Kelly v. Peerstar LLC, Case No. 3:18-cv-126
| Decision Date | 26 August 2020 |
| Docket Number | Case No. 3:18-cv-126 |
| Parties | GEORGE V. KELLY, Plaintiff, v. PEERSTAR LLC and LARRY J. NULTON, Defendants. |
| Court | U.S. District Court — Western District of Pennsylvania |
MEMORANDUM OPINION
This case arises from a dispute regarding the obligations of Defendants Peerstar LLC ("Peerstar") and Larry J. Nulton ("Dr. Nulton") under a settlement agreement entered into with Plaintiff George V. Kelly ("Kelly"), as well as counterclaims by Peerstar and Dr. Nulton and claims by Charles J. Kennedy ("Dr. Kennedy") that relate to Kelly's allegedly improper use of Dr. Nulton and Dr. Kennedy's names and National Provider Identifier ("NPI") numbers to submit medical insurance claims for reimbursement.1 Pending before the Court is Kelly's Motion for Summary Judgment (ECF No. 80) and Peerstar, Dr. Nulton, and Dr. Kennedy's Motion for Summary Judgment (ECF No. 78). The Motions are fully briefed (ECF Nos. 79, 81, 88, 89, 100, 101) and ripe for disposition. For the reasons that follow, the Court GRANTS IN PART Kelly's Motion and DENIES Peerstar, Dr. Nulton, and Dr. Kennedy's Motion.
This Court has subject-matter jurisdiction because the parties are diverse and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). Venue is proper because a substantial part of the events giving rise to the parties' claims occurred in the Western District of Pennsylvania. 28 U.S.C. § 1391(b)(2).
The following facts are undisputed unless otherwise noted.2
Dr. Nulton is a licensed psychologist who owns Nulton Diagnostic and Treatment Center ("NDTC"), which provides a variety of mental health services throughout Pennsylvania. (ECF No. 84 ¶ 7.) Dr. Kennedy is a licensed psychologist who has worked for NDTC for approximately 18 years. (Id. ¶ 8.) In the late 1990s, Dr. Nulton hired Kelly to perform various administrative roles at NDTC; Kelly eventually became NDTC's Chief Operating Officer ("COO"). (Id. ¶¶ 9-10.)
In 2005, Dr. Nulton sold a segment of NDTC to Providence Service Corporation ("Providence"), which was spun off into a separate entity called Children's Behavioral Health ("CBH"). (Id. ¶ 11.) CBH provides behavioral health rehabilitation services ("BHRS") for children, including children with autism. (Id. ¶ 12.) As part of this sale, Kelly was transferred from NDTC to CBH and became the COO of CBH. (Id. ¶ 14; ECF No. 82 ¶ 6.) Providence wasalso the parent company of The ReDCo Group ("ReDCo"), another mental health services company. (ECF No. 84 ¶ 15.) Kelly asserts that he has never been employed by ReDCo. (ECF No. 82 ¶ 2.) Neither Dr. Nulton nor Dr. Kennedy were employed by CBH or ReDCo, and neither rendered or supervised BHRS services to CBH or ReDCo patients. (ECF No. 84 ¶ 17.)
Following the spinoff, Dr. Nulton and Dr. Kennedy had limited relationships with CBH and ReDCo, serving, on a case-by-case basis, as consultants for CBH and ReDCo. (Id. ¶¶ 16, 18.) As consultants, Dr. Nulton and Dr. Kennedy were available to consult with CBH or ReDCo staff but they did not supervise CBH or ReDCo's care providers. (Id. ¶¶ 19-20.)
In April 2015, Kelly provided Dr. Nulton with a written agreement for Dr. Nulton's consulting arrangement with ReDCo. (Id. ¶ 22.) Prior to April 2015, Dr. Nulton and Dr. Kennedy had not formalized their consulting relationship in a written agreement with CBH and ReDCo. (Id. ¶ 21.) Dr. Nulton agreed to continue providing "clinical case consultation" for ReDCo and signed the agreement. (Id. ¶ 24.) Dr. Nulton executed a similar agreement with CBH in December 2015. (Id. ¶ 25.)
In 2009, Pennsylvania passed the Autism Insurance Act ("Act 62"), which requires private health insurance companies to cover services for the diagnosis and treatment of Autism Spectrum Disorders ("ASD") in children. (ECF No. 84 ¶ 27.) Act 62 became effective on July 1, 2009. (Id. ¶ 28.) Act 62 mandated that patients are to be treated by qualified professionals by requiring that a licensed physician or licensed psychologist develop their treatment plans. (Id. ¶ 32.) Act 62 also mandated insurance coverage for services provided by non-professional providers, such astechnical system support therapists, mobile therapists, or behavioral specialist consultants. (Id. ¶ 33. )
With Act 62 enacted, CBH and ReDCo, both providers of BHRS services provided by non-professional providers, became eligible to bill private insurers for their services. (Id.) CBH and ReDCo contracted with Highmark to bill Highmark for BRHS services that CBH and ReDCo provided. (Id. ¶ 34.) As part of Highmark's claim submission system, Highmark required CBH and ReDCo to identify a licensed psychologist as the performing or rendering provider. (Id. ¶ 34. ) Without this information, Highmark could not load these entities into its system to enable CBH or ReDCo to receive payment. (Id. ¶ 35.) Highmark referred to this process of adding individual providers to its network as "credentialing." (Id. ¶ 36.)
Although certain services could be provided by someone other than a psychiatrist or psychologist under Act 62, Highmark required that CBH and ReDCo identify a performing provider that needed to be licensed and credentialed through its system. (Id. ¶ 38.) Highmark could not individually credential non-psychologist or psychiatrist service providers like technical system support therapists, mobile therapists, or behavioral specialist consultants, meaning Highmark's system could not process claims with only these therapists' names on them. (Id.) When an individual provider was credentialed, a group that employed the provider, such as CBH or ReDCo, could submit a Request for Assignment of Account, which allowed the group to be paid for services provided or supervised by the individual provider. (Id. ¶ 39.)
CBH and ReDCo were required to provide the individual rendering provider's NPI number when submitting claims through Highmark's Navinet system, an electronic version of the HCFA 1500 form, a standardized claim form. (Id. ¶¶ 40, 42.) As licensed psychologists, Dr.Nulton and Dr. Kennedy each have a unique 10-digit NPI number that is used to identify them as a provider when billing insurers. (Id. ¶ 41.) CBH and ReDCo could bill Highmark for their services either by filing claims on a UB-04 form or a HCFA 1500 form. (ECF No. 83-11 at 133:8-134:17.) These two forms are similar, but one difference between the forms is that HCFA 1500 form has a field in which to list the rendering/performing provider, but the UB-04 form does not have this field. (Id. at 136:12-18.) Highmark told CBH and ReDCo that it would prefer, but not require, CBH and ReDCo to use the HCFA 1500 form to submit claims for BHRS services through Highmark's electronic claim submission portal. (Id. at 134:17-136:18.)
In May 2009, Kelly instructed Michelle Hershberger, a CBH employee, to complete the appropriate Highmark Request for Assignment Account and other forms that were necessary to affiliate Dr. Nulton and Dr. Kennedy with CBH for reimbursement from Highmark. (ECF No. 84 ¶ 53.) Kelly told her that he would get Dr. Nulton and Dr. Kennedy's consent, signatures and professional credentials on the Highmark forms. (Id.) Dr. Nulton and Dr. Kennedy assert that neither Kelly nor Hershberger communicated with them about using their identifying information on the Highmark forms. (Id. ¶¶ 55, 56.) Kelly sent Hershberger the completed Assignment Account Request form for CBH with what purported to be the signatures of Dr. Nulton and Dr. Kennedy. (Id. ¶ 58.) Dr. Nulton and Dr. Kennedy assert that they never saw the Assignment Account Request form, did not sign it, and did not authorize anyone to sign it for them. (Id. ¶¶ 59-61.) Kelly signed the Assignment Account Request form on behalf of CBH and Hershberger mailed the fully completed application to Highmark. (Id. ¶¶ 63, 66.) After Hershberger submitted the Assignment Account Request Form to Highmark, Dr. Nulton and Dr.Kennedy were identified as "rendering providers" for CBH in Highmark's billing system. (Id. ¶ 67.)
In July 2009 ReDCo and Kelly also discussed adding Dr. Nulton to ReDCo's Highmark Assignment Account for billing purposes. (Id. ¶¶ 73-75.) Mary Catherine Symons, a ReDCo employee, faxed the request to Kelly so that it could be filled out and sent back. (Id. ¶ 77.) Kelly returned the form with Dr. Nulton's identifying information filled in and bearing what purported to be Dr. Nulton's signature. (Id. ¶¶ 78-79.) Dr. Nulton asserts that he was never consulted about this form, nor did he give permission for his identifying information to be used on it. (Id. ¶ 80.)
On June 11, 2009, Kelly executed CBH's contract with Highmark for BHRS reimbursements, known as the Participating Provider Agreement, identifying Dr. Nulton and Dr. Kennedy as employed practitioners of CBH. (Id. ¶¶ 68-69.) After receiving these agreements, Highmark began processing and paying CBH for Act 62 BHRS claims for children with ASD, claims on which CBH identified Dr. Nulton and Dr. Kennedy as rendering providers. (Id. ¶ 71.) Between July 2009 and November 2017, CBH and ReDCo submitted thousands of insurance claims to Highmark with Dr. Nulton and Dr. Kennedy listed as the rendering provider. (Id. ¶¶ 84-85.)
On April 15, 2009, Dr. Nulton formed a company with James P. Kimmel, Jr. called Peerstar LLC. (Id. ¶ 87.) Peerstar is engaged in the business of providing behavioral health peer support services in Pennsylvania. (Id. ¶ 88.) After Peerstar was formed, Dr. Nulton decided that Peerstar needed to bring on someone to handle operations full time. (Id. ¶ 89.) Kelly was then brought on to serve as Peerstar's COO in exchange for a 25 percent ownership stake in the company. (Id.¶ 90.) Kelly executed Peerstar's operating...
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