Montgomery Cnty. v. Managed Care Innovations, LLC

261 F.Supp.3d 567

MONTGOMERY COUNTY, MARYLAND, Plaintiff,

v.MANAGED CARE INNOVATIONS, LLC, Defendant.

Civil No. PJM 16–713

United States District Court, D. Maryland.

Signed August 10, 2017

Jeffrey William Stickle, Patricia Victoria Haggerty, Scott R. Foncannon, Office of the County Attorney for Montgomery County, Rockville, MD, for Plaintiff.

Devin James Stone, Scott N. Godes, Barnes & Thornburg LLP, Washington, DC, Kenneth M. Gorenberg, Barnes and Thornburg LLP, Chicago, IL, for Defendant.

MEMORANDUM OPINION

PETER J. MESSITTE, UNITED STATES DISTRICT JUDGE

Montgomery County, Maryland (the "County") sues Managed Care Innovations, LLC ("MCI"), alleging that, over the time that MCI provided third-party claims administration services to the County, it mismanaged dozens of claims against the County, a self-insurer, to the considerable detriment of the County.

Focusing on the largest of those allegedly mismanaged claims, MCI filed a Motion for Summary Judgment (ECF No. 36), to which the County filed a Response in Opposition and Cross–Motion for Summary Judgment (ECF No. 42). The Court held a hearing on June 8, 2017, at which it granted the County's Cross–Motion for Summary Judgment as to the issue of liability only, and took all remaining issues in the cross-motions under advisement. ECF Nos. 56–58.

For the reasons set forth in this Memorandum Opinion, the County's Cross–Motion for Summary Judgment (ECF No. 42) will now be GRANTED IN PART and DENIED IN PART and MCI's Motion for Summary Judgment (ECF No. 36) will be DENIED .

I. FACTUAL AND PROCEDURAL HISTORY

On April 30, 2007, the County and MCI entered into a written contract (the "Contract") requiring MCI, for the period of July 1, 2007 to June 30, 2009, to provide third-party claims administration services ("TPA Services") to the County. Excerpts of the Parties' Contract, the County's Cross–Mtn. for Summary Judgment, Exhibit 1, Appx. 1–6, ECF No. 44. The term of the Contract was later extended to June 30, 2015. The County's Cross–Mtn. for Summary Judgment 2, ECF No. 42.

The Contract authorized MCI to engage a subcontractor to perform relevant services and, from the start of the term until June 30, 2012, MCI engaged Gallagher Bassett as a subcontractor to perform the TPA Services for the County.¹ Cross–Mtn. for Summary Judgment at 2.

The County's Request for Proposal ("RFP"), which was incorporated by reference into the Contract, laid out the parties' obligations. Excerpts of the Parties' Contract at Appx. 2; Extract from Request for Proposal, Cross–Mtn. for Summary Judgment, Exhibit 2, Appx. 17–34, ECF No. 44. Pursuant to the RFP, MCI assumed several obligations regarding the handling of cases against the County, the nature of its cooperation with the County, and the need for timeliness in the handling of the claims. Id. at 28–31. The RFP also required MCI to abide by all requirements of the Maryland Workers' Compensation Act, Code of Maryland Regulations, and any other rules formal or otherwise implemented by the Maryland Workers' Compensation Commission. Id. at 28. MCI guaranteed that all work performed under the Contract would be accomplished in a workmanlike manner and in compliance with all laws, ordinances, and regulations. Excerpts of the Parties' Contract at Appx. 10–11. MCI agreed to indemnify and hold the County harmless for any loss and any other damage (including incidental and consequential damages) that might be suffered by reason of the contractor's negligence or failure to perform its contractual obligations. Id. at 11.

On November 24, 2015, the County filed a Complaint against MCI in the Circuit Court for Montgomery County, Maryland, alleging breach of contract, breach of express warranty, and indemnification. See Compl. On March 10, 2016, MCI answered the Complaint and removed the case to this Court. Notice of Removal, ECF No. 1. A Scheduling Order was issued on April 13, 2016. Scheduling Order, ECF No. 15.

Subsequently, the parties filed a Consent Motion to Alter/Amend the Scope of the Scheduling Order, indicating that while the County was alleging that MCI mismanaged some 25 claims as to which the County was self-insured, one claim (the "Christopher V. Claim") in particular constituted more than half of the County's alleged damages. ECF No. 23. Believing that resolution of the Christopher V. Claim (whether by dispositive motion, settlement, trial, or otherwise) might facilitate resolution of the entire suit, the parties sought to defer discovery and motion practice regarding the other 24 claims. Id. Accordingly, the parties requested that the Court modify its Scheduling Order so that discovery and motion practice regarding claims other than Christopher V. would be deferred until further order. The Court granted the Consent Motion. ECF No. 24.

A. The Christopher V. Claim

The undisputed facts of the Christopher V. claim are as follows.

On Thursday, April 19, 2012 at 5:40 pm, Christopher V.—a volunteer firefighter with the Rockville Volunteer Fire Department, then aged 28—was riding his motorcycle when he was involved in a severe accident. Excerpts of the Gallagher Bassett Claims Notes, Cross–Mtn. for Summary Judgment, Exhibit 7, Appx. 77–107, ECF No. 44. According to his supervisor, Christopher V. was traveling from his normal station, Fire Station 3 in Rockville, Maryland, to Fire Station 14 in Beallsville, Maryland to attend an assigned meeting. Email from Alan Hinde, MCI's Mtn. for Summary Judgment, Exhibit 3, App. 8, ECF No. 37. While traveling west on Darnestown Road in Montgomery County, Christopher V. attempted to pass five or six cars on the left—crossing a double yellow line in doing so—and ultimately collided with the lead car he was attempting to pass, as it was legally turning left in front of him onto Berryville Road. Police Report, Cross–Mtn. for Summary Judgment, Exhibit 5, Appx. 44–45, ECF No. 44.

The police report indicates that the driver of the car with which Christopher V. collided, Salem Abadi, did not contribute to the accident but that it was Christopher V. who caused the accident by failing to yield the right of way. Id. The County says photographs taken at the scene indicate that Christopher V. had driven down a hill just prior to the accident and that, after the accident, the tachometer of the motorcycle was found to be stuck at "8,5000 revolutions per minute" (suggesting that this was the measure of speed at the time of the crash). Cross–Mtn. for Summary Judgment, Exhibit 6, Appx. 46–76, ECF No. 44.²

Christopher V. suffered devastating permanent injuries, was temporarily placed into an induced coma, and to this day suffers from serious brain damage. Excerpts of the Gallagher Bassett Claims Notes at Appx. 104–106.

On April 20, 2012, the day following the accident, Timothy Jones, President of Rockville Volunteer Fire Station 3, reported the accident to the County for workers compensation purposes. Id. On Sunday, April 22, 2102, MCI's subcontractor Gallagher Bassett assigned the claim to adjuster Nina Hill. Id. Over the course of the next two weeks, Hill communicated with representatives of the Rockville Fire Department (including Jones and Alan Hinde, Division Chief of the Volunteer Services of the Montgomery County Fire and Rescue Service) as well as County employees (including Terry Fleming and Lissa Bales, respectively the Chief and Claims Manager of the Montgomery County Division of Risk Management and Wendy Karpel, the Supervisor of the Workers Compensation Unit in the County's Office of County Attorney).Id. at 77–107. A key issue discussed among all these individuals was whether Christopher V. was on duty at the time of the accident. Id. at 94. Various means of assessing this fact were suggested to Hill. Id. at 77–107.

In an oral conversation with President Jones of Fire Station 3, Hill was advised that, although Christopher V. was not paid for his mileage to attend a meeting on April 19, 2012 (one of the means of assessing whether he was on duty that day), an entry on Fire Station 3's computer indicated that Christopher V. had logged onto the computer at Fire Station 3 on April 19, 2012 (suggesting that he "clocked in" at Fire Station 3 prior to the accident, another one of the means of assessing whether he was on duty that day). Email from Wendy Karpel, Mtn. for Summary Judgment, Exhibit 3, App. 14–16, ECF No. 37; Email from Lissa Bales, Mtn. for Summary Judgment, Exhibit 3, App. 18–20, ECF No. 37. Jones subsequently sent Hill an email in which he may have copied and pasted information from the Fire Station 3 computer's log-in system, which he suggested "show[ed] that [Christopher V.] signed in to attend the MCVFRA Meeting on April 19, 2012." Email from Lissa Bales, Mtn. for Summary Judgment, Exhibit 3, App. 18–20. Hill forwarded Jones' email to Bales at the County Division of Risk Management and asked Bales if she had a recommendation as to how she might secure a copy of the actual log. Id. Bales directed Hill to call President Jones again and "flesh out further what other evidence he can supply on this." Id.³ Hill called Jones, who said he would ask the "IT person." Excerpts of the Gallagher Bassett Claims Notes at Appx. 89. Hill's claim notes indicate that she told Jones that the information he had provided was "not sufficient documentation." Id. Hill, however, never followed up with Jones regarding this necessary documentation when Jones failed to supply it. See generally id.

On May 9, 2012, Hill received a copy of the police report and summarized it in her claim notes. Id. at 90. The notes mentioned that Christopher V. had illegally passed five or six vehicles proceeding outside a double yellow line. Id. Hill called Abadi (the driver of the lead car involved in the accident), but Abadi refused to speak with her. Id. at 90. Hill's claim notes indicate that she never discussed the potential implications of the police report, including the possible defense of willful misconduct on Christopher V.'s part, with her supervisor. See...