount. As a result, providers are paid at discounted rates,instead of their usual rates, by payors who are not party to the PPO agreement.2 Because the third-party payors are not obligated to steer its customers to the provider but nonetheless pay the discounted rate, the provider receives none of the benefits of the PPO agreement and bears all of its costs. Plaintiffs allege they lost significant revenue as a result of Defendants' scheme.

a. Corporate History

Medical Investments of Branson, LLC, was organized as an LLC in Missouri in 1999 with a business address at 523 State Hwy. 248, Suite 300, Branson, Missouri 65616. That same year, it registered the fictitious name "Branson Imaging, LLC." On April 1, 2000, the company entered in a Provider Agreement contract with a PPO, United Payors and United Providers ("UP&UP"). Under that contract, the Provider Agreement would be renewed automatically every year unless either party gave written notice of its intention to terminate the agreement at least ninety days prior to the expiration of the current one-year term. The contract stated that UP&UP was contracting for itself and for the benefit of any affiliates having common management and control with UP&UP, including any subsequently-acquired affiliate. Later, UP&UP was acquired by BCE EmergisCorp., which was in turn acquired by Multiplan in 2004. Multiplan also acquired Private Healthcare Systems, Inc. ("PHCS") in 2006.3

On October 2, 2000, Articles of Organization were filed creating Branson Imaging, LLC. It was organized by the same person at the same business address as Medical Investments of Branson. Its registered agent and managing partner was Robert Heriford. On April 2, 2001, Medical Investments of Branson, LLC, cancelled the fictitious name of "Branson Imaging." Medical Investments of Branson did not file Articles of Termination until April 17, 2013.

On January 10, 2003, Articles of Incorporation were filed creating Tri-Lakes Diagnostic Technologies, Inc. ("TLDT"). Its business address was identical to Branson Imaging's address. On February 8, 2003, Robert Heriford, in his capacity as Branson Imaging, LLC's managing partner and registered agent, wrote to Blue Cross Blue Shield:

Effective February 6, 2003, Branson Imaging, LLC is now operating under the new name of Tri-Lakes Diagnostic Technologies, Inc. Everything remains the same as before. Attached is a W-9 for your convenience.
Branson Imaging, LLC - Tax ID number of 43-1904174 is now Tri-Lake Diagnostic Technologies, Inc. Tax ID number of 42-1570105."
Please note this change.

Soon after, Multiplan changed the provider name and tax identification number ("TIN") associated with the Network Agreement to reflect Heriford's requested changes. An employee of Multiplan who manages Network Agreements, Nina Conway, testified at deposition that such a change would not have been made absent a specific request from the provider. TLDT was administratively dissolved on November 10, 2008.

On February 5, 2008, Articles of Organization were filed creating Tri-Lakes Diagnostic Imaging ("TLDI") with Kris Crutcher as the registered agent and sole organizer. Its business address was identical to Branson Imaging's address. On February 22, 2008, Crutcher wrote to Multiplan that TDLI was a freestanding imaging facility that had a previous contract with Multiplan through a radiologist who was no longer affiliated with the facility and that the facility's ownership and name had "changed slightly."

On May 5, 2008, Crutcher sent a message to Multiplan, stating:

We have changed our name and EIN. The former name for our company was Branson Imaging. The address remains the same as well as the services and imaging capabilities we offer. Please make the following changes to update your system . . .
The billing address is the same as the business address above. We look forward to continuing to provide imaging services for our clients. Thank you for your time and attention.

On June 9, 2008, Crutcher sent a similar message to Multiplan, where she again asked to substitute the new name and TIN (Tri-Lakes Diagnostic Imaging, LLC, 51-0667791) for the old name and TIN (Branson Imaging, 43-1904174) in their directory. She also said that she "look[ed] forward to continued patient service for your clients" and that the "address remains the same as well as the services we provide." Crutcher stated she wrote the letter after noticing that Multiplan's PPO directory listed Branson Imaging, not TLDI, as an in-network provider. Nina Conway stated that she understood Crutcher's correspondence to mean that she was assuming ownership of the business at that address and meant to continue the Network Agreement that had been in effect since April 1, 2000, on behalf of TLDI.

Conway testified at deposition that following the June 9, 2008 letter, Crutcher contacted Multiplan on numerous occasions to complain that TLDI had not been substituted for Branson Imaging in the PPO system and was not being treated as in-network. Conway also testified that Crutcher appealed a number of claims because payors were not being given "in-network" discountsby Multiplan after directing patients to TLDI. Multiplan updated its provider name and TIN as requested by Crutcher.

Multiplan claims the Provider Agreement between UP&UP and Branson Imaging survived these acquisitions and transfers, eventually becoming an agreement between Multiplan and TLDI. Plaintiffs admit that Multiplan acted as if a Provider Agreement existed between itself and TLDI but deny that any agreement actually existed. There is no evidence that Medical Investments of Branson, Branson Imaging, TLDT, or TLDI ever provided written notice of its intent to terminate the Provider Agreement before 2014.

B. Post-2008 Communications between Multiplan/PHCS and TLDI

Plaintiffs claim that although they were aware of the Provider Agreement from the beginning because her payments from insurance companies were routinely subject to Multiplan discount, they never thought TLDI was actually part of the PPO network. On June 19, 2008, Crutcher faxed a letter to Multiplan stating that she was interested in joining Multiplan's network. She says Multiplan never responded. Because of its nonresponse, Crutcher on July 20 and 22, 2009, requested from Multiplan a copy of the Provider Agreement it had on file for TLDI. Multiplan responded two days later that it was having trouble locating the agreement, but that Multiplan had become part of the Provider Agreement entered into by UP&UP by virtue of its integration with BCE in 2004 and BCE's subsequent acquisition by...

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