Mission Toxicology, LLC v. Unitedhealthcare Ins. Co.

• Decision Date: 04 November 2020
• Docket Number: Case No. 5:17-CV-1016-JKP (,C/w Case No. 5:18-CV-0347-JKP)
• Citation: 499 F.Supp.3d 350
• Parties: MISSION TOXICOLOGY, LLC, et al., Plaintiffs, v. UNITEDHEALTHCARE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Western District of Texas

499 F.Supp.3d 350

MISSION TOXICOLOGY, LLC, et al., Plaintiffs,

v.UNITEDHEALTHCARE INSURANCE COMPANY, et al., Defendants.

Case No. 5:17-CV-1016-JKP (

C/w Case No. 5:18-CV-0347-JKP)

United States District Court, W.D. Texas, San Antonio Division.

Signed November 4, 2020

Bridget A. Zerner, Pro Hac Vice, John J.E. Markham, Pro Hac Vice, Markham & Read, Boston, MA, Cassandra Garza Matheson, David William Navarro, David Jed Williams, Hornberger Fuller & Garza, Inc., San Antonio, TX, for Plaintiffs Mission Toxicology, LLC, Sun Clinical Laboratory, LLC.

Andrew G. Jubinsky, Timothy A. Daniels, Figari & Davenport, L.L.P., Dallas, TX, Charles C. Gokey, Ena M. Kovacevic, Pro Hac Vice, Jamie R. Kurtz, Pro Hac Vice, Jeffrey S. Gleason, Pro Hac Vice, Nathaniel J. Moore, Pro Hac Vice, William Bornstein, Pro Hac Vice, Robins Kaplan LLP, Minneapolis, MN, for Plaintiff Unitedhealthcare Insurance Company, Inc.

Andrew G. Jubinsky, Timothy A. Daniels, Figari & Davenport, L.L.P., Dallas, TX, Jamie R. Kurtz, Pro Hac Vice, Robins Kaplan LLP, Minneapolis, MN, for Plaintiff UnitedHealthcare Services, Inc.

Andrew G. Jubinsky, Timothy A. Daniels, Figari & Davenport, L.L.P., Dallas, TX, Charles C. Gokey, Jeffrey S. Gleason, William Bornstein, Pro Hac Vice, Robins Kaplan LLP, Minneapolis, MN, for Defendant UnitedHealthcare Insurance Company.

Andrew G. Jubinsky, Timothy A. Daniels, Figari & Davenport, L.L.P., Dallas, TX, Charles C. Gokey, Ena M. Kovacevic, Pro Hac Vice, Jamie R. Kurtz, Pro Hac Vice, Jeffrey S. Gleason, Pro Hac Vice, Nathaniel J. Moore, Pro Hac Vice, William Bornstein, Pro Hac Vice, Robins Kaplan LLP, Minneapolis, MN, for Defendants UnitedHealthcare of Texas, Inc., UnitedHealthcare of Florida, Inc.

Andrew G. Jubinsky, Timothy A. Daniels, Figari & Davenport, L.L.P., Dallas, TX, Ena M. Kovacevic, Pro Hac Vice, Jamie R. Kurtz, Pro Hac Vice, Jeffrey S. Gleason, Pro Hac Vice, Nathaniel J. Moore, Pro Hac Vice, William Bornstein, Pro Hac Vice, Robins Kaplan LLP, Minneapolis, MN, for Defendant United Healthcare Services, Inc.

Cassandra Garza Matheson, David William Navarro, David Jed Williams, Hornberger Fuller & Garza, Inc., San Antonio, TX, John J.E. Markham, Markham & Read, Boston, MA, for Defendants Michael Murphy, M.D., Lynn Murphy, Integrity Ancillary Management LLC, Alternate Health Lab, Inc.

Bridget A. Zerner, Pro Hac Vice, John J.E. Markham, Pro Hac Vice, Markham & Read, Boston, MA, Cassandra Garza Matheson, David William Navarro, David Jed Williams, Hornberger Fuller & Garza, Inc., San Antonio, TX, for Defendants Jesse Saucedo, Jr., Samantha Murphy, Julie Pricer, Sun Ancillary Management LLC, LMK Management LLC, Mission Toxicology, LLC, Sun Clinical Laboratory, LLC.

MEMORANDUM OPINION AND ORDER

JASON PULLIAM, UNITED STATES DISTRICT JUDGE

This consolidated action involving millions of dollars in alleged damages by both sides pits a group of related insurance entities against various lab-service providers and other involved entities and individuals. The lead case arises under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. Plaintiffs, Mission Toxicology, L.L.C. ("Mission") and Sun Clinical Laboratory, L.L.C. ("Sun Clinical") (collectively "Plaintiffs" or "the Labs"), therein seek to recover unpaid claims from Defendants (four affiliates of United Healthcare) on behalf of Defendants' insureds. In the member case, the consolidated plaintiffs, Unitedhealthcare Insurance Company, Inc. and Unitedhealthcare Services, Inc. (collectively "United"),¹ sue the Labs, several individuals, and other entities (collectively "the Lab Defendants")² for various claims under state law, including (1) tortious interference with contract against all Lab Defendants except the last two listed in footnote 1 and (2) money had and received against all Lab Defendants.

The consolidated action has spawned several pending motions, four of which the Court addresses in this Memorandum Opinion and Order: (1) United's Motion for Partial Summary Judgment (ECF Nos. 173 (redacted) and 179 (unredacted and sealed)),³ (2) United's Motion to Strike Defendants' "Declarations of Marketers Involved in Lab Outreach Program" (ECF Nos. 201 (redacted) and 212 (unredacted and sealed)), (3) United's Motion to Strike Defendants' Evidence of "Audit Responses" (ECF No. 204), and (4) Lab Defendants' Opposed Motion for Leave to File Sur-Reply (ECF No. 220). To avoid potential confusion, the Court may cite these filings by their docket number (redacted version if more than one filing), but a generic citation to "Mot.," "Resp.," or "Reply" will refer to briefing related to the motion for summary judgment.

The motions are fully briefed, including evidence submitted by both sides.⁴ The Lab Defendants have responded to the summary judgment motion, see ECF Nos. 184 (redacted), 193 (unredacted and sealed) and both motions to strike, see ECF Nos. 215 (redacted response to ECF No. 204), 217 (response to ECF No. 201), 221 (unredacted and sealed response to ECF No. 204). United has filed reply briefs (ECF Nos. 208 (redacted version of reply to motion), 214 (unredacted and sealed version of reply), 222 (reply to ECF No. 201), and 223 (reply to ECF No. 204) to support each of their motions and a response to the Lab Defendants' motion for leave, see ECF No. 225. The Lab Defendants have filed a reply brief (ECF No. 228) to the response to their motion for leave to file a surreply.

I. BACKGROUND

The current motions concern the member case brought by United after the Labs brought the lead action. In an order denying a motion to dismiss, the Court previously set out a thorough background based upon the allegations of the Second Amended Complaint filed by the Labs. See Order Denying Defs.' Mot. Dismiss (Dkt. # 47) (ECF No. 115). There is no reason to reiterate that background here. Nor is there reason to delve deeply into the various allegations asserted by United against the Lab Defendants. The Court will provide necessary background information as needed to resolve the pending motions. At his point, suffice to say that this case involves a complex billing arrangement involving two non-party, rural hospitals (Newman Memorial Hospital ("Newman") and Community Memorial Hospital ("Community" or "CMH") (collectively "the Hospitals"), the Lab Defendants, and United.

Like most cases, this one has both disputed and undisputed facts. One disputed aspect is the nature and existence of a "Lab Outreach Program" in which the Labs claim to have endeavored to assist vulnerable rural hospitals at the request of the Hospitals and their management company, People's Choice Hospital, LLC ("PCH"). United describes this program as made-up and fraudulent, which is consistent with its numerous allegations and claims asserted against the Lab Defendants.

Of course, the summary judgment context requires the Court to view the facts in the light most favorable to the non-movant. Regardless of the existence or nature of such a program, the parties do not dispute that the Labs are non-contracted (also known as out-of-network) providers that entered into arrangements with the Hospitals, which had in-network contracts with United. Further, the parties agree that, the Labs (or referred third-party laboratories) performed most laboratory testing, not the Hospitals. And they agree that, after such testing, Integrity, an entity formed by the owners of Sun Clinical (Dr. Michael Murphy) and of Mission (Jesse Saucedo), would submit claims for services allegedly provided by the Labs to beneficiaries of ERISA plans administered or insured by United on behalf of, and using the names and billing credentials, of the Hospitals. Although the submitted claim forms list the names and credentials of the Hospital providers rather than the Labs' names and credentials, there is evidence that Integrity also submitted the claims on behalf of the Mission and Sun Clinical, although United vigorously disputes that fact in its briefing on its other pending motion for summary judgment.

Through the motion for partial summary judgment addressed herein, United argues that (1) it is entitled to summary judgment on its claims of tortious interference and money had and received and (2) Dr. Murphy and Saucedo are personally and jointly liable as co-conspirators with Sun Clinical, Mission, and Integrity.

II. APPLICABLE LAW

"Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law." Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) ; accord Erie R.R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Although the lead case of this consolidated action arises under federal law, the issues presented in the motions addressed in this Memorandum Opinion and Order arise solely out of the member case which the Court consolidated for all pretrial purposes, including discovery. See Order Adopting Mag. Judge's Report & Recommendation (ECF No. 25 in member case). Jurisdiction in the member case is predicated on diversity of citizenship. See Orig. Compl. (ECF No. 1 in Cause No. 5:18-CV-0347-JKP) ¶ 24.

When jurisdiction is based on diversity of citizenship, the Court "must apply state substantive law," which is Texas law in this case.

Balfour Beatty Constr., L.L.C. v. Liberty Mut. Fire Ins. Co. , 968 F.3d 504, 509 (5th Cir. 2020). Although "federal law, rather than state law, invariably governs procedural matters in federal courts," Camacho v. Tex, Workforce Comm'n , 445 F.3d 407, 409 (5th Cir. 2006), classifying "law as ‘substantive’ or ‘procedural’ for Erie purposes is sometimes a challenging endeavor," Gasperini , 518 U.S. at 427, 116 S.Ct. 2211. But when a matter is "covered by the Federal Rules of Civil Procedure, the characterization question is usually unproblematic," because "if the Rule in point is consonant with the Rules Enabling Act, 28 U.S.C. § 2072, and the Constitution, the Federal Rule applies regardless of contrary...