Physicians Home Health Infusion, P.C. v. UnitedHealthcare of Midwest, Inc.

• Decision Date: 18 November 2019
• Docket Number: Case no. 4:18cv01959 PLC
• Parties: PHYSICIANS HOME HEALTH INFUSION, P.C., Plaintiff, v. UNITEDHEALTHCARE OF THE MIDWEST, INC., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

PHYSICIANS HOME HEALTH INFUSION, P.C., Plaintiff,
v.
UNITEDHEALTHCARE OF THE MIDWEST, INC., Defendant.

Case no. 4:18cv01959 PLC

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

November 18, 2019

MEMORANDUM AND ORDER

This matter is before the Court¹ on Defendant United Healthcare of the Midwest, Inc.'s ("UHC's") motion to dismiss amended complaint [ECF No. 40]. Plaintiff Physicians Home Health Infusion, P.C., ("PHHI") opposes the motion [ECF No. 49]. Also pending are PHHI's motion for sanctions related to a deposition [ECF No. 62] and PHHI's motion to compel discovery responses [ECF No. 77]. The Court stayed discovery pending resolution of UHC's motion to dismiss [ECF No. 85]. Therefore, the Court first resolves UHC's motion to dismiss.

I. Background

In its first amended complaint, PHHI seeks from UHC monetary and injunctive relief based on claims for breach of contract (Count I), negligent misrepresentation (Count II), quantum meruit (Count III), unjust enrichment (Count IV), and "preliminary and permanent injunction" (Count V).² PHHI makes the following allegations in support of its claims.

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PHHI is "a home healthcare agency employing physicians and nurses to provide pain management services [through 'continuous spinal infusion of pain medication'] to patients diagnosed with chronic pain." Id. ¶¶ 7, 18. More specifically, PHHI provides trained nurses, available twenty-four hours a day, for "specialized services related to spinal infusion," including "pump management, rate adjustments, refills, troubleshooting, consultations and training." Id. ¶ 8.

UHC "is a private health insurance agency that[, in relevant part,] provides Medicare Advantage plans" that "are approved by [the] Centers for Medicare & Medicaid Services ('CMS')." Id. ¶ 11. PHHI is a "non-participating" or "out-of-network" provider under the terms of UHC's group health insurance policies for individuals participating in Medicare Advantage (also referred to as "members" or "enrollees"). Id. ¶¶ 11, 12. Before PHHI renders its services, each of its patients signs an "Admission Service Agreement and Patient Health Information Consent Form," which grants PHHI "the right to directly receive the[ patient's] health benefit payments" as the patient's assignee. Id. ¶¶ 14-17.

After providing services to a patient, PHHI submits a request for reimbursement to UHC, billing "the usual and customary amount of $2400 for the services rendered under the Healthcare Common Procedure Coding System (HCPCS) codes S9325 and S9328." Id. ¶¶ 19, 20. Those two codes "identify services of home infusion therapy and pain management infusion." Id. ¶¶ 20, 21. PHHI alleges that, regardless of whether it has obtained UHC's prior authorization to provide the services under codes S9325 and S9328, UHC does not consistently approve PHHI's claims for

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reimbursement of its pain management services.³ Id. ¶¶ 23-25, 28. When UHC approves the services coded S9325 and S9328, "UHC reimburse[s PHHI] $600 per service claim." Id. ¶ 31.

On occasion, when UHC provides an explanation for its denial of PHHI's claims under codes S9325 and S9328, UHC states "that the codes are not valid." Id. ¶ 25. PHHI appeals "UHC's denials for reimbursement . . . to UHC's Claims Department, UHC's Appeals and Grievance Department, and other UHC departments." Id. ¶ 26. As a result of these appeals, UHC occasionally reverses the initial denial and reimburses PHHI "for the services rendered . . . under the codes S9325 and S9328," and issues letters "recognizing that its initial denial was a 'clerical error' and making clear that the service is reimbursable and the codes are valid."⁴ Id. ¶¶ 27, 28. PHHI "has relied on [UHC's] statements, corrections, and reimbursements in continuing to provide services to . . . UHC [Medicare Advantage] Patients." Id. ¶ 29.

When UHC denies an appeal by PHHI, UHC has "instructed [PHHI] that it will not reimburse [PHHI] for the services rendered." Id. ¶ 32. PHHI responds with letters and telephone calls seeking reimbursement and "an explanation for why UHC arbitrarily denied some appeals while accepting others." Id. ¶ 33. PHHI alleges that "UHC has not provided any information to adequately or even plausibly explain its arbitrary and contradictory conclusions regarding the reimbursement of services properly coded under the codes S9325 and S9328." Id. ¶ 34. Recently, PHHI asserts, UHC claimed "that all or a portion of the improper and arbitrary actions by UHC are the result of recklessly hired and/or retained contractors that UHC has failed to appropriately supervise." Id. ¶ 35.

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From January 1, 2016, to March 31, 2018, PHHI billed UHC over $2,674,000.00 "for services rendered to UHC [Medicare Advantage patients]. This amount represents the value of the services provided" by PHHI. Id. ¶ 36. PHHI alleges "UHC has failed to reimburse [PHHI] for well over half . . . of th[e] billed amount" and the "amount continues to accrue, as [PHHI] continues to rely on UHC's past reimbursement of services coded S9325 and S9328 . . . to render pain management services to [UHC's Medicare Advantage] patients." Id. ¶ 37. PHHI further alleges that, "[i]n continuing to provide services to UHC's [Medicare Advantage] patients, [PHHI] has purchased products, hired and paid employees, forgone other profitable endeavors, and expended time, energy, and effort in reliance on UHC's representations." Id. ¶ 38. Moreover, PHHI alleges, it "has incurred lost time and profits" because, between January 1, 2016 and February 20, 2019, it and its employees "have spent approximately thirty hours per week appealing UHC's denials of reimbursement for services coded under S9325 and S9328." Id. ¶ 39.

For its breach of contract claim in Count I, PHHI alleges that UHC's Medicare Advantage patients have "a valid and enforceable written contract with UHC . . . [for UHC] to provide the UHC [Medicare Advantage p]atients health insurance under UHC's Medicare Advantage plan" and those patients assign their benefits to PHHI, "instruct[ing] UHC to reimburse [PHHI] for health services" it renders. Id. ¶¶ 42, 43. PHHI asserts it "fully and adequately performed" by treating UHC's Medicare Advantage patients and "properly submitting requests for reimbursement to UHC for CMS and UHC-approved health services rendered to" those patients. Id. ¶ 44. UHC, however, "breached the health insurance contract by refusing to reimburse [PHHI] for . . . services [PHHI] rendered to the UHC [Medicare Advantage p]atients." Id. ¶ 45. Because it is the assignee under the UHC Medicare Advantage patients' contracts, PHHI alleges it "has suffered damages equal to the amount of unpaid claims [it] submitted to UHC that remain unpaid, plus pre-judgment

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interest, which has been and is herein again demanded." Id. ¶ 47. PHHI alleges "[t]he total amount of damages continues to accrue, but is well in excess of $500,000." Id. In addition to seeking monetary relief,⁵ PHHI asks the Court to enter a

preliminary and/or permanent injunction preventing UHC from wrongfully denying claims for services coded as S9325 and S9328 and ordering UHC to apply the same standards and provide a full and fair review to [PHHI]'s claims for services coded as S9325 and S9328 at each stage of the review process.

Id. at 8, subparagraph (a) of the WHEREFORE paragraph for Count I.

In the negligent misrepresentation claim in Count II, PHHI seeks only monetary relief⁶ for UHC's "negligent and reckless behavior." Id. ¶ 49. In particular, PHHI alleges that in the course of their dealing, UHC has: (1) represented that claims coded as S9325 and S9328 are reimbursable, (2) reimbursed PHHI for services with those codes, (3) given "written prior approval for the services to be provided to specific patients" for those codes, and (4) reversed its initial denials of PHHI's requests for reimbursement submitted under those codes as "'incorrect' and the result of a 'clerical error.'" Id. ¶¶ 50-53. PHHI alleges that UHC "now arbitrarily and sporadically changes its position and refuses to reimburse [PHHI] for service codes S9325 and S9328." Id. ¶ 54.

To support its negligent misrepresentation claim, PHHI further alleges that UHC "failed to exercise reasonable care and provided [PHHI] with false information that service codes S9325 and S9328 were reimbursable," and intended that PHHI would rely on the representations and course

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of conduct between the parties "when [PHHI] elected to provide services to UHC [Medicare Advantage p]atients." Id. ¶¶ 55, 56. Relying justifiably on "UHC's representations and course of conduct[, PHHI alleges it] render[ed] services to UHC [Medicare Advantage p]atients and bill[ed] UHC under the service codes S9325 and S9328," and "continue[s] to provide services to UHC's [Medicare Advantage p]atients, . . . purchase[] products, hire[] and pa[y] employees, forg[o] other profitable endeavors, and expend[] time, energy, and effort in reliance on UHC's representations." Id. ¶¶ 58, 59. As a result of UHC's representations and course of conduct, PHHI alleges:

since January 2016, [PHHI] has incurred hours of time and thousands of dollars of lost profits by dedicating approximately thirty hours per week to seeking reimbursement from UHC for claims of service submitted under the codes S9325 and S9328.

. . . [B]etween January 2016 and March 31, 2018, [PHHI] billed UHC a total of [more than $2,674,000.00], which represents billed value of services rendered, and well over half of this billed amount remains outstanding. To date [PHHI] continues to bill and continues to incur amounts outstanding for services [it] rendered to UHC [Medicare Advantage p]atients.

Id. ¶¶ 59, 60.

In Count III, based on quantum meruit, PHHI asserts (1) it "provides services to UHC [Medicare Advantage p]atients at the request of and with the knowledge of UHC," (2) PHHI's services have "reasonable value," (3) PHHI "bills UHC the customary and reasonable amount for each service...