Baptist Hosp. of Miami, Inc. v. Medica Healthcare Plans, Inc., Case No. 18-cv-25460-UU

376 F.Supp.3d 1298

BAPTIST HOSPITAL OF MIAMI, INC., et al., Plaintiffs,

v.MEDICA HEALTHCARE PLANS, INC., Defendant.

Case No. 18-cv-25460-UU

United States District Court, S.D. Florida.

Signed April 29, 2019

ORDER

Ursula Ungaro

THIS CAUSE comes before the Court upon the Report and Recommendation, issued by Magistrate Judge John O'Sullivan on March 26, 2019 (D.E. 39). Judge O'Sullivan recommended that the Court deny Defendant Medica Healthcare Plans, Inc.'s Motion to Compel Arbitration and Stay the Litigation (D.E. 9).

The Parties' objections to the Report were due by April 9, 2019, and neither party has filed objections. See LoConte v. Dugger , 847 F.2d 745 (11th Cir. 1988), cert. denied , 488 U.S. 958, 109 S.Ct. 397, 102 L.Ed.2d 386 (1988) (holding that failure to file timely objections bars the parties from attacking factual findings on appeal). The matter is thus ripe for disposition.

THIS COURT has made a de novo review of the entire file and record herein, and, being otherwise fully advised in the premises, it is hereby

ORDERED and ADJUDGED that the Magistrate Judge O'Sullivan's Report and Recommendation, (D.E. 39), is RATIFIED, AFFIRMED and ADOPTED. Defendant Medica Healthcare Plans, Inc.'s Motion to Compel Arbitration and Stay the Litigation (D.E. 9) is DENIED. It is further

ORDERED AND ADJUDGED that Defendant Medica Healthcare Plans, Inc. SHALL file its Answer to the Complaint no later than Wednesday, May 8, 2019 .

DONE AND ORDERED in Chambers at Miami, Florida, this 29th day of April, 2019.

REPORT AND RECOMMENDATION

JOHN J. O'SULLIVAN, CHIEF UNITED STATES MAGISTRATE JUDGE

THIS MATTER comes before the Court on the defendant, Medica Healthcare Plans, Inc.s' Motion to Compel Arbitration and Stay the Litigation (DE# 9, 1/4/19). This matter was referred to the undersigned by the Honorable Ursula Ungaro, United States District Judge for the Southern District of Florida (DE# 14, 1/8/19). Having carefully considered the motion, the Plaintiffs' Response in Opposition to Defendant's Motion to Compel Arbitration [D.E. 9] (DE# 18, 1/18/19) and the defendant Medica Healthcare Plans, Inc's Reply in Support of Motion to Compel Arbitration and Stay the Litigation, the parties' exhibits, the court file and the applicable law, the undersigned recommends that the defendant Medica Healthcare Plans, Inc.s' Motion to Compel Arbitration and Stay the Litigation (DE# 9, 1/4/19) be DENIED.

I. INTRODUCTION

The plaintiffs, Baptist Hospital of Miami, Inc., South Miami Hospital, Inc., Doctors Hospital, Inc., Homestead Hospital, Inc., and West Kendall Hospital, Inc. (collectively "plaintiffs" or "Baptist Hospitals") filed an action in state court against the defendant to recover more than $ 800,000 for alleged medically necessary and covered services provided to Medicare beneficiaries enrolled in Medica's Medicare Advantage plans ("Medica Members") between January 2017 and January 2018 pursuant to the Medical Hospital Provider Agreement with an effective date of January 1, 2005 between the defendant and the plaintiff hospitals ("2005 Medica Hospital Provider Agreement"). The plaintiffs allege four counts in their complaint: 1) breach of contract (Count I), unjust enrichment/breach of implied-in-law contract (Count II), promissory estoppel (Count III), and claim for benefits under contract by assignee (Count IV).

The defendant, Medica Healthcare Plans, Inc. ("defendant" or "Medica") removed the action to federal court pursuant to the Federal Officer Statute because Medica claims it was acting on behalf of the Centers for Medicare and Medicaid Services as a Medicare Advantage Organization ("MAO") and that the Court has supplemental jurisdiction over any related state law claims.

The defendant argues that the plaintiffs' claims are subject to mandatory arbitration pursuant to a provision in the 2005 Medical Hospital Provider Agreement that requires the plaintiffs to comply with any manuals or publications maintained by Medica, as amended and revised from time to time. Medica contends that the current and operative manual that applies to contracted providers for members of Medicare Advantage plans generally, and Medica Members specifically, is the 2018 UnitedHealthcare Care Provider Administrative Guide (the "2018 UHC Provider Guide") which contains an arbitration provision. Baptist Hospital maintains that the operative manual for its claims is the 2017 UHC Provider Guide, which does not contain an arbitration provision, because Baptist Hospitals' claims pre-date the April 1, 2018 effective date of the 2018 UHC Provider Guide.

Baptist Hospitals oppose arbitration on three grounds: 1) the 2005 Medica Hospital Provider Agreement does not contain an arbitration provision; 2) the 2018 UHC Provider Guide is an unenforceable modification to the 2005 Medica Hospital Provider Agreement; and 3) the 2018 UHC Provider Guide does not cover the benefit claims at issue because Baptist Hospitals' claims predate its effective date of April 1, 2018 and the 2017 UCH Provider Guide does not contain an arbitration provision.

II. FACTUAL BACKGROUND

In its Complaint that was filed in state court on November 14, 2018, Baptist Hospitals seek payment for denied benefit claims for services provided to Medicare beneficiaries pursuant to the 2005 Medica Hospital Provider Agreement with Medica. Baptist Hospitals allege that the 2005 Medica Hospital Provider Agreement "obligated Medica to ‘compensate [the Hospitals] for [Covered] Services furnished to [Medica's] members pursuant to this agreement and the rates and charges set forth [in it]." Complaint at ¶ 8 (DE# 1-1, 12/28/18). Baptist Hospitals seek to recover approximately $ 800,000 for claims between January 2017 and January 2018 for the alleged medically necessary and covered services provided to Medica Members. See Complaint at ¶¶ 13-101 (DE# 1-1, 12/28/18).

It is undisputed that the 2005 Medica Hospital Provider Agreement does not contain an arbitration provision. See Motion at 5 (DE# 9, 1/4/19). Medica relies on Section 3.2 of the 2005 Medica Hospital Provider Agreement, which implicitly incorporates the definition of "Hospital Manual" found in Section 1.24, and states:

3.2 Cooperation and Compliance. Provider agrees to use commercially reasonable efforts to cooperate with Plan's policies and procedures, including, without limitation, the Hospital Manual, the Peer Review/Quality Management Program, the Quality Assurance and Utilization Management Program. Provider will use best efforts to reasonably cooperate with the aforementioned policies and programs to the extent they do not conflict with the terms of this Agreement, are not in conflict with Provider's policies and procedures or do not require Provider to increase staffing levels as a result of changes in Plan's policies, procedures and rules. Provider and Plan agree to abide by all applicable Laws.

2005 Medica Hospital Provider Agreement § 3.2 (DE# 9-2, 1/4/19). The 2005 Medica Hospital Provider Agreement defines "Hospital Manual" in Section 1.24 as follows:

1.24 "Hospital Manual" means the publication maintained by Plan containing instructions and policies applicable to all of its Participating Hospitals, as amended and revised from time to time by Plan in its discretion. A hospital manual has been furnished to [Baptist Hospitals]. Provider shall reasonably cooperate with the provisions of the Hospital Manual provided the instructions and/or policies do not conflict with the terms of this Agreement or are not in conflict with Provider's policies and procedures. In the event of a conflict between any provision in the Hospital Manual and any provision in this Agreement, the terms of this Agreement shall govern.

2005 Medica Hospital Provider Agreement § 1.24 (DE# 9-2, 1/4/19).

Section 3.11 of the 2005 Medica Hospital Provider Agreement does not reference arbitration but provides:

3.11 Grievances and Disputes

Subject to any remedy provided by Law or this Agreement, Provider agrees to use commercially reasonable efforts to reasonably cooperate with [Medica's] Medicare Member Grievance procedures, as enacted by Plan from time to time, including all appeal and expedited appeal processes.

Response at 6 (DE# 18, 1/18/19) (represented as quoting redacted 2005 Medica Hospital Provider Agreement § 3.11 (DE# 9-2, 1/4/19) ).¹

The general section of the 2018 UHC Provider Guide contains the arbitration provision at issue and provides:

Resolving Disputes – Concerns or Complaint

If you disagree with the outcome of any claim appeal, or for any other dispute other than claim appeals, you may pursue dispute resolution.

If your concern/complaint is regarding:

• Your relationship with us, then send a letter containing the details to the address listed in your agreement with us. A representative will look into your complaint and try to resolve it through an informal discussion. If you disagree with the outcome of this discussion, an arbitration proceeding may be filed.

• Our administrative procedures, then follow the dispute procedures set forth in those benefit plans to resolve the concern or complaint. After following these procedures, if one of us remains dissatisfied, an arbitration proceeding may be filed as described below and in your agreement with us. For disputes regarding payment of claims, you must timely complete the claim reconsideration and appeal process as set forth in this guide prior to initiating arbitration.

• Your compliance with your provider agreement, then we will send you a letter containing the details. If we cannot resolve the complaint through informal discussions with you, an arbitration proceeding may be filed as described in your agreement with us. Arbitration proceedings will be held at the location described in your agreement with us, or if a location is not specified in your agreement, then at a location as described in the Arbitration Counties by Location section below.

2018 UHC Provider Guide, Ch. 9 Our Claims Process: Resolving Disputes - Concern or Complaint at p....