St. Luke's Episcopal Hosp. v. Great West Life

• Decision Date: 21 January 1999
• Docket Number: No. CIV.A. H-98-0106.,CIV.A. H-98-0106.
• Citation: 38 F.Supp.2d 497
• Parties: ST. LUKE'S EPISCOPAL HOSPITAL, Plaintiff, v. GREAT WEST LIFE & ANNUITY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Texas

Page 497

38 F.Supp.2d 497

ST. LUKE'S EPISCOPAL HOSPITAL, Plaintiff, v. GREAT WEST LIFE & ANNUITY INSURANCE COMPANY, Defendant.

No. CIV.A. H-98-0106.

United States District Court, S.D. Texas, Houston Division.

January 21, 1999.

Michael H. Johnston, Sullins, Johnston, Houston, TX, for plaintiff.

John Philip, Griffis, Hays, McConn, Rice & Pickering, Houston, TX, for defendant.

MEMORANDUM OPINION AND ORDER

LAKE, District Judge.

Pending before the court are Plaintiffs' [sic] Motion for Summary Judgment (Docket Entry No. 9) and Defendant's Motion for Summary Judgment (Docket Entry No. 10).

I. BACKGROUND

On July 1, 1996, John W. Painter & Assoc. Inc. ("Painter") established a health benefits plan for its employees. The plan was self-funded. Painter contracted with defendant, Great West Life & Annuity Insurance Company ("Great West"), to process and pay claims according to the terms of the plan. Under the contract Painter agreed to reimburse Great West for claim payments that Great West paid on behalf of the plan.

On August 28, 1996, plaintiff, St. Luke's Episcopal Hospital ("St.Luke's"), admitted a Painter employee named Dale Lauver ("Lauver"). St. Luke's alleges that it contacted Great West and received assurances that Lauver had health insurance coverage. St. Luke's treated Lauver and discharged him on August 31, 1996. On September 17 or 18, 1996, St. Luke's readmitted Lauver. The hospital allegedly called Great West again and confirmed coverage. St. Luke's treated Lauver again and discharged him on or about September 25, 1996.

St. Luke's subsequently submitted claims to Great West for the treatment it provided Lauver. While Great West agrees that Lauver is a participant of the plan and is eligible for benefits,¹ it denied St. Luke's claims. Great West contends that because Painter failed to make its scheduled premium payments, Great West terminated its services contract with Painter, effective September 1, 1996. Great West stopped processing and paying claims on that date regardless of when the benefit claims arose.²

On November 25, 1997, St. Luke's filed suit against Great West³ in the 190th District Court of Harris County, alleging:

(1) deceptive and unfair trade practices in violation of Tex. Ins.Code Ann. arts. 17.41, 21.21, 21.21-2 (Vernon Supp.1998); Tex. Bus. & Com.Code Ann. §§ 17.46(a), 17.50(a) (Vernon 1987); and 28 Tex. Admin. Code §§ 21.1-21.2011 (1998) (Tex. Dep't of Ins.); and

(2) negligence and negligent misrepresentation under Texas common law.

Great West removed the action on January 14, 1998, alleging diversity jurisdiction and that ERISA completely preempts St. Luke's claims.

On August 27, 1998, St. Luke's filed a motion for summary judgment on its negligence and negligent misrepresentation claims. The next day Great West filed its own motion for summary judgment claiming that all of St. Luke's claims are preempted by ERISA and that, should St. Luke's amend its complaint to allege a claim for benefits under ERISA, Great West is not the proper party for such claims. St. Luke's amended its complaint on December 1, 1998, alleging the following causes of action:

(1) denial of benefits in violation of ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (1994);

(2) breach of contract;

(3) breach of fiduciary duty and breach of the duty of good faith and fair dealing;

(4) deceptive and unfair trade practices in violation of Tex. Ins.Code Ann. arts. 21.21 & 21.21-2 (Vernon Supp.1998); Tex. Bus. & Com.Code Ann. §§ 17.46, 17.50(a) (Vernon 1987); and 28 Tex. Admin.Code §§ 21.1-21.2011 (1998) (Tex. Dep't of Ins.); and

(5) negligence and negligent misrepresentation.

II. EVIDENTIARY ISSUES

In response to St. Luke's motion for summary judgment Great West objects to certain evidence and asks the court to strike it. St. Luke's did not reply to Great West's objections. First, Great West objects to the admission of medical records attached to the affidavits of Drs. Donald Trillos and Surendra Jain, the physicians who treated Lauver. Great West contends that the medical records are inadmissible for lack of authentication and because they are hearsay. The court is not persuaded by these objections and will consider the medical records.

Second, Great West objects to several statements in the affidavit of Wayland Madden, Accounts Services Supervisor for St. Luke's, that St. Luke's submitted in support of its motion for summary judgment. In this affidavit Madden attempts to explain the general procedures St. Luke's employs in verifying patient insurance coverage, testifies as to specific events related to Lauver's admission, and speculates as to the views and understandings of insurance providers and third-party administrators. Great West argues that Madden has not testified that he had personal knowledge of the specific facts stated in his affidavit or how he gained such personal knowledge. Great West also argues that Madden's statements as to what insurance companies and third-party administrators know are speculative, conclusory, and not based on personal knowledge.

When affidavits are used to support or oppose a motion for summary judgment they "shall be made on personal knowledge, shall set forth facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e); Beijing Metals & Minerals Import/Export Corp. v. American Bus. Ctr., Inc., 993 F.2d 1178, 1182 (5th Cir.1993). Affidavits that are not based on personal knowledge or that are based merely on information and belief do not satisfy the requirements of Rule 56(e), and those portions of an affidavit that do not comply with Rule 56(e) are not entitled to any weight and cannot be considered in deciding a motion for summary judgment. See Richardson v. Oldham, 12 F.3d 1373, 1378-79 (5th Cir.1994). Neither shall conclusory affidavits suffice to create or negate a genuine issue of fact. See McCallum Highlands, Ltd. v. Washington Capital Dus, Inc., 66 F.3d 89, 92 (5th Cir.), as modified, 70 F.3d 26 (5th Cir.1995); Travelers Ins. Co. v. Liljeberg Enters., Inc., 7 F.3d 1203, 1207 (5th Cir. 1993); Salas v. Carpenter, 980 F.2d 299, 305 (5th Cir.1992).

The court concludes that Madden's affidavit fails these requirements with regard to the following statements:

(1) "The insurance companies or their third party administrators know why the hospital is calling for benefits and coverage;"⁴

(2) "Further, the insurance carriers are well aware of why the information is required by the hospital;"⁵

(3) "The insurance companies and the third party administrators have the hospital at a disadvantage;"⁶

(4) "The insurance carriers or their third party administrators provide the information regarding benefits and coverage, knowing that the hospital will rely on this information with regard to anticipated payment for services that are to be provided to patients;"⁷

(5) "In connection with Dale Lauver's admission of August 28, 1996, Defendant represented he was covered and provided benefits payable at 90% of room, board, and miscellaneous expenses. In addition, Defendant precertified and authorized the admission of Dale Lauver;"⁸ and

(6) "In connection with Dale Lauver's admission of September 18, 1996, Defendant represented he was covered and provided benefits payable at 90% of room, board, and miscellaneous expenses. Further, Defendant did not disclose that Dale Lauver's insurance coverage had been terminated on September 1, 1996 based upon the alleged failure of the employer to pay for the premium."⁹

Because Madden's affidavit does not explain whether Madden had personal knowledge of any of these facts, these statements are not competent summary judgment evidence, and the court will not consider them. See Lee v. National Life Assurance Co. of Canada, 632 F.2d 524, 529 (5th Cir.1980). The court is not persuaded by Great West's other objections.

III. STANDARD OF REVIEW

Summary judgment should be granted if the record, taken as a whole, "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); New York Life Ins. Co. v. Travelers Ins. Co., 92 F.3d 336, 338 (5th Cir.1996); Rogers v. International Marine Terminals, Inc., 87 F.3d 755, 758 (5th Cir.1996). The Supreme Court has interpreted the plain language of Rule 56(c) as mandating "the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); see Gunaca v. Texas, 65 F.3d 467, 469 (5th Cir.1995).

A party moving for summary judgment "must `demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant's case." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc) (quoting Celotex, 106 S.Ct. at 2553, 106 S.Ct. 2548). "The movant accomplishes this by informing the court of the basis for its motion, and by identifying portions of the record which highlight the absence of genuine factual issues." Rizzo v. Children's World Learning Ctrs., Inc., 84 F.3d 758, 762 (5th Cir.1996) (citing Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.1992)). If the moving party "fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response." Little, 37 F.3d at 1075.

If, however, the moving party meets this burden, Rule 56(c) requires the nonmovant to go beyond the pleadings and to show by affidavits, depositions, answers to interrogatories, admissions on file, or other admissible evidence that specific facts exist over which there is a genuine issue for trial. EEOC v. Texas Instruments Inc., 100 F.3d 1173, 1180 (...