State ex rel. Third-Party Defendant Health Plans v. Nines

• Decision Date: 25 November 2020
• Docket Number: No. 20-0296, No. 20-0297,20-0296
• Citation: 852 S.E.2d 251
• Parties: STATE of West Virginia EX REL. THIRD-PARTY DEFENDANT HEALTH PLANS, et al., Petitioners v. The Honorable Shawn D. NINES, Presiding Judge Business Court Division, and MedTest Laboratories, LLC, Respondents State of West Virginia ex rel. Blue Cross and Blue Shield of Kansas, Inc., and HealthNow New York, Inc. d/b/a BlueCross BlueShield of Western New York, and BlueShield of Northeastern New York, Petitioners v. The Honorable Shawn D. Nines, Presiding Judge Business Court Division, and MedTest Laboratories, LLC, Respondents
• Court: West Virginia Supreme Court

852 S.E.2d 251

STATE of West Virginia EX REL. THIRD-PARTY DEFENDANT HEALTH PLANS, et al., Petitioners

v.The Honorable Shawn D. NINES, Presiding Judge Business Court Division, and MedTest Laboratories, LLC, Respondents

State of West Virginia ex rel. Blue Cross and Blue Shield of Kansas, Inc., and HealthNow New York, Inc. d/b/a BlueCross BlueShield of Western New York, and BlueShield of Northeastern New York, Petitioners

v.The Honorable Shawn D. Nines, Presiding Judge Business Court Division, and MedTest Laboratories, LLC, Respondents

No. 20-0296

No. 20-0297

Supreme Court of Appeals of West Virginia.

Submitted: October 27, 2020

Filed: November 19, 2020

Dissenting Opinion of Justice Hutchison November 25, 2020

Andrew B. Cooke, Esq., Thomas Combs & Spann, PLLC, Charleston, West Virginia, James C. Martin, Esq., Pro Hac Vice, William J. Sheridan, Esq., Pro Hac Vice, Gregory D. Vose, Esq., Pro Hac Vice, Reed Smith LLP, Pittsburgh, Pennsylvania, Martin J. Bishop, Esq., Pro Hac Vice, Bryan M. Webster, Esq., Pro Hac Vice, Daniel J. Hofmeister Jr., Esq., Pro Hac Vice, Reed Smith LLP, Chicago, Illinois, Counsel for Petitioners, Health Care Service Corporation, A Mutual Legal Reserve Company (operating as Blue Cross and Blue Shield of Texas; Blue Cross and Blue Shield of Illinois; Blue Cross and Blue Shield of Montana; Blue Cross and Blue Shield of Oklahoma; and Blue Cross and Blue Shield of New Mexico); Blue Cross and Blue Shield of Alabama; Premera Blue Cross; Highmark Inc.; Highmark BCBSD Inc. d/b/a Highmark Blue Cross and Blue Shield of Delaware; Blue Cross of Idaho Health Service, Inc.; Blue Cross and Blue Shield of Kansas City; Blue Cross and Blue Shield of Nebraska, Inc.; Noridian Mutual Insurance Company d/b/a Blue Cross Blue Shield of North Dakota; Blue Cross Blue Shield of Tennessee, Inc.; Blue Cross & Blue Shield of Wyoming.

Benjamin L. Bailey, Esq., Samuel A. Hrko, Esq., Bailey & Glasser LLP, Charleston, West Virginia, Patrick J. Sheehan, Esq., Pro Hac Vice, Henry C. Quillen, Esq., Pro Hac Vice, Whatley Kallas, LLP, New York, New York, Counsel for Respondent, MedTest Laboratories, LLC.

Melissa Foster Bird, Esq., Marc E. Williams, Esq., Nelson Mullins Riley & Scarborough LLP, Huntington, West Virginia, N. Thomas Connally, III, Esq., Pro Hac Vice, Hogan Lovells U.S. LLP, Tysons, Virginia, Counsel for Anthem, Inc.; Blue Cross of California d/b/a Anthem Blue Cross; Rocky Mountain Hospital and Medical Service, Inc. d/b/a Anthem Blue Cross and Blue Shield, Anthem Blue Cross and Blue Shield; Anthem Blue Cross and Blue Shield; Anthem Health Plans, Inc. d/b/a Anthem Blue Cross and Blue Shield of Connecticut; Blue Cross and Blue Shield of Georgia, Inc.; Anthem Insurance Companies, Inc. d/b/a Anthem Blue Cross and Blue Shield of Indiana; Anthem Health Plans of Kentucky, Inc. d/b/a Anthem Blue Cross and Blue Shield of Kentucky; Anthem Health Plans of Maine, Inc. d/b/a Anthem Blue Cross and Blue Shield of Maine; HMO Missouri, Inc. d/b/a Anthem Blue Cross and Blue Shield of Missouri; Anthem Blue Cross and Blue Shield of Nevada; Anthem Health Plans of New Hampshire, Inc. d/b/a Anthem Blue Cross and Blue Shield of New Hampshire; Empire HealthChoice Assurance, Inc. d/b/a Empire BlueCross BlueShield; Community Insurance Company d/b/a Anthem Blue Cross and Blue Shield of Ohio; Anthem Health Plans of Virginia, Inc. d/b/a Anthem Blue Cross and Blue Shield of Virginia, Inc.; Blue Cross Blue Shield of Wisconsin d/b/a Anthem Blue Cross and Blue Shield of Wisconsin.

Eric W. Iskra, Esq., Spilman Thomas & Battle, PLLC, Charleston, West Virginia, Counsel for Blue Cross Blue Shield of Michigan; and Capital Blue Cross.

Michael J. Joyce, Esq., Saul Ewing Arnstein & Lehr LLP, Pittsburgh, Pennsylvania, Counsel for Capital Blue Cross.

Thomas J. Hurney, Jr., Esq., Laurie M. Miller, Esq., Chelsea Creta, Esq., Jackson Kelly PLLC, Charleston, West Virginia, Covert J. Geary, Esq., Pro Hac Vice, Jones Walker LLP, New Orleans, Louisiana, Counsel for USAble Mutual Insurance Company d/b/a Arkansas Blue Cross and Blue Shield; Blue Cross and Blue Shield of Florida, Inc.; Louisiana Health Service and Indemnity Company, PAC d/b/a Blue Cross and Blue Shield of Louisiana; Blue Cross and Blue Shield of Massachusetts, Inc.; Blue Cross & Blue Shield of Mississippi, A Mutual Insurance Company; Blue Cross and Blue Shield of North Carolina; Blue Cross & Blue Shield of Rhode Island; Blue Cross Blue Shield of South Carolina; California Physicians’ Service, Inc. d/b/a Blue Shield of California; Excellus Health Plan, Inc. d/b/a Excellus BlueCross BlueShield; Cambia Health Solutions, Inc.; Regence BlueShield of Idaho, Inc.; Regence BlueCross BlueShield of Oregon; Regence BlueCross BlueShield of Utah; Regence BlueShield.

Andrew B. Cooke, Esq., Thomas Combs & Spann, PLLC, Charleston, West Virginia, Coppersmith Brockelman PLC, Phoenix, Arizona, Counsel for Blue Cross and Blue Shield of Arizona, Inc.

Paula L. Durst, Esq., Don C.A. Parker, Esq., Spilman Thomas & Battle PLLC, Charleston, West Virginia, Honor R. Costello, Esq., Pro Hac Vice, Crowell & Moring LLP, New York, New York, Rochelle-Leigh Rosenberg, Esq., Pro Hac Vice, Crowell & Moring LLP, Washington, D.C., Counsel for Blue Cross and Blue Shield of Kansas, Inc. and HealthNow New York Inc. d/b/a BlueCross BlueShield of Western New York and BlueShield of Northeastern New York.

ARMSTEAD, Chief Justice:

In this original jurisdiction proceeding, Petitioners, out-of-state Blue Cross Blue Shield Plans ("Blues"),¹ ask this Court to prevent the enforcement of the circuit court's March 27, 2020, order, and to grant the requested writ of prohibition dismissing them from the underlying civil action for lack of personal jurisdiction. The Blues contend that there is no allegation or evidence showing that they developed or maintained a substantial relationship with West Virginia or purposefully engaged in any forum-related conduct that gave rise to the claims asserted by Respondent MedTest Laboratories ("MedTest"). Therefore, the Blues argue, "any attempt to exercise specific jurisdiction violates the limits due process imposes."

After reviewing all matters of record, including the parties’ briefs, oral arguments, and the pertinent authorities, we grant the requested writ of prohibition.

I. FACTUAL AND PROCEDURAL BACKGROUND

This litigation began in October of 2018 when Highmark West Virginia, Inc. ("Highmark"), the Blue Cross Blue Shield health plan operating in West Virginia, sued MedTest, a laboratory testing company located in West Virginia. Highmark alleged that these "Defendants² billed Highmark WV for independent laboratory and diagnostic services that MedTest did not perform." Highmark sought to recover "more than $6 million because of the billing scheme" it alleged MedTest carried out. Highmark set forth seven counts in its complaint: 1) fraudulent misrepresentation and inducement; 2) breach of contract; 3) unjust enrichment; 4) civil conspiracy; 5) joint venture; 6) negligence; and 7) "Piercing the MedTest LLC veil."

MedTest filed an answer, and counterclaimed with breach of contract and negligence claims against Highmark, alleging that

Highmark WV has breached the Network Agreement by refusing to compensate MedTest for laboratory testing services provided to subscribers of health insurance plans insured or administered by Highmark WV's fellow Blues through their National Networks, including but not limited to, their "Blue Card" networks,³ despite the fact that the Network Agreement requires it. Highmark WV's breaches of contract have caused MedTest millions of dollars in damages. MedTest therefore brings its Counterclaim for breach of contract to remedy these breaches.

(Footnote added).

MedTest's counterclaim named the Blues as third-party defendants. It asserted four causes of action against Highmark and the Blues: 1) fraudulent misrepresentation and inducement; 2) civil conspiracy; 3) joint venture; and 4) unjust enrichment. These claims are alleged in the alternative, that is, MedTest seeks relief from the Blues only if it cannot recover against Highmark. MedTest's complaint provides:

In the alternative, at all relevant times, Highmark and its fellow Blues have misrepresented to MedTest, other health care providers and members of their health insurance plans that MedTest was an in-network provider of laboratory testing services, causing those health care providers and members to obtain laboratory testing services from MedTest for which Highmark and its fellow Blues have refused to provide compensation, causing MedTest to incur millions of dollars in losses attributable to laboratory testing services it provided without compensation.

MedTest asserted that the Blues entered into "a series of contracts" that require healthcare providers in West Virginia, including MedTest, to provide services to the Blues’ members, and for Highmark to process and pay claims for those services. MedTest explains that when a healthcare provider in West Virginia provides a service to an out-of-state member of the Blues, Highmark is responsible for processing the claim. Highmark, in turn, pays the provider, and is then reimbursed by one of the out-of-state Blues.

MedTest states that this contractual agreement is incorporated by reference in the "Network Agreement" between MedTest and Highmark. The "Network Agreement" provides:

To the extent that Highmark WV participates in national or interregional networks, Provider shall provide services as defined by said program to persons who have coverage under such programs. Compensation for such services ... shall be obtained from Highmark WV upon submission of a properly submitted claim form or electronic record/format documenting the services provided.

Additionally, MedTest alleged that Highmark and the Blues listed MedTest as an in-network provider on their respective websites. According to MedTest, it "relied on these listings in performing laboratory services to members of health insurance plans insured or...