Opinion
Case No. CIV-17-600-J
2022-01-17
EMERGENCY SERVICES OF OKLAHOMA, PC, et al., Plaintiffs, v. AETNA HEALTH, INC., et al., Defendants.
Alan D. Lash, Benjamin Shiekman, Evan A. Creutz, Justin C. Fineberg, Michael L. Ehren, Lash & Goldberg LLP, Miami, FL, Ashley L. Powell, Laura McConnell-Corbyn, Hartzog Conger Cason & Neville, Oklahoma City, OK, Jonathan E. Siegelaub, Lash & Goldberg LLP, Weston, FL, Joseph Ahmad, Pro Hac Vice, Patrick Kevin Leyendecker, Pro Hac Vice, Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, P.C., Houston, TX, for Plaintiffs Emergency Services of Oklahoma PC, Oklahoma Emergency Services PC, Emergency Services of Mid-America PC, South Central Emergency Services PC. Amy Sherry Fischer, Andrew M. Bowman, Larry D. Ottaway, Foliart Huff Ottaway & Bottom, Oklahoma City, OK, Dimitri D. Zgourides, Jeffrey D. Migit, Jessica E. Schaffner, John Bruce Shely, Andrews Kurth, Houston, TX, for Defendants Aetna Health Inc., Aetna Health Insurance Company, Aetna Life Insurance Company.
Alan D. Lash, Benjamin Shiekman, Evan A. Creutz, Justin C. Fineberg, Michael L. Ehren, Lash & Goldberg LLP, Miami, FL, Ashley L. Powell, Laura McConnell-Corbyn, Hartzog Conger Cason & Neville, Oklahoma City, OK, Jonathan E. Siegelaub, Lash & Goldberg LLP, Weston, FL, Joseph Ahmad, Pro Hac Vice, Patrick Kevin Leyendecker, Pro Hac Vice, Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, P.C., Houston, TX, for Plaintiffs Emergency Services of Oklahoma PC, Oklahoma Emergency Services PC, Emergency Services of Mid-America PC, South Central Emergency Services PC.
Amy Sherry Fischer, Andrew M. Bowman, Larry D. Ottaway, Foliart Huff Ottaway & Bottom, Oklahoma City, OK, Dimitri D. Zgourides, Jeffrey D. Migit, Jessica E. Schaffner, John Bruce Shely, Andrews Kurth, Houston, TX, for Defendants Aetna Health Inc., Aetna Health Insurance Company, Aetna Life Insurance Company.
ORDER
BERNARD M. JONES, UNITED STATES DISTRICT JUDGE Before the Court is Plaintiffs' Corrected Motion for Summary Judgment on Defendants' Counterclaims (Motion). [Doc. No. 175]. Defendants have filed a response in opposition (Response) [Doc. No. 187], Plaintiffs have replied (Reply) [Doc. No. 199], and the Motion is fully briefed. Based upon the parties' submissions, the Court makes its determination.
All page citations refer to the Court's CM/ECF pagination.
I. Background
Plaintiffs are medical providers who provided emergency medical services to patients covered under health plans underwritten, operated, and/or administered by Defendants (Defendants' members). Plaintiffs are out-of-network providers for Defendants, and the parties did not have a contract establishing rates of reimbursement for the medical services provided. At issue in this matter are claims for payment that Plaintiffs submitted to Defendants and Defendants paid, but which Plaintiffs assert were paid at impermissibly low rates. Defendants, in turn, assert five counterclaims alleging that the claims were overpaid due to "systematic overcharging for emergency services by Plaintiffs." Defendants' Amended Answer and Counterclaim (Counterclaim) [Doc. No. 79] at 19. Plaintiffs move for summary judgment on all counterclaims.
II. Standard of Review
Summary judgment is warranted "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." Fed. R. Civ. P. 56(a). Material facts are those that "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. To determine whether this standard is met, the court views the evidence in the light most favorable to the non-moving party. Estate of Booker v. Gomez , 745 F.3d 405, 411 (10th Cir. 2014). "[T]he plain language of Rule 56(c) mandates entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
III. Analysis
A. Counterclaims Sounding in Fraud
1. Actual Fraud
Under Oklahoma law, which we apply in this diversity action, to establish a claim for fraud, Defendants must show, inter alia , that Plaintiffs made a false material representation either knowingly or with reckless disregard for the truth. See Bowman v. Presley , 2009 OK 48, ¶ 13, 212 P.3d 1210, 1217-18 (setting forth the elements of actual fraud). As such, Defendants bear the burden of proving at trial, by clear and convincing evidence, that Plaintiffs acted with knowledge of falsity or reckless disregard for the truth. See, e.g., Ace Oilfield Rentals, LLC v. W. Dakota Welding & Fabrication, LLC , CIV-15-672-D, 2021 WL 4556234, at *5 & n.2 (W.D. Okla. Oct. 5, 2021). And while Defendants may meet this burden through circumstantial evidence, such evidence must be sufficient to allow a reasonable inference of fraud. See Silk v. Phillips Petroleum Co. , 760 P.2d 174, 177 (Okla. 1988) ("Although fraud is never presumed, but must be proved, it may be proved by circumstantial evidence."); Liberty Lobby , 477 U.S. at 252, 106 S.Ct. 2505 ("The mere existence of a scintilla of evidence in support of the [claimant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [claimant]."); K-B Trucking Co. v. Riss Int'l Corp. , 763 F.2d 1148, 1157 (10th Cir. 1985) (recognizing that when state law permits a showing of fraud by circumstantial evidence, fraud "may be proved by showing circumstances from which the inference of fraud is natural and irresistible" (internal quotation marks omitted)). The evidence Defendants rely on, however, does not lead to a "natural and irresistible" inference of fraud and, thus, Defendants have not met their burden.
Defendants assert that a "pattern or practice" of "more than one-third" – specifically 36% – of the reviewed sample set of claims that Defendants' expert asserts were upcoded. See Response at 27; [Doc. No. 175-4] at 20. Specifically, Defendants' expert, Robert A. Shapiro, MD, CPC, opines that an error rate in the range of 5% to 15%, combining both upcoding and undercoding, is "considered normal and acceptable." [Doc. No. 175-5] at 4; see also id. at 23 (stating his experience is that coding discrepancy rates of around 15% are "more common"). In support of their fraud claims, Defendants point to the discrepancy between the 36% upcoding rate that Dr. Shapiro found in his audit of the sample set of Plaintiffs' claims and the 5%-15% "normal and acceptable" error rate.
Upcoding results when a claim is coded at a level higher than justified.
However, a 36% upcoding rate is not evidence "from which an irresistible deduction of fraud reasonably arises." See Roberts v. Wells Fargo AG Credit Corp. , 990 F.2d 1169, 1173 (10th Cir. 1993) (internal quotation marks omitted, emphasis deleted)). As an initial matter, in both his report and supplemental report, Dr. Shapiro cites to published findings of the Office of Inspector General (OIG) that 26% of the claims in an OIG study were upcoded. [Doc. No. 175-4] at 11; [Doc. No. 175-5] at 4-5. The OIG study focused on coding for Medicare patients and Dr. Shapiro explains that audits of such coding would "likely" show "lower rates of incorrect billing" than audits of "patients covered by commercial insurance like Aetna's plans." [Doc. No. 175-5] at 4-5. Dr. Shapiro opines that "a higher up-coding rate might be expected in an audit of non-Medicare claims" (such as the one performed here of patients covered by commercial insurance) than in an audit of Medicare claims (such as the OIG study finding an upcoding rate of 26%). Id. at 5. In other words, Defendants' expert opines that an audit of claims such as the one he performed here is likely to show upcoding at a rate higher than 26%. And if Defendants' expert expects an upcoding rate of greater than 26% in an audit like the one at issue, then finding a rate of 36% does not naturally and irresistibly lead to an inference of fraud.
Additionally, there is no evidence in Dr. Shapiro's report that the 26% upcoding rate found in the OIG study was knowing, intentional, or otherwise fraudulent. Nor does Dr. Shapiro suggest – let alone opine – that higher rate of upcoding he would expect in an audit of non-Medicare patients would be knowing, intentional, or otherwise fraudulent. See id. at 4-5, 23; [Doc. No. 175-4] at 11. And Dr. Shapiro does not offer an opinion as to whether the upcoding he found in the audit of the sample set of Plaintiffs' claims was knowing, intentional, or done with reckless disregard for the truth. See [Doc. Nos. 175-4, 175-5]. Finally, Dr. Shapiro opined in his supplemental report that variances arise in coding decisions "even when applying industry guidelines in a standard way, because there are sometimes judgement [sic] calls that have to be made when evaluating a specific piece of documentation for coding credit." [Doc. No. 175-5] at 23; accord [Doc. No. 175-3] at 127-129 (Dr. Shapiro testifying at a 30(b)(6) deposition that, depending on the details of the specific claim, different coders could reach different conclusions regarding the applicable code). As such, even though the 36% upcoding rate found by Dr. Shapiro is greater than the 15% he more commonly finds, Defendants offer no evidence – circumstantial or otherwise – that a rate that high would necessarily be due to fraud. For these reasons, the Court finds that Defendants' expert's finding of a 36% rate of upcoded claims does not lead to "an irresistible deduction of fraud." See Roberts , 990 F.2d at 1173.
Defendants additionally purport to provide evidence that Plaintiffs' clinicians were instructed to alter their methods of documentation to support a higher code and generate revenue. Response at 13-14, 23, 27-28. But the Court's review of the evidence cited finds it does not support Defendants' assertions of fraud. See [Doc. No. 175-17] at 52-53; [Doc. No. 187-1] at 57-60.
The Court draws Defendants' attention to ECF Policies and Procedures Manual , § II.A.5, which instructs that courtesy copies include "tabs that match the exhibit." In future filings, courtesy copies should include tabs for all exhibits. See, e.g. , [Doc. No. 187-1] Exs. 1-1 through 1-6; [Doc. No. 187-2] Exs. 2-1 through 2-11.
Because Defendants have failed to make a showing sufficient to establish the elements of actual fraud, their counterclaim for actual fraud cannot survive Plaintiffs' Motion. See Roberts , 990 F.2d at 1173 (requiring that fraud be "properly alleged by the plaintiff " and explaining that submission of the issue of fraud to the jury is appropriate only when "facts are produced from which an irresistible deduction of fraud reasonably arises " and not when there is only a "mere allegation of fraud" (internal quotation marks omitted)); see also Celotex Corp. , 477 U.S. at 322-23, 106 S.Ct. 2548 ("[T]he plain language of Rule 56(c) mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.").
2. Constructive Fraud
To establish a claim for constructive fraud, Defendants must show, inter alia , that Plaintiffs owed them a duty. See Okla. Stat. tit. 15, § 59. "Under Oklahoma law, a claim for constructive fraud requires a showing that the defendant owed some form of duty to the plaintiff, such as a fiduciary duty or a ‘duty based upon a confidential relationship or a special relationship of trust.’ " Roberts Ranch Co. v. Exxon Corp. , 43 F. Supp.2d 1252, 1259 (W.D. Okla. 1997) (quotation and footnote omitted). Here, Defendants argue they were owed the duty of full disclosure, which they assert stems from "the very nature of the insurance business – which would come to a screeching halt if insurers carefully examined every claim submitted." Response at 29-30. In support of their assertion of this duty, Defendants rely on a declaration from the Chief Network and Operations Director of Aetna Life Insurance Company that, due to the volume of claims Defendants process each year, Defendants rely on providers to submit accurate claims. Id. at 30 (citing [Doc. No. 187-3] at 3). But Defendants have not shown that either the nature of the insurance business or the volume of claims processed within that industry creates a special relationship between Plaintiffs and Defendants resulting in Plaintiffs owing an equitable, fiduciary, or legal duty to Defendants (or, as Defendants assert, see id. , a duty owed by all insurance-claims-submitters to all payors).
Other support relied upon by Defendants is specific to knowingly filing a false claim and, thus, is inapposite for Defendants' assertion of the existence of a duty. See Response at 29 (citing [Doc. No. 187-1] at 45; In re Porter , ADV. 06-5002-PWB, 2007 WL 7141821, at *5 (Bankr. N.D. Ga. May 22, 2007) ).
The Court recognizes that "[c]onstructive fraud has been ‘defined as the concealment of material facts which one is bound under the circumstances to disclose.’ " Id. (quoting Sutton v. David Stanley Chevrolet, Inc. , 475 P.3d 847, 853, as corrected (Okla. Oct. 21, 2020)). However, the Court has found no case arising under Oklahoma law where the submission of claims (rather than, say, negotiation of a contract) gave rise to a duty sufficient to meet the first element of a constructive fraud claim. Accordingly, because Defendants have failed to make a showing sufficient to establish the elements of constructive fraud, their counterclaim for constructive fraud cannot survive Plaintiffs' Motion.
Moreover, as even an innocent misrepresentation may constitute constructive fraud where there is an underlying right to be correctly informed of the facts, see Gentry v. Am. Motorist Ins. Co. , 867 P.2d 468, 471 (Okla. 1994), the Court finds Defendants have not supported their assertion that a duty applies to the entire insurance industry such that liability for constructive fraud could result from any innocently mistaken claim submitted to any insurance payor.
3. Punitive Damages
Because Defendants' assertion of the right to punitive damages is premised upon their counterclaims of fraud, see Counterclaim at 33-34, ¶¶ 69-71, it, too, does not survive Plaintiffs' Motion. See also Okla. Stat. tit. 23, § 9.1(B)(1), (C)(1), (D)(1) ; Response at 29 n.9.
B. Counterclaims Sounding in Contract and Quasi-Contract
1. ERISA
Defendants present a counterclaim premised upon "[a]t least some" of the health plans at issue in this case being ERISA plans. Counterclaim at 32, ¶ 60. Plaintiffs move for summary judgment on this counterclaim on the basis that Defendants have failed to identify the specific ERISA plans and terms. Motion at 32-36. Defendants, however, assert they have provided Plaintiffs with adequate information regarding the ERISA plans at issue. See [Doc. No. 175-10]; [Doc. No. 187-1] at 68-92. Because the issue of identification of the plans is fundamental to Plaintiffs' position, and because such identification is disputed, summary judgment on this basis is unwarranted. Accordingly, Defendants' ERISA counterclaim survives Plaintiffs' Motion. 2. Money Had and Received and Unjust Enrichment/Quantum Meruit
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 -1461.
Plaintiffs assert that Defendants' equitable counterclaims of Money Had and Received and Unjust Enrichment/Quantum Meruit are precluded by the "express contract bar," i.e., the "principle that quasi-contractual remedies, such as unjust enrichment and quantum meruit, are not to be created when an enforceable express contract regulates the relations of the parties with respect to the disputed issue." Motion at 26 (internal quotation marks and alteration omitted); see Counterclaim at 27-28, ¶¶ 31-34; id. at 31, ¶¶ 53-58. Plaintiffs argue that Defendants' counterclaims for overpayment are governed by the plan documents within Defendants' various health plans, which are express contracts. Motion at 27. Thus, according to Plaintiffs, the plan documents preclude Defendants' quasi-contractual counterclaims.
The plan documents, however, are express contracts between Defendants and their members; they are not contracts between Defendants and Plaintiffs. And though Plaintiffs receive payments from Defendants due to the existence of such contracts, it is undisputed that Plaintiffs are not parties to the contracts. Thus, though the plan documents may set forth Defendants' obligations to their members to reimburse Plaintiffs for medical treatment provided to said members, the plan documents do not represent an agreement between Plaintiffs and Defendants so as to preclude Defendants' quasi-contractual counterclaims. See Member Servs. Life Ins. Co. v. Am. Nat. Bank & Tr. Co. of Sapulpa , 130 F.3d 950, 957 (10th Cir. 1997) ("[Q]uasi-contractual remedies ... are not to be created when an enforceable express contract regulates the relations of the parties with respect to the disputed issue. " (emphasis added)); cf. Peter v. United States , 6 Cl. Ct. 768, 780 (1984) ("The rule that the existence of an express contract preempts an implied contract has full effect only when the parties to both contracts are the same."). As such, Defendants' equitable counterclaims of Money Had and Received and Unjust Enrichment/Quantum Meruit survive Plaintiffs' Motion.
Throughout this litigation, Defendants have asserted they paid plan benefits to Plaintiffs pursuant to assignments made by Defendants' members to Plaintiffs. See, e.g. , Reply at 22-23 (listing record citations). In these instances, Plaintiffs would be standing in the shoes of Defendants' members and would, therefore, be operating as a party to the contract created by the plan documents. In these instances, then, the express contract bar would preclude a quasi-contractual theory of recovery. The Court has already held, however, that because the validity of such assignments is disputed, summary judgment on this basis is unwarranted. [Doc. No. 148] at 5-6. The Court is not intending to address here whether there may be valid assignments under which Plaintiffs operate as parties to the contracts.
3. Money Had and Received
Plaintiffs additionally move for summary judgment on Defendants' Money Had and Received counterclaim on the basis that Defendants failed to identify a sum certain. Motion at 31-32. Defendants, however, assert they have pled a sum certain adequate to survive Plaintiffs' Motion. See [Doc. No. 187-1] at 72. Because the identification of a sum certain is fundamental to Plaintiffs' position, and because such identification is disputed, summary judgment on this basis is unwarranted. Accordingly, Defendants' Money Had and Received counterclaim survives Plaintiffs' Motion.
IV. Conclusion
For the reasons set forth above, Plaintiffs' Corrected Motion for Partial Summary Judgment on Defendants' Counterclaims [Doc. No. 175] is GRANTED IN PART and DENIED IN PART. Plaintiffs' Motion is GRANTED with respect to Defendants' counterclaims for Fraud, Negligent Misrepresentation/Constructive Fraud, as well as their assertion of the right to Punitive Damages; Plaintiffs' Motion is DENIED with respect to Defendants' counterclaims for Equitable Relief (ERISA), Money Had and Received, and Unjust Enrichment/Quantum Meruit.
IT IS SO ORDERED this 17th day of January, 2022.