George Raymond Williams, M.D., Orthopaedic Surgery, LLC v. Bestcomp, Inc.

333 So.3d 461

George Raymond WILLIAMS, M.D., Orthopaedic Surgery, A Professional Medical LLC, et al.

v.BESTCOMP, INC., et al.

20-106

Court of Appeal of Louisiana, Third Circuit.

December 15, 2021

Patrick J. McShane, Carl E. Hellmers, III, D. Burke Stough, Frilot L.L.C., 100 Poydras Street, Suite 3700, New Orleans, Louisiana 70163, (504) 599-8000, COUNSEL FOR DEFENDANT/APPELLANT: Landmark American Insurance Company

George D. Fagan, Leake & Andersson LLP, 1100 Poydras Street, Suite 1700, New Orleans, Louisiana 70163, (504) 585-7500, COUNSEL FOR DEFENDANT/APPELLANT: Chartis Specialty Insurance Company

Thomas A. Filo, Somer G. Brown, Cox, Cox, Filo, Camel & Wilson, LLC, 723 Broad Street, Lake Charles, Louisiana 70601, (337) 436-6611, COUNSEL FOR PLAINTIFFS/APPELLEES: George R. Williams, M.D., Orthopaedic Surgery, A Professional Medical L.L.C., et al.

Patrick C. Morrow, James P. Ryan, Morrow, Morrow, Ryan, Bassett & Haik, 324 West Landry Street, Opelousas, Louisiana 70570, (337) 948-4483, COUNSEL FOR PLAINTIFFS/APPELLEES: George R. Williams, M.D., Orthopaedic Surgery, A Professional Medical L.L.C., et al.

Stephen B. Murray, Stephen B. Murray, Jr., Arthur M. Murray, Murray Law Firm, 909 Poydras Street, Suite 2150, New Orleans, Louisiana 70112-4000, (504) 525-8100, COUNSEL FOR PLAINTIFFS/APPELLEES: George R. Williams, M.D., Orthopaedic Surgery, A Professional Medical L.L.C., et al.

John S. Bradford, William B. Monk, Stockwell, Sievert, Viccellio, Clements & Shaddock, L.L.P., One Lakeside Plaza, Fourth Floor, Lake Charles, Louisiana 70601, (337) 436-9491, COUNSEL FOR PLAINTIFFS/APPELLEES: George R. Williams, M.D., Orthopaedic Surgery, A Professional Medical L.L.C., et al.

Court composed of Elizabeth A. Pickett, John E. Conery, and Jonathan W. Perry, Judges.

PERRY, Judge.

This matter arises from alleged violations of the Louisiana Preferred Provider Organization Act ("PPO Act"), La.R.S. 40:2201 –2210. Defendant excess insurers Chartis Specialty Insurance Company ("Chartis") and Landmark American Insurance Company ("Landmark") (collectively "Appellants") suspensively appeal several adverse rulings which resulted in judgment in the amount of $5 million against each, together with legal interest and court costs. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

Louisiana health care providers ("Plaintiffs") filed a petition for damages and class certification on September 30, 2009, alleging their workers’ compensation medical bills were discounted pursuant to PPO agreements without the benefit of notice as required by La.R.S. 40:2203.1. Plaintiffs’ suit was initially filed solely against Bestcomp, Inc. ("Bestcomp"), based on allegations that as a group purchaser under La.R.S. 40:2202(3), Bestcomp failed to comply with the mandatory notice provisions contained in Subsection B of La.R.S. 40:2203.1 and, thus, was liable for damages under Subsection G thereof.¹

Plaintiffs filed an amended petition on January 11, 2011, naming Advantage Health Plans, Inc., CCMSI Holdings, Inc.,² and Stratacare, Inc. ("Stratacare"), as additional group purchasers liable for damages for failing to follow the mandatory notice provisions. Plaintiffs alleged Stratacare entered into PPO agreements for alternative rates of pay ("PPO discounts") on its own behalf and on behalf of its clients.

Plaintiffs’ fifth amended petition named Cannon Cochran Management Services, Inc. ("Cochran") as another alleged group purchaser subject to damages under La.R.S. 40:2203.1(G). In its answer, Cochran filed a third-party demand against Rehab Review, Inc. ("Rehab Review"). According to Cochran, Rehab Review "performed bill review services of health care providers who have rendered medical services to workers’ compensation patients in Louisiana" and "applied PPO discounts to the bills of [Plaintiffs] ostensibly pursuant to the providers’ respective contracts with Bestcomp." Cochran further alleged "the activities of Rehab Review respecting the Bestcomp contracts and plaintiffs’ bills, are the same as or substantially similar to the activities of defendant Stratacare" and so "to the extent Stratacare is deemed to be a ‘Group Purchaser’ ... then Rehab Review is also a ‘Group Purchaser’ subject to statutory penalties for the discounts applied by it to providers’ bills without prior notice." Cochran contended Rehab Review was liable for damages applicable to any discount applied in violation of La.R.S. 40:2203.1.

Relevant to this appeal, on October 1, 2013, Plaintiffs’ sixth amended petition added Stratacare's insurers—Chartis, Landmark, Darwin Select Insurance Company ("Darwin"), Illinois Union Insurance Company ("Illinois Union"), and Westchester Surplus Lines ("Westchester")—as defendants pursuant to the direct-action statute, La.R.S. 22:1269. Presently, only Chartis and Landmark remain defendants.

Several pre-trial dispositive motions were filed prior to class certification in the instant matter.³ In motions for summary judgment, Appellants argued Stratacare was not a group purchaser under La.R.S. 40:2202(3) and was not liable for damages under La.R.S. 40:2203.1. Appellants further alleged that certain terms and exclusions within their respective insurance policies barred coverage for Plaintiffs’ claims against Stratacare. The trial court deferred consideration of these motions until after its adjudication of the issue of class certification.

By judgment dated March 8, 2017, the trial court certified the following class: "All medical providers who have provided services to workers’ compensation patients as contemplated in La.R.S. 23:1201, et seq., and whose bills have been discounted after January 1, 2000, pursuant to a preferred provider organization agreement, as defined in La.R.S. 40:2202, by and through Bestcomp and Stratacare." This court affirmed the class certification. See Williams v. Bestcomp, Inc. , 17-478 (La.App. 3 Cir. 1/4/18), 237 So.3d 80.

Following class certification, Plaintiffs filed a motion for summary judgment, contending Stratacare was a group purchaser, failed to comply with the notice requirements of La.R.S. 40:2203.1, and applied PPO discounts to Plaintiffs’ medical bills by virtue of its contract with Bestcomp and, in turn, its contract with third-party defendant, Rehab Review. Plaintiffs further asserted that their claims against Stratacare fell within the Insuring Agreements of both Appellants’ excess liability insurance policies and that the total amount of Stratacare's liability exceeded the available $5 million coverage provided therein. Plaintiffs submitted the affidavit of Robert A. Ehlers, CPA, in support of their motion. Mr. Ehlers reviewed Stratacare's corporate records and identified a total of 11,126 PPO discounts (from the first date of service only) taken by Rehab Review, Stratacare's client and third-party defendant herein. The number of discounts multiplied by $2,000 equaled $22,252,000.

Next, Appellants filed peremptory exceptions of prescription or, alternatively, no right of action. Appellants argued Plaintiffs’ claims are delictual in nature and, as such, are prescribed. See La.Civ.Code art. 3492. The latter exception challenged Plaintiffs’ ability to pursue Appellants, as insurers, in a direct action should Plaintiffs’ claims be deemed contractual in nature. See La.Civ.Code art. 3499.

At a hearing on the parties’ cross-motions for summary judgment and Appellants’ exceptions, held on September 28, 2018, the trial court found Stratacare to be a group purchaser liable for damages for failing to follow the mandatory notice provisions of La.R.S. 40:2203.1. Relying upon the affidavit of Mr. Ehlers, the trial court further ruled Plaintiffs proved sufficient violations, with each violation being subject to a damage award of $2,000 pursuant to La.R.S. 40:2203.1(G). The trial court took under advisement the remaining motions for summary judgment and peremptory exceptions filed by Appellants.

In March 2019, Appellants filed additional peremptory exceptions and motions for summary judgment.⁴ Essentially, Appellants argued res judicata barred coverage for Plaintiffs’ claims against Stratacare under each Appellants’ second excess policy, and untimely notice barred coverage under each Appellants’ first excess policy.

Roughly a week later, on March 26, 2019, the trial court issued written Reasons for Judgment on the motions and exceptions that were argued on September 28, 2018, denying all relief sought by Appellants. On June 20, 2019, a judgment was signed, denying Appellants’ motions for summary judgment and peremptory exceptions, granting Plaintiffs’ motions for summary judgment, and granting judgment in the amount of $5 million each against Chartis and Landmark, together with legal interest and all costs of court.

Also on June 20, 2019, the trial court issued a Per Curiam, denying the peremptory exceptions of res judicata and/or motions for summary judgment which Appellants filed in March 2019. The trial court explained, in pertinent part:

As to the March 2019 Exceptions and/or Motions for Summary Judgment filed by Chartis and Landmark, the court views those motions in the nature of Motions for New Trial based upon arguments of newly discovered evidence that had arisen after the September 28, 2018 arguments. Without a written signed judgment, any motion for a new trial would have been premature.

Wishing to preserve for the defendants for further review in this matter any substantive rights that they may have, the Court denies the March 29, [sic] 2019 Exceptions and/or Summary Judgment motions filed by Chartis and Landmark, reserving the rights to Chartis and Landmark to either file a Motion for New Trial now that a written judgment on the Exceptions and/or Summary Judgment motions argued September 28, 2018 has been filed or directly appeal the newly executed judgment.

Appellants filed motions for new trial, again arguing res judicata barred coverage for Plaintiffs’ claims against Stratacare under each Appellants’ second excess...