Opinion
Civil Action No. 3:02-CV-0656-D
May 30, 2003
MEMORANDUM OPINION AND ORDER
A hospital that provided extensive medical services to a patient injured in an automobile accident sues an ERISA employee welfare benefit plan for breach of contract and negligent misrepresentation to recover the costs of these services. The court must decide whether ERISA preempts these claims and, if not, whether defendant is entitled to summary judgment on the merits. The court holds that ERISA does not preempt the causes of action and that genuine issues of material fact preclude summary judgment as to all but one claim.
Employment Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.
I
Plaintiff Methodist Hospitals of Dallas ("Methodist") sues defendant Wal-Mart Stores, Inc. ("Wal-Mart") to recover under state-law theories of breach of contract and negligent misrepresentation for almost $120,000 in hospital services and supplies furnished by its Methodist Medical Center ("MMC") hospital unit to Preston Cave ("Cave") in October and November 2000. Cave was covered by the Wal-Mart Employee Health Benefit Plan ("Plan") — a self-funded ERISA employee welfare benefit plan — as a dependent of his stepfather. Cave was hospitalized at MMC for
The court granted Methodist leave to amend its complaint after Wal-Mart filed its motion for summary judgment. The court will decide Wal-Mart's motion based on the claims set out in Methodist's first amended complaint. Cf. Holmes v. Nat'l Football League, 939 F. Supp. 517, 522 n. 7 (N.D. Tex. 1996) (Fitzwater, J.) (holding that court may consider sufficiency of amended complaint in response to motion to dismiss filed before amended complaint was filed, where defects addressed in motion are also present in amended complaint).
Methodist sued Wal-Mart in Texas state court, and Wal-Mart removed the case to this court based on ERISA preemption. Methodist moved to remand the case. The court denied the motion in an April 10, 2003 order because, even if the case is not removable based on federal question jurisdiction (ERISA preemption), the parties are completely diverse citizens.
one month following a single car accident that Wal-Mart contends was caused by Cave's use of marihuana and therefore excluded from Plan coverage.
According to Methodist, Blue Cross Blue Shield of Texas, Inc. ("BCBS Texas") operated the BlueChoice Network ("Network"), which consisted of health care providers and participating payors. Network providers (i.e., hospitals, physicians, and other health care providers) contracted with BCBS Texas to provide services at negotiated prices to patients covered by participating payors. Network payors (i.e., insurers, employers, and other payors) contracted with BCBS Texas to pay for covered health care services directly to the service provider. Methodist was a Network provider and Wal-Mart was a Network payor. Methodist alleges that Wal-Mart agreed with BCBS Texas under a BlueChoice Participation Contract ("Participation Contract") to make prompt payment of covered health care services directly to the service provider, in this case Methodist via its MMC hospital unit. It also posits that it is an intended third-party beneficiary of the Participation Contract.
Methodist maintains that, following Cave's admission to MMC, it contacted Wal-Mart to verify that he was covered under the Plan and to determine the general terms of eligible benefits. On October 16, 2000 it used the Wal-Mart Benefits Hotline for this purpose and also contacted the Wal-Mart Pre-notification Unit, from whom it obtained pre-certification for three days of hospitalization and instructions concerning where to mail its claim. On December 5, 2000 Methodist conferred with BCBS Texas as Wal-Mart's agent. The BCBS Texas representative said that the claim was in pricing, i.e., that BCBS Texas was calculating the amount payable by Wal-Mart and/or the Plan, but that the claim had not yet been sent to Wal-Mart. In December 2000 BCBS Texas reiterated that the claim was still being processed; in January 2001 Wal-Mart confirmed that the claim had been received; and in March 2001 Wal-Mart confirmed that it had all needed information except a laboratory report (which MMC then sent Wal-Mart). On April 3, 2001 Wal-Mart denied Methodist's claim based on the Plan's exclusion of coverage for treatment or services that resulted from a Plan participant's being under the influence of alcohol or illegal drugs.
Methodist alleges that Wal-Mart is liable to it as a third-party beneficiary of the Participation Contract for breach of contract. It maintains that it provided hospital services and supplies to Cave, that Cave, the services, and the supplies were covered by the Plan, and that the services and supplies were not the result of Cave's being under the influence of alcohol or drugs. Therefore, Wal-Mart was contractually obligated to make prompt payment directly to Methodist, and it breached the Participation Contract by failing to do so.
Methodist also sues Wal-Mart for negligent misrepresentation based on Wal-Mart's representing that Cave was covered under the Plan, representing the extent of the benefits for which he was eligible, and indicating that Wal-Mart was obligated to pay Methodist's claim, less any applicable reductions. It maintains that Wal-Mart effectively represented that the charges for MMC's services and supplies would be covered.
Methodist also sues to recover attorney's fees, pre- and postjudgment interest, and costs.
According to Wal-Mart, Cave was injured in the automobile accident in question because he fell asleep while driving under the influence of marihuana. Cave tested positive for marihuana when he was admitted to MMC. When Methodist contacted Wal-Mart telephonically to obtain coverage information, Wal-Mart's customer service representative advised Methodist that Cave was covered under the Plan and provided information concerning eligible benefits. Before the caller was transferred to the customer service representative, however, a prerecorded statement advised her that "[t]he following information is not a guarantee of payment." Wal-Mart denied Methodist's claim based on the Plan's exclusion for medical charges that resulted from the use of illegal drugs. Cave did not appeal the Plan's decision denying coverage.
The Plan contained the following exclusion:
Benefits shall not be payable for treatment or services for the following:
Charges that were a result of the participant being under the influence of alcohol and/or having tested positive for illegal drug(s), or charges resulting from a motor vehicle accident in which the participant was a driver and was legally intoxicated.
D. App. 11.
Wal-Mart also maintains that, in 2000, there was no enforceable contract between BCBS Texas and Wal-Mart and that, even if there was one, it did not confer third-party beneficiary status on Methodist. It asserts that in 1994 BCBS Texas and Wal-Mart contracted for the Plan to access the BCBS Texas negotiated discounts with medical providers but that this agreement expired in 1999. Therefore, Wal-Mart did not have an enforceable agreement with BCBS Texas in 2000. On January 1, 2001 Wal-Mart entered into an Administrative Services Agreement ("Services Agreement") with BlueCross BlueShield of Illinois ("BCBS Illinois"), which covers Plan participants and other covered persons in Texas, including Cave, but the Services Agreement had an effective date of January 1, 2001, and it specifically disclaims the creation of third-party beneficiaries.
Wal-Mart moves for summary judgment. It contends that Methodist is not a third-party beneficiary of the Participation Contract or the Services Agreement and that Methodist's breach of contract claim is preempted by ERISA. Wal-Mart also argues that Methodist's negligent misrepresentation claim is preempted by ERISA and that it cannot recover on this claim because it cannot satisfy the elements of negligent misrepresentation.
Wal-Mart also moves for summary judgment dismissing the ERISA claim in Methodist's state-court petition. Because Methodist has omitted this cause of action from its first amended complaint, the court need not address this ground of Wal-Mart's motion.
II
The court turns first to Wal-Mart's contention that Methodist's breach of contract and negligent misrepresentation causes of action are preempted by ERISA.A
Citing Transitional Hospitals Corp. v. Blue Cross and Blue Shield of Texas, Inc., 164 F.3d 952 (5th Cir. 1999), and district court decisions decided thereafter, Wal-Mart argues that Methodist's breach of contract claim is preempted — even if Methodist is a third-party beneficiary — because all its rights are dependent upon and derived from Cave's rights to recover benefits under the Plan. Wal-Mart contends that Cave assigned his rights under the Plan to Methodist and that Methodist is suing to recover as a Plan assignee. Wal-Mart argues that even if the Services Agreement applies (despite its January 1, 2001 effective date and its specific disclaimer of third-party beneficiaries), Methodist is necessarily suing dependently on Cave's rights under the Plan because the Services Agreement obligates BCBS Illinois to pay only for services for which payment is due pursuant to the Plan.
Wal-Mart also relies on (and attempts to distinguish) Transitional Hospitals to argue that Methodist's negligent misrepresentation claim is preempted. It reasons that, because Cave undisputably is covered under the Plan, Methodist's claim is dependent upon and derived from Cave's rights to recover Plan benefits. This is so because the court must examine and interpret the Plan language and communications and representations between Methodist and the Plan, and because Methodist's claim is based on the extent of benefits allegedly represented by the Plan.
B
Methodist's breach of contract claim is not preempted by ERISA because Methodist is not suing under the Plan as Cave's assignee. Instead, Methodist is suing Wal-Mart as an alleged third-party beneficiary of the Participation Contract between Wal-Mart and BCBS Texas. Under ¶ 2.4 of the Participation Contract Wal-Mart promised, in pertinent part, to "make prompt payments for covered health services directly to the provider rendering the service[.]" D. App. 12. Although the terms and conditions of the Plan control whether Methodist is seeking payment for "covered health services," Methodist's right, if any, to recover payment for covered health services is governed by the Participation Contract. That Methodist could have sued, but opted not to, as Cave's assignee is not dispositive. Accordingly, Methodist's claim is neither dependent upon nor derived from Cave's rights to recover benefits under the Plan, and its breach of contract cause of action is not preempted under ERISA.
As the court notes infra in section II (C), its decision in Methodist Hospitals of Dallas v. O'Briant, No. 3:00-CV-0499-D (N.D. Tex. May 5, 2000) (Fitzwater, J.), teaches that a health care provider's claims are not preempted where — for whatever reason — coverage does not exist at the time of treatment and the party's cause of action does not relate to ERISA but arises under state law, see id. at 11-12.
Transitional Hospitals therefore does not control. In that case, the breach of contract claim was based on the assertion that the defendants had failed "to pay the full amount of benefits due under the term of the policy[.]" Transitional Hosps., 164 F.3d at 955. The policy was a self-funded employee welfare benefit plan under ERISA. See id. at 953. The plaintiff was suing to recover under the plan, not under a separate contract.
C
Methodist's negligent misrepresentation claim likewise is not preempted. In Transitional Hospitals the Fifth Circuit held that "ERISA does not preempt state law when the state-law claim is brought by an independent, third-party health care provider (such as a hospital) against an insurer for its negligent misrepresentation regarding the existence of health care coverage." Transitional Hosps., 164 F.3d at 954. Wal-Mart attempts to distinguish Transitional Hospitals from the instant case on the ground that this lawsuit involves a claim concerning the extent, not the existence, of Plan coverage. Wal-Mart maintains that it concedes that Cave is covered under the Plan, but it argues that he is not covered for medical services rendered as a result of his use of drugs.
This court at least implicitly rejected just such an alleged distinction in Methodist Hospitals of Dallas v. O'Briant, No. 3:00-CV-0499-D (N.D. Tex. May 5, 2000) (Fitzwater, J.). There the patient to whom Methodist had provided medical services was involved in an automobile accident, and the insurer denied coverage based on a policy exclusion for injuries sustained as a result of intoxication. Slip op. at 1. The court held that "due to her intoxicated state, [the patient] was not covered at all by the Plan at the time of her hospitalization and has no rights to benefits." Id. at 11 (emphasis added); see Syndicated Office Sys., Inc. v. S.E. Med Alliance, Inc., 1999 WL 600339, at *4-*5 (E.D. La. Aug. 6, 1999) (holding that ERISA did not preempt health care provider's Louisiana statutory claims for negligent misrepresentation and detrimental reliance where insurer allegedly verified coverage of plan participant's spouse then denied payment for treatment based on preexisting conditions). Instead, an example of an extent-of-coverage dispute is found in Transitional Hospitals. In that case, the plan beneficiary was entitled under the ERISA plan to greater benefits if the facility that rendered care was a participating hospital rather than a nonparticipating hospital. Transitional Hosps., 164 F.3d at 953.
Moreover, even in a case where there is some coverage, ERISA preemption is not automatic. The court must decide "whether the claim in question is dependent on, and derived from the rights of the plan beneficiaries to recover benefits under the terms of the plan." Id. at 955. If this court assumes arguendo that the present suit is an extent — rather than an existence-of-coverage case, there is still no preemption because, as the court explains below, Methodist's negligent misrepresentation claim is not dependent on the Plan. See id. (holding that claim was not dependent where plaintiff asserted misrepresentation claim to the extent plan beneficiary was not covered under plan).
Wal-Mart contends that Methodist's negligent misrepresentation claim is preempted because it is dependent upon and derived from Cave's rights to recover benefits under the Plan. It maintains that, to assess whether Methodist is entitled to recover, the court must examine and interpret the Plan language and the communications and representations made by and between Methodist and the Plan. The court disagrees. In Memorial Hospital System v. Northbrook Life Insurance Co., 904 F.2d 236 (5th Cir. 1990), the Fifth Circuit distinguished between independent and derivative misrepresentation claims. It held that ERISA did not preempt the misrepresentation cause of action because the plaintiff
brought [its] state law action in its independent status as a hospital, and Echols' assignment of benefits is irrelevant to Memorial's right to recover. It is undisputed that [the employer's] plan did not cover Echols for Memorial's services, and Memorial neither seeks benefits from the plan nor claims that the plan acted improperly in processing and denying Memorial's claim. The claim is thus independent of the plan's actual obligations under the terms of the insurance policy and in no way seeks to modify those obligations. Rather, Memorial seeks damages from an insurance company and its alleged agent, claiming that, had it not been for negligent misrepresentations of coverage, Memorial would not have accepted the financial risk of providing medical treatment to Echols. We do not think that Congress intended ERISA to regulate the commercial interactions of such entities in such situations.Id. at 250 (emphasis added) (citation omitted). Likewise, in the present case, Methodist brings this claim in its independent status. It neither seeks Plan benefits nor sues to modify Wal-Mart's obligations under the Plan. Methodist alleges, in pertinent part, that, in reliance on Wal-Mart's representations, it "provid[ed] its hospital services and supplies to Mr. Cave and/or [forewent] other actions it could and normally would have taken to secure payment from other sources in the event a patient lacks insurance coverage." Am. Compl. ¶ 21 (emphasis added). Therefore, as in Transitional Hospitals, Methodist's negligent misrepresentation cause of action assumes that Cave is not covered.
Accordingly, the claim is not preempted under ERISA.
Wal-Mart's reliance on Sundown Ranch, Inc. v. General American Life Insurance Co., 2001 WL 863596 (N.D. Tex. July 17, 2001) (Fish, J.), is misplaced. In Sundown Ranch the plaintiff sued as the assignee of the patient to whom it had rendered services under its chemical dependence program. Id. at *1. The plaintiff alleged that "General American improperly denied Doe benefits under the Plan and failed to pay medical benefits to Sundown." Id. at *2. Although the opinion (written, as it was, as unpublished) does not indicate unambiguously whether the plaintiff also sued on a basis other than under the ERISA plan, in Judge Fish's analysis of preemption, he characterized the case only "[a]s a suit by an assignee to recover benefits from a covered plan[.]" id. at *3 As the court has explained above, unlike the plaintiff in Sundown Ranch, Methodist does not sue Wal-Mart as Cave's assignee. See P. Br. at 13 (asserting, in context of breach of contract claim, that "Methodist has sued Wal-Mart . . . directly, in Methodist's own right, and not as an assignee of Preston Cave's rights but in vindication of Methodist's own rights").
III
Having concluded that Methodist's causes of action are not preempted, the court now determines whether Wal-Mart is entitled to summary judgment dismissing them on the merits. The court considers first Methodist's breach of contract claim.A
Wal-Mart contends that Methodist is not entitled to recover for breach of contract. It maintains that Methodist cannot establish that it is a third-party beneficiary of the Participation Contract because the agreement expired in September 1999, and BCBS Texas and Wal-Mart did not have an enforceable contract for 2000, when MMC rendered the medical services at issue to Cave. Wal-Mart also argues that Methodist cannot demonstrate from the terms of the Participation Contract itself that BCBS Texas and Wal-Mart made the agreement for the benefit of Methodist and intended to benefit Methodist at the time they entered into the agreement.
Wal-Mart argues that the BCBS Illinois Services Agreement did not take effect until January 1, 2001, after Methodist rendered services to Cave, and that it cannot serve as a basis for recovery. Methodist does not rely on this agreement on a basis for recovery. See P. Br. at 9 n. 32. The court need not address whether Methodist can recover as a third-party beneficiary of the Services Agreement.
In an argument that blends both contentions, Wal-Mart asserts that, absent an enforceable contract, Methodist cannot make the required showing for third-party beneficiary status.
Methodist counters that its evidence concerning the two telephone calls to Wal-Mart raises a fact issue regarding whether the Participation Contract was still in existence because both occurred during the gap period during which Wal-Mart maintains the agreement was not effective. It asserts that there is other evidence that raises a genuine issue of material fact whether the Participation Contract was adhered to during 2000 and that terms contained in the Participation Contract demonstrate that Methodist was a third-party beneficiary.
Methodist also argues that Wal-Mart has failed to prove conclusively that the Participation Contract was not in effect between September 1, 1999 and January 1, 2001. See P. Br. at 7-9. Wal-Mart does not have this burden. As the summary judgment movant regarding an issue on which Methodist will have the burden of proof at trial, it can point to the absence of evidence that the Participation Contract was extant during the relevant period. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
B
Methodist has introduced sufficient evidence to present a genuine fact issue whether the Participation Contract remained in effect during the gap period. According to Methodist's proof, in one call that it placed to Wal-Mart, the Plan representative instructed Methodist to mail its claim to BlueChoice. In the other, it was directed to mail the claim to "TXBC," which Methodist maintains refers to "Texas Blue Cross" or "Blue Cross Texas." Methodist argues that Wal-Mart would not have given these instructions were it not still participating in the Network on October 16, 2000 and November 8, 2000. Methodist also offers evidence that 409 BlueChoice patients who were Wal-Mart employees or dependents were inpatients of Methodist hospital units during 2000, and in numerous instances their accounts were paid at Network rates. And it has also introduced proof that, in the explanation of benefits, Wal-Mart explicitly stated that the discounts imposed on submitted charges were "subject to provider contract requirements with Blue Cross and Blue Shield of Texas, Inc." P. App. 27-36. Accordingly, a trier of fact could reasonably find that, during the period in question, Wal-Mart continued to operate under the terms of the Participation Contract.
C
Even if Wal-Mart has failed to establish that the Participation Contract was no longer in effect, however, Methodist must still demonstrate that it is a third-party beneficiary of the contract. The court holds that it cannot meet this burden.
1
There is a strong presumption in Texas law against third-party beneficiary agreements, and we must look to the terms of the contract to determine whether the contracting parties expressly demonstrated an intent to depart from that presumption. A third-party beneficiary contract will not be created by implication. We must begin with the presumption that the parties to a contract contracted for themselves unless it "clearly appears" that they intended the third party to benefit from the contract. The intent of the contracting parties is controlling. If there is any reasonable doubt as to the contracting parties' intent to confer a direct benefit on the third party by way of the contract, the third-party beneficiary claim must fail.
A third party faces a "difficult burden" in establishing a contractual third-party beneficiary claim. A third party may enforce or recover under a contract only if: (1) the contracting parties intended to secure some benefit to that third party; and (2) the contracting parties entered into the contract directly for the third party's benefit. The intent of the contracting parties to confer a direct benefit to the third party must be "clearly and fully" expressed in the agreement itself, or enforcement by the third party will be denied.
To qualify as an intended third-party beneficiary, the third party must show that it is either a "donee" or "creditor" beneficiary. The fact that a third party may receive an incidental benefit from a contract is not sufficient to provide him a right of action to enforce or recover under the contract. Furthermore, the contracting parties must intend to secure a benefit for the specific third party bringing the action; it is not enough that the contract is designed to benefit a broad class of people, of whom the third-party might be a member.Ortega v. City Nat'l Bank, 97 S.W.3d 765, 773 (Tex.App. 2003, no pet. h.) (on rehearing) (citations omitted).
"An agreement benefits a `donee' beneficiary if, under the contract, `the performance promised will, when rendered, come to him as a pure donation.'" Stine, 80 S.W.3d at 589 (quoting MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999)). "[A]n agreement benefits a `creditor' beneficiary if, under the agreement, `that performance will come to him in satisfaction of a legal duty owed to him by the promisee.'" Id (quoting MCI, 995 S.W.2d at 651). "This duty may be an indebtedness, contractual obligation or other legally enforceable commitment owed to the third party." Id. (citing MCI, 995 S.W.2d at 651). "[A] creditor beneficiary is `a third person to whom the bargain-seeking party (the "promisee" or contract party exacting the particular stipulation) has an indebtedness, contractual obligation, or other legally enforceable commitment to the third party which commitment the bargain-seeker wishes to discharge or protect by stipulating that the bargain-giver (the opposing contract party or "promisor" concerning the particular stipulation) shall deliver a contract performance to the third party.'" Ortega, 97 S.W.3d at 774 (quoting MJR Corp. v. B B Vending Co., 760 S.W.2d 4, 11 (Tex.App. 1988, writ denied)). Thus a court must identify the bargain seeker in the agreement, examine whether there is any indebtedness, contractual obligation, or other legally enforceable commitment between the bargain seeker and the third party, and determine whether the bargain seeker clearly intended to discharge or protect that indebtedness, contractual obligation, or other legally enforceable commitment by agreeing that the bargain-giver would contractually undertake to satisfy the same. Id.
2
There are several reasons why Methodist cannot overcome the strong presumption against third-party beneficiary status and establish that it is a creditor beneficiary of the Participation Contract.First, there is no indication in the Participation Contract itself that BCBS Texas and Wal-Mart entered into the agreement directly for Methodist's benefit. The Participation Contract explicitly states that "[t]his agreement constitutes a contract between Wal-Mart and [BCBS Texas.]" D. App. 14. BCBS Texas sought to sell administrative services (e.g., claims processing) to Wal-Mart. See id. at 13 (providing for payment of fee for services). Wal-Mart sought these services and desired access to health care providers who rendered services at BCBS Texas-negotiated rates, to help it control Plan costs. See id at 12 (contractual recital referring to Wal-Mart's use of Network providers "as an instrument to assist in controlling the cost of services rendered" and to desire "to utilize administrative services provided by [BCBS Texas]"). The detailed provisions of the agreement reflect the intentions of BCBS Texas and Wal-Mart to contract for themselves in order to carry out this relationship, not to benefit any third party, including Methodist.
Second, there is no indication in the Participation Contract that BCBS Texas intended to confer on Methodist a right to enforce a payment obligation owed by BCBS Texas to Methodist. The agreement expressly provides that BCBS Texas "is not assuming any financial risk or obligation with respect to payment of claims by virtue of its execution and performance of this Agreement." Id at 14.
Third, even assuming that Wal-Mart was indebted, contractually obligated, or otherwise legally committed to Methodist — e.g, for services rendered to Plan participants — Wal-Mart only promised that, based on the BCBS Texas contracted allowance, it would "make prompt payments for covered health care services directly to the provider rendering the service." Id. at 12. Methodist is not specifically identified any place in the contract as a provider whom Wal-Mart promised to pay. At most, it is an unnamed Network provider. "[I]t is not enough that the contract is designed to benefit a broad class of people, of whom the third-party might be a member." Ortega, 97 S.W.3d at 773.
Fourth, "there is no language that indicates that [Methodist] may sue to enforce the agreement to secure the performance of an action intended to discharge or protect a legal obligation owed to [it]." Id at 775.
Fifth, although the Participation Contract evinces Wal-Mart's desire to access Network providers at favorable negotiated rates, see D. App. 12, and BCBS Texas' contracts with individual Network providers, in combination with the Participation Contract, contemplate a mutually-beneficial relationship among providers, BCBS Texas, and Wal-Mart, third-party beneficiary status must be based on the Participation Contract itself, not on other agreements. See Ortega, 97 S.W.3d at 775 (holding that third-party beneficiary succeeds or fails according to provisions of contract sued upon and that court would examine only language of agreement itself).
Methodist has not overcome the strong presumption against third-party beneficiary agreements. It has not met its difficult burden of establishing a contractual third-party beneficiary claim. BCBS Texas and Methodist did not expressly demonstrate an intent to contract directly for Methodist's benefit. After considering the entire agreement and all its provisions, see Stine, 80 S.W.3d at 589, the court holds that, at best, Methodist can be considered an incidental beneficiary of the Participation Contract. Accordingly, a reasonable trier of fact could not find that Methodist is entitled recover as a third-party beneficiary, and Wal-Mart is entitled to summary judgment dismissing Methodist's breach of contract claim.
IV
Wal-Mart also seeks summary judgment dismissing Methodist's negligent misrepresentation cause of action. It maintains that Methodist cannot prove three of the five essential elements of this claim: that Wal-Mart provided false information, that Wal-Mart did not exercise reasonable care or competence in obtaining or communicating the information, or that Methodist justifiably relied on the representation.
Under Texas law, to recover for negligent misrepresentation, Methodist must prove that (1) Wal-Mart made a representation in the course of its business, or in a transaction in which it had a pecuniary interest, (2) Wal-Mart supplied false information for the guidance of Methodist in its business, (3) Wal-Mart did not exercise reasonable care or competence in obtaining the information, and (4) Methodist suffered pecuniary loss by justifiably relying on the representation. See Great Plains Trust Co. v. Morgan Stanley Dean Witter Co., 313 F.3d 305, 318 (5th Cir. 2002) (Texas law).
A
Wal-Mart argues that Methodist cannot satisfy the "false information" component of this cause of action because, under Texas law, negligent misrepresentations are limited to representations of existing facts, not promises of future conduct, and a promise to pay someone in the future does not qualify as a statement of existing fact. It also appears to advance the slightly different argument that it did not provide Methodist false information, as alleged. Wal-Mart points to summary judgment evidence that, when Methodist contacted it on October 16, 2000, its representative stated accurately that Cave was covered under the Plan, subject to a deductible and co-payment requirement. It points to an absence of evidence that Wal-Mart's representative stated that the Plan would pay Methodist for services rendered to Cave regardless of the Plan's limitations and exclusions.Methodist's negligent misrepresentation claim is not based on a promise of future performance, such as a promise to pay. Wal-Mart cites Allied Vista, Inc. v. Holt, 987 S.W.2d 138 (Tex.App. 1999, pet. denied), for this premise. In Allied Vista, however, the defendant allegedly represented to provide all equipment needed to start a plant and to pay the plaintiff an specified annual salary. Id. at 141. Both representations clearly were promises of future performance and therefore not actionable. In the instant case, by contrast, Methodist has introduced evidence that Wal-Mart represented that Cave was covered by the Plan and that his hospital stay was pre-certified for three days. See P. App. 15. These are representations of existing facts, not promises of future performance.
Methodist has raised a fact issue whether Wal-Mart represented that the Plan would pay Methodist for services rendered to Cave regardless of the Plan's limitations and exclusions. According to Methodist's evidence, Wal-Mart stated that Cave was covered and, critically, it pre-certified Cave for three days of hospitalization. According to Methodist's evidence, Wal-Mart has refused even to pay for the days that it pre-certified.
The parties do not appear to define the term "pre-certified," and it appears from the court's research that pre-certification may have different meanings depending on the context, including the specific terms of the contract in question. Therefore, although for purposes of this opinion the court has assumed a specific concept of pre-certification, it does not purport to fix that definition should the parties provide the court different evidence of its meaning.
B
The court considers next whether Methodist can satisfy the requirement that Wal-Mart did not exercise reasonable care or competence in obtaining or communicating the information.
Wal-Mart maintains that, in response to Methodist's coverage inquiry, Wal-Mart provided entirely accurate information about Cave's coverage levels and reasonably advised Methodist's representative "[t]he following information is not a guarantee of payment." It reasons that it could not have known at the time of the contact — two days after Cave was admitted — that marihuana would be found in Cave's system and that the charges would thus be excluded from coverage. Therefore, it contends that Methodist cannot demonstrate that Wal-Mart acted unreasonably in conveying information.
Under the evidence that Methodist has introduced, however, Wal-Mart represented that Cave was covered, and it pre-certified Cave for three days of hospitalization, without requesting, or even indicating a need for, medical information that would inform Wal-Mart whether an exclusion applied. There is thus a genuine issue of material fact whether Wal-Mart exercised reasonable care or competence in obtaining or communicating the information.
C
Wal-Mart argues that Methodist cannot prove that it justifiably relied on the alleged representation because, in the telephone call in question, Wal-Mart informed Methodist "[t]he following information is not a guarantee of payment." D. App. 3. According to Wal-Mart, when a provider called the Plan in 2000, she heard the foregoing disclaimer before being transferred to a customer service representative. Id Methodist's evidence, however, does not include a reference to this disclaimer, and Wal-Mart's proof relates to what was the standard practice in 2000, not what occurred during the telephone call in question. There is thus a genuine issue of material fact whether the disclaimer was given in this instance. Moreover, even if the court assumes arguendo that Wal-Mart did include the disclaimer, it is essentially arguing that Methodist could not have justifiably relied on specific representations about Cave's coverage, and on a specific three-day hospital pre-certification, because they were preceded by boilerplate language transmitted by a recording while the caller waited to speak to a Plan representative. A trier of fact must decide whether this prerecorded statement rendered Methodist's reliance on specific representations about the patient and treatment in question unjustified.
Methodist presents several objections to the evidence on which Wal-Mart relies to establish that it invoked this disclaimer during the call in question. See P. Br. at 20-21. Because the court concludes that there is a genuine issue of material fact even if the evidence is admissible, it need not decide whether the objections have merit.
* * *
Wal-Mart's January 3, 2003 motion for summary judgment is granted in part and denied in part.