Shattuck v. Kalispell Reg'l Med. Ctr. Inc.

• Decision Date: 14 September 2011
• Docket Number: No. DA 10–0486.,DA 10–0486.
• Parties: Gail A. SHATTUCK, Individually and as Personal Representative for the Estate of Dane M. Shattuck, and on Behalf of Others Similarly Situated, Plaintiffs, Appellees and Cross–Appellants,v.KALISPELL REGIONAL MEDICAL CENTER, INC., a Montana Corporation and Blue Cross and Blue Shield of Montana, Inc., a Montana Corporation, State of Montana, Department Of Public Health and Human Services, and Does 1 to 99, Defendants and Appellants.
• Court: Montana Supreme Court

362 Mont. 100

261 P.3d 1021

2011 MT 229

Gail A. SHATTUCK, Individually and as Personal Representative for the Estate of Dane M. Shattuck, and on Behalf of Others Similarly Situated, Plaintiffs, Appellees and Cross–Appellants,

v.KALISPELL REGIONAL MEDICAL CENTER, INC., a Montana Corporation and Blue Cross and Blue Shield of Montana, Inc., a Montana Corporation, State of Montana, Department Of Public Health and Human Services, and Does 1 to 99, Defendants and Appellants.

No. DA 10–0486.

Supreme Court of Montana.

Argued and Submitted Aug. 12, 2011.Decided Sept. 14, 2011.

For Appellants: Geralyn J. Driscoll (argued), Special Assistant Attorney General; Office of Legal Affairs; Helena, Montana, Robert C. Lukes; Garlington, Lohn & Robinson, PLLP; Missoula, Montana (Attorneys for State of Montana, Department of Public Health and Human Services), Jacqueline T. Lenmark (argued); Keller, Reynolds, Drake, Johnson & Gillespie, P.C.; Helena, Montana (Attorney for Blue Cross and Blue Shield of Montana, Inc.), Sean M. Morris; Worden Thane, P.C.; Missoula, Montana (Attorney for Kalispell Regional Medical Center, Inc.).For Appellees and Cross–Appellants: Alan Jay Lerner (argued), Linda C. Semrow; Lerner Law Firm; Kalispell, Montana, Michael A. Viscomi, Judah M. Gersh; Viscomi & Gersh; Whitefish, Montana.Justice JIM RICE delivered the Opinion of the Court.

[362 Mont. 101] ¶ 1 Defendants Kalispell Regional Medical Center (KRMC), Blue Cross and Blue Shield of Montana (BCBSMT), and State of Montana, Department of Public Health and Human Services (DPHHS) appeal from the Order of the First Judicial District Court, Lewis and Clark County, granting summary judgment, in part, to Plaintiff Gail A. Shattuck, who brought this action individually and as Personal Representative of the Estate of Dane M. Shattuck (Shattuck). Defendants appeal from the District Court's holding that the Children's Health Insurance Program, commonly known as CHIP, constitutes insurance and is subject to the “made whole” statute. Shattuck cross appeals the District Court's further determination that BCBSMT is not an “insurer” in its role here and therefore not subject to the “made whole” statute. The appeal arises from the District Court's certification of its ruling as a final judgment, which we approved by order on October 19, 2010. We reverse in part, affirm in part, and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 In July 2007, Dane Shattuck, a minor, tragically died from injuries sustained after being hit by an automobile driven by a third-party tortfeasor. Dane received medical care at KRMC for his injuries, which were billed in the amount of $2,365.75. At the time of his injuries and death, Dane was enrolled in CHIP, administered by DPHHS. KRMC was a CHIP hospital provider and submitted the bill for Dane's care to BCBSMT, which served as third-party administrator (TPA) of the CHIP program for DPHHS. Pursuant to the payment terms of the provider agreement, KRMC was paid the sum of $2,005.85 from CHIP through BCBSMT.¹

¶ 3 Pursuant to § § 71–3–1111, et seq., MCA, KRMC asserted a health care provider lien for the amount of $2,365.75 against recoveries Shattuck may obtain against responsible third parties. Dane's estate recovered $100,000 in automobile insurance proceeds for damages associated with Dane's injuries and death.² Shattuck took the position that KRMC's lien was unnecessary because CHIP had paid the bill in full and requested KRMC release the lien. KRMC contended that because BCBSMT had the authority to adjust overpayment charges on claims, including claims involving third-party tortfeasors, it could not release its lien without jeopardizing payment for its services, and thus had no choice but to pursue its lien. In January 2008, Shattuck commenced an action against KRMC and BCBSMT challenging the lien's validity. Shattuck alleged breach of contract, wrongful assertion of an invalid lien, constructive fraud, deceit, conspiracy, tortious breach of the implied covenant of good faith and fair dealing, conversion, and actual fraud, and sought release of KRMC's lien, interest, general and punitive damages, and attorney fees. ³ Shattuck asserted that the Defendants unlawfully acted to avoid application of common law and statutory “made whole” rules. She argued that KRMC could not foreclose the lien because she had not been made whole. As stated in Shattuck's complaint:

The agreement between KRMC and Blue Cross (and other insurers and administrators) is designed to avoid the “made whole” requirements of Montana common law and statutes, including, but not limited to, Sections 2–18–902, 33–22–1602, and 33–20–1102, MCA. The agreement resulted in a constructive fraud and deceit upon Shattuck designed to deprive her of the protection of Montana's “made whole” doctrine, by allowing health insurers and administrators, such as Blue Cross (and other insurers and administrators), to collect subrogation without the injured party first being fully compensated and “made whole” for his or her injuries.”KRMC filed a motion for summary judgment, arguing that CHIP was not insurance and BCBSMT was not an insurer, with which BCBSMT joined. The District Court ruled that CHIP constitutes insurance and was subject to the “made whole” statute, reasoning, in part, that the Montana Insurance Code “attempts to be inclusive of numerous kinds of insurance and plans, expressly excluding those programs not to be included.... CHIP is not expressly excluded.” However, the court also determined that BCBSMT was not an insurer. Both KRMC and BCBSMT moved to certify the order as final pursuant to M.R. Civ. P. 54(b), which was granted by the District Court.

¶ 4 Prior to the court's certification, Shattuck filed an amended complaint naming DPHHS as an additional defendant. DPHHS appeared on March 16, 2010, and moved to vacate the Rule 54(b) certification. On March 19, 2010, BCBSMT and KRMC filed a joint appeal from the certified order to this Court. Shattuck moved to dismiss the appeal, and DPHHS moved to remand the appeal to permit an opportunity for DPHHS to present evidence and argument to the District Court on the issue of CHIP's status as insurance. In April 2010, this Court dismissed the appeal without prejudice and remanded the matter to the District Court for that purpose.

¶ 5 On remand, DPHHS sought reconsideration of the District Court's ruling on CHIP, but on August 30, 2010, the District Court issued an order reaffirming its earlier determination that CHIP was insurance. The District Court again granted Rule 54(b) certification, and DPHHS filed an appeal to this Court, which was joined by BCBSMT and KRMC. This Court determined that the Rule 54(b) certification was sufficient and permitted this appeal to proceed. We designated the issues as “whether the Montana Children's Health Insurance Plan (CHIP) is an insurance covered by the ‘made whole’ doctrine codified in the Montana Insurance Code and whether Blue Cross Blue Shield of Montana, as administrator of CHIP, is an ‘insurer’ for purposes of this lawsuit,” reasoning that these issues were of statewide importance that merited prompt and final resolution. Shattuck then filed a notice of cross appeal “from that part of the Orders at issue in this appeal that hold that [BCBSMT] is not an ‘insurer’ for purposes of the ‘made-whole’ rule, either as an insurance company or as an administrator.” KRMC and BCBSMT moved to dismiss the cross appeal, which we denied. Therefore, the two issues on appeal to this Court which have been certified, pursuant to M.R. Civ. P. 54(b), are:

¶ 6 Issue 1: Did the District Court err by concluding that CHIP constitutes insurance subject to the “made whole” provision of the Montana Insurance Code?

¶ 7 Issue 2: Did the District Court err by concluding that BCBSMT, in its capacity as third-party administrator of CHIP, is not an “insurer” for purposes of the “made whole” rule? ⁴

STANDARD OF REVIEW

¶ 8 “We review summary judgment rulings de novo, applying the same M.R. Civ. P. 56 criteria as the district court.” Gaston Eng'g & Surveying, P.C. v. Oakwood Props., LLC, 2011 MT 44, ¶ 11, 359 Mont. 341, 249 P.3d 75. “The moving party must establish both the absence of genuine issues of material fact and entitlement to judgment as a matter of law. Once the moving party has met its burden, the opposing party must present material and substantial evidence, rather than mere conclusory or speculative statements, to raise a genuine issue of material fact.” Hern v. Safeco Ins. Co. of Ill., 2005 MT 301, ¶ 18, 329 Mont. 347, 125 P.3d 597. The evidence must be analyzed in the most favorable light to the non-moving party, and all reasonable inferences are to be drawn in favor of the non-moving party. Gaston, ¶ 11. “We review a district court's conclusions of law for correctness.” Gaston, ¶ 11.

DISCUSSION

¶ 9 Issue 1: Did the District Court err by concluding that CHIP constitutes insurance subject to the “made whole” provision of the Montana Insurance Code?

¶ 10 CHIP is a joint federal and state government-funded program to provide health care to qualifying low-income children.⁵ “Title XXI of the Social Security Act, enacted in 1997 by the Balanced Budget Act, authorizes Federal grants to States for provision of child health assistance to uninsured, low-income children. The program is jointly financed by the Federal and State governments and administered by the States. Within broad Federal rules, each State decides eligible groups, types and ranges of services, payment levels for benefit coverage, and administrative and operating procedures.” 42 C.F.R. § 457.1 (2006); see generally 42 U.S.C. §§ 1397aa-jj (2006).⁶ According to federal law, the purpose of the state CHIP programs “is to provide funds to States to enable them to initiate and expand the provision of child health assistance to uninsured, low-income children in an effective and efficient manner that is coordinated with...