Koenig v. Aetna Life Ins. Co.
| Decision Date | 27 October 2015 |
| Docket Number | CIVIL ACTION NO. 4:13-CV-00359 |
| Parties | KENNETH R. KOENIG, et al., Plaintiffs, v. AETNA LIFE INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Pending before the Court is the defendants', Aetna Life Insurance Company ("Aetna"),1 motion for partial summary judgment on Counts 1 - 10 of Plaintiff's Third Amended Complaint (Dkt. No. 189).2 The plaintiffs, North Cypress Medical Center Operating Company, Ltd. and North Cypress Medical Center Operating Company GP, LLC, have filed a response in opposition to Aetna's motion, (Dkt. No. 210), and Aetna has filed a reply. (Dkt. No. 218). After having carefully considered the motion, response, reply, the record and the applicable law, the Court determines that Aetna's motion for partial summary judgment should be GRANTED in part and DENIED in part.
The plaintiffs, North Cypress Medical Center Operating Company, Ltd. and North Cypress Medical Center Operating Company GP, LLC (collectively, "North Cypress"), own and operate a 150-bed, general acute care hospital located in Cypress, Harris County, Texas which was established on or about January 4, 2007. North Cypress is a full service hospital offering a broad range of medical services, including an emergency room, surgery center, oncology unit and a pediatrics unit. North Cypress qualifies as a "participating hospital" under the requirements of the Federal Emergency Medical Treatment and Active Labor Act ("EMTALA"), 42 U.S.C. §§ 1395(dd) et seq., which requires it to provide appropriate medical screening in its ER facilities to any patient who requests examination or treatment, notwithstanding the patient's ability to pay. North Cypress treats thousands of patients, including those covered by plans and/or insurance policies that Aetna administers and/or insures.
Aetna is a managed care company organized and existing under the laws of Connecticut that provides access to coverage to its members pursuant to several healthcare benefit plans, including employer-sponsored welfare benefit plans governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001 et seq. Aetna acts as either a direct insurer with regard to ERISA fully-insured plans or as a third-party administrator with regard to ERISA self-funded plans. Aetna provides its services/products under written Administrative Services Agreements ("ASA") with various plan sponsors pursuant to which Aetna is given discretionary authority to administer such plans.
Pursuant to North Cypress' Third Amended Complaint, Aetna's plans at issue, namely its Preferred Provider Organization ("PPO") and Point of Service ("POS") plans, permit subscribers to obtain healthcare services from medical providers, such as North Cypress, who set their ownfee schedules and have no contractual relationship with Aetna to provide services to its members at reduced, pre-negotiated rates. Such providers are often referred to as "out-of-network" or "non-participating" medical providers. Certain Health Maintenance Organization ("HMO") plans insured and/or administered by Aetna are also at issue in this case as Aetna's subscribers utilized North Cypress' emergency room services which are covered, at least in part, by such plans. North Cypress maintains that Aetna is required to pay benefits for such out-of-network and emergent care services based on the usual, customary and reasonable care rates ("UCR") for such services in the relevant health care market and/or the rate defined in the plan.
Beginning in January of 2007, North Cypress opened as an out-of-network provider after notifying Aetna it was implementing a "prompt pay discount" program through which some patients, for whom North Cypress was out-of-network, would get a discount on their coinsurance obligation if they paid upfront or within a limited period of time. North Cypress argues that its discount approach made good business sense because it benefitted the hospital, its patients, and the community. Since North Cypress was not a contracted medical provider with Aetna, it submitted healthcare claims to Aetna seeking reimbursement for medical services rendered by virtue of assignments of benefits it received from various Aetna plan members for services and/or treatment they had obtained at North Cypress. Aetna processed and administered these healthcare claims.
On February 12, 2013, however, North Cypress commenced the instant action against Aetna for substantial underpayment and/or nonpayment of certain healthcare claims from 2009 through 2014. Specifically, North Cypress alleged claims against Aetna for failing to comply with various group plans in violation of ERISA, breaching its fiduciary duties under ERISA, failing to provide a full and fair review under ERISA, violating claims procedure under ERISA,violations of the Texas Insurance Code, breach of contract, and failing to comply with requests for information pursuant to 29 USC § 1132(c)(1)(B). (See Dkt. No. 1). After multiple amendments, North Cypress, on July 21, 2014, filed Plaintiffs' Third Amended Complaint against Aetna and the other Aetna entities alleging claims for: (1) benefits and/or money damages under ERISA § 502(a)(1)(B) and ERISA § 502(a)(3), 29 U.S.C. § 1132(a); (2) violation of fiduciary duties of loyalty and due care under ERISA; (3) violations of ERISA § 502(c), 29 USC § 1132(c); (4) breach of contract as to non-ERISA health plans; (5) unjust enrichment; (6) violations of Texas Insurance Code, as to non-ERISA health plans; (7) violations of Texas Deceptive Trade Practices Act, Tex. Ins. Code § 541; (8) violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (9) violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(C); (10) request for information under 29 USC § 1132(c)(1)(B); (11) attorneys' fees; (12) exemplary damages; and(13) a declaration that North Cypress submitted all claims for reimbursement in compliance with state and federal laws, a declaration that North Cypress did not engage in any acts of fraud or misrepresentation in its attempts to recover benefits, a declaration that North Cypress, as a beneficiary of its patients' claims, is entitled to be fully reimbursed by Aetna at the UCR or as set forth in the plans or policies and a declaration that it would have been futile for North Cypress to continue to pursue administrative remedies through Aetna.
On May 31, 2013, Aetna filed a counterclaim against North Cypress for allegedly engaging in fraudulent billing and illegal "kickback" schemes involving patient referrals, charging grossly excessive fees, fraudulently admitting non-emergent patients through the emergency room, and improperly waiving patient co-pays, deductibles and co-insurance. In its Original Counterclaim, Aetna asserts claims against North Cypress for: (1) common law fraud;(2) negligent misrepresentation; (3) money had and received; (4) unjust enrichment; (5) injunctive relief requiring North Cypress to disclose when referring physicians have an ownership interest in North Cypress and enjoining North Cypress from charging unreasonable fees, waiving fees or making other promises to induce Aetna members to use its facility, including ensuring them that patient responsibility charges would not be more for North Cypress' out-of-network services; (6) a declaratory judgment that North Cypress' billing practices violate multiple Texas statutes and that Aetna is entitled to recoup all overpayments paid to North Cypress; (7) exemplary damages; and (8) attorneys' fees. Alternatively, Aetna seeks equitable relief under ERISA, 29 U.S.C. § 1132(a)(3), including, a constructive trust over fees improperly obtained as a result of North Cypress' fraudulent conduct, an order requiring the return of such funds, and an order permanently enjoining North Cypress from disposing of or transferring any of said funds.
Aetna now moves for a partial summary judgment on certain of North Cypress's claims.3
Rule 56 of the Federal Rules of Civil Procedure authorizes summary judgment against a party who fails to make a sufficient showing of the existence of an element essential to the party's case and on which that party bears the burden at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). The movant bears the initial burden of "informing the district court of the basis for its motion" and identifying those portions of the record "which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323; see also Martinez v. Schlumber, Ltd.,338 F.3d 407, 411 (5th Cir. 2003). Summary judgment is appropriate where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).
If the movant meets its burden, the burden then shifts to the nonmovant to "go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Stults v. Conoco, Inc., 76 F.3d 651, 656 (5th Cir. 1996) (citing Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995); Little, 37 F.3d at 1075). "To meet this burden, the nonmovant must 'identify specific evidence in the record and articulate the 'precise manner' in which that evidence support[s] [its] claim[s].'" Stults, 76 F.3d at 656 (citing Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.), cert. denied, 513 U.S. 871, 115 S. Ct. 195, 130 L. Ed.2d 127 (1994)). It may not satisfy its burden "with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence." Little, 37 F.3d at 1075 (internal quotation marks and...
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