Opinion
NO. 2022 CA 0051
11-04-2022
STRATEGIC MEDICAL ALLIANCE II v. STATE of Louisiana, Office of Risk Management and Sedgwick (Employee: Joseph Dier)
Mark D. Plaisance, Marcus J. Plaisance, Prairieville, Louisiana, Counsel for Plaintiff/Appellant Strategic Medical Alliance II Jeff Landry, Attorney General, Kirk L. Landry, Virginia J. McLin, Special Assistant Attorneys General, Baton Rouge, Louisiana, Counsel for Defendant/Appellee State of Louisiana
Mark D. Plaisance, Marcus J. Plaisance, Prairieville, Louisiana, Counsel for Plaintiff/Appellant Strategic Medical Alliance II
Jeff Landry, Attorney General, Kirk L. Landry, Virginia J. McLin, Special Assistant Attorneys General, Baton Rouge, Louisiana, Counsel for Defendant/Appellee State of Louisiana
BEFORE: THERIOT, CHUTZ, AND HESTER, JJ.
THERIOT, J.
Claimant-appellant, Strategic Medical Alliance II, LLC (SMA), appeals the judgment of the Office of Workers’ Compensation (OWC), which dismissed with prejudice SMA's claims against employer-appellee, the State of Louisiana (State), based on a finding that SMA does not have a right of action under the Louisiana Workers’ Compensation Act. For the reasons set forth herein, we affirm.
FACTS AND PROCEDURAL HISTORY
On November 27, 2018, SMA filed a disputed claim for compensation (Form 1008) with the OWC, contending that it is a health care provider entitled to recover the costs of implants provided to Dr. Eric Oberlander of The Spine Hospital of Louisiana during an authorized surgery on employee Joseph Dier. SMA claimed that it is entitled to payment of $17,330.61, plus penalties, costs, and attorney fees for failure to make payment.
The only defendant named in SMA's November 27, 2018 disputed claim for compensation was an entity referred to as "Sedgwick," which it identified as the insurer. Sedgwick Claims Management Services, Inc. filed an exception raising the objection of no cause of action on the grounds that it is not an insurer, but rather a third-party administrator, and there is no statutory basis for a claim against a third-party administrator. The OWC granted the exception and, in a February 14, 2019 judgment, dismissed SMA's claims against Sedgwick with prejudice, reserving all rights SMA may have against any other party. At some point, an amended claim was apparently filed listing the State as Dier's employer and the Office of Risk Management as the insurer, but this amended claim is missing from the appellate record.
On May 15, 2019, the State filed several exceptions along with its answer, including exceptions of no cause of action and no right of action. At the December 13, 2019 hearing on the exceptions, the State argued that SMA, by its own admission, is not a health care provider and, therefore, has "no right of action or cause of action for anything in a Workers’ [Compensation] court to get their medical bills paid here, to get penalties and attorneys fees under [ La. R.S. 23:1201 ]." SMA countered that although it is not a health care provider, it has a right of action under the Louisiana Workers’ Compensation Act as "an agent of a doctor." In response to the State's assertion that the pleadings lack any facts to support this position or explain how SMA is an agent of the doctor, counsel for SMA stated that SMA's role, the items it supplied, and its relationship with the treating physician and the facility at which the surgery was performed were "obvious and apparent" on the face of the Request for Authorization (Form 1010) submitted by the physician. Following arguments on the exceptions, the OWC gave SMA thirty days to amend its petition "to state with specificity the agency situation between [SMA] and [the physician]." A judgment in accordance with the OWC's ruling was signed on February 24, 2020, granting SMA thirty days from the date of the judgment "to amend the suit to specifically outline facts to support its claim that it has a cause and/or right of action under the Louisiana Workers[’] Compensation law," failing which SMA's suit would be dismissed with prejudice. On July 21, 2020, SMA filed the OWC-ordered amended disputed claim for compensation pleading, which "retained" all prior pleadings and attached as an exhibit the affidavit of SMA's corporate representative, Rachel McEnary, "who testifies to the close relationship of [SMA] and the health care provider." McEnary's affidavit states that SMA "works with doctors to provide supplies, devices, or implantation during surgeries." She further stated that "on occasion, now and in the past, [SMA] has agreed to associate or contract with medical providers, to deliver/provide some supplies, devices, or implantation in accordance with determined medical necessity." McEnary explained that "when a doctor has selected supplies, devices, or implantation to be used in his surgeries, subject to the agreement with [SMA], the medical provider has allowed [SMA] to bill directly for any good or service rendered and avail [itself of] any legal right or remedy therein to the maximum extent of the law." She attested that "it is generally standard practice for the insurer or responsible party to make timely payment after having received [an] invoice for the goods provided by [SMA]." Lastly, McEnary stated that the contract between the health care provider and SMA was not in written form, as "there is no requirement of form for the relationship."
The Exceptions and Answer were also filed on behalf of the Office of Risk Management and Sedgwick. It is unclear why Sedgwick was included, since all claims against it in this matter were dismissed with prejudice on February 14, 2019; nevertheless, the Office of Risk Management and Sedgwick were both voluntarily dismissed from this suit following the December 13, 2019 hearing on the exceptions, and this appeal concerns only the State.
The exceptions in this matter (Docket # 18-07930) were heard along with similar exceptions in several similar suits involving the same parties (Docket # 18-07970, 18-07980, and 18-07910).
The OWC deferred ruling on the State's remaining exceptions pending the amendment of SMA's pleadings to set forth the agency relationship.
Following SMA's filing of its OWC-ordered amended pleading, the State filed a motion to dismiss, which was set for hearing. At the conclusion of the hearing, the OWC determined that SMA's amended pleading failed to allege sufficient facts to establish that Dr. Oberlander had turned over to SMA his right to collect payment for the supplies he used during the surgery and, therefore, SMA had no right of action against the State. Noting that it had "already given [SMA] time to amend and show agency," and that the amendment filed by SMA was "woefully short of what's needed to support a Right of Action as [SMA] being the agent of the doctors that performed the services," the OWC dismissed the matter with prejudice. SMA appealed.
The State's motion to dismiss was based on its assertion that SMA's amended pleading, filed more than thirty days from the date of judgment, was not timely. As with the December 13, 2019 hearing on the exceptions, the motion was heard simultaneously with similar motions before the court in several similar cases between the same parties. The OWC ultimately determined that SMA's amended pleading was timely filed, and the State has not appealed that determination.
DISCUSSION
Preliminarily, we note that the record does not contain a written exception filed by the State raising the objection of no right of action on the basis that SMA was not a health care provider entitled to recover reimbursement payments under the Louisiana Workers’ Compensation Act. The record does show, however, that the parties argued the merits of the objection of no right of action at both the initial December 13, 2019 hearing, which gave rise to the OWC's order directing SMA to amend its pleading, and again at the March 26, 2021 hearing at which SMA's claims were dismissed.
The peremptory exceptions that the State filed when it answered SMA's claims included an objection of no right of action directed at SMA's claims naming Sedgwick as a defendant. The State also raised two separate objections of no cause of action. In the first one, the State asserted that under the Louisiana Workers’ Compensation Act, any reimbursement that may be owed to SMA was capped at $750.00 if SMA did not seek preauthorization as required under La. R.S. 23:1142 ; the other alleged that because SMA was not a physician, it was not entitled to the 20% markup permitted under LAC 40:1.5115. The record is devoid of a pleading filed by the State asserting a no right of action based on SMA's failure to include facts establishing its relationship with Dr. Oberlander that permits SMA to assert his reimbursement claim for the materials he used in the surgery.
While an exception is a pleading that must be made in writing, making the oral urging of the exception improper, either the OWC or appellate court may, on its own motion, notice that the claimant does not have a right of action. See La. C.C.P. arts. 852 and 927(B). Consequently, the OWC did not abuse its discretion in addressing the objection of no right of action, and the ruling is properly before this court for review. See Three Rivers Commons Condo. Ass'n v. Grodner , 2016-0067, p. 4 (La.App. 1 Cir. 5/10/17), 220 So.3d 776, 779, writ denied , 2017-0974 (La. 4/2/18), 248 So.3d 315.
Except as otherwise provided by law, an action can only be brought by a person having a real and actual interest that he asserts. La. C.C.P. art. 681. The peremptory exception raising the objection of no right of action tests whether the claimant has any interest in judicially enforcing the right asserted. See La. C.C.P. art. 927(A)(6). Simply stated, the objection of no right of action tests whether this particular claimant, as a matter of law, has an interest in the claim sued on. Pearce v. Lagarde , 2020-1224, p. 10 (La.App. 1 Cir. 10/7/21), 330 So.3d 1160, 1167, writ denied , 2022-00010 (La. 2/22/22), 333 So.3d 446. The party raising a peremptory exception bears the burden of proof. To prevail on a peremptory exception pleading the objection of no right of action, the defendant must show that the claimant does not have an interest in the subject matter of the suit or legal capacity to proceed with the suit. Id.
Evidence may be introduced to support or controvert the objection of no right of action, when the grounds thereof do not appear from the petition. See La. C.C.P. art. 931. In the absence of evidence to the contrary, the objection of no right of action must be decided upon the facts alleged in the petition, and all well-pleaded facts in the petition must be taken as true. Miller v. Thibeaux , 2014-1107, p. 6 (La. 1/28/15), 159 So.3d 426, 430 ; Rain CII Carbon, LLC v. Turner Industries Group, LLC , 2019-403, p. 23 (La.App. 3 Cir. 3/18/20), 297 So.3d 797, 814, writ denied , 2020-00774 (La. 10/20/20), 303 So.3d 319. It is only well-pleaded allegations of fact that are accepted as true. The adjective "well-pleaded" refers to properly pleaded allegations conforming to the system of fact pleading embodied in the Louisiana Code of Civil Procedure. It does not include allegations deficient in material detail, conclusory factual allegations, or allegations of law. Hamilton v. Baton Rouge Health Care , 2009-0849, p. 4 (La.App. 1 Cir. 12/8/10), 52 So.3d 330, 333.
Where, as here, no evidence was admitted at the hearing, whether a claimant has a right of action is a question of law. See Jones v. Americas Ins. Co. , 2016-0904, p. 5 (La.App. 1 Cir. 8/16/17), 226 So.3d 537, 541. Appellate review of questions of law is simply to determine whether the OWC was legally correct. Box v. City of Baton Rouge , 2002-0198, p. 3 (La. App. 1 Cir. 4/2/03), 844 So.2d 405, 407. On legal issues, an appellate court gives no special weight to the findings of OWC and, instead, exercises its constitutional duty to review questions of law de novo, after which it renders judgment on the record. Phillips v. Kirkland's Corporation , 2019-0420, p. 5 (La.App. 1 Cir. 2/18/20), 296 So.3d 6, 10.
For purposes of our review of whether SMA has a right of action for reimbursement for the materials Dr. Oberlander utilized during Dier's surgery, we must presume a cause of action exists. See Bunge North America, Inc. v. Board of Commerce & Industry & Louisiana Department of Economic Development , 2007-1746, p. 16 (La.App. 1 Cir. 5/2/08), 991 So.2d 511, 522, writ denied, 2008-1594 (La.App. 1 Cir. 11/21/08), 996 So.2d 1106. The Louisiana Supreme Court has held that where an agency relationship exists between a physician and a pharmaceutical distributor pursuant to an agreement that allows the distributor to collect assigned workers’ compensation medication claims for the physician, the distributor, as the physician's agent, falls within the statutory definition of a health care provider under La. R.S. 23:1021(6), and thus, has a right of action against the employer and its insurer to collect on the assigned claims. Rebel Distributors Corp., Inc. v. LUBA Workers’ Comp ., 2013-0749, p. 22-23 (La. 10/15/13), 144 So.3d 825, 840-841.
Louisiana Revised Statutes 23:1021(6) defines "Health care provider" as:
a hospital, a person, corporation, facility, or institution licensed by the state to provide health care or professional services as a physician, hospital, dentist, registered or licensed practical nurse, pharmacist, optometrist, podiatrist, chiropractor, physical therapist, occupational therapist, psychologist, graduate social worker or licensed clinical social worker, psychiatrist, or licensed professional counselor, and any officer, employee, or agent thereby acting in the course and scope of his employment.
SMA urges that its allegations and the exhibits attached to its disputed claim for compensation demonstrate its status as an agent for Dr. Oberlander. SMA argues that since the State did not produce any evidence to controvert the allegations set forth in the disputed claim for compensation, the OWC was required to accept those allegations as true, and thus it was error for the OWC to order SMA to amend its pleading. SMA further argues that the OWC erred in finding that the OWC-ordered amended claim, including McEnary's affidavit, failed to set forth a right of action as an agent of a health care provider.
An agency relationship is a contract of mandate. Rebel Distributors Corp., Inc ., 2013-0749 at p. 8, n.5, 144 So.3d at 832, n.5. In a contract of mandate, one person, the principal, confers authority on another person, the mandatary, to transact one or more affairs for the principal. La. C.C. art. 2989. Because mandate is a contract, it is governed by the general rules on contracts for all matters for which the special rules on mandate do not provide otherwise. Thus, in matters relative to contract formation, La. C.C. arts. 1927 - 1947 apply. See La. C.C. art. 2990. See also Wendell H. Holmes & Symeon C. Symeonides, Representation, Mandate, and Agency: A Kommentar on Louisiana's New Law , 73 Tul. L. Rev. 1087, 1119 (1999).
A contract of mandate is formed by the consent of the parties established through offer and acceptance. See La. C.C. art. 1927. Thus, in order to set forth a right of action as an agent for Dr. Oberlander, it was incumbent on SMA to allege properly-pleaded material allegations of fact - rather than allegations deficient in material detail, conclusory factual allegations, or allegations of law - sufficient to aver that Dr. Oberlander, as a principal, conferred authority on SMA, as the mandatary, to transact his affairs relative to the collection of reimbursement payments for the materials used during Dier's surgery.
Based on our review of SMA's disputed claim for compensation, including the attached exhibits, we can identify no facts that detail Dr. Oberlander's consent to a verbal agreement conferring authority on SMA to collect reimbursement payments due to him under the Louisiana Workers’ Compensation Act for the materials used in Dier's surgery. In its November 27, 2018 claim, SMA identified itself as the health care provider and designated its attorney as the health care provider's attorney. However, this is a conclusory allegation and not a properly-pleaded material allegation of fact that must be accepted as true. Further, none of the exhibits annexed to the claim are signed by Dr. Oberlander, and none of the exhibits allege that Dr. Oberlander offered as principal to confer authority to SMA as a mandatary to collect reimbursement payments for the surgical materials Dr. Oberlander used in Dier's surgery. The Request for Authorization (Form 1010) apparently submitted by Dr. Oberlander does not mention SMA in any capacity. The remaining documents do not show any expressed or implied conduct, representations, or statements by Dr. Oberlander conferring authority to collect reimbursement under the Louisiana Workers’ Compensation Act in favor of SMA. Thus, OWC did not err in ordering SMA to amend its pleading to set forth a right of action.
In its OWC-ordered amended claim, SMA retained all prior pleadings and attached the affidavit of its corporate representative, McEnary. Because the amended pleading contains no other averments, we turn our attention to the factual allegations as set forth in McEnary's affidavit. Notably, McEnary's affidavit does not mention Dr. Oberlander at all. It simply states that on occasion, SMA has agreed to associate or contract with "medical providers" to provide surgical supplies, and the "medical provider" has allowed SMA to seek reimbursement directly for the supplies provided. There is no allegation in McEnary's affidavit that SMA had any agreement with Dr. Oberlander, that Dr. Oberlander as a principal conferred authority on SMA as his mandatary to seek reimbursement for surgical supplies provided, or that SMA sought reimbursement for supplies used by Dr. Oberlander in Dier's surgery pursuant to such an agreement. We find these allegations inadequate to constitute allegations that a contract of mandate existed between Dr. Oberlander and SMA for SMA to seek reimbursement for the surgical supplies used in Dier's surgery. Mindful that under the Louisiana Workers’ Compensation Act it is a health care provider to whom reimbursement payments are statutorily due, and that SMA does not fall within the express definition of a health care provider absent a showing of a mandate/agency relationship, even taking as true all the allegations of fact set forth in SMA's pleadings, SMA has simply failed to allege the requisite mandate/agency relationship with Dr. Oberlander necessary to support a right of action in its favor. Therefore, the OWC correctly dismissed SMA's claims.
Since SMA failed to aver facts to support its right of action after OWC permitted an amendment of its pleading, we find no error in the dismissal of SMA's claims. See La. C.C.P. art. 934 ("When the grounds of the objection pleaded by the peremptory exception may be removed by amendment of the petition, the judgment sustaining the exception shall order such amendment within the delay allowed by the court. ... [I]f the plaintiff fails to comply with the order to amend, the action, claim, demand, issue, or theory shall be dismissed.").
DECREE
For these reasons, the OWC judgment is affirmed. All costs of this appeal are assessed to the claimant-appellant, Strategic Medical Alliance II, LLC.
AFFIRMED .