Quality Infusion Care, Inc. v. Health Care Serv. Corp.

• Decision Date: 23 December 2010
• Docket Number: No. 09-20188,09-20188
• Citation: 628 F.3d 725
• Parties: QUALITY INFUSION CARE, INC., Plaintiff-Appellant, v. HEALTH CARE SERVICE CORPORATION, doing business as Blue Cross and Blue Shield of Texas, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

628 F.3d 725

QUALITY INFUSION CARE, INC., Plaintiff-Appellant,

v.HEALTH CARE SERVICE CORPORATION, doing business as Blue Cross and Blue Shield of Texas, Defendant-Appellee.

No. 09-20188.

United States Court of Appeals, Fifth Circuit.

Dec. 23, 2010.

Appeal from the United States District Court for the Southern District of Texas.

Constance Hankins Pfeiffer (argued), David Michael Gunn, Beck, Redden & Secrest, L.L.P., Robert Dale Green, Houston, TX, for Plaintiff-Appellant.

Reagan Mark Brown (argued), Charles Jason Rother, Fulbright & Jaworski, L.L.P., Houston, TX, for Defendant-Appellee.

Before JONES, Chief Judge, PRADO, Circuit Judge, and OZERDEN, District Judge.^*

PRADO, Circuit Judge:

This case presents a narrow legal dispute between a healthcare provider, Quality Infusion Care, Inc. ("QIC"), and an insurance company, Healthcare Service Corp., d/b/a Blue Cross and Blue Shield of Texas ("BCBS"). BCBS overpaid QIC for certain patient claims and then set off the overpayments by underpaying subsequent patient claims, without regard to whether the subsequent claim was from the same patient or under the same insurance plan. QIC argues that BCBS's setoffs were improper because BCBS did not have a contractual or statutory right to set off overpayments against different patients' claims and because the debts that were offset were not mutual and in the same capacity. BCBS responds that the setoffs comport with all relevant precedent, and that the setoffs satisfy its rights under the insurance contracts and Texas Insurance Code. The district court granted summary judgment to BCBS, finding that the setoffs comported with the language of the Plans and the Insurance Code.

We AFFIRM the district court's take-nothing judgment because BCBS had a contractual right under all three plans to privately deduct overpayments it had previously made to QIC from subsequent claims it was obligated to pay QIC.

I. FACTUAL AND PROCEDURAL BACKGROUND

QIC is a non-contracted healthcare provider to BCBS health insurance policyholders. In the usual health insurance reimbursement scenario, a patient pays the healthcare service provider for the care, submits a claim to her insurance company, and the insurance company reimburses the patient. However, as is typical of many healthcare transactions, thepatients here did not pay QIC directly; rather, as a condition of treatment, the patients assigned to QIC their right to reimbursement from BCBS. The patients remained liable to QIC in the event that BCBS did not reimburse the amount due for the medical services or the reimbursement did not cover the entire amount owed. The assignment contract states that "I understand that I am financially responsible for all charges regardless of any applicable or benefit payments."

Following treatment and assignment, QIC made a payment demand on BCBS. QIC disclosed the assignment of reimbursement from the patients in its demand on BCBS. BCBS thereafter submitted payments to QIC. BCBS overpaid QIC for a number of claims. BCBS requested refunds from QIC.¹ QIC, however, did not provide a refund for any of the requests by BCBS. BCBS then set off, or deducted, the overpaid amounts from subsequent payments to QIC.

QIC sued BCBS, claiming that it was entitled to the amounts that BCBS set off from its payments. The parties stipulated that those setoffs "did not necessarily contain payments related to the same [patients] or same healthcare plan as those at issue in the requested refund." The parties also stipulated that six claims (out of 284 disputed overpayments) would represent the dispute: three Employee Retirement System ("ERS") claims, one Texas Health Insurance Risk Pool ("THIRP") claim, and one claim in which BCBS served as the insurer (the "Insured claim").² Each class of claims carries its own plan policy, with slightly different language and coverage.³

The parties both filed motions for summary judgment and the district court granted summary judgment in favor of BCBS and entered a take-nothing final judgment against QIC. Although the district court found that BCBS offset certain debts from later-acquired ones involving different patients and different benefit plans, it held that after patients assigned their right to payment to QIC, BCBS and QIC were mutually indebted and these setoffs were allowed by the Texas InsuranceCode and the language of the Plans. QIC timely appealed.

II. JURISDICTION AND STANDARD OF REVIEW

This Court has jurisdiction over the final judgment of the district court under 28 U.S.C. § 1291, and reviews the district court's grant of summary judgment in favor of BCBS de novo. Trinity Universal Ins. Co. v. Emp'rs Mut. Cas. Co., 592 F.3d 687, 691 (5th Cir.2010). Summary judgment is proper when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the non-moving party." Gates v. Tex. Dep't of Protective & Regulatory Servs., 537 F.3d 404, 417 (5th Cir.2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)) .

III. DISCUSSION

QIC argues that BCBS is not entitled to the setoffs that it has taken because the debts here are not mutual. QIC argues that the debts cannot be mutual because for each patient claim, it could only act with the capacity granted by that particular patient's assignment of the claim to reimbursement. BCBS contends that there is merely a payor-payee relationship and the setoffs were appropriate. BCBS argues on appeal that mutuality does exist and the parties acted in the same capacity. Further, it argues that it has a statutory and contractual right to set off its payment obligations to QIC by the amount it overpaid previous claims. Because BCBS had a contractual right under all three plans to deduct overpayments it had previously made to QIC from subsequent claims it was obligated to pay QIC, we AFFIRM the district court's judgment.

When the parties cross-moved for summary judgment, they disputed whether BCBS had a right to execute a setoff. BCBS, in its motion for summary judgment, argued that the Texas Insurance Code and the language of each of the plans allowed for a privately executable setoff; in other words, BCBS argued that it had a statutory and contractual right to deduct the amount it overpaid QIC for one claim against benefit payments owed to QIC for the claim of another patient under potentially a different plan. The district court agreed with BCBS that it had a right to execute a setoff, and thus granted summary judgment to BCBS and awarded a take-nothing final judgment against QIC.

Given that the contractual provisions of each of the three plans allow BCBS to privately deduct an overpayment amount paid on one patient's claim against the subsequent benefit payment owed on another patient's claim, BCBS is entitled to a take-nothing summary judgment as a matter of law.⁴

A. Assignments

The transactions at issue in this case each involve claims that patient-beneficiaries have assigned to QIC. An assignment is " 'a manifestation to another person by the owner of a right indicating his intention to transfer, without further action or manifestation of intention, his right to such other person or third person.' "Harris Methodist Fort Worth v. Sales Support Servs. Inc. Emp. Health Care Plan, 426 F.3d 330, 334 (5th Cir.2005) (quoting Wolters Village Mgmt. Co. v. Merch. & Planters Nat'l Bank of Sherman, 223 F.2d 793, 798 (5th Cir.1955)). After an assignment, "the assignor's right to performance by the obligor is extinguished in whole or in part and the assignee acquires a right to such performance." Restatement (Second) of Contracts § 317(1). We have recognized that " 'an assignee takes all of the rights of the assignor, no greater and no less.' " FDIC v. McFarland, 243 F.3d 876, 887 n. 42 (5th Cir.2001) (quoting In re New Haven Projects Ltd. Liab. Co. v. City of New Haven, 225 F.3d 283, 290 n. 4 (2d Cir.2000)). In other words, "an assignee ... stands in the same position as its assignor stood." Houk v. Comm'r, 173 F.2d 821, 825 (5th Cir.1949) (citations omitted).

The positive aspects of assigned rights are accompanied by their corollary negatives. "An assignee is also subject to any defenses, limitations, or setoffs that could be asserted against the assignor's rights." Adams v. Petrade Int'l, Inc., 754 S.W.2d 696, 721 (Tex.App.—Houston [1st Dist.] 1988) (emphasis added) (citations omitted). Thus, under the applicable laws of assignment, an assignee may be subject to a setoff if the assignor could be subject to the same setoff under the assigned contract.

BCBS argues that because QIC accepted a policyholders' assignment of their healthcare plans, QIC became subject to BCBS's setoff rights contained in those plans. BCBS further maintains...