Port Med. Wellness, Inc. v. Conn. Gen. Life Ins. Co.

24 Cal.App.5th 153

233 Cal.Rptr.3d 830

PORT MEDICAL WELLNESS, INC., Plaintiff and Appellant,

v.CONNECTICUT GENERAL LIFE INSURANCE COMPANY, et al., Defendants and Respondents.

B275874

Court of Appeal, Second District, Division 3, California.

Filed May 10, 2018

Shernoff Bidart & Echverria, William M. Shernoff, Travis M. Corby, Claremont; Law Offices of Randy D. Curry, Randy D. Curry, Newport Beach; The Arkin Law Firm and Sharon J. Arkin, for Plaintiff and Appellant.

Gibson, Dunn & Crutcher, Richard J. Doren, Timothy W. Loose and Michael Holecek, Los Angeles, for Defendant and Respondent Connecticut General Life Insurance Company.

Seyfarth Shaw, D. Ward Kallstrom, Eric M. Steinert, Justin T. Curley, San Francisco; Leonard Carder, Peter Saltzman, Christine S. Hwang and Sara B. Tosdal, San Francisco, for Defendants and Respondents ILWU-PMA Welfare Plan and ILWU-PMA Welfare Plan Board of Trustees.

LAVIN, Acting P.J.

INTRODUCTION

Port Medical Wellness, Inc. (Port Medical) sued the International Longshore & Warehouse Union—Pacific Maritime Association Welfare Plan (Plan), its Board of Trustees (Board), and its former claims administrator, Connecticut General Life Insurance Company (Connecticut General), seeking payment for health care services provided to persons eligible for benefits under the Plan. The trial court granted summary judgment in favor of all defendants.¹

State law causes of action seeking to recover unpaid benefits under a welfare benefit plan regulated under the Employee Retirement Income Security Act of 1974 (ERISA) ( 29 U.S.C. § 1001 et seq. ) are generally conflict preempted. We conclude that Port Medical's claims for breach of implied-in-fact contract, intentional misrepresentation and quantum meruit—each of which seeks payment for services covered under the Plan—are conflict preempted under section 514 of ERISA. Port Medical's two remaining claims—unfair competition ( Bus. & Prof. Code, § 17200 et seq. ) and intentional interference with prospective economic advantage—are not preempted because they are predicated on the theory that the Plan and Connecticut General conspired to force Port Medical out of business in order to benefit a competitor, rather than strictly on a claim for benefits under the Plan. Nevertheless, we conclude Port Medical failed to demonstrate there is a dispute of material fact with respect to those claims. Accordingly, we affirm the judgment in its entirety.

FACTS AND PROCEDURAL BACKGROUND

1. The Parties

1.1. The Plan and its Board of Trustees

The Plan is an employee benefit plan established and operated under ERISA that provides health and welfare benefits to members of the International Longshore and Warehouse Union (Union) and their beneficiaries.² The Board is the Plan's administrator as defined under ERISA and is the Plan's named fiduciary. The Plan and the Board do not administer claims for benefits under the Plan. Instead, the Plan contracts with a third party to administer benefit claims.

In addition, the Plan contracts with networks of health care providers that in turn contract with individual practitioners. As pertinent here, the Plan engaged Chiropractic Health Plan of California (Network) as its chiropractic provider network. The Plan covers 100 percent of the cost of covered services provided by Network providers.

1.2. Connecticut General, the Plan's Third-Party Claims Administrator

Prior to the specific events which are the subject of the present suit, Great-West Life & Annuity Insurance Company (Great-West) administered medical benefits claims under the Plan. According to the contract between Great-West and the Plan, Great-West administered the claims as the Plan's agent. On April 1, 2008, Connecticut General's parent company acquired Great-West and Connecticut General became the administrator of the Plan. Connecticut General operated the Coastwise Claims Office (Coastwise) which received claims submitted by Port Medical.

As the Plan's administrator, Connecticut General processed medical benefit claims under the direction of the Plan, which retained the final responsibility for determining the Plan's claims liability. As part of its standard procedures, Connecticut General verified that patients were covered under the Plan and confirmed eligibility for the benefits requested. If Connecticut General determined that a claim related to benefits covered under the Plan, Connecticut General paid the claim using funds made available by the Plan.

After processing medical claims and making coverage and eligibility determinations, Connecticut General (through Coastwise) issued Explanation of Benefits forms (EOBs) which identified each service provided and the amount paid (if any) for each service. In some cases, Connecticut General denied claims and requested additional information about the services provided. As required under ERISA, Connecticut General sent EOBs to Plan members and their health care providers explaining what medical services were approved for payment or denied and the reason(s) for any denial.

1.3. Port Medical

Port Medical was a chiropractic and medical provider with three office locations in the Los Angeles area. Port Medical was an in-network provider with the Network and nearly all of its patients were Plan members.

After treating Plan members, Port Medical submitted claims for its services to Coastwise. For approximately two years prior to the events at issue, Port Medical treated Plan members and submitted claims to Coastwise and, largely, the claims were paid.

2. Plan Coverage of Chiropractic Care

The Plan provides benefits for, among other things, chiropractic services. Generally, the Plan covers only 40 visits per calendar year. In addition, the Plan only provides a benefit for services deemed medically necessary.

3. Network Provider Agreement

Each of Port Medical's chiropractic practitioners joined the Network as a "participating practitioner," defined in the "Participating Practitioner Agreement" (network agreement) as "a duly licensed and/or certified practitioner of a healing art or arts or other professional services who, upon application and approval by [the Network], has agreed in writing to provide Covered Services to Members in accordance with the terms and conditions of this Agreement." As participating practitioners in the Network, Port Medical's chiropractors could make their services available to members of the Participating Payors who contracted with the Network, including, as relevant here, the Plan. Per the network agreement, the Network contracted with "Participating Payor[s]," defined as "any organization that has a contractual obligation to provide Covered Services to Members and/or Member Groups."

The Network agreed, among other things, to market participating practitioners to Participating Payors. In return, the participating practitioners agreed "to provide professional services to Members in compliance with [the network agreement] and as set forth in Participating Payor Agreements and Member Agreements." As defined in the network agreement, a Participating Payor Agreement is an agreement "entered into by a payor and a Member and/or Member Group whereby Members and/or Member Groups may be eligible to receive Covered Services designated therein." A Member Agreement is defined as an agreement "entered into by a payor and an individual or group of individuals (Member Group) whereby individual(s) may be eligible to receive Covered Services designated therein." "Covered Services means any services which are specified by the terms of a Member Agreement for which Members are eligible."

Under the network agreement, participating practitioners agreed to comply with a range of conditions set forth in the Network's provider manual and with a quality assurance program monitored by the Network. Participating practitioners also authorized the Network to negotiate the reimbursement rate for practitioner services with each payor, and agreed to accept the reimbursement rate as payment in full for its services (with the exception of copayments, coinsurance and deductibles, which practitioners could collect directly from patients.) In addition, participating practitioners agreed to submit their bills to payors or their designated representatives as specified in the Participating Payor Agreements.

Several specific provisions of the network agreement are at issue here:

"4.03 Participating Practitioner shall be responsible for the verification of the eligibility of Members and/or Member Groups to receive Covered Services prior to the initiation of the provision of professional services as specified in the Provider Manual.

"4.04 Participating Practitioner agrees to accept assignment of Member benefits as they apply to Covered Services and to obtain written acknowledgment from Members that Members are personally responsible for co-insurance, copayments, deductibles and Non-Covered Services; Practitioner further agrees not to bill Members for professional services and/or supplies determined by Participating Payor or its designee as not Medically Necessary" subject to exceptions not relevant here.

"4.09 Participating Practitioner agrees to accept the lesser of Participating Practitioner's actual and accurate billed charges or the Reimbursement Rate as payment in full for Covered Services rendered to Members and not to seek additional payments or compensation from Members with the exception of co-insurance, co-payments and deductibles. Co-insurance, copayments and deductibles must be collected and cannot be waived by Participating Practitioner. Participating Practitioner shall not bill for or collect from Member, payment for coinsurance, deductibles or Non-Covered Services prior to receipt of an explanation of benefits (EOB) from Participating Payor or its designee. Co-payments may be collected at the time of service. Participating Practitioner agrees not to ‘balance bill’ Members except for applicable deductibles, co-insurance, co-payments, and Non-Covered Services in...