Emerus Hosp. v. Health Care Serv. Corp.

EMERUS HOSPITAL, CR EMERGENCY ROOM, LLC, TOMBALL EXPRESSMEDICAL CENTER, LLC, SUGAR LAND 24 HOUR HOSPITAL, LLC, SAN FELIPEMEDICAL CENTER, LLC, CRAIG RANCH EMERGENCY HOSPITAL, LLC, TOMBALLEMERGENCY PHYSICIANS, PA, TOWN & COUNTRY EMERGENCY PHYSICIANS, PA,and CR EMERGENCY PHYSICIANS, PA, Plaintiffs, v. HEALTH CARE SERVICE CORPORATION, a Mutual Legal Reserve Company, and BLUECROSS BLUE SHIELD OF TEXAS, a division of Health Care Service Corporation, aMutual Legal Reserve Company, Defendants.

No. 13 C 8906

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

April 6, 2020

Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiffs Emerus Hospital, CR Emergency Room, LLC, Tomball Express Medical Center, LLC, Sugar Land 24 Hour Hospital, LLC, San Felipe Medical Center, LLC, Craig Ranch Emergency Hospital, LLC, Tomball Emergency Physicians, PA, Town & Country Emergency Physicians, PA, and CR Emergency Physicians, PA have brought a second amended complaint against defendants Health Care Service Corporation ("HCSC") and Blue Cross Blue Shield of Texas ("BCBSTX")¹ alleging that defendant violated the Texas Prompt Pay Act ("TPPA"), §§ 1301.101, 1301.202, 843.001-843.464 of the Texas Insurance Code. On March 23, 2017, thecourt granted defendant's motion for partial summary judgment and denied plaintiffs' motion for partial summary judgment. Emerus Hosp. v. Health Care Serv. Corp, 247 F.Supp.3d 944 (N.D. Ill. 2017). The parties then engaged in a lengthy and contentious discovery process administered by then Magistrate Judge Rowland. After that process was complete, defendant filed a second motion for summary judgment [Doc. 519]. Plaintiffs countered with their own second motion for summary judgment [Doc. 530]. While those motions were being briefed, plaintiff filed a motion seeking reconsideration of the court's decision denying plaintiffs' motion to remand [Doc. 569] the case back to the Circuit Court of Cook County, Illinois, from which it had been removed on Dec. 13, 2013. All three motions, along with several motions to strike declarations and expert reports submitted in support of the summary judgment motions, are fully briefed and ready for resolution. For the reasons described below, plaintiffs' motions to remand and for summary judgment are denied. Defendant's motion for summary judgment is granted.

BACKGROUND

Plaintiffs are health care providers and physicians that provide emergency care services. Defendant is an insurer as defined under the TPPA. Plaintiffs allege that from November 8, 2009, to the present, they have provided emergency care to patients insured by defendant. At all times relevant to the allegations, plaintiffs were out-of-network, or nonpreferred, providers with defendant.

Plaintiffs allege that during the relevant time period "Emerus Hospital was the 'd/b/a' under which each of the LLC entities conducted business and submitted bills or 'claims' to Defendants." According to plaintiffs, Emerus Hospital and the LLC plaintiffs were licensed health care providers with National Provider Identifier ("NPI") numbers through which healthcare claims were submitted to defendant for payment. From November 8, 2009, through the present, the Professional Association ("PA") plaintiffs employed licensed emergency care physicians to work as independent contractors providing emergency care at the LLC entities. Plaintiffs allege that the physicians' services were billed to defendant through the NPI numbers of the PA entities or their own NPI numbers.²

Plaintiffs complain that, in violation of the statutory provisions of the TPPA, defendant "improperly underpaid, late paid, or wholly failed to pay" clean claims submitted for emergency care services provided to patients insured by defendant. As a result, plaintiffs allege that they suffered substantial damages. Plaintiffs seek to recover the full amount of the claims that defendant allegedly underpaid or denied, as well as penalties for late paid claims under the TPPA.

DISCUSSION

I. Remand

As noted, the case was originally filed in state court. Defendant removed the case to this court on the basis that the Employee Retirement Income Security Act ("ERISA") completely preempted certain of plaintiffs' claims, giving the court federal question jurisdiction. Plaintiffs moved to remand, arguing that they had executed irrevocable waivers of assignment of ERISA benefits prior to commencing the lawsuit. The court denied that motion, applying the 2 part test established in Aetna Health Inc. v. Davila, 542 U.S. 200, 201 (2004), for determining whether ERISA completely pre-empts a state law cause of action: "if an individual, at some point in time could have brought his claim under ERISA §502(a)(1)(B) and" where no other independentlegal duty is implicated by a defendant's action, the individual's cause of action is completely pre-empted by ERISA §502(a)(1)(B). Davila, 542 U.S. at 201.

Plaintiffs argued that they could not have brought their claims under ERISA because of the written waivers. The court rejected this argument, concluding that "prior to the execution of the written waivers, from November 2009, to June 2013," plaintiffs held themselves "out to be [the] assignee[s] of the beneficiaries, submitting requests for payment directly to [defendant]. Consequently, during this time, [plaintiffs] could have brought [their] claim[s] under ERISA §502(a)(1)(B)." Emerus Hosp. Partners v, Health Care Serv. Corp., 41 F.Supp.3d 695, 699 (N.D. Ill. 2014). Thus, the court concluded that plaintiff had derivative standing under ERISA. Id. at 700.

In their current motion, plaintiffs argue that defendant is now taking the position in its summary judgment motion that the patient assignments, the validity of which formed the basis of the court's earlier opinion, are invalid by virtue of the irrevocable waivers executed before the lawsuit was filed. According to plaintiffs, this means that the court does not have subject matter jurisdiction.

Plaintiffs misconstrue both defendant's current position as well as the court's earlier opinion. Plaintiffs had derivative standing to bring ERISA claims from 2009 to 2013. As a result, the court concluded that the waivers were an attempt to artfully plead the complaint by disguising the federal claims. Id. The court never held that the waivers were invalid. Because the waivers are valid, plaintiffs cannot now plead a claim under ERISA, which is what defendant has argued in its motion for summary judgment. And, as defendant notes, the availability of a federal remedy is not a prerequisite for federal preemption, and the inability to bring a claimunder ERISA after removal is not unusual. See Lister v. Stark, 890 F.2d 941, 946 (7^th Cir. 1989). Defendant has never argued, and the court never found, that the waivers were invalid. Consequently, plaintiffs' motion to reconsider remand [Doc. 567] is denied.

II. Motions for Summary Judgment

A. Legal Standard

Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The movant bears the burden of establishing both elements, Becker v. Tenebaum-Hill Associates, Inc., 914 F.2d 107, 110 (7th Cir. 1990), and all reasonable inferences are drawn in the non-movant's favor. Fisher v. Transco Services - Milwaukee, Inc., 979 F.2d 1239, 1242 (7th Cir. 1992). If the movant satisfies its burden, then the non-movant must set forth specific facts showing there is a genuine issue for trial. Nitz v. Craig, 2013 WL 593851, at *2 (N.D. Ill. Feb. 12, 2013). In doing so, the non-movant cannot simply show some metaphysical doubt as to the material facts. Pignato v. Givaudan Flavors Corp., 2013 WL 995157, at *2 (N.D. Ill. March 13, 2013) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). Summary judgment is inappropriate when "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

B. Defendant's Motion

Defendant raises three basic arguments to support its motion for summary judgment. First it argues that the TPPA does not provide penalties to out-of-work providers because they do not have a "contracted rate." Second, defendant argues that ERISA either completely orexpressly preempts any of plaintiffs' TPPA claims that relate to benefits provided to members of fully insured ERISA Benefit Plans. Finally, defendant argues that plaintiffs have presented no evidence to establish liability under the TPPA for any claims submitted, including claims not preempted. The court will address each argument in turn.

1. Penalties

Sections 1301 and 843 of the TPPA³ require an insurer that has received a clean claim to make a determination within a specified amount of time as to whether the claim is payable. Within that time the insurer "must either (1) pay the claim, (2) partially pay and partially deny the claim and notify the provider in writing of the reason for partial denial, or (3) deny the claim in full and notify the provider in writing of the reason for denial." Health Care Serv. Corp. v. Methodist Hops. of Dallas, 814 F.3d 242, 245 (5^th Cir. 2016). If an insurer fails to comply with these requirements, sections 1301.137 and 843.342 impose "a range of penalties for late payments of claims determined to be payable." Id. The statute does not explicitly give out-of-network providers, like plaintiffs, the right to actual damages or penalties, but in ruling on defendant's motion to dismiss the original complaint, this court held that under §§ 1301.069 and 843.351 "a non-preferred provider may ... seek payment under the TPPA," and "out-of-network emergency care providers [may] seek penalties and fees for delayed payment." Emerus Hosp., 2014 WL 4214260 at *3.

After plaintiffs filed their second amended complaint, defendant again moved to dismiss, raising a number of grounds,...