Harris v. St. Vincent Healthcare

• Decision Date: 25 July 2013
• Docket Number: Nos. DA 12–0602,DA 12–0661.,s. DA 12–0602
• Citation: 371 Mont. 133,305 P.3d 852
• Parties: Dorothy J. HARRIS, Plaintiff and Appellant, v. ST. VINCENT HEALTHCARE, Defendant and Appellee, Dorothy J. Harris and Tedeen Holbert, Plaintiffs and Appellants, v. Billings Clinic, Defendant and Appellee.
• Court: Montana Supreme Court

371 Mont. 133

305 P.3d 852

Dorothy J. HARRIS, Plaintiff and Appellant,

v.ST. VINCENT HEALTHCARE, Defendant and Appellee,Dorothy J. Harris and Tedeen Holbert, Plaintiffs and Appellants,

v.Billings Clinic, Defendant and Appellee.

Nos. DA 12–0602, DA 12–0661.

Supreme Court of Montana.

Submitted on Briefs May 28, 2013.

Decided July 25, 2013.

For Appellant: Alexander (Zander) Blewett, III, Andrew (Drew) Blewett, Hoyt & Blewett, Great Falls, Montana, Jim Edmiston, Shane Colton, Joe Cook, Edmiston & Colton, Billings, Montana.

For Appellee St. Vincent Healthcare: Brendon J. Rohan, Poore, Roth & Robinson, P.C., Butte, Montana.

For Appellee Billings Clinic: Ian McIntosh, Kenneth K. Lay, Crowley Fleck, PLLP, Bozeman, Montana.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

[371 Mont. 134]¶ 1 Dorothy J. Harris (Harris) and Tedeen Holbert (Holbert) appeal from orders in two separate cases from Montana's Thirteenth Judicial District Court, Yellowstone County, dismissing Harris and Holbert's breach of contract and constructive fraud claims against Billings Clinic, and Harris' similar claims against St. Vincent Healthcare. We affirm both District Court decisions in this consolidated appeal.

ISSUES

¶ 2 Harris and Holbert raise four issues on appeal. Ultimately, all of these issues can be addressed in the following inquiry:

¶ 3 Did the District Courts err in dismissing Harris and Holbert's breach of contract and constructive fraud claims pursuant to M.R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 On November 9, 2008, Holbert was involved in an automobile accident caused by another driver. The at-fault driver carried a Farmers automobile insurance policy. Holbert received medical treatment at Billings Clinic on 30 occasions from the date of the accident to December 17, 2009. Billings Clinic billed Holbert for medical expenses related to the accident, which totaled $6,073.60. Farmers, as the at-fault driver's insurer, remitted payment for Holbert's medical expenses in full.

¶ 5 On February 25, 2010, Harris was injured in an unrelated automobile accident caused by a different third-party tortfeasor. The other driver carried a State Farm automobile insurance policy. Harris received medical treatment at St. Vincent Healthcare on the day of the accident and on March 22, 2010. St. Vincent Healthcare billed Harris for medical expenses totaling $777.52. The third-party tortfeasor's insurance carrier, State Farm, paid for Harris' medical expenses incurred at St. Vincent Healthcare. Harris also received medical treatment at Billings Clinic for injuries sustained in the accident on nine occasions between April 26, 2010, and July 19, 2011. State Farm paid Harris' $8,993.34 Billings Clinic bill.

¶ 6 During the relevant period of time when Holbert and Harris were patients of Billings Clinic and St. Vincent Healthcare, both Holbert and Harris were members of health plans administered by Blue Cross Blue Shield of Montana (BCBS). BCBS entered into a preferred provider agreement (PPA) with Billings Clinic and St. Vincent Healthcare. The pertinent terms of the PPAs are the same for both providers. Pursuant to the PPA, Billings Clinic and St. Vincent Healthcare agreed to accept payment from BCBS at a discounted reimbursement rate for certain medical services provided to BCBS insureds.

¶ 7 On January 13, 2012, Harris filed her complaint in District Court against Billings Clinic. Harris filed an amended complaint that added Holbert as a plaintiff on April 9, 2012. The amended complaint alleged individual and class claims of breach of contract and constructive fraud, and requested compensatory damages equal to the difference between the amount the third-party insurers paid to Billings Clinic and the reduced reimbursement rates under the PPA with BCBS. Judge Fagg presided in the case against Billings Clinic.

¶ 8 On May 17, 2012, Billings Clinic filed a M.R. Civ. P. 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. After the matter was fully briefed, the District Court granted Billings Clinic's motion to dismiss on July 3, 2012. The District Court determined that an insured plaintiff is entitled to recover only the amount of medical expenses paid and accepted as payment in full by the medical provider, not the amount billed for such medical services. Otherwise, a plaintiff would receive a windfall because he would recover amounts he never incurred and would never have had to pay. Next, the District Court determined that Harris and Holbert did not show that they suffered any detriment or legally cognizable damages based on their claims. The District Court concluded that Harris and Holbert did not owe Billings Clinic any additional amount and therefore had been made whole. The District Court reasoned that even if Billings Clinic had charged the third-party insurers at the reduced rate pursuant to the PPA, Harris and Holbert would essentially have been in the same exact position had the alleged breach never occurred. The District Court noted that Harris and Holbert's amended complaint did not contain any allegations that they had been deprived of settlement or insurance proceeds as a result of Billings Clinic's conduct.

¶ 9 On January 13, 2012, Harris also filed a complaint against St. Vincent Healthcare. This case was assigned to Judge Todd. Harris filed her second amended complaint on April 3, 2012, in which she asserted the same individual and class claims as she did against Billings Clinic. On August 2, 2012, Harris filed a motion for class certification. St. Vincent Healthcare filed a M.R. Civ. P. 12(b)(6) motion to dismiss on August 3, 2012. The District Court held oral argument on the motion for class certification and the motion to dismiss.

¶ 10 On October 16, 2012, the District Court granted St. Vincent Healthcare's motion to dismiss. The District Court determined that St. Vincent Healthcare was only contractually obligated to bill or collect discounted rates as set forth in the PPA when a patient received services that were paid for under a BCBS health plan. Under these circumstances, the District Court concluded that St. Vincent Healthcare did not breach any contractual obligation by billing State Farm according to its usual rates. Next, the District Court examined Harris' constructive fraud claim and determined that St. Vincent Healthcare had no legal duty under the PPA to charge a third-party insurer at the BCBS reimbursement rate. Accordingly, the District Court concluded that Harris failed to state a claim upon which relief could be granted.

¶ 11 The cases against Billings Clinic and St. Vincent Healthcare present common questions for this Court. Harris and Holbert appeal both District Court orders dismissing their claims against Billings Clinic and St. Vincent Healthcare in this consolidated appeal.

STANDARD OF REVIEW

¶ 12 We review de novo a district court's ruling on a motion to dismiss for failure to state a claim pursuant to M.R. Civ. P. 12(b)(6). Meagher v. Butte–Silver Bow City–County, 2007 MT 129, ¶ 13, 337 Mont. 339, 160 P.3d 552;Plouffe v. State, 2003 MT 62, ¶ 8, 314 Mont. 413, 66 P.3d 316. The determination of whether a complaint states a claim is a conclusion of law, and the district court's conclusions of law are reviewed for correctness. Farmers Coop. Ass'n v. Amsden, 2007 MT 287, ¶ 9, 339 Mont. 452, 171 P.3d 684;Guest v. McLaverty, 2006 MT 150, ¶ 2, 332 Mont. 421, 138 P.3d 812.

DISCUSSION

¶ 13 Did the District Courts err in dismissing Harris and Holbert's breach of contract and constructive fraud claims pursuant to M.R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted?

¶ 14 A motion to dismiss under M.R. Civ. P. 12(b)(6) allows the district court to examine only whether “a claim has been adequately stated in the complaint.” Meagher, ¶ 15. The court is limited to an examination of the contents of the complaint in making its determination of adequacy. Meagher, ¶ 15. The effect of a M.R. Civ. P. 12(b)(6) motion to dismiss is that all of the well-pleaded allegations in the complaint are admitted as true, and the complaint is construed in the light most favorable to the plaintiff. Amsden, ¶ 9;Plouffe, ¶ 8. The Court has no obligation, however, to accept as true legal conclusions or allegations that lack factual basis. Western Sec. Bank v. Eide Bailly LLP, 2010 MT 291, ¶ 55, 359 Mont. 34, 249 P.3d 35;Cowan v. Cowan, 2004 MT 97, ¶ 14, 321 Mont. 13, 89 P.3d 6. We will affirm the district court's dismissal only if we conclude that the plaintiff would not be entitled to relief based on any set of facts that could be proven to support the claim. Guest, ¶ 2;Plouffe, ¶ 8.

¶ 15 It is important to note, at the outset, a recent decision of this Court involving similar issues to those presented in the instant case. In Conway v. Benefis Health Sys., 2013 MT 73, 369 Mont. 309, 297 P.3d 1200, Conway was injured in a car accident and received medical treatment at Benefis. Conway, ¶ 6. Conway had healthcare coverage through TRICARE and also had medical payments coverage through Kemper, his automobile insurance carrier. Conway, ¶ 6. BCBS served as the network subcontractor for TRICARE and entered into a PPA with Benefis. Conway, ¶ 6. Benefis billed multiple insurers and first received payment from TRICARE at the reduced reimbursement rate agreed upon in the PPA. Conway, ¶ 7. Subsequently, Benefis received payment from Kemper at the undiscounted billing rate, and therefore refunded the earlier payment made by TRICARE in full because TRICARE functions as a secondary payer. Conway, ¶ 7. Conway filed a lawsuit against Benefis claiming that he was entitled to the additional amount that Benefits received from Kemper over and above the TRICARE reimbursement rate established by the PPA. Conway, ¶ 8.

¶ 16 This Court determined that while Benefis was required under the PPA to accept the...