McGovern Physical Therapy Assocs., LLC v. Metro. Prop. & Cas. Ins. Co.

• Citation: 802 F.Supp.2d 306
• Decision Date: 29 July 2011
• Docket Number: Civil Action No. 10–CV–12003–RGS.
• Court: U.S. District Court — District of Massachusetts
• Parties: McGOVERN PHYSICAL THERAPY ASSOCIATES, LLC, as assignee of PIP benefits due John Doe, on behalf of itself and all others similarly situated v. METROPOLITAN PROPERTY & CASUALTY INSURANCE COMPANY.

802 F.Supp.2d 306

McGOVERN PHYSICAL THERAPY ASSOCIATES, LLC, as assignee of PIP benefits due John Doe, on behalf of itself and all others similarly situated

v.METROPOLITAN PROPERTY & CASUALTY INSURANCE COMPANY.

Civil Action No. 10–CV–12003–RGS.

United States District Court, D. Massachusetts.

July 29, 2011.

John R. Yasi, Yasi & Yasi, P.C., Kevin J. McCullough, Robert E. Mazow, Mazow McCullough P.C., Salem, MA, Kenneth D. Quat, Quat Law Offices, Cambridge, MA, for Plaintiff.

Garrett J. Harris, Gallagher & Associates, P.C., Malden, MA, Lisa M. Lilly, Lilly, LLC, Steven M. Levy, SNR Denton U.S. LLP, Chicago, IL, Owen Gallagher, Gallagher & Associates, P.C., Boston, MA, for Defendant.

MEMORANDUM AND ORDER ON MOTION TO DISMISS SECOND AMENDED COMPLAINT

STEARNS, District Judge.

Plaintiff McGovern Physical Therapy Associates, LLC (McGovern) brought this lawsuit on behalf of itself and all other assignees of statutory Personal Injury Protection (PIP) benefits paid to insureds whose Massachusetts automobile coverage is underwritten by Metropolitan Property & Casualty Insurance Company (Metropolitan). McGovern contends that Metropolitan arbitrarily refuses to fully reimburse the medical bills incurred by its insureds when they exceed “provider charges within the provider's geographic region” (usual and customary charges) and without reviewing the bills for their “reasonableness,” as required by Mass. Gen. Laws ch. 90, § 34M. In this regard, McGovern alleges that Metropolitan's use of Ingenix databases to conduct “fee audits” as a substitute for a physical examination of the patient and/or an individualized review of his or her medical records by a qualified practitioner violates Metropolitan's “duty” to pay reasonable bills. Because the Massachusetts state appellate courts have yet to definitively consider the issue, McGovern suggests that this court certify the question of the legality of Metropolitan's practice to the Massachusetts Supreme Judicial Court (SJC).

Metropolitan moves to dismiss, asserting that McGovern's claims fail as a matter of law, namely that: (1) there is no statutorily required “reasonableness review” of its PIP reimbursements by a licensed practitioner; (2) the substitute comparison of the amount billed with customary provider charges within the same geographic area fully complies with section 34M; (3) the Explanation of Benefits (EOB) it gives to McGovern and other providers is statutorily sufficient to serve as a challenge to the reasonableness of a submitted bill; (4) contrary to McGovern's assertion, there is no presumption that a provider's charges are reasonable; and (5) that a recent Third Circuit decision in “an identical case” dispels any notion that use of auditing databases violates the PIP statute or insurance contracts.

BACKGROUND

McGovern is a Massachusetts limited liability company providing physical therapy services to patients injured in automobile accidents.¹ Metropolitan issues automobile insurance policies to Massachusetts drivers. McGovern treated a Metropolitan insured (John Doe) for injuries he sustained in a July 7, 2007 automobile accident.

Under the Massachusetts “no fault” automobile insurance scheme, an insurer must provide PIP coverage to its insureds for “all reasonable expenses incurred within two years from the date of the accident for necessary medical, surgical, x-ray and dental services ... and necessary ambulance, hospital, professional nursing and funeral services ....” Mass. Gen. Laws ch. 90, § 34A. Section 34M provides that

[p]ersonal injury protection benefits and benefits due from an insurer assigned shall be due and payable as loss accrues, upon receipt of reasonable proof of the fact and amount of expenses and loss incurred .... [N]o insurer shall refuse to pay a bill for medical services submitted by a practitioner registered or licensed under the provisions of chapter one hundred twelve, if such refusal is based solely on a medical review of the bill or of the medical services underlying the bill, which review was requested or conducted by the insurer, unless the insurer has submitted, for medical review, such bill or claim to at least one practitioner registered or licensed under the same section of chapter one hundred and twelve as the practitioner who submitted the bill for medical services.

On October 12, 2007, McGovern submitted a request for payment (RFP) to Metropolitan for physical therapy services it provided to Doe on September 4, 2007. The RFP was supported by the associated medical bills and treatment records. McGovern requested an aggregate payment of $176.00. Metropolitan submitted the RFP to a third-party “software audit.” The third-party reviewer analyzed the Doe RFP by using the Ingenix databases.² On October 15, 2007, Metropolitan paid McGovern $142.58, that is, $34.42 less than the submitted RFP, explaining only that “[t]he amount allowed is based on provider charges within the provider's geographic region.”

McGovern, on behalf of itself and others, seeks to be reimbursed in full for its RFPs in all instances in which Metropolitan has failed “to challenge the [RFP] on its merits.” McGovern's Second Amended Complaint is set out in six counts: Count I—Breach of Contract—No Finding That Charges Were Unreasonable; Count II—Breach of Contract—No Physical Examination or Medical Review; Count III—Violation of Mass. Gen. Laws ch. 90, § 34M (invalid basis for denial of benefits); Count IV—Violation of Mass. Gen. Laws ch. 90, § 34M (insurer failed to use appropriate criteria in reviewing charges for reasonableness); Count V—Breach of the Covenant of Good Faith and Fair Dealing (implied on the contract alleged in Count I); and Count VI—Violation of Mass. Gen. Laws ch. 93A, § 11 (unfair trade practices). In addition to its motion to dismiss, Metropolitan moves to dismiss or strike the class allegations contained in the Second Amended Complaint.

DISCUSSION

To survive a motion to dismiss, a complaint must allege “a plausible entitlement to relief.” Twombly, 550 U.S. at 559, 127 S.Ct. 1955. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555, 127 S.Ct. 1955 (internal citations and quotations omitted). See also Rodríguez–Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95 (1st Cir.2007). Dismissal for failure to state a claim will be appropriate if the pleadings fail to set forth “ ‘factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory.’ ” Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir.1997), quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988). In ruling on a motion to dismiss, the court may look to documents the authenticity of which are not disputed by the parties, to documents central to the plaintiff's claim, and to documents referenced in the complaint. Watterson v. Page, 987 F.2d 1, 3 (1st Cir.1993). “[T]he discovery process is not available where, at the complaint stage, a plaintiff has nothing more than unlikely speculations. While this may mean that a civil plaintiff must do more detective work in advance, the reason is to protect society from the costs of highly unpromising litigation.” DM Research, Inc. v. Coll. of Am. Pathologists, 170 F.3d 53, 56 (1st Cir.1999).

As a preliminary matter, the court declines McGovern's invitation to certify any case-dispositive issues of statutory determination to the SJC, particularly those requiring the interpretation of Chapter 90, § 34M. The plain language of Chapter 90, §§ 34A and 34M, and the relevant opinions of the Massachusetts lower courts “provide sufficient guidance” to this court to insure that its decision will not be “merely conjectural.” Boston Car Co. v. Acura Auto. Div., Am. Honda Motor Co., 971 F.2d 811, 817 n. 3 (1st Cir.1992). The court is also mindful of the rule that certification to a state Supreme Court is not something to be undertaken lightly by a lower federal court. See In re Engage, Inc., 544 F.3d 50, 53 (1st Cir.2008) (“[E]ven in the absence of controlling precedent, certification would be inappropriate where state law is sufficiently clear to allow [federal courts] to predict its course.”). Cf. González Figueroa v. J.C. Penney Puerto Rico, Inc., 568 F.3d 313, 323 (1st Cir.2009) (“Certification of questions of local law from one court to another is, by its very nature, a cumbersome and time-consuming process. The use of that device stops a case in its tracks, multiplies the work of the attorneys, and sharply increases the costs of litigation. Not surprisingly, then, we have held with monotonous regularity that certification is inappropriate when the course that the state courts would take is reasonably clear.”).

Reasonableness of the Charges

Underpinning each of McGovern's claims is the assertion that section 34M requires review by a licensed practitioner, or a physical examination of the patient, where there is a dispute over the reasonableness of the charges. A more plausible reading of the language of section 34M, both from a grammatical and public policy perspective, is the one offered by Metropolitan, namely that the practitioner's review requirement attaches only when an insurer denies payment based upon an alleged lack of medical necessity for the services provided. Section 34M specifies that the insurer must submit the bill for a practitioner's review if payment is refused and “if such refusal is based solely on a medical review of the bill or of the medical services underlying the bill.” (Emphasis added).³

McGovern ripostes that Metropolitan's “approach excludes any and all information peculiar to the particular patient, to the patient's specific injuries and conditions, to the...