Saint Luke's Hosp. of Kan. City v. Benefit Mgmt. Consultants, Inc.

Decision Date13 April 2021
Docket NumberWD 83388 (,C/w WD 83418, WD 83420, WD 83425)
Citation626 S.W.3d 731
CourtMissouri Court of Appeals
Parties SAINT LUKE'S HOSPITAL OF KANSAS CITY, Appellant-Respondent, v. BENEFIT MANAGEMENT CONSULTANTS, INC., Carthage R-9 School District, and Gerber Life Insurance Company, Respondents-Appellants.

Gregory J. Minana, JoAnn T. Sandifer, and Mohsen Pasha, St. Louis, MO, Attorneys for Appellant-Respondent Saint Luke's Hospital of Kansas City.

Casey O. Housley and Christopher R. Staley, Overland Park, KS, Attorneys for Respondent-Appellant Benefit Management Consultants, Inc.

J. Drew Marriott and Ryan VanFleet, Independence, MO, Attorneys for Respondent-Appellant Carthage R-9 School District.

Thomas F. A. Hetherington and Jennifer H. Frank, Houston, TX, and Jeffery T. McPherson, Karrie J. Clinkinbeard, and Kevin W. Prewitt, Kansas City, MO, Attorneys for Respondent-Appellant Gerber Life Insurance Company.

Before Division Four: Cynthia L. Martin, Chief Judge, and Thomas H. Newton and Mark D. Pfeiffer, Judges

Mark D. Pfeiffer, Judge

Saint Luke's Hospital of Kansas City ("St. Luke's") appeals from the judgments/orders of the Circuit Court of Jackson County, Missouri ("trial court"), granting the motions for summary judgment filed by Benefit Management Consultants, Inc. ("BMI"), Gerber Life Insurance Company ("Gerber"), and Carthage R-9 School District ("Carthage") (collectively, "Defendants"), and the motion for judgment on the pleadings filed by BMI in St. Luke's action for breach of contract, promissory estoppel, unjust enrichment, and violation of Missouri's Prompt Payment Act. BMI, Gerber, and Carthage cross-appeal. This Court ordered the appeals consolidated. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

Factual and Procedural Background1

John Doe2 worked for Carthage and was covered under Carthage's self-funded Carthage R-9 School District Employee Health Care Plan ("Carthage Plan" or "Plan"). He suffered from heart failure and was initially treated in Joplin, Missouri. When Doe's condition progressed, his healthcare providers recommended that Doe be transferred to St. Luke's in Kansas City for further evaluation and treatment. Doe's transfer out of the area was approved based on his doctor's recommendation because his condition and treatment were highly specialized and required a higher level of care than was available in southwest Missouri.

The Carthage Plan specified to its members that it utilized a "Preferred Provider Network":

In an effort to better control costs and promote quality service, the Plan is participating in a discount program. Employees and their dependents are given the opportunity to utilize physicians and hospitals who have contracted with the Plan, also called in-network providers. The Plan member may choose to use an in-network provider or an out-of-network provider. However, if the Plan member utilizes an in-network provider, the Plan will pay at a higher benefit percentage than if the member were to see an out-of-network provider. A directory of hospitals and physicians in your area who have agreed to handle billing and collections for the patient will be made available to the Plan member through the Plan Administrator's Benefits’ Office or can be obtained from the Plan Supervisor. The Plan member's personal identification card will notify the provider of membership in the program.

The Plan would pay 80% or more of most in-network services and 40% for most out-of-network services. The Plan defined a "network provider" for its members as:

any provider having a contractual relationship with the plan at the time treatment, care, services or supplies are provided. This will include any provider that negotiates with Benefit Management, Inc. before or after services are rendered. BMI negotiations will always be paid at the PPO level of benefits. A network provider may also include any provider who is contracted with one of BMI's national wrap-around PPO's if allowed by the plan as stated on page 1.

BMI began acting as the third-party administrator for the Carthage Plan on or about July 1, 1999. BMI's services on behalf of the Plan were governed by an Administrative Services Agreement ("ASA"). The ASA between Carthage and BMI authorized BMI to perform certain administrative functions on behalf of the Carthage Plan, including "[c]laim verification and payment," preparation of "ID cards," and "[g]uidance in Plan arrangement." The ASA instructed BMI to "pay all claims which it has determined to properly qualify under the terms of The Plan without additional consent from [Carthage]." As third-party administrator of the Carthage Plan, BMI received, processed, and paid claims on behalf of the Plan.

The ASA also granted BMI "the authority to negotiate discounts ... itself or through a designated agent." On or about June 1, 2012, BMI entered into a Client Services Agreement ("CSA") with MultiPlan, Inc. ("MultiPlan"). A "national wrap-around PPO" is a group of providers who contract with an entity to provide services at a discounted price. MultiPlan maintained a network of healthcare providers for its clients and entered into contracts with healthcare providers who agreed to provide "certain healthcare services at certain negotiated rates." St. Luke's was a provider within the MultiPlan Provider Network. Doe's insurance card was branded with a MultiPlan logo and instructed healthcare providers to submit claims to BMI for processing and payment.

Carthage contracted with Gerber for an Excess Loss Insurance Policy, also called a stop-loss policy, in order to mitigate the financial risks associated with maintaining a self-insured health plan. Gerber agreed to reimburse Carthage for large medical expense losses incurred by Carthage members under the Carthage Plan, subject to the terms and conditions of the stop-loss policy.3

Doe presented at St. Luke's with a health insurance card that identified his Group Medical Plan as the Carthage Plan and his third-party administrator as BMI, and directed St. Luke's to submit claims for services rendered to Doe to BMI. St. Luke's was aware that Doe's ID card indicated that BMI was accessing the MultiPlan network as a wrap-around network. On each of the dates of treatment, Doe executed a form titled "St. Luke's Health System Consent and Agreement of Health Care Services," which contained a section titled "ASSIGNMENT OF BENEFITS."

St. Luke's provided healthcare services to Doe over the course of fifteen separate admissions from June 3, 2014, through January 6, 2015. At the time of Doe's treatment, St. Luke's utilized the clearinghouse RelayHealth to transmit claims to payors. A clearinghouse is a third-party intermediary that contracts with both providers and payors to facilitate the transmission of claims for payment from healthcare providers to healthcare payors. All of St. Luke's claims were submitted to RelayHealth in the standardized 837 electronic format. Per BMI's instructions, RelayHealth converted the electronic claims submitted by St. Luke's in the 837 format to paper UB-04 claims4 before transmission to BMI. Separate and apart from the transmission through RelayHealth, St. Luke's also submitted its claims directly to BMI by facsimile.

Consistent with BMI's affirmative assurances to Doe and St. Luke's that St. Luke's qualified as an "in-network" provider, BMI paid St. Luke's at the in-network benefit level under the Carthage Plan for healthcare services rendered to Doe during his first three admissions. The first three admissions covered dates of services from June 3, 2014, to July 2, 2014, and the claim payment checks were drawn on Carthage's bank account and signed by BMI. Those first three admissions are not at issue in this appeal, but Doe's remaining twelve admissions are.5 Upon each admission, BMI affirmatively advised St. Luke's that St. Luke's was an in-network provider under the Carthage Plan and would be reimbursed at the MultiPlan contract rates.

After the third admission, Doe's medical bills reached the Plan's deductible, so the explanation of benefits for Doe's fourth admission advised that the claim was covered 100% by the Plan, but the payment "[w]ould be held for stop-loss reimbursement." Once Carthage reached its deductible under the Gerber Excess Loss Insurance Policy, BMI continued to process the claims and then submitted the excess claims to Gerber for further processing and claim payment funding. Upon receipt of St. Luke's claims for payment, Gerber unilaterally determined that St. Luke's was an out-of-network provider under the Plan.

Because it did not receive payment as an in-network provider, St. Luke's sued BMI on March 4, 2016, alleging breach of contract, promissory estoppel, unjust enrichment, and violation of Missouri's Prompt Payment Act ("MPPA"). BMI then filed a third-party petition against Carthage, alleging breach of contract and common law and contractual indemnification. Carthage filed a third-party petition against Gerber, alleging breach of contract, indemnity, and vexatious refusal to pay claims. St. Luke's was granted leave to file a first amended petition, which added counts for breach of contract, promissory estoppel, and unjust enrichment against Carthage; and counts of prima facie tort, fraudulent misrepresentation, and violation of the MPPA against BMI, Carthage, and Gerber. Gerber filed a cross-petition against Carthage, alleging a claim for indemnity. Gerber then filed an amended cross-petition, adding BMI and adding a claim for contribution and/or equitable indemnity. Carthage filed a cross-claim against BMI, alleging counts for errors and omissions in breach of contract, breach of duty of good faith and fair dealing, and indemnity and defense. Carthage also filed a cross-claim against Gerber, alleging counts for indemnity and...

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