Hendrix v. Mun. Health Benefit Fund
| Decision Date | 08 December 2022 |
| Docket Number | CV-22-138 |
| Citation | 2022 Ark. 218,655 S.W.3d 678 |
| Parties | Ricky HENDRIX, Individually and on Behalf of All Arkansans Similarly Situated, Appellants v. MUNICIPAL HEALTH BENEFIT FUND, Appellee |
| Court | Arkansas Supreme Court |
Streett Law Firm, P.A., by: James A. Streett, Russellville; and Brian G. Brooks, Attorney at Law, PLLC, by: Brian G. Brooks, for appellant.
Harrington, Miller, Kieklak, Eichmann & Brown, P.A., by: R. Justin Eichmann and Thomas N. Kieklak, Springdale; and Catlett Law Firm, PLLC, by: H. Bradley Walker, for appellee.
Appellant Ricky Hendrix, individually and on behalf of all Arkansans similarly situated, appeals the Pope County Circuit Court's order granting summary judgment in favor of appellee Municipal Health Benefit Fund (the "Fund"). Pursuant to Rule 1-2(a)(7) of the Arkansas Supreme Court Rules, we have jurisdiction over the present appeal because it is a subsequent appeal following an appeal previously decided by this court. See Mun. Health Benefit Fund v. Hendrix , 2020 Ark. 235, 602 S.W.3d 101 ( Hendrix I ). Hendrix presents two arguments on appeal: (1) summary judgment in favor of the Fund was error and should be reversed; and (2) summary judgment in favor of Hendrix should have been granted and the case should be remanded for a damages determination. We affirm.
As set forth in Hendrix I , the Fund is a trust created by the Arkansas Municipal League under authority of the Interlocal Cooperation Act, Arkansas Code Annotated sections 25-20-101 through -108 (Repl. 2014 & Supp. 2021). The Fund provides benefits to employees of its municipal members. The Fund's Policy Booklet1 sets forth the benefits available and the Fund's rights and obligations with respect to payment of those benefits. Through Hendrix's employment with the Russellville Police Department, he obtained Fund health-benefits coverage. In May 2016, Hendrix's daughter was injured in a car accident, which required treatment from various medical providers. The Fund denied payment for portions of Hendrix's daughter's medical bills based on its interpretation of the uniform, customary, and reasonable charges (UCR) exclusion in the Policy Booklet. Hendrix filed a class-action complaint against the Fund challenging the enforcement of the UCR term due to the Policy Booklet's subjective and ambiguous standards for determining the UCR rate. Hendrix alleged that the Policy Booklet was a contract between the Fund and the class members and that the UCR term's ambiguity rendered it unenforceable. On June 26, 2019, the circuit court granted Hendrix's motion for certification of the following UCR class:
All individuals and/or entities located and/or domiciled within the State of Arkansas who filed one or more claims with the Arkansas Municipal Health Benefit Fund on or between September 12, 2012 through the date of entry of this Class Certification Order and who had their claim(s) denied or reduced by the MHBF, in whole or in part, on the stated basis that the charges claimed exceed those that are "reasonable and customary."
In Hendrix I , the Fund appealed the circuit court's grant of class certification. We affirmed.2
Hendrix took issue with these provisions because the first purported to tether application of the UCR exclusion to some unspecified "national table(s), method(s), or standards(s)"; and in the second provision, the Fund grants itself unfettered freedom to unilaterally exclude any provider charges, without notice, at any time. Hendrix pointed out that the Policy Booklet then set forth a third standard that is equally subjective and ambiguous:
Covered Medical Charges include only the charges and fees described below that ... (d) do not exceed the usual, customary and reasonable charges as determined by the Fund in accordance with health care industry standards for the area in which the services and supplies are furnished[.]
Hendrix argued that with this final clause, the Policy Booklet purports to limit the Fund's obligation to pay for otherwise covered medical charges to the extent that the Fund "determines" that they are not UCR utilizing the health care industry standards "of the area" where the care is provided. Hendrix argued that the class was entitled to summary judgment on its claims because the UCR exclusion is both internally contradictory and ambiguous and thus not enforceable under Arkansas contract law. Hendrix also argued that the UCR exclusion violated the contractual requirement of mutuality. He asserted that the lack of mutuality provided an independent basis for requiring entry of summary judgment in his favor.
On May 24, 2021, the Fund responded to Hendrix's motion for summary judgment and also moved for summary judgment. In support of its motion for summary judgment, the Fund argued that it is indisputable that the Fund is a trust and that there is no cause of action in Hendrix's complaint that seeks to confront the Fund as a trust. Specifically, the Fund argues that Hendrix has made no breach-of-fiduciary-duty claim, no allegation that the Fund wrongfully calculated a claim, failed to pay the UCR amount for any out-of-network claim or engaged in any wrongful or bad faith conduct in the coordination of benefits.
To support its position, the Fund relied on the affidavit and exhibits attached thereto of Mark Hayes, executive director of the Arkansas Municipal League. The Fund asserted that the following material facts support its position: The Fund was established through the execution of a declaration of trust on November 16, 1981 (the "Trust") by member municipalities in order to provide, among other services, "health and dental benefits coverage for the benefit of member municipalities and their employees and officials."
The Fund also relied on the affidavit and exhibits attached of Katie Bodenhamer, general manager and benefits counsel for the Fund. Bodenhamer stated that the Trust for the Fund authorizes the trustees to promulgate rules and regulations for the operation of the Fund. She explained that the rules and regulations promulgated by the trustees are set forth in the Policy Booklet. Bodenhamer stated that the Fund has a fiduciary obligation to the member municipalities and former and current employees and elected officials who participate in the Fund. Part of this fiduciary obligation is to manage the Fund assets, including the payment of claims, in order to keep premiums paid by municipalities low and to allow the Fund to provide the best benefits possible to the beneficiaries. Bodenhamer observed that billed charges received by the Fund for out-of-network claims vary widely for the same claim by provider and are far from bearing any relation to actual market prices for the claim. The UCR provision is a standard industry provision in health-benefits funds and insurance policies that explains the limit of the benefit provided for out-of-network claims.
On June 28, 2021, Hendrix filed his consolidated reply in support of his motion for summary judgment and response in opposition of the Fund's countermotion for summary judgment. Hendrix argued that the Fund raised straw-man arguments involving the interpretation of internal trust documents, how other insurers define UCR terms, and rising trends in billed charge rates across the country. Hendrix argued that none of these arguments bear on whether the UCR term at issue in this case is objectively ascertainable or ambiguous and thus enforceable or unenforceable on the face of this Policy Booklet. Hendrix again asserted that the Policy Booklet is a contract between the Fund and the class. Additionally, Hendrix argued that the Fund's status as a trust is irrelevant to whether the Booklet is a contract.
On November 10, 2021, the circuit court issued a letter order granting the Fund's motion for summary judgment, denying Hendrix's motion for summary judgment, and dismissing Hendrix's complaint. The circuit court found that there were no genuine issues of material fact and that the health benefits offered by the Fund and purchased by Hendrix are not an insurance policy. The circuit court found that while it is uncontroverted that the Fund is a trust, the existence of the trust relationship did not preclude the Fund and Hendrix from entering into contracts with one another. The circuit court then found that the Policy Booklet at issue is a contract between the UCR class members and the Fund. Further, the circuit court rejected Hendrix's claim that the terms of the Policy Booklet contract are ambiguous and contradictory regarding the definition of the UCR term. The circuit court found that it is permissible for a contract term to leave a decision to the discretion of one party, and when that occurs, that decision is virtually unreviewable unless the decision is made in bad faith. The circuit court...
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