IHC Health Servs. v. Meritain Health Inc.

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IHC HEALTH SERVICES, INC., d/b/a PRIMARY CHILDREN'S MEDICAL CENTER, Plaintiff, v. MERITAIN HEALTH, INC., Defendant.

No. 2:19-cv-861

United States District Court, D. Utah

November 3, 2022

AMENDED MEMORANDUM DECISION AND ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

Howard C. Nielson, Jr. United States District Judge

On October 1, 2019, Plaintiff IHC Health Services, Inc., d/b/a Primary Children's Medical Center, sued Defendant Meritain Health, Inc., in state court, asserting claims for breach of contract and unjust enrichment. See Dkt No. 2-1. Meritain removed the suit to this court. See Dkt. No. 2. IHC moves for summary judgment on its breach of contract claim. See Dkt. No. 20. Meritain moves for summary judgment on both of IHC's claims. See Dkt. No. 19. The court grants IHC's motion and grants in part and denies in part Meritain's motion.

I.

On January 1, 2007, Plaintiff IHC entered into a Memorandum of Understanding with Aetna Health Management, LLC, and its affiliates. See Dkt. No. 20-1 at 4-27. The MOU established discounted rates for medical services provided by IHC facilities to members and enrollees of Aetna and its affiliates. See id. From October 15-18, 2013, N.E. received medical treatment at IHC's Primary Children's Hospital. See Dkt. No. 20-1 at 223. At the time of the treatment, N.E. was a beneficiary of a health insurance plan for which Defendant Meritain was the third-party claims administrator. See id; Dkt. No 19-1 at 3. At that time, and at all relevant times thereafter, Meritain was a subsidiary of Aetna. See Dkt. No. 38-1 at 49, 101, 155. But Meritain never paid for N.E.'s treatment, instead asserting that IHC had failed to itemize N.E.'s medical expenses in a proper and timely manner. See Dkt. No. 20-1 at 235-39. IHC sues to recover the cost of N.E.'s treatment. See Dkt. No. 2-1.

II.

Under Federal Rule of Civil Procedure 56, “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” A fact is material if it “might affect the outcome of the suit under the governing law”; a “dispute about a material fact is ‘genuine' . . . if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

When deciding a summary judgment motion, the court “must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150 (2000). “Thus, although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe.” Id. at 151. This includes evidence “that is contradicted and impeached” and “evidence that comes from interested witnesses.” Id. (cleaned up).

“When the moving party does not have the ultimate burden of persuasion at trial, it has both the initial burden of production on a motion for summary judgment and the burden of establishing that summary judgment is appropriate as a matter of law.” Pelt v. Utah, 539 F.3d 1271, 1280 (10th Cir. 2008). Under such circumstances, “[t]he moving party may carry its initial burden either by producing affirmative evidence negating an essential element of the non- moving party's claim, or by showing that the nonmoving party does not have enough evidence to carry its burden of persuasion at trial.” Id. (citation omitted).

But “if the moving party has the burden of proof, a more stringent summary judgment standard applies.” Id. In this situation, “to obtain summary judgment, [the moving party] cannot force the nonmoving party to come forward with ‘specific facts showing there [is] a genuine issue for trial' merely by pointing to parts of the record that it believes illustrate the absence of a genuine issue of material fact.” Id. (quotation omitted). “Instead, the moving party must establish, as a matter of law, all essential elements of the issue before the nonmoving party can be obligated to bring forward any specific facts alleged to rebut the movant's case.” Id.

III.

The court first addresses Meritain's argument that IHC's claims are preempted by the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. The court rejects this argument.

Congress enacted ERISA to

protect . . . participants in employee benefits plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44 (1987) (quoting 29 U.S.C. § 1001(b)). To “eliminate the threat of conflicting or inconsistent State and local regulation of employee benefit plans,” id. at 46 (cleaned up), Congress provided that, subject to specific enumerated exceptions, ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” covered by ERISA, 29 U.S.C. § 1144(a).

As the Supreme Court has explained, “Congress used the words ‘relate to'” in this provision “in their broad sense,” preempting any state law that “has a connection with or reference to” an ERISA benefits plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97-98 (1983). Indeed, this provision has “such ‘extraordinary pre-emptive power' that it ‘converts an ordinary state common law complaint into one stating a federal claim.'” Aetna Health Inc. v. Davila, 542 U.S. 200, 209 (2004) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)).

Nevertheless, ERISA does not preempt state law actions that relate to an ERISA benefits plan only in a “tenuous, remote, or peripheral” way. Shaw, 463 U.S. at 100 n. 21. It follows that state law claims that do “not affect the relations among the principal ERISA entities, the employer, the plan, the plan fiduciaries, and the beneficiaries as such, are not preempted by ERISA.” Hospice of Metro Denver, Inc. v. Group Health Ins. of Oklahoma, Inc., 944 F.2d 752, 756 (10th Cir. 1991) (cleaned up).

In Hospice of Metro Denver, the Tenth Circuit thus held that an “action brought by a health care provider to recover promised payment from an insurance carrier” was not preempted. Id. The court explained that such an action was “distinct from” more typical ERISA actions, such as those between plan participants and their insurers. Id. Although the complaint did specifically reference an ERISA plan, the plaintiff did not claim rights under the plan, allege a breach of the plan contract, or seek to “enforce or modify” the terms of the plan. Id. at 754. For those reasons, and because “[d]enying a third-party provider a state law action based upon misrepresentation by the plan's insurer in no way furthers the purposes of ERISA,” the court determined that a conclusion that the state law action was preempted “would stretch the ‘connected with or related to' standard too far.” Id. at 756.^[1]

Here also, IHC's action does not “not affect the relations among the principal ERISA entities, the employer, the plan, the plan fiduciaries, and the beneficiaries as such.” IHC does not claim rights under an ERISA plan, allege a breach of an ERISA plan contract, or seek to “enforce or modify” the terms of such a plan. Rather, it asserts a claim for breach of the MOU. To be sure, N.E. is a beneficiary of the Plan. But N.E. is not a party to this action and IHC's claim is neither based on an assignment of N.E.'s rights under the Plan nor otherwise derivative of those rights. To the contrary, N.E.'s right to receive benefits under the Plan is simply not at issue here. At bottom, then, IHC asserts a claim for damages, not for benefits. Cf. Franciscan Skemp Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare Tr. Fund, 538 F.3d 594, 599 (7th Cir. 2008). The court concludes that under these circumstances, as in Hospice of Metro Denver, holding that IHC's action is preempted “would stretch the ‘connected with or related to' standard too far.”^[2]

IV.

The court will next address IHC's claim for breach of contract. Under Utah law, “[t]he elements of a prima facie case for breach of contract are (1) a contract, (2) performance by the party seeking recovery, (3) breach of the contract by the other party, and (4) damages.” Bair v. Axiom Design, L.L.C., 20 P.3d 388, 392 (Utah 2001), overruled on other grounds by A.S. v. R.S., 416 P.3d 465 (Utah 2017).^[3] The court concludes that IHC has identified undisputed evidence establishing all of these elements and is thus entitled to summary judgment on this claim.

A.

To satisfy the first element, the existence of a valid contract, IHC must establish “offer and acceptance, competent parties, and consideration.” Golden Key Realty, Inc. v. Mantas, 699 P.2d 730, 732 (Utah 1985). The court concludes that IHC has done so here.

1.

IHC has included a copy of the MOU in its appendix. See Dkt. No. 20-1 at 4-221. It is evident from the face of the MOU that IHC offered to provide medical services to the members and enrollees of Aetna and its affiliates in exchange for payment at discounted rates set forth in the MOU. See id. at 5-221. Authorized representatives from IHC and Aetna signed the MOU, indicating their mutual acceptance of the agreement. See id. at 11. All of this amply establishes offer, acceptance, and consideration. And there can be no genuine dispute that the parties to the MOU were legally competent to enter into a binding contract.

To be sure,...