BrainBuilders, LLC v. Optum, Inc.

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BRAINBUILDERS, LLC., Plaintiff, v. OPTUM, INC., OPTUM SERVICES,INC., OPTUMHEALTH HOLDINGS, LLC, OPTUMHEALTH FINANCIALSERVICES, INC., OPTUM HEALTHCARE SOLUTIONS, LLC,OPTUMHEALTH CARE SOLUTIONS,INC., OXFORD HEALTH INSURANCE,INC., OXFORD HEALTH PLANS (NY), INC., OXFORD HEALTH PLANS (NJ), INC., OXFORD HEALTH PLANS LLC, UNITEDHEALTHCARE SERVICES LLC, UNITEDHEALTH GROUP, INC., UNITEDHEALTHCARE SERVICES, INC., UHIC HOLDINGS, INC., UNITED BEHAVIORAL HEALTH, UNITEDHEALTHCARE INSURANCE COMPANY, and JOHN DOES 1 - 20, JANE DOES 1 - 20, XYZ CORPORATIONS 1 - 20, and ABC PARTNERSHIPS 1 - 20, Defendants.

No. BER-L-8088-17

Superior Court of New Jersey, Law Division, Bergen

September 12, 2022

NOT TO BE PUBLISHED WITHOUT APPROVAL FROM THE COMMITTEE ON OPINIONS

Argued: August 26, 2022

Vafa Sarmasti, Esq., appearing on behalf of Plaintiff BrainBuilders, LLC.

Francis X. Manning, Esq. and Robert J Norcia, Esq., appearing on behalf of Defendants Optum, Inc., Optum Services, Inc. Optumhealth Holdings, Llc, Optumhealth Financialservices, Inc., Optum Healthcare Solutions, LLC, Optumhealth Care Solutions, Inc., Oxford Health Insurance, Inc., Oxford Health Plans (Ny), Inc., Oxford Health Plans (Nj), Inc., Oxford Health Plans LLC, Unitedhealthcare Services LLC, Unitedhealth Group, Inc., Unitedhealthcare Services, Inc., UHIC Holdings, Inc., United Behavioral Health, Unitedhealthcare Insurance Company, and John Does 1 - 20, Jane Does 1 - 20, XYZ Corporations 1 - 20, and ABC Partnerships 1 - 20.

OPINION

Honorable Robert C. Wilson, J.S.C.

FACTUAL BACKGROUND

THIS MATTER arises out of a dispute between BrainBuilders, LLC (hereinafter "BrainBuilders" or "Plaintiff"), an autism therapy services agency, and Optum, Inc., et. al., a healthcare benefits provider, and numerous affiliated entities (hereinafter "Optum" or "Defendants"). Several patients of BrainBuilders sought and/or received reimbursement from Optum for services rendered by BrainBuilders.

During the summer of 2017, BrainBuilders' owner and Clinical Director, its Chief Operations Officer, and its Director of Finance were arrested, along with 23 other residents of Lakewood, New Jersey. All parties were charged with conspiracy to defraud Medicaid by misrepresenting their income and eligibility to obtain benefits reserved to those most in need. News of the arrests was widely covered in the media. At the time, Optum was already reviewing BrainBuilders' claims because of the number of claims and amounts charged in comparison to BrainBuilders' peers.

In or about August 2017, BrainBuilders learned that Optum had sent letters to BrainBuilders patients sometime in July 2017. In one such letter, Optum told BrainBuilders patients that BrainBuilders "will no longer be reimbursed for services provided you and/or your child/ren due to potential insurance fraud and other violations of state and federal law." The letter further invited patients to make arrangements for continued treatment with a practitioner approved by Optum.

In subsequent letters sent by Optum, recipients were told that Optum required preauthorization of services provided by BrainBuilders, due to quality of care or member safety concerns. The letters further averred that BrainBuilders' services were not and did not amount to professional care. It is BrainBuilders' contention that such statements are false and were made with the intention of damaging BrainBuilders' relationships with its patients. It is Defendants' contention that any statements made to BrainBuilders' patients were truthful and made after a lengthy investigation which affirmed the necessity of making such statements.

PROCEDURAL HISTORY

On November 28, 2017, Plaintiff filed a Complaint solely against Optum in the Superior Court of New Jersey, Law Division, Bergen County. On January 16, 2018, Optum, Inc. removed the matter to the United States District Court for the District of New Jersey, asserting diversity jurisdiction. On May 31, 2019, U.S. District Court Judge John Vazquez granted BrainBuilders' motion to amend, adding 15 new Defendants, including a New Jersey company, and remanded the matter to this Court for lack of subject matter jurisdiction. Shortly thereafter, Plaintiff filed its First Amended Complaint, asserting the following seven causes of action: (1) conspiracy and aiding in the commission of a tort; (2) tortious interference with current business relations; (3) tortious interference with prospective economic advantage; (4) negligence; (5) trade libel/false light; (6) defamation, slander, and libel; and (7) unjust enrichment/quantum meruit.

Through three case management orders, this Court extended the discovery end date from October 22, 2019, to January 10, 2021, and finally to April 15, 2022. Defendants produced over 2,700 documents in December 2020 and responded to written discovery in February 2021. Plaintiff produced over 18,000 documents on August 31, 2020, and November 10, 2020. This Court, by Order dated May 13, 2022, denied Plaintiff's motion to extend the April 15, 2022, discovery end date. Defendants filed the instant motion on June 24, 2022.

SUMMARY JUDGMENT STANDARD

The New Jersey procedural rules state that a court shall grant summary judgment "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 challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). In Brill v. Guardian Life Insurance Co., 142 N.J. 520 (1995), the Supreme Court set forth a standard for courts to apply when determining whether a genuine issue of material fact exists that requires a case to proceed to trial. Justice Coleman, writing for the Court, explained that a motion for summary judgment under R. 4:46-2 requires essentially the same analysis as in the case of a directed verdict based on R. 4:37-2(b) or R. 4:40-1, or a judgment notwithstanding the verdict under R. 4:40-2. Id. at 535-536. If, after analyzing the evidence in the light most favorable to the non-moving party, the motion court determines that "there exists a single unavoidable resolution of the alleged dispute of fact, that issue should be considered insufficient to constitute a 'genuine' issue of material fact for purposes of R. 4:46-2." Id. at 540.

RULE OF LAW AND DECISION

Optum's Statements are Subject to Qualified Immunity

"In determining whether the qualified privilege is a defense, it is irrelevant whether the statement at issue was defamatory. Thus, a court need not decide what normally is the threshold question of law, that is, whether a statement was 'reasonably susceptible of a defamatory meaning." Feggans v. Billington, 291 N.J.Super. 382, 393 (App Div. 1996). Instead, the court only examines the "relationship of the parties, the persons to whom the statement is communicated, the circumstances attendant to the statement, and the manner in which the statement is made." Id. The "critical test of the existence of the privilege is the circumstantial justification for the publication of the [allegedly] defamatory information," which includes consideration of the "appropriateness of the occasion on which the [allegedly] defamatory information is published, the legitimacy of the interest thereby sought to be protected or promoted, and the pertinence of the receipt of that information by the recipient." Erickson v. Marsh &McLennan Co., Inc., 117 N.J. 539, 564 (1990).

The State of New Jersey heavily regulates the business of health insurers through both statute and regulations promulgated by the Department of Banking and Insurance. There are statutes and regulations governing a health insurer's obligation to communicate with its members and healthcare providers about decisions on prior authorizations and claims submissions. See, e.g., N.J.S.A. 17B:30-48 et seq. Likewise, there are statutes and regulations obligating a health insurer to identify, investigate, root out, and take steps to prevent the occurrence of insurance fraud. See, e.g., N.J.S.A. 17:33A-1 et seq.; N.J.A.C. 11:22-3.8. In conjunction with their statutory and regulatory obligations, health insurers are also contractually required by health benefits plans to communicate with members and, therefore, deal with them in good faith regarding all things that implicate the availability of benefits under a plan. See, e.g., N.J.A.C. 11:4-42.8 (requiring all health benefits plans requiring prior authorization to state the process and timeframe for obtaining prior authorization and for appealing any adverse determination).

The statements communicated to Plaintiff and its patients in the July 2017 and August 2017 Letters are plainly subject to and protected by a qualified privilege. Upon deciding to suspend authorizations for services rendered by Plaintiff, Optum was duly obligated to inform patients of that decision. The July 2017 Letters, which communicated to patients the true reason for the suspension, which was the dubious insurance claims and potential violations of state or federal law, was a legally necessary course of conduct.

Even prior to the arrests of Plaintiff's owner and Clinical Director, Chief Operating Officer, and Director of Finances for conspiracy to commit Medicaid fraud, Optum had already begun reviewing the dollar amount and volume of claims submitted by Plaintiff because of suspicious activity; namely the high volume of claims and recent increase in the number of patients being treated, including patients from the same family. Upon receiving news of the arrests, Optum opened a formal fraud investigation into Plaintiff's activities. This led to evidence which suggested that Plaintiff had potentially committed insurance fraud. The...