Holton v. Blue Cross and Blue Shield of S.C.

56 F.Supp.2d 1338

Michael Guy HOLTON, Plaintiff, v. BLUE CROSS and BLUE SHIELD OF SOUTH CAROLINA, et al., Defendants.

No. CIV.A. 98-A-889-S.

United States District Court, M.D. Alabama, Southern Division.

July 27, 1999.

COPYRIGHT MATERIAL OMITTED

Anne Laura R. Parker, Ozark, AL, Rhon E. Jones, Thomas J. Methvin, Beasley, Allen, Crow, Methvin, Portis & Miles, PC, Montgomery, AL, for Michael Guy Holton, plaintiffs.

David R. Boyd, Sterling G. Culpepper, Jr., Donald R. Jones, Jr., Balch & Bingham, Montgomery, AL, for Blue Cross and Blue Shield of South Carolina, Almetto Ins. Underwriter, defendants.

Robert P. MacKenzie, III, Reed R. Bates, Geoffrey S. Bald, Starnes & Atchison, Birmingham, AL, for Choice Behavioral Health Partnership, Pam Moore, Fictitious Defendant(s), A, B, and C, defendants.

MEMORANDUM OPINION

ALBRITTON, Chief Judge.

I. INTRODUCTION

This cause is before the court on a Motion for Summary Judgment, filed by Defendants Choice Behavioral Health Partnership ("Choice") and Pam Moore ("Moore") (collectively, "the Choice Defendants") on December 17, 1998 (Doc. # 21).

Holton originally filed his Complaint in the Circuit Court of Coffee County, Alabama on June 26, 1998, alleging state law claims for breach of contract, fraud, and conspiracy to defraud. Blue Cross and Blue Shield of South Carolina ("Blue Cross"), another Defendant, removed the case to this court on August 12, 1998, pursuant to 28 U.S.C. §§ 1442(a)(1) and 1446. Holton filed a Motion to Remand on September 10, 1998. Because Holton did not file a brief in support of his Motion to Remand, despite an order from the court requiring him to do so, his Motion to Remand was denied. The court has jurisdiction pursuant to 28 U.S.C. §§ 1442(a)(1) and 1367(a).

The Choice Defendants' Motion for Summary Judgment alleges that they are due summary judgment as a matter of law because Holton cannot produce substantial evidence to support claims of fraudulent misrepresentation or suppression, and because there has been no breach of a contract between Holton and Defendants. For reasons to be discussed, the Motion for Summary Judgment is due to be GRANTED.

II. SUMMARY JUDGMENT STANDARD

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "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 and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The party asking for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the `pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323, 106 S.Ct. 2548. The movant can meet this burden by presenting evidence showing there is no dispute of material fact, or by showing the district court that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Id. at 322-24, 106 S.Ct. 2548.

Once the moving party has met its burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, `designate' specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. 2548. To avoid summary judgment, the nonmoving party "must do more than show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). On the other hand, the evidence of the non-movant must be believed and all justifiable inferences must be drawn in its favor. Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

After the nonmoving party has responded to the motion for summary judgment, the court must grant summary judgment if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).

III. FACTS

The submissions of the parties establish the following facts:

Choice is a United States Department of Defense subcontractor which manages mental health care for members of the Civilian Health and Medical Program of the Uniformed Services ("CHAMPUS"), now known as TRICARE. See Moore Aff. at 1, ll. 8-10.¹ The prime contractor is Humana Military Healthcare Services. Id. As a managed care company, Choice authorizes and manages mental health services provided to CHAMPUS/TRICARE beneficiaries in parts of the southeastern United States. Defendant Pam Moore ("Moore") is an Area Manager for Choice; she is responsible for the day-to-day operations of the Birmingham Choice field office, which serves the Alabama area. See id. at 1, l. 16 through 2, l. 2.

Plaintiff Holton is a licensed professional counselor in the State of Alabama and a listed provider of mental health services under the CHAMPUS/TRICARE program. Holton's claims in this lawsuit arise from Defendants' alleged non-payment for mental health services provided by Holton to CHAMPUS/TRICARE beneficiaries.

Choice provides authorization to counselors such as Holton to perform mental health services for CHAMPUS/TRICARE members. Moore Aff. at 2, ll. 3-4. Choice does not pay claims; rather, it authorizes the performance of services, allowing service providers such as Holton to submit claims for payment to Blue Cross and Blue Shield of South Carolina ("Blue Cross and Blue Shield") and its subcontractor, Palmetto Government Benefits Administrator ("PGBA"),² which completes the processing and payment of claims. See Moore Aff. at 2, ll. 6-8.

Mental health services, with the exception of the initial eight (8) outpatient mental health visits and emergency visits, must be preauthorized by Choice for the service provider to receive payment under the CHAMPUS/TRICARE plan, and if mental health services are not properly authorized by Choice, PGBA will not consider a claim for payment to the service provider. See id. at 2, ll. 8-11; Ex. 1, TRICARE Provider Handbook, at 87. A copy of the TRICARE Provider Handbook (the "Handbook") was given to Holton's administrative assistant, Fran Walters, at a Choice training seminar in Dothan, Alabama on July 16, 1996. See Moore Aff. at 2, ll. 14-15.

Holton provided mental health counseling services to CHAMPUS/TRICARE members from July of 1996 through October of 1997. PGBA did not initially pay the claims submitted by Holton for these services. See Moore Aff. at 3, ll. 8-9. Choice became aware of a problem with the payment of Holton's claims in September of 1997. Id. at 3, ll. 11-13. On September 11, 1997, Moore contacted Holton's office and stated that she would investigate the situation if Holton would provide copies of the unpaid claims. Id. at 3, ll. 14-16.

On October 1, 1997, Moore³ visited Holton's office in order to assist with Holton's claims and was advised to obtain copies of the claims from Holton's attorney. Id. at 3, ll. 15-17. On October 2, 1997, Holton's attorney provided Choice copies of claims for forty-four (44) dates of services. Id. at 3, l. 18. A review of the claims revealed that no prior authorization had been requested or granted on thirty (30) claims which required authorization.⁴ Id. at 3, ll. 18-20.

On October 14, 1997, Moore met with Holton's attorney and provided further information on the status of the claims in a letter to Holton. Id. at 3, ll. 22-23. Holton alleges that Moore informed him on October 27, 1997 that the claims in question would be expedited and "hand carried" through to PGBA for payment. See Holton Aff.

Moore met with Holton again on November 5 and 6, 1997. Id. at 4, ll. 1-2. Holton states that at the November 5 meeting, a "grid" showing the status of the claims was presented and that none of the reasons given for Blue Cross' failure to pay the claims was "lack of pre-authorization." Holton Aff. at 3, ll. 7-14. Holton states that he handed Moore copies of Outpatient Treatment Reports ("OTRs") on November 6, 1997, and that when he asked her, "is this all you need to get these processed and paid," Moore responded "yes." Holton Aff. at 3, ll. 17-20. On November 12, 1997, Choice, through retroactive review, authorized the care performed by Holton. See id. at 4, ll. 10-11. Following Choice's authorization, Holton's claims were submitted to PGBA for consideration of payment. See id. at 4, ll. 10-11.

IV. DISCUSSION

As was earlier stated, Holton seeks to hold the Choice Defendants liable for fraudulent misrepresentation, suppression, conspiracy to defraud, and breach of contract. The Choice Defendants have moved for summary judgment as to each of Holton's claims.

A. Fraudulent Misrepresentation

The Choice Defendants argue that Holton cannot establish fraud on the part of Choice or Moore. Under Alabama law, to establish a claim for fraudulent misrepresentation, a plaintiff must establish: (1) a misrepresentation of a material fact; (2) made willfully to deceive, or recklessly without knowledge; (3) which was reasonably relied upon by the plaintiff under the circumstances; and (4) which caused damage as a proximate cause. See Foremost Ins. Co. v. Parham, 693 So.2d 409, 423 (Ala.1997) (adopting reasonable reliance standard and abandoning justifiable reliance standard). Holton claims that Moore made two misrepresentations to Holton.

First, Holton alleges that Moore told him that the claims in question would be expedited and "hand carried" through to PGBA for payment. See Holton Aff. As to this representation made by Moore, the court finds no evidence to support Holton's argument that this representation was false. Even under...