Temple. Univ. Children's Med. Cntr. v. Group Health

• Decision Date: 25 January 2006
• Docket Number: No. CIV.A.05-103.,CIV.A.05-103.
• Citation: 413 F.Supp.2d 530
• Parties: TEMPLE UNIVERSITY CHILDREN'S MEDICAL CENTER, v. GROUP HEALTH, INC., et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

413 F.Supp.2d 530

TEMPLE UNIVERSITY CHILDREN'S MEDICAL CENTER, v. GROUP HEALTH, INC., et al.

No. CIV.A.05-103.

United States District Court, E.D. Pennsylvania.

January 25, 2006.

COPYRIGHT MATERIAL OMITTED

Howard R. Maniloff, Tabas & Rosen, P.C., Philadelphia, PA, for Temple University Children's Medical Center.

Michael H. Bernstein, Sedgwick Detert Moran & Arnold LLP, New York, NY, Anthony E. Creato, Philadelphia, PA, for Group Health, Inc.,

Brian T. Must, Michael P. Robic, II, Metz Lewis, LLC, Pittsburgh, PA, for Multiplan, Inc.

MEMORANDUM

BARTLE, Chief Judge.

Plaintiff, Temple University Children's Medical Center ("TUCMC"), has sued defendants, Group Health, Inc. ("GHI"), Multiplan, Inc. ("Multiplan"), and Transport Workers Union-New York City Transit Authority-Mabstoa Health Benefit Trust for breach of contract for refusing to pay the billed charges for medical services provided to three different patients. Multiplan has filed a cross claim against GHI for indemnity. We have diversity jurisdiction under 28 U.S.C. § 1332. Before the court are the motions of GHI and Multiplan for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Rule 56(c) permits

I.

Rule 56(c) permits us to grant summary judgment only "if the pleadings, depositions, answers to interrogatories, and admissions on file, 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 summary judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A dispute is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. See Anderson, at 254, 106 S.Ct. 2505. We review all evidence and make all reasonable inferences from the evidence in the light most favorable to the non-movant. See In re Flat Glass Antitrust Litig., 385 F.3d 350, 357 (3d Cir.2004). The non-moving party may not rest upon mere allegations or denials of the moving party's pleadings but must set forth specific facts showing there is a genuine issue for trial. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990).

II.

This case arises out of disputed charges for medical services rendered at TUCMC to Yisroel Rosenbaum ("Rosenbaum"), Zev Kahn ("Kahn"), and Nadia Zehngut ("Zehngut"). At the time Rosenbaum and Kahn were treated at TUCMC, both were insured under group health insurance contracts issued by GHI to cover the employees and dependents of the employees of Mesivta Nachlas Yakov and the Neshoma Orchestra. Zehngut, it appears, was covered by a self-insured ERISA plan.

In 1997, GHI and Multiplan entered into an "Agreement for GHI's Access to Multiplan Inc.'s Facility Networks." The contract declares that in exchange for the payment of the access fee, GHI "shall have the right to access [Multiplan's] Contract Rates" on behalf of its insureds. If the Multiplan contract governed, GHI was required to pay 90% of the charges billed by a health care provider and pay Multiplan a fee based on the 10% savings.

At all times relevant to this action, TUCMC was a member of the Multiplan network by virtue of a "Prompt Payment Discount Agreement" between Multiplan and the Temple University Health System of which TUCMC is a part. GHI was not a party to this agreement. Barely more than one page in length, the agreement states that Multiplan "shall reimburse Temple University Health System" in accordance with "Attachment B-5," which details the specific reimbursement for services performed by TUCMC. Under that attachment, Multiplan agrees to "reimburse [TUCMC] 90% of billed charges within thirty (30) days of receipt of claim or 100% of billed charges shall be due." Multiplan contends that despite this language, it was the consistent practice of its member providers to bill a patient's insurer directly. Indeed, in this case TUCMC did not charge Multiplan for costs and services associated with the Rosenbaum, Kahn and Zehngut surgeries and instead billed GHI.

TUCMC's first claim involves payments for surgery performed on Yisroel Rosenbaum. He was admitted to TUCMC on May 31, 2002 for anterior/posterior spinal fusion surgery and was released on June 1, 2002. During this period Rosenbaum was a beneficiary under a health insurance agreement between GHI and Mesivta Nachlas Yakov ("Mesivta Plan") and consequently was entitled to insurance coverage as provided by its, terms. Under the Mesivta Plan, GHI agreed to reimburse non-participating health care providers the "allowed charge" for registered bed patients. The Plan defines "allowed charge" as the "reasonable and customary charge, as determined by GHI, for the covered services." A non-participating provider is one who does not meet the Mesivta Plan's definition of a "participating provider." It defines a participating provider as an entity that either has agreed to accept GHI's scheduled rates or has otherwise contracted with GHI for alternative rates as payment in full for covered services.

TUCMC sent GHI a bill for $113,720.87 which the latter received on September 10, 2002. Pursuant to its agreement with Multiplan, GHI accessed the Multiplan 10% discount and remitted a check to TUCMC for $101,737.95, that is 90% of the original charges less $132 for uncovered "blood storage procedures." TUCMC cashed the check without objection. Eight months later, TUCMC mailed GHI another bill for expenses arising out of the Rosenbaum surgery. TUCMC claimed the $180,656 cost of the implant had been omitted from the first bill. After researching the cost of the implant with the manufacturer, GHI concluded "reasonable and customary" charges for the implant were in the range of $15,000. GHI paid TUCMC $20,000 and sent letters both to Rosenbaum and TUCMC on July 23, 2003 explaining its determination.

TUCMC's second claim involves payment for Zev Kahn's surgery and treatment between January 10-12, 2003. At the time Kahn was hospitalized at TUCMC for anterior/posterior spinal fusion surgery, he was a beneficiary under a group health insurance contract between GHI and the Neshoma Orchestra ("Neshoma Plan"). Under the Neshoma Plan, GHI agreed to reimburse non-participating health care providers the "allowed charge" for registered bed patients. The Plan defines "allowed charge" as the "lesser" amount of five options:

(1) the negotiated rate between GHI and the Hospital or facility; (2) the negotiated rate between the Hospital or facility and any network arrangements with which GHI has an agreement; (3) the Hospital or facility's published rate for a semi-private room; (4) for out of area Hospitals and facilities, the Hospital or facility's published rate for a semiprivate room, not to exceed the average charge or GHI Participating Hospitals and skilled nursing facilities for the same services; or (5) charges.¹

Where GHI has not determined an allowed charge for a specific service, the Neshoma Plan states that GHI will make a payment "based upon either Medicare guidelines and/or the Relative Value Scale to determine comparability between procedures." Like the Mesivta Plan, a non-participating provider is one which does not meet the Neshoma Plan's definition of a "participating provider." Upder the Neshoma Plan, "participating providers" are entities that have either agreed to accept GHI's scheduled rates or otherwise contracted with GHI for different rates as payment in full for covered services.

On July 24, 2003, GHI received a bill for $387,273.23 from TUCMC for the Kahn surgery. The total amount included the implant ($212,220) and the surgery ($175,053.23). GHI determined these charges were unreasonable. It also refused to pay $5,582.20 for the "blood storage procedure." Because the Multiplan network's 10% discount would not have made the bill "reasonable" or the least expensive of the Neshoma Plan's five options, GHI elected not to access the Multiplan discount. Instead, GHI remitted a check for $117,656.54, that is $97,656.54 for the surgery and $20,000 for the implant. GHI sent letters to both Kahn and TUCMC explaining its decision. TUCMC did not object and cashed the check.

TUCMC's third claim arises from surgery performed on Nadia Zehngut. At the time of her surgery, Zehngut was a beneficiary of the self-insurance health benefit plan maintained by the New York City Transit Authority ("NYCTA") for eligible members of the Transport Workers Union ("TWU") and their dependents. GHI has never entered into a group health insurance agreement with the NYCTA or the TWU to provide health insurance coverage to its employees or members. GHI points to an "administrative services agreement" between it and the NYCTA that initially took effect on August 1, 2003. Though the agreement was never signed by either party, both GHI and NYCTA have nevertheless operated by its provisions. According to the agreement, GHI agreed to perform only administrative services on behalf of the NYCTA with regard to the implementation of its health plan. The agreement states:

Except as expressly set forth in this Agreement or as otherwise provided by law, GHI shall not have any discretion or authority with respect to the control, handling or disposition of any Plan assets. With respect to Plan claims adjudication activities and the processing and payment of claims submitted by and on behalf of Members for covered services with respect to the Benefits, GHI neither insurers nor underwrites any liability of the Customer under the Plan. With respect to the Customer as Plan Sponsor and/or Plan Administrator, GHI acts only as the provider of the services described in this Agreement and, with respect to members, acts only as the agent of the Customer as Plan Sponsor and/or Plan Administrator, GHI is not providing any insurance coverage or insurance benefits to either the...