DCIPA, LLC v. Lucile Slater Packard Children's Hosp. at Stanford, Civ. 10–6131–AA.

• Decision Date: 20 October 2011
• Docket Number: No. Civ. 10–6131–AA.,Civ. 10–6131–AA.
• Citation: 868 F.Supp.2d 1042
• Parties: DCIPA, LLC, an Oregon domestic limited liability company; Plaintiff, v. LUCILE SLATER PACKARD CHILDREN'S HOSPITAL AT STANFORD; Defendant.
• Court: U.S. District Court — District of Oregon

868 F.Supp.2d 1042

DCIPA, LLC, an Oregon domestic limited liability company; Plaintiff,

v.LUCILE SLATER PACKARD CHILDREN'S HOSPITAL AT STANFORD; Defendant.

No. Civ. 10–6131–AA.

United States District Court, D. Oregon.

Oct. 20, 2011.

Wm. Randolph Turnbow, Judith A. Giers, Eugene, OR, for Plaintiff.

Randall P. Sutton, Saalfeld Griggs P.C., Salem, OR, Kathryn Doi, Stephen M. Lerner, Murphy Austin Adams Schoenfeld LLP, Sacramento, CA, for Defendant.

OPINION AND ORDER

AIKEN, Chief Judge:

Defendant and counter-claimant Lucile Slater Packard Children's Hospital at Stanford moves for partial summary judgment, pursuant to Fed.R.Civ.P. 56, on plaintiff's claim for declaratory judgment and on its eighth counterclaim.

Plaintiff DCIPA, LLC filed a cross-motion for summary judgment on its claim for declaratory judgment and on all of defendant's affirmative defenses and counterclaims. For the reasons set forth below, defendant's motion for partial summary judgement is denied and plaintiff's motion for summary judgment is granted.

BACKGROUND

Plaintiff is an Oregon Medicaid managed care health plan. Defendant is a California hospital. On June 20, 2009, a 13–year–old member of plaintiff's health plan was transferred to defendant's hospital for an urgent liver transplant evaluation due to suspected liver failure. Plaintiff and defendant did not have a provider agreement or other contract in place for the payment of services at the time of the transfer.

On June 21, 2009, the patient was placed at top priority status on the United Network of Organ Sharing wait list. On June 22, 2009, the transplant was authorized, on a form provided by plaintiff, which stated “BY ACCEPTING THIS PRIOR AUTHORIZATION, YOU AGREE TO ACCEPT DMAP [Division of Medical Assistance Program] RATES FOR SERVICES RENDERED” (capitals in original). On that same day, defendant contacted plaintiff in an attempt to negotiate a contract for services, suggesting that plaintiff would pay sixty-percent of the total billed charges. Plaintiff declined this offer.

On June 23 and 24, 2009, defendant performed a successful liver transplant on the patient. On June 25, 2009, plaintiff formally responded, via letter from its outside counsel, to defendant's rate proposal. The letter explained that plaintiff was required, by its contract with DMAP and by the Oregon Administrative Rules, to pay at 80% of the Medicare rate in accordance with OAR 410–120–1295. Plaintiff attached a copy of its contract with DMAP to the letter and offered to enter into a formal contract for services with payment set at 80% of the Medicare rate. Defendant did not respond to this letter.

The patient remained at the hospital for post-surgery related services until July 3, 2009. Defendant continued to treat the patient for four months after the transplant, performing a number of inpatient and outpatient services. Plaintiff authorized each one of these services before they were performed, using the same form that stated “BY ACCEPTING THIS PRIOR AUTHORIZATION, YOU AGREE TO ACCEPT DMAP RATES FOR SERVICES RENDERED” (capitals in original). Other than the authorization form, no further communications were exchanged regarding the payment rate for the services provided. The total billed charges for the transplant and related services provided by defendant equaled $1,469,649.91.

Throughout the course of treatment, defendant sent bills to plaintiff regarding these services. For each bill received, plaintiff paid 80% of the Medicare rate. After the provision of services concluded, defendant sent plaintiff several “underpayment appeals,” requesting that plaintiff pay sixty-percent of its billed charges.

On May 27, 2010, plaintiff filed this action, seeking a declaratory judgment that it had fulfilled its financial obligation to defendant by paying $236,699.92, which represents 80% of the Medicare rate, for the disputed services. On April 5, 2011, defendant filed an amended answer, alleging six affirmative defenses and eight counterclaims. Defendant requested, as damages, that plaintiff pay the “reasonable value” of the billed charges. The parties subsequently moved for summary judgment.

STANDARD

Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(a). Substantive law on an issue determines the materiality of a fact. T.W. Electrical Serv., Inc. v. Pacific Electrical Contractors Assoc., 809 F.2d 626, 630 (9th Cir.1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of a dispute. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324, 106 S.Ct. 2548.

Special rules of construction apply when evaluating summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Electrical, 809 F.2d at 630.

DISCUSSION

The parties move for summary judgment on the application and interpretation of certain provisions of Chapter 410 of the Oregon Administrative rules, including OAR 410–120–1295, among other issues. It is undisputed that the interpretation of Chapter 410 of the Oregon Administrative Rules and the provisions therein are questions of law, to be interpreted by this Court.

I. Preliminary Matter

To support their cross-motions for summary judgment, the parties request that this Court take judicial notice of certain documents and regulations. Plaintiff seeks judicial notice of: a report, entitled “Impact of Rogers Amendment on Contracts between Participating Health Plans and Hospital and the Affect on MediCal Managed Care Enrollees,” by the California Medicaid authority, dated October 1, 2009; and an unpublished California Superior Court case, Molina Healthcare of CA Partner Plan v. Shewry, Case No. 34–2008–8000111 (April 3, 2009), which interprets 42 U.S.C. §§ 1396u–2.

Defendant requests judicial notice of: OAR §§ 410–120–0000, 410–120–1295, and 410–124–0000 through 410–124–0160 as they existed in 2009; current versions of Or.Rev.Stat. § 414.743 and OAR 410–120–1295; 42 U.S.C. §§ 1396u–2, 1395dd; Oregon'sMedicaid State Plan under Title XIX of the Social Security Act Medical Assistance Program; excerpts from the websites of DMAP, the U.S. Census Bureau, and OHSU's Oregon Office of Rural Health; a letter, dated March 31, 2006, from Dennis G. Smith, director of the Centers for Medicaid and State Operations (“CMS”); pages from the Oregon State Plan, including Attachment 3.1 relating to Transplant Services; HB 3624, Laws 2003, c. 810, § 12, eff. Oct. 1, 2003; written testimony of Lynn Read, Administrator, Health Services, Office of Medical Assistance Programs, dated April 23, 2003 concerning HB 3624; minutes of the 2003 House Committee on Audit & Human Services Budget Reform, April 28, 2003, 3:15 p.m.; copy of California Rules of Court, Rule 8.1115; Santa Ana Hospital Medical Center v. S. Kimberly Belshe, 56 Cal.App.4th 819, 65 Cal.Rptr.2d 754 (1997); and the Complaint and Civil Docket, filed in the Central District of California, for Cal. Hosp. Ass'n v. David Maxwell–Jolly, Director of the Cal. Dept. of Health Care Servs., Case No. 2:09–cv–03694–CAS–MAN (May 22, 2009).

Judicial notice may be taken at any stage in the proceedings. Fed.R.Evid. 201(f). A judicially noticed fact “must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). However, taking judicial notice of certain documents does not demonstrate the truth of everything contained in those records, and, as such, the truthfulness and proper interpretation of the document are disputable. SeeOhio Bell Telephone Co. v. Public Utilities Commission, 301 U.S. 292, 300–1, 57 S.Ct. 724, 81 L.Ed. 1093 (1937).

The relevant facts in this case are largely undisputed. Further, most of the documents that the parties seek judicial notice of are statutes, administrative rules, or case law, which are already part of the public record, and are therefore capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. I find that the additional documents introduced by both plaintiff and defendant, despite the parties' respective objections, are also not subject to reasonable dispute. Accordingly, the parties' requests for judicial notice are granted.

II. Medical and Legal Background

Before analyzing the merits of the parties' cross-motions for partial summary judgment, this Court reviews the relevant medical and legal background.

A. Federal Medicaid Law

The Medicaid program, established by Title XIX of the Social Security Act, is a cooperative effort by the federal government and the states to provide medical care to persons “whose income and resources are insufficient to meet the costs of necessary medical services.” Atkins v. Rivera, 477 U.S. 154, 156–7, 106 S.Ct. 2456, 91 L.Ed.2d 131 (1986) (citing to 42 U.S.C. §§ 1396 et seq.). The federal government shares the costs of Medicaid with states that voluntarily elect to participate in the program and, in return,...