Highmark West Virginia, Inc. v. Jamie

• Decision Date: 20 November 2007
• Docket Number: No. 33309.,33309.
• Parties: HIGHMARK WEST VIRGINIA, INC., d/b/a Mountain State Blue Cross Blue Shield, a West Virginia Corporation, Plaintiff Below, Appellee v. Sharooz S. JAMIE, M.D, Defendant Below, Appellant.
• Court: West Virginia Supreme Court

655 S.E.2d 509

HIGHMARK WEST VIRGINIA, INC., d/b/a Mountain State Blue Cross Blue Shield, a West Virginia Corporation, Plaintiff Below, Appellee v. Sharooz S. JAMIE, M.D, Defendant Below, Appellant.

No. 33309.

Supreme Court of Appeals of West Virginia.

Submitted October 24, 2007.

Decided November 20, 2007.

Syllabus by the Court

1. "The standard of review applicable to an appeal from a motion to alter or amend a judgment, made pursuant to W. Va. R. Civ. P. 59(e), is the same standard that would apply to the underlying judgment upon which the motion is based and from which the appeal to this Court is filed." Syl. pt. 1, Wickland v. American Travellers Life Insurance Co., 204 W.Va. 430, 513 S.E.2d 657 (1998).

2. "The trial court, in appraising the sufficiency of a complaint on a Rule 12(b)(6) motion, should not dismiss the complaint unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 [, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84] (1957)." Syl. pt. 3, Chapman v. Kane Transfer Company, 160 W.Va. 530, 236 S.E.2d 207 (1977).

3. "[F]raud or mistake must be alleged in the appropriate pleading with particularity and the failure to do so precludes the offer of proof thereof during the trial" Syl. pt. 1, in part, Hager v. Exxon Corporation, 161 W.Va. 278, 241 S.E.2d 920 (1978).

Kristin A. Boggs, Esq., Goodwin & Goodwin, Charleston, WV, for Appellant.

Ancil G. Ramey, Esq., Kara L. Cunningham, Esq., Russell D. Jessee, Esq., Steptoe & Johnson Charleston, WV, for Appellee.

PER CURIAM.

This matter is before this Court upon the appeal of Sharooz S. Jamie, M. D., defendant below, from the February 27, 2006, order of the Circuit Court of Wood County, West Virginia, dismissing his Second Amended Counterclaim with prejudice in an action wherein the plaintiff, Highmark West Virginia, Inc., d/b/a Mountain State Blue Cross Blue Shield (hereinafter "Mountain State"), sought recovery for alleged overpayments made to Dr. Jamie pursuant to his participation as a provider under Mountain State's medical benefit program. On August 15, 2006, the Circuit Court entered an order denying the appellant's motion to alter or amend the order of dismissal.

On September 1, 2006, the Circuit Court facilitated an appeal from the dismissal by entering a final judgment in favor of Mountain State upon the appellant's Second Amended Counterclaim. That ruling was made pursuant to Rule 54(b) of the West Virginia Rules of Civil Procedure which authorizes the entry of judgment upon one or more but fewer than all of the claims in an action upon a determination that there is no just reason for delay. As a result, further proceedings in the Circuit Court were stayed pending this Court's resolution of the appeal.

This Court has before it the petition for appeal, the designated record and the briefs and argument of counsel. In syllabus point 1 of Wickland v. American Travellers Life Insurance Co., 204 W.Va. 430, 513 S.E.2d 657 (1998), this Court held: "The standard of review applicable to an appeal from a motion to alter or amend a judgment, made pursuant to W. Va. R. Civ. P. 59(e), is the same standard that would apply to the underlying judgment upon which the motion is based and from which the appeal to this Court is filed." Syl. pt. 1, Cogar v. Lafferty, 219 W.Va. 743, 639 S.E.2d 835 (2006); syl.pt. 1, Judy v. Grant County Health Department, 210 W.Va. 286, 557 S.E.2d 340 (2001). See also, syl. pt. 4, James M.B. v. Carolyn M., 193 W.Va. 289, 456 S.E.2d 16 (1995) (indicating that a motion to alter or amend may be employed following a judgment upon a motion to dismiss). Accordingly, this Court is primarily concerned with the February 27, 2006, order dismissing the Second Amended Counterclaim rather than the subsequent orders. The dismissal was entered, upon Mountain State's motion, pursuant to Rule 12(b)(6) of the West Virginia Rules of Civil Procedure.

The Second Amended Counterclaim included Nine Counts which alleged, generally, that Mountain State breached its contract with the appellant and committed fraud and defamation against him. The appellant asserted that he was, thus, entitled to compensatory and punitive damages. The Circuit Court concluded that none of the Counts were sufficient to withstand scrutiny under Rule 12(b)(6).

Upon a careful review of the Second Amended Counterclaim, this Court is of the opinion that, although the Circuit Court correctly dismissed some of the Counts set forth by the appellant, it committed error in dismissing other Counts. Therefore, for the reasons stated below, the dismissal of Dr. Jamie's Second Amended Counterclaim with prejudice is affirmed, in part, and reversed, in part, and this matter is remanded to the Circuit Court for further proceedings.

I. Factual and Procedural Background

In October 1991, the appellant, a medical doctor practicing in Clay County, West Virginia, entered into a Participation Agreement with Mountain State through which he became a provider under Mountain State's medical benefit program. Under the Agreement, Mountain State promised to pay the appellant for the provision of covered medical services to patient-members of health plans offered or administered by Mountain State, minus the amount payable directly by the patient-member as a deductible or co-payment.

Incorporated in the Participation Agreement was Mountain State's Provider Manual which required the appellant to follow the billing guidelines or codes published in the Current Procedure Technology ("CPT") Manual of the American Medical Association. Dr. Jamie was required to follow the "CPT Codes" in submitting claims to Mountain State. The Participation Agreement also provided that, in the event of overpayments or payments resulting from billing or coding errors, Mountain State was authorized to make "automatic remittance adjustments" to recoup monies paid to the appellant. Moreover, the Participation Agreement permitted Mountain State to conduct on-site or off-site audits of the appellant's records concerning patient-members to verify compliance with the Agreement, the Provider Manual and the CPT Codes.

In 2002, the appellant allegedly began to systematically over-bill Mountain State for claims under the CPT Codes, particularly concerning blood panel testing under CPT Codes 80050 and 80053. Between January 1, 2002, and January 1, 2004, the appellant was said to have received overpayments in the amount of $115,165, approximately $56,000 of which was recouped by Mountain State through automatic remittance adjustments to monies sent to the appellant for other claims. The appellant, on the other hand, denied that the payments he received were overpayments and asserted that Mountain State confiscated $56,000 to which he was entitled. He terminated the Participation Agreement with Mountain State and refused to reimburse any payments.¹

On December 22, 2004, Mountain State filed an action in the Circuit Court of Wood County against Dr. Jamie to recover an amount equal to the unrecouped overpayments. Recovery was grounded upon breach of contract and unjust enrichment. In addition, Mountain State sought punitive damages based upon allegations of fraud and an order compelling the appellant to provide access to his patient-member records for purposes of an audit.

The appellant filed a pro se answer and counterclaim denying the allegations of the complaint and seeking compensatory damages. Ultimately, the appellant, having obtained counsel, filed the Second Amended Counterclaim, with leave of court, alleging entitlement to both compensatory and punitive damages. The Second Amended Counterclaim included Nine Counts consisting of claims for: (1) breach of contract, (2) the retroactive denial of payments in violation of statutory law, (3) breach of the covenant of good faith and fair dealing, (4) fraudulently withholding payments, (5) fraudulently making underpayments, (6) fraudulently charging deductibles, (7) fraudulently charging co-payments, (8) negligence and (9) defamation.²

In February 2006, Mountain State filed a motion to dismiss the Second Amended Counterclaim pursuant to Rule 12(b)(6) for failure to set forth any claims upon which relief could be granted. Memoranda of law were filed by the parties, and a hearing was conducted on February 23, 2006. At the conclusion of the hearing, the Circuit Court dismissed the Second Amended Counterclaim in its entirety, with prejudice. Thereafter, the Court entered the February 27, 2006, order of dismissal followed by the August 15, 2006, order denying the appellant's motion to alter or amend and the September 1, 2006, order entering final judgment in favor of Mountain State upon the Second Amended Counterclaim pursuant to Rule 54(b).³

The appellant's appeal was granted by this Court in February 2007.

II.

Standard of Review Concerning Rule 12(b)(6)

Rule 12(b)(6) of the West Virginia Rules of Civil Procedure authorizes the filing of a motion requesting dismissal of a claim or counterclaim for "failure to state a claim upon which relief can be granted." In actions resulting in an appeal from a Rule 12(b)(6) dismissal, review by this Court is de novo. Syl. pt. 1, Longwell v. Board of Education of the County of Marshall, 213 W.Va. 486, 583 S.E.2d 109 (2003); syl. pt. 1, Holbrook v. Holbrook, 196 W.Va. 720, 474 S.E.2d 900 (1996); syl. pt. 2, State ex rel. McGraw v. Scott Runyan Pontiac-Buick, 194 W.Va. 770, 461 S.E.2d 516 (1995). In that regard, guidance for both the trial court and this Court may be found in syllabus point 3 of Chapman v. Kane Transfer Company, 160 W.Va. 530, 236 S.E.2d 207 (1977), which holds: "The trial court, in appraising the sufficiency of a complaint on a Rule 12(b)(6) motion, should not dismiss the complaint unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v....