Ucsf-Stanford v. Hawaii Mgt. Alliance Benefits
| Decision Date | 22 July 1999 |
| Docket Number | No. Civ. 98-00648DAE.,Civ. 98-00648DAE. |
| Citation | 58 F.Supp.2d 1162 |
| Court | U.S. District Court — District of Hawaii |
| Parties | UCSF-STANFORD HEALTH CARE f/k/a Stanford Health Services, Plaintiff, v. HAWAII MANAGEMENT ALLIANCE BENEFITS & SERVICES, INC. and Hawaii Management Alliance Association, Defendants. |
Peter A. Lee, Honolulu, HI, Tracy D. Swann, Joy Y. Stephenson, George Colman, Vincent A. Acquisto, Tracy A. Wade, Alyssa B. Klausner, Stephenson Acquisto & Colman, Burbank, CA, for UCSF-Stanford Health Care.
Stuart T. Feeley, Reinwald O'Connor Marrack, Hoskins & Playdon, Honolulu, HI, Ellen Godbey Carson, Alston Hunt Floyd & Ing, Honolulu, HI, Alexander F. Stuart, Willoughby, Stuart, & Bening, San Jose, CA, for Hawaii Management Alliance Benefit & Services, Inc.
Ellen Godbey Carson, Alston Hunt Floyd & Ing, Honolulu, HI, for Hawaii Management Alliance Association.
AMENDED ORDER
The court heard Defendants' Motion on July 6, 1999. Alyssa Klausner, Esq., and Peter Lee, Esq., appeared at the hearing on behalf of Plaintiff; Bill Hunt, Esq., and Lea Hong, Esq., appeared at the hearing on behalf of Defendants. After reviewing the Motion and the supporting and opposing memoranda, the court GRANTS in part and DENIES in part Defendants' Motion for Summary Judgment.
This case involves a dispute between an insurer and a health care provider over the insurer's liability for medical services performed by the health care provider. Plaintiff UCSF-Stanford Health Care ("Plaintiff") brings this action against Defendants Hawaii Management Alliance Benefits & Services, Inc. and Hawaii Management Alliance Association ("Defendants"), based on Defendants' refusal to compensate Plaintiff for treatment it provided to a third party, Ye Sun Chon ("Chon").
On March 25, 1997, Chon completed an Employee Application Form seeking to obtain health insurance from Defendants. In the form, Chon was asked several questions regarding both her employment status and medical history. Chon responded that she was employed by Holiday Shoe Repair ("Holiday"), a company owned by her brother-in-law. Chon also indicated that she was not receiving treatment at the time she completed her application. Defendants contend that Chon's answers to these questions were false, and were intended to induce Defendants to provide insurance coverage for expensive procedures relating to a brain tumor she had developed in 1992.
On April 1, 1997, allegedly in reliance on the misrepresentations in Chon's application, Defendants added Chon to the list of insureds from Holiday. The policy contained specific provisions relating to conditions regarding continuing eligibility as well as termination of coverage. With respect to eligibility, the policy provided that Chon would be entitled to coverage "on the first of the month following a minimum of twenty (20) hours of employment for four (4) consecutive weeks." The policy further explained that eligibility would continue only if the employee "remains actively working and maintains a minimum of twenty (20) hours of employment per week."
With respect to termination, the policy provided that Policy at 8, attached as Exhibit B to Defendants' Motion for Summary Judgment. The Policy defines "actively working" as "performing all regular duties of ... occupation for a Participating Employer at least seventy (70) hours a month."
On June 10, 1997, Plaintiff contacted Defendants' utilization review department, informing them of Chon's condition and the pending claim for coverage. At that time, during their telephone conversation, Defendants authorized the services to be performed and certified the requested treatment as medically necessary. They then faxed the authorization form to Plaintiff.
On June 18, 1997, Plaintiff again contacted Defendants to confirm Chon's eligibility for coverage. At that time, Defendants again informed Plaintiff: 1) Chon was an insured and covered by Defendants; 2) Chon was eligible for benefits; 3) Chon's policy became effective April 1, 1997; 4) Chon had a $2 million lifetime maximum benefit; 5) Chon had a $100 deductible, which had been met; 6) Defendants would pay "80% CTR"; and 7) Chon had an Out-of-Pocket co-payment of $1,500.00, of which $500 had been met. Again, Defendants did not indicate at anytime during the phone call that Chon's eligibility was being investigated, and actually affirmatively represented to Plaintiff that there were no pre-existing condition exclusions or limitations on Chon's policy.
On June 19, 1997, Plaintiff informed Defendants that the scheduled day of treatment had been changed, and Defendants responded by faxing pre-certification forms which indicated that Chon was an insured, and included information regarding deductibles and coverage limits. Also included with the pre-certification forms were disclaimers regarding the effect of pre-certification:
Pre-Certification is for the sole purpose of reviewing medical necessity of the recommended hospitalization, procedure, treatment, therapy or rehabilitation. Pre-Certification is not a guarantee that charges are covered under the Plan. All charges submitted to [Defendants] are subject to eligibility and all plan provisions, regardless of precertification.
Pre-Certification Forms, attached as Exhibits C & D to Defendants' Motion for Summary Judgment.
Allegedly in reliance on Defendants' pre-certification of Chon, on July 1, 1997, Plaintiff admitted Chon for surgery to remove a brain tumor. On June 24 and July 1, 1997, Plaintiff performed two separate brain surgeries, and in August of that year, after a period of recovery, Chon was released. For the services it provided to Chon, Plaintiff submitted interim inpatient bills to Defendants on July 24, 1997, August 4, 1997 and by mail on approximately August 5, 1997.
Meanwhile, on July 24, 1997, Barbara M. Ornellas, R.N., of Defendants' Utilization Review Department, informed Plaintiff by facsimile that Chon's eligibility was being investigated. After conducting its investigation, which allegedly included a review of Plaintiff's own medical records regarding Chon and an interview with Holiday's owner, Defendants discovered that it had issued the policy based on false representations made by Chon. Specifically, Defendants discovered that Chon had concealed two previous brain surgeries on her application, and had never been an active employee of Holiday. Because Defendants had issued the policy on the basis of Chon's false representations, Defendants rescinded both Chon's and Holiday's coverage and denied Plaintiff the reimbursement it sought for the services it had provided to Chon.
On February 4, 1999, Plaintiff filed its Complaint for damages, alleging five separate causes of action:1
Count One: Breach of Oral Contract
Count Two: Fraud and Deceit
Count Three: Negligent Misrepresentation
Count Four: Estoppel
Count Five: Quantum Meruit
On March 31, 1999, Defendants filed the instant Motion for Summary Judgment, contending that they are entitled to summary judgment on each of Plaintiff's five claims. Plaintiff filed its Opposition to Defendants' Motion on May 27, 1999. Defendants filed their Reply on June 3, 1999.
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall be entered when:
... 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 a judgment as a matter of law.
The moving party has the initial burden of "identifying for the court those portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)). The movant must be able to show "the absence of a material and triable issue of fact," Richards v. Neilsen Freight Lines, 810 F.2d 898, 902 (9th Cir.1987), although it need not necessarily advance affidavits or similar materials to negate the existence of an issue on which the nonmoving party will bear the burden of proof at trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. But cf., id., at 328, 106 S.Ct. 2548 (White, J., concurring).
If the moving party meets its burden, then the opposing party may not defeat a motion for summary judgment in the absence of any significant probative evidence tending to support his legal theory. Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270, 282 (9th Cir.1979). The opposing party cannot stand on his pleadings, nor can he simply assert that he will be able to discredit the movant's evidence at trial. See T.W. Elec., 809 F.2d at 630. Similarly, legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment. British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). Moreover, "if the factual context makes the nonmoving party's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial." California Architectural Bldg. Prod., Inc. v. Franciscan Ceramics, 818 F.2d 1466, 1468 (9th Cir.1987), (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)) (original emphasis).
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