Wooley v. Amcare Health Plans of Louisiana

• Decision Date: 25 October 2006
• Docket Number: No. 2005 CW 2025.,2005 CW 2025.
• Citation: 944 So.2d 668
• Parties: J. Robert WOOLEY, as Acting Commissioner of Insurance for the State of Louisiana v. AMCARE HEALTH PLANS OF LOUISIANA, INC.
• Court: Court of Appeal of Louisiana — District of US

944 So.2d 668

2005-2025 (La.App. 1 Cir. 10/25/06)

J. Robert WOOLEY, as Acting Commissioner of Insurance for the State of Louisiana v. AMCARE HEALTH PLANS OF LOUISIANA, INC.

No. 2005 CW 2025.

Court of Appeal of Louisiana, First Circuit.

October 25, 2006.

COPYRIGHT MATERIAL OMITTED

Joseph E. Cullens, Jr., Baton Rouge, Guy M. Hohmann, Austin, TX, Kimberly S. Morgan, Edward J. Walters, Jr., Baton Rouge, Sue Buser, Gonzales, Jonathan C. Augustine, Baton Rouge, Counsel for Plaintiff—Appellee J. Robert Wooley, as Acting Commissioner of Insurance and Liquidator of AmCare Health Plans of Louisiana, Inc.

James C. Percy, David M. Kerth, Baton Rouge, Robert B. Bieck, Jr., New Orleans, Counsel for Defendant—Appellant HealthNet, Inc.

Joseph J. McKernan, Baton Rouge, Counsel for Plaintiff—Appellee Jean Johnson as Texas Special Deputy Receiver.

David M. Latham, Keary L. Everitt, New Orleans, Counsel for Plaintiff—Appellee Louisiana Department of Insurance.

Gary P. Koederitz, Baton Rouge, Counsel for Defendant—Appellee BestCare, Inc.

Wendell Clark, Baton Rouge, Counsel for Defendant—Appellee Thomas S. Lucksinger, Michael D. Nadler and Stephen J. Nazarenus.

Claude F. Reynaud, Jr., Baton Rouge, Counsel for Defendant—Appellee Proskauer Rose, L.L.P. and Stuart L. Rosow.

Harry J. Philips, Jr., Baton Rouge, Counsel for Defendant—Appellee William Galtney, Jr. and Michael K. Jhin.

Mary Olive Pierson, V. Thomas Clark, Jr., Baton Rouge, Counsel for Defendant—Appellee PriceWaterhouseCoopers, L.L.C.

Robert J. Burns, Jr., Baton Rouge, David H. Topol, Washington, D.C., Counsel for Defendant—Appellee Greenwich Insurance Company.

George B. Hall, Jr., New Orleans, Merril Hirsh, Washington, D.C., Kelsey Kornick Funes, Baton Rouge, Counsel for Defendant—Appellee Executive Risk Management and Executive Risk Specialty Ins. Co.

David L. Guerry, Baton Rouge, Counsel for Defendant—Appellee Scott Westbrook.

William C. Kaufman, III, Baton Rouge, Counsel for Defendant—Appellee M. Lee Pearce.

Dominique J. Sam, Michael Charles Guy, Baton Rouge, Counsel for Amicus Curiae Charles C. Foti, Jr., Atty. Gen., On Behalf of the Commissioner of Insurance-Liquidator of AmCare Health Plans of Louisiana, Inc.

Before: CIACCIO, LANIER and CLAIBORNE, JJ.¹

LANIER, J.

Defendant, Health Net, Inc., seeks appellate review of the overruling of its declinatory exception raising the objection of improper venue. For the following reasons, we affirm.

GENERAL PROCEDURAL FACTS

AmCare Health Plans of Texas, Inc. (AmCare-TX), was a health maintenance organization (HMO) licensed by and operating in Texas. Foundation Health Corp. and/or Foundation Health System, now known as Health Net, Inc. (Health Net), owned AmCare-TX, along with similar licensed HMOs in Louisiana, AmCare Health Plans of Louisiana, Inc. (AmCare-LA), and Oklahoma, AmCare Health Plans of Oklahoma, Inc. (AmCare-OK).² Health Net considered the three HMOs a financial liability and sold the HMOs to Thomas S. Lucksinger and others (collectively Lucksinger). Health Net retained a minority ownership interest in the HMOs. The HMOs eventually were ruled insolvent by the three respective state regulators.

Multiple lawsuits were filed in Louisiana and Texas by the receivers against various defendants, including Lucksinger, Price-WaterhouseCoopers (PWC) and Health Net. The lawsuits alleged mismanagement of the HMOs and accounting negligence and sought enforcement of guarantees made by Health Net regarding the HMOs' solvency. The allegations were amended to include charges of contract fraud and tort gross negligence by Health Net, Lucksinger, PWC and others. The trial court subsequently consolidated the three suits filed in Louisiana by J. Robert Wooley, Louisiana Commissioner of Insurance as Liquidator for AmCare-LA. The Texas receiver then intervened in the Louisiana proceedings against Health Net. The Texas receiver's allegations against Health Net included claims of fraud and conspiracy to defraud in connection with the sale, operation and management of the HMOs. Health Net responded by filing a declinatory exception raising the objection of improper venue asserting that under Texas law the exclusive venue for the Texas receiver's action was in Texas and, thus, venue was improper in Louisiana. The trial court overruled Health Net's exception and Health Net took this appeal.

APPEAL OR SUPERVISORY WRIT:

THE RETROACTIVE EFFECT OF ACT 205 OF 2005

Procedural Facts

On May 24, 2005, the district court judge signed a judgment that, in part, overruled Health Net's declinatory exception raising the objection of improper venue. Health Net filed a motion for a devolutive appeal. The district court judge refused to grant an appeal and ordered Health Net to seek a supervisory writ. Health Net reurged its request for an appeal, and on June 1, 2005, the district court judge signed an order for a devolutive appeal. This appeal was lodged with this Court on September 29, 2005. The order of appeal was correctly granted.

During this time period La. C.C.P. art. 2083 A provided, in pertinent part, that "[a]n appeal may be taken ... from an interlocutory judgment which may cause irreparable injury." Contemporary jurisprudence held that, although the overruling of a declinatory exception raising the objection of improper venue was an interlocutory judgment, if it may cause irreparable injury it was an appealable judgment. La. C.C.P. art. 1841; Price v. Roy O. Martin Lumber Co., 2004-0227, p. 6, n.2 (La.App. 1 Cir. 4/27/05), 915 So.2d 816, 821, n. 2, writ denied, 2005-1390 (La.1/27/06), 922 So.2d 543; Revision Comments — 2005(a) and (b) for Act 205.

Act 205 of 2005

Article 2083 was amended by 2005 La. Act 205 to provide that "[a]n interlocutory judgment is appealable only when expressly provided by law." No law has been found that expressly provides for an appeal in this case at the present time.

Effective Date of Act 205

Section 2 of Act 205 provides that "[t]his Act shall become effective on January 1, 2006." (Emphasis added.)

The effective date of all laws is provided for in La. CONST. art. III, § 19 as follows:

All laws enacted during a regular session of the legislature shall take effect on August fifteenth of the calendar year in which the regular session is held and all laws enacted during an extraordinary session of the legislature shall take effect on the sixtieth day of the final adjournment of the extraordinary session in which they were enacted. All laws shall be published prior thereto in the official journal of the state as provided by law. However, any bill may specify an earlier or later effective date. (Emphasis added.)

In Section 2 of Act 205 the legislature exercised its constitutional power to fix a "later effective date". The fixing of an effective date determines when the prospective effect of a law commences. As will be hereinafter shown, this does not equate to a "legislative expression" of retroactivity. The words prospective and retroactive have antithetical meanings. Although all laws have an effective date (are prospective), all laws are not retroactive.

Retroactive Effect of Act 205

The legislature is free, within constitutional confines, to give its enactments retroactive effect. A court must defer to the legislature's intent when determining whether a statute should be applied retroactively. Retroactive application of new legislation is constitutionally permissible only if it does not result in impairment of the obligations of contracts or in divestiture of vested rights. U.S. CONST. amend. XIV, § 1 (due process and equal protection); U.S. CONST. art. I, § 10(1) (ex post facto law or law impairing the obligations of a contract); La. CONST. art. I, § 2 (due process); La. CONST. art. 23 (ex post facto law or law impairing the obligations of a contract); Morial v. Smith & Wesson Corp., 2000-1132, pp. 11-13 (La.4/3/01), 785 So.2d 1, 9-11, cert. denied, 534 U.S. 951, 122 S.Ct. 346, 151 L.Ed.2d 262 (2001).

In determining whether a law may be applied retroactively, courts are guided by La. C.C. art. 6 which provides as follows:

In the absence of contrary legislative expression, substantive laws apply prospectively only. Procedural and interpretative laws apply both prospectively and retroactively, unless there is a legislative expression to the contrary.

See also La. R.S. 1:2.

Article 6 requires a two-step inquiry: (1) did the legislature express its intent regarding retrospective or prospective application, and (2) if not, is the law substantive, procedural or interpretive. Substantive laws establish new rules, rights and duties or change existing ones. Procedural laws prescribe a method (remedy) for enforcing a substantive right and relate to the form of the proceeding or the operation of the laws. Interpretive laws merely establish the meaning the interpreted law had from the time of its enactment. Segura v. Frank, 93-1271, pp. 9-12 (La.1/14/94), 630 So.2d 714, 720-23, cert. denied sub nom., Allstate Ins. Co. v. Louisiana Ins. Guar. Ass'n, 511 U.S. 1142, 114 S.Ct. 2165, 128 L.Ed.2d 887. See also Manuel v. Louisiana Sheriff's Risk Mgmt. Fund, 95-0406, pp. 8-9 (La.11/27/95), 664 So.2d 81, 85-86.

Finally, an appellate court is bound to adjudge a case before it in accordance with the law existing at the time of its decision. Where the law has changed during the pendency of a suit and retroactive application of the new law is permissible, the new law applies on appeal even though it requires reversal of a trial court judgment which was correct under the law in effect at the time it was rendered. Segura, 630 So.2d at 725. See also Cheron v. LCS Corrections Serv. Inc., 2004-0703, p. 8 (La.1/19/05), 891 So.2d 1250, 1257-58.

The first inquiry to be made pursuant to the Segura methodology for determining retroactivity is did the legislature express its intent regarding retrospective application? A review of Act 205 shows that it does not contain a "legislative expression" that it applies...