Hca Health Servs. of Tenn., Inc. v. Bluecross Blueshield of Tenn., Inc.
| Decision Date | 09 June 2016 |
| Docket Number | No. M2014-01869-COA-R9-CV,M2014-01869-COA-R9-CV |
| Parties | HCA HEALTH SERVICES OF TENNESSEE, INC., ET AL. v. BLUECROSS BLUESHIELD OF TENNESSEE, INC. |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Davidson County
Carol L. McCoy, Chancellor
Interlocutory appeal in suit brought by healthcare corporations to recover costs for emergency medical services rendered to patients participating in Defendant's insurance plans. We conclude that the Employee Retirement Income Security Act ("ERISA") preempts plaintiffs' state-law cause of action based on implied-in-law contract; that we are without subject matter jurisdiction to rule on whether Plaintiffs should be deemed to have exhausted the insurance company's appeals process and therefore decline to consider whether summary judgment should have been granted on the defense of failure to exhaust administrative remedies; that Plaintiff is not entitled to relief under an implied-in-law contract cause of action as to those plans which are not governed by ERISA based upon the duties imposed on the parties by state and federal law; that the insurance company should have been granted summary judgment on certain coverage claims arising from plans not governed by ERISA because Plaintiffs failed to exhaust grievance procedures; that Tenn. Code Ann. § 56-7-110(b) does not bar coverage claims; and that 47 coverage claims were improperly included in this lawsuit and should have been dismissed on summary judgment. Accordingly, we affirm in part, reverse in part, and vacate in part the lower court's order and remand for further proceedings.
Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Chancery Court Affirmed in Part, Reversed in Part, Vacated in Part, and Remanded
RICHARD H. DINKINS, J., delivered the opinion of the court, in which ANDY D. BENNETT and W. NEAL MCBRAYER, JJ., joined.
Richard C. Rose, Robert F. Parsley, James T. Williams, Chattanooga, Tennessee, for the appellant, BlueCross BlueShield of Tennessee, Inc. David A. King and Kinika L. Young, Nashville, Tennessee, for the appellees, HCA Health Services of Tennessee, Inc., Hendersonville Hospital Corporation, Central Tennessee Hospital Corporation, and HTI Memorial Hospital Corporation.
OPINIONThis interlocutory appeal involves the payment of claims for healthcare services provided in Plaintiffs' hospital emergency rooms to participants in Defendant's insurance plans.
Plaintiffs (collectively, "HCA") are Tennessee corporations that own and operate eight hospitals in Middle Tennessee under the name Tristar Health System. Defendant BlueCross BlueShield of Tennessee ("BCBST") sells health insurance policies to individuals as well as to participants in employee welfare benefit plans, which are established or maintained by private employers or employee organizations and governed by the federal Employee Retirement Income Security Act ("ERISA").1 BCBST also provides policies to the employees of churches and state or local governments; these insurance policies are not governed by ERISA. See 29 U.S.C. § 1003.
BCBST contracts with healthcare providers, such as HCA, to serve patients who are participants in BCBST's insurance plans. In Tennessee BCBST maintains two networks of healthcare providers which are available to participants: Networks S and P. Network P offers participants a wide variety of practitioners, hospitals, and other providers; in contrast, Network S costs less and has fewer providers than Network P. As a provider of healthcare, HCA has entered into an agreement with BCBST, known as a network agreement, to provide healthcare services to participants in the Network P plans; no similar agreement exists with respect to participants in Network S plans.
HCA has treated thousands of participants of BCBST's S and P networks in its emergency rooms. Prior to being discharged, each participant signed a "Conditions of Admission Agreement" in which the participant assigned the benefits from the plan to HCA. Based on this assignment, HCA sent bills for its services directly to BCSCT, expecting BCBST to pay the charges, minus any co-payment for which the patient was responsible. When BCBST determined that the situation was a true medical emergency, it paid HCA's bill in full for services rendered to Network S participants. However, forclaims that BCBST determined were not true medical emergencies, BCBST did not pay the full amount of the bill.
Being disappointed with BCBST's reimbursement for emergency room services provided to Network S participants when BCBST determined that the situation was not an emergency, HCA filed suit against BCBST on June 1, 2010, alleging that BCBST "systematically paid substantially less than the Hospitals' usual and customary charges for Network S patients . . . generally a small percentage of charges." HCA asserted causes of action for implied-in-law contract and breach of contract and sought actual damages of "at least $7.8 million" for the services rendered to Network S participants at the hospitals since January 1, 2007. The first amended complaint added a cause of action for a declaratory judgment that, under the plan documents, BCBST "must reimburse the hospitals for at least 80% of full-billed usual and customary charges" and "no longer apply a 'Maximum Allowable Charges' limitation, or any similar limitation, to reduce the amount owed on full-billed usual and customary charges" for emergency services provided to Network S patients. HCA amended the complaint a second time to add, within its breach of contract cause of action, an action to recover benefits as assignee of the participants' benefits pursuant to the civil recovery enforcement provision of ERISA, 29 U.S.C. § 1132(a)(1)(B).
In due course, BCBST moved for partial summary judgment, on the grounds that: (1) ERISA preempted HCA's state law cause of action for unjust enrichment; (2) all but 145 of the 4,037 ERISA benefits claims were subject to dismissal because HCA failed to exhaust administrative remedies; (3) federal courts had exclusive jurisdiction of and HCA lacked standing to pursue the matters raised in the declaratory judgment action; (4) that, with respect to HCA's unjust enrichment cause of action: express contracts already governed the subject matter, HCA failed to exhaust its remedies against the network S participants, and HCA failed to confer a benefit on BCBST; (5) claims for which HCA received any payment from BCBST on or before November 30, 2008 were time-barred under Tenn. Code Ann. § 56-7-110(b) and should be excluded from the suit; (6) Plaintiff had failed to exhaust administrative grievance procedures governing the non-ERISA plans, which should result in dismissal of 540 claims; and (7) the 112 Network P claims should be dismissed because the parties have agreements that govern these claims.
With respect to BCBST's contention that HCA failed to exhaust administrative remedies, HCA moved for partial summary judgment on the ground that "[t]he undisputed facts show that the notices of adverse benefit determination and denial letters for the claims at issue do not provide the information required by ERISA regulations" and that, in accordance with 29 C.F.R. § 2560.503-1(l),2 the trial court should deem that HCA had exhausted administrative remedies.
The trial court entered a Memorandum Opinion and Order on January 9, 2014, followed by a revised Memorandum and Order on April 22, 2014. In the revised order, the Chancellor held as follows:
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