EL PASO HEALTHCARE SYS. v. MOLINA HEALTHCARE OF NM.

• Decision Date: 21 January 2010
• Docket Number: No. EP-09-CV-54-KC.,EP-09-CV-54-KC.
• Parties: EL PASO HEALTHCARE SYSTEM, LTD., Plaintiff, v. MOLINA HEALTHCARE OF NEW MEXICO, INC., Defendant.
• Court: U.S. District Court — Western District of Texas

683 F.Supp.2d 454

EL PASO HEALTHCARE SYSTEM, LTD., Plaintiff, v. MOLINA HEALTHCARE OF NEW MEXICO, INC., Defendant.

No. EP-09-CV-54-KC.

United States District Court, W.D. Texas, El Paso Division.

January 21, 2010.

Joseph L. Hood, Jr., Windle Hood Alley Norton Brittain & Jay, LLP, El Paso, TX Lance J. Ramsey, Shauna Lorenz, Gjerset & Lorenz, L.L.P., Austin, TX, for Plaintiff.

Alex C. Walker, Lisa Mann, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, NM, Jeffery W. McElroy, Ray, Valdez, McChristian & Jeans, P.C., El Paso, TX, for Defendant.

ORDER CONCERNING MOTIONS FOR SUMMARY JUDGMENT

KATHLEEN CARDONE, District Judge.

On this day, the Court considered Plaintiff El Paso Healthcare System's Motion for Partial Summary Judgment ("EPH Mot.") (Doc No. 40) and Defendant Molina Healthcare's Motion for Summary Judgement ("Molina Mot.") (Doc. No. 42). For the reasons set forth herein, El Paso Healthcare System's Motion is DENIED and Molina Healthcare's Motion is GRANTED in part and DENIED in part.

I. BACKGROUND

A. Procedural Posture

El Paso Healthcare System, Ltd. ("EPH"), which owns Las Palmas Medical Center and Del Sol Medical Center—two hospitals in El Paso, Texas (the "Hospitals")—is suing Molina Healthcare of New Mexico ("Molina"), an insurance company which provides managed care organization ("MCO") health coverage to certain New Mexico Medicaid beneficiaries. See Notice of Removal (Doc. No. 1) 1-2; see also generally N.M. ADMIN. CODE §§ 8.301.5, 8.305.1-4 (implementing a policy of shifting Medicaid beneficiaries from a directly-state-paid fee-for-service system to privately-run managed care programs which receive predetermined capitation premiums from the state for each enrollee). Pending before the Court are cross motions for summary judgment. See EPH Mot.; see also Molina Mot. Each side has filed a Response to the opposing Motion. See Def.'s Resp. to Pl.'s Mot. ("Molina Resp.") (Doc. No. 44); see also Pl.'s Resp. to Def.'s Mot. ("EPH Resp.") (Doc. No. 46). Each side has also filed a Reply in support of its own Motion. See Pl.s Reply to Def.'s Resp. ("EPH Reply") (Doc. No. 47); see also Def.'s Reply to Pl.'s Resp. ("Molina Reply") (Doc. No. 49). To the extent discussed below, the Court denies EPH's Motion and grants in part and denies in part Molina's Motion.

B. Facts

At the center of this suit is EPH's claim that, since at least 2006, Molina has underpaid (and continues to underpay) it for certain services rendered at the Hospitals to Molina-covered New Mexico Medicaid beneficiaries. See Notice of Removal 1-2; see also Pl.'s Orig. Pet. (Doc. No. 1 Ex. A) ¶ 9. At this point in the litigation, a number of issues have been privately resolved, and the dispute now boils down to a single subject—alleged underpayments for emergency outpatient services. See EPH Mot. 1 ("Plaintiff respectfully requests that the Court determine ... the application of a New Mexico regulation setting the Medicaid reimbursement rate for outpatient hospital services."); see also Molina Resp. 1 ("The parties have effectively resolved all disputes regarding the reimbursement of inpatient hospital services."). In connection with this single disputed area, EPH has requested, in its pleadings, a judgment against Molina in the amount of the alleged payment deficiencies plus interest, fees and costs, as well as declaratory judgment and injunctive relief to prevent Molina from underpaying in the future. See Pl.'s Orig. Pet. ¶¶ 22-32.

This dispute about emergency outpatient services reimbursement rates stems from the following circumstances: MCO plans generally require patients to seek medical services from contracted ("in-network") physicians and hospitals, who have privately agreed, in advance, to accept certain payment levels and reimbursement procedures from the insurer for the furnished services. See EPH Mot. 2; see also Molina Mot. 2-3; N.M. ADMIN. CODE § 8.311.2.11(C). Such agreements would, logically, greatly reduce the opportunity for disputes over regulatory payment rates. The rules governing New Mexico Medicaid, however, provide that patients may go to any in-network or out-of-network hospital in an emergency situation and have the MCO pay for that care. See N.M. ADMIN. CODE § 8.305.7.11(F). Another rule provides that when a facility is out-of-network and has no rate-setting contract with the insurer, the payment owed by the insurer is equal to that paid by the state¹ to the facility for the same type of care given to Medicaid beneficiaries whose care is paid for directly by the state. See N.M. ADMIN. CODE § 8.311.2.11(C)(2). As there is no private rate-setting contract between EPH and Molina, and as Molina patients have allegedly been regularly obtaining emergency care at the Hospitals, the dispute principally concerns the definition and calculation of this "default" government-set reimbursement rate. See EPH Mot. 2; see also Molina Mot. 4. The parties also dispute whether the causes of action cited by EPH in its Original Petition actually provide standing to sue and/or a basis for private recovery of amounts due under the regulatory reimbursement rate. See Molina Mot. 5-6, 13-17; see also EPH Resp. 9-10.

Molina seeks summary judgment in its favor, denying EPH any monetary recovery or declaratory and injunctive relief. It argues, first, that it is subject to no privately enforceable obligation to pay, and second, that if it is subject to such an obligation, it has fully discharged it by making certain payments to EPH in the past—payments smaller than what EPH deems correct. See generally Molina Mot.; see also Aff. of Julie Perez ("Perez Aff.") (Doc. No. 40-3) ¶ 8 (hospital official acknowledging that Molina made some payments to EPH).

EPH, by contrast, only seeks partial summary judgment. It moves for the Court to hold that the rate of payment or method for calculating payment, under the regulations, is a certain simpler and more generous formula, rather than the more complex and less-generous one favored by Molina. See generally EPH Mot.² The precise amount owed under any such formula cannot be ascertained by the Court at this time because specific evidence concerning each outstanding claim for each service performed has not been placed before the Court—and EPH does not request that the Court make such a specific finding at this time. While EPH has brought affidavit evidence showing that the alleged payment deficiencies under its formula total at least $3,400,000, and Molina does not bring evidence to dispute this calculation, EPH has not asked the Court to enter a final judgment in that amount at this time. See Perez Aff. ¶ 8; see also EPH Mot. 1-2. As these cross motions deal with essentially the same issues and arguments, though differing somewhat in the scope of requested relief, they are discussed here together.

II. DISCUSSION:

A. Standard of Review

Summary judgment is required "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Warfield v. Byron, 436 F.3d 551, 557 (5th Cir.2006). The substantive law identifies which facts are material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Ellison v. Software Spectrum, Inc., 85 F.3d 187, 189 (5th Cir.1996). A dispute about a material fact is genuine only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Ellison, 85 F.3d at 189.

"The party seeking summary judgment always bears the initial responsibility 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, 106 S.Ct. 2548; Wallace v. Texas Tech. Univ., 80 F.3d 1042, 1046-47 (5th Cir.1996). If the moving party meets its initial burden, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). The nonmovant's burden may not be satisfied by "conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence." Warfield, 436 F.3d at 557 (quoting Freeman v. Texas Dep't of Crim. Justice, 369 F.3d 854, 860 (5th Cir.2004)). Factual controversies are to be resolved in favor of the nonmovant, "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc). Thus, the ultimate inquiry in a summary judgment motion is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505.

B. Obligation to Pay

EPH asserts three distinct legal theories on which they are entitled to receive payment from Molina and to sue if payment is not forthcoming: (1) contract, (2) quantum meruit and (3) regulatory rates. See Pl.'s Orig. Compl. ¶¶ 11-21. Molina argues in response that none of these theories supports a legally-enforceable obligation, on its part, to pay the hospitals, and that it is entitled to summary judgment on that point. See Molina Mot. 5, 13-18. The nature of the briefing and the submitted evidence, however, reveal that resolving this question is not a simple task and is not feasible at this time; the Court cannot now state whether some or all of EPH's theories conclusively support an obligation to pay and standing to sue on such an obligation. At the same time, the evidence is such that the Court cannot accept Molina's proposition that there is no obligation to pay,...