Medical Center Inc v. Humana Military Healthcare Services, Inc. et al, No. 4:2010cv00124 - Document 31 (M.D. Ga. 2012)
Court Description: ORDER granting 24 Motion for Summary Judgment. Ordered by Judge Clay D. Land on 08/10/2012 (ajp)
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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION THE MEDICAL CENTER, INC., Plaintiff, * * vs. * CASE NO. 4:10-CV-124 (CDL) HUMANA MILITARY SERVICES, INC., and PGBA, LLC, HEALTHCARE * * Defendants. * O R D E R After making erroneous overpayments for medical claims to Plaintiff The Medical Center, Inc. (“Medical Center”), Defendants Humana Military Healthcare Services, Inc. (“HMHS”) and PGBA, LLC (“PGBA”) (collectively, “Defendants”) offset the amounts of the overpayments against future claim payments owed to Medical Center. were not Medical Center contends that these offsets authorized and alleges state law claims against Defendants based upon breach of contract, conversion, tortious interference with contractual and business relationships, and the voluntary payment doctrine. diversity of citizenship. Jurisdiction is based upon Presently pending before the Court is Defendants’ Motion for Summary Judgment (ECF No. 24). reasons explained below, Defendants’ motion is granted. For the SUMMARY JUDGMENT STANDARD Summary judgment may be granted only “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.” Civ. P. 56(a). In determining whether a genuine Fed. R. dispute of material fact exists to defeat a motion for summary judgment, the evidence is viewed in the light most favorable to the party opposing summary judgment, drawing all justifiable inferences in the opposing party=s favor. U.S. 242, 255 (1986). Anderson v. Liberty Lobby, Inc., 477 A fact is material if it is relevant or necessary to the outcome of the suit. Id. at 248. A factual dispute is genuine if the evidence would allow a reasonable jury to return a verdict for the nonmoving party. Id. FACTUAL AND PROCEDURAL BACKGROUND Although Medical Center filed a response to Defendants’ Statement of Material Facts as to Which There Is No Genuine Issue for Trial (“SMF”), Medical Center’s response did not include specific citations to the record to controvert the facts contained in Defendants’ SMF. Defs.’ Statement of Material See generally Facts as to Pl.’s Resp. to Which There Is No Genuine Issue for Trial, ECF No. 28 [hereinafter Pl.’s Resp. to Defs.’ SMF]. Accordingly, Medical Center failed to comply with Local Rule 56, and the facts contained in Defendants’ SMF are deemed admitted. See M.D. Ga. 2 R. 56 (“All material facts contained in specifically the moving controverted party’s by statement specific which citation to are the not record shall be deemed to have been admitted”). Medical Center did submit an affidavit with its response to Defendants’ Motion for Summary Judgment, Pl.’s Resp. to Defs.’ Mot. for Summ. J. Ex. A, Brumbeloe Aff., ECF No. 27-1, but Medical Center did not cite to the affidavit in the response to Defendants’ SMF, see generally Pl.’s Resp. to Defs.’ SMF. Thus, the affidavit is not properly considered by the Court. See Reese v. Herbert, 527 F.3d 1253, 1268 (11th Cir. 2008) (“The proper course in applying Local Rule [56] at the summary judgment stage is for a district court to disregard or ignore evidence relied response to yields facts on the by the movant’s contrary respondent—but statement to those of not cited undisputed listed in the in its facts—that movant’s statement.”). The facts contained in Defendants’ SMF, viewed in the light most favorable to Medical Center, are as follows. I. The Hospital Agreement HMHS is a managed care support contractor for the United States Department of Defense’s TRICARE program, formerly known as the Civilian Health and Medical Program of the Uniformed Services (“CHAMPUS”). Defs.’ Mot. for Summ. J. Ex. 1, Biefeld Aff. ¶ 2, ECF No. 24-3. PGBA is a subcontractor for HMHS and 3 provides administrative services on behalf of HMHS, including claims administration services under TRICARE. and Medical Center entered into an Id. ¶ 3. agreement HMHS (“Hospital Agreement”) for Medical Center to provide health care services to members of the TRICARE program. for Summ. J. [hereinafter Ex. 2, Hospital Hospital See generally Defs.’ Mot. Agreement, Agreement]. The ECF No. Hospital 26-1 Agreement applies to services provided by Medical Center to all persons designated by HMHS to be eligible members, including active duty military personnel (“Beneficiaries”), to receive benefits under an agreement between HMHS and TRICARE Management Activity. ¶ 1. Under the Hospital Agreement, Medical Center Id. is a “Participating Hospital” of HMHS and subject to the terms and conditions of the Hospital Agreement. agreed to accordance provide with health TRICARE (“Covered Services”). abide by all care services regulations, Id. quality Id. ¶ 2. for Medical Center Beneficiaries policies and in procedures Medical Center also “agree[d] to assurance, utilization management, grievance, appeals and other policies and procedures established and revised by HMHS and/or TRICARE from time to time.” Id. ¶ 4. Specifically, the Hospital Agreement sets out the policies and procedures that Medical Center agreed to follow in the “HMHS Tricare Provider Handbook” (“Handbook”). 4 Id.; Hospital Agreement Attach. A, HMHS TRICARE Provider Handbook 7, ECF No. 26-1 at 8 of 15. The Hospital Agreement contains the following provisions regarding payment procedures and rates. The Hospital Agreement specifies that HMHS must pay Medical Center in accordance with the terms set out in “Attachment B” to the Hospital Agreement, and Medical Center agreed that those payments, plus any payments owed by Beneficiaries, including but not limited to copayments, coinsurance deductibles and/or cost-share payment in full for all Covered Services. 13. amounts, constitute Hospital Agreement ¶ Attachment B provides that Medical Center “agree[d] that in no event shall payments made for medical services provided to Beneficiaries exceed one hundred CHAMPUS/TRICARE allowable” rate. percent (100%) of any Hospital Agreement Attach. B, Payment Arrangement For CHAMPUS TRICARE Program Beneficiaries 8, ECF No. 26-1 at 9 of 15. The Hospital Agreement also “authorizes HMHS to deduct monies that may otherwise be due and payable to [Medical Center] from any outstanding monies that [Medical Center] may, for any reason, owe to HMHS.” Agreement was amended Hospital Agreement ¶ 15. effective April 11, 2007, The Hospital and Medical Center again agreed to abide by the policies and procedures set out in the Handbook. Hospital Agreement, Amendment to Agreement ¶ F, ECF No. 26-1 at 13 of 15. The policies and procedures in 5 the Handbook request that Medical Center return any duplicate payments or overpayments Beneficiary. Defs.’ made for for Summ. Mot. Provider Handbook 83, ECF No. 24-5. a claim J. for Ex. 3, a TRICARE 2007 TRICARE In the event that Medical Center does “not return the overpayment[s], then PGBA may, after written notice, offset future claim payments.” the amount of double payment against Id.; accord Defs.’ Mot. for Summ. J. Ex. 4, 2009 TRICARE Provider Handbook 96, ECF No. 24-7. The operations manual for contractors like HMHS and PGBA directs the contractors to correct all claims, including recouping overpayments. erroneously processed Defs.’ Mot. for Summ. J. Ex. 6, TRICARE Operations Manual 6010.51-M, August 1, 2002, Claims Adjustments and Recoupments Ch. 11, § 1, ¶ 5, ECF No. 249. When requesting a refund for overpayments or duplicate payments, contractors must provide “[a] clear explanation of why the payment was not correct.” II. Id. at Ch. 11, § 3, ¶ 14.1. Offset of Overpayments As a result of an audit, HMHS and PGBA determined that overpayments Medical in the Center for Biefeld Aff. ¶ 17. Center resulted of the from amount services $125,959.94 rendered to had been TRICARE made to members. PGBA wrote Medical Center advising Medical overpayments an of and “[i]ncorrect explaining application schedules for outpatient care.” the of overpayments government fee Defs.’ Mot. for Summ. J. Ex. 6 7, Letter from PGBA to Medical Center (Sept. 16, 2009), ECF No. 24-10 at 2. The letter requested Medical Center return the overpayments to PGBA within thirty days. notified Medical Center that PGBA was Id. at 2-3. required to PGBA annotate Medical Center’s records to enable PGBA to collect the erroneous payments by administrative offset if Medical Center failed to mail payment to PGBA. The Id. at 3. letter from PGBA to Medical Center also included a “Claim Detail” spreadsheet containing the following information for each overpaid claim: (1) a patient account number, (2) the “billed amount,” charges,” and spreadsheet (5) (3) the the “refund specified “paid that amount,” amount.” overpayment (4) Id. the at “correct The because occurred 4-9. each “claim was incorrectly keyed/coded which caused it to process at a higher allowable rate, which resulted in an overpayment.” Id. at 9. Approximately another letter one month regarding the later, PGBA overpayments Center to return the overpayments. sent Medical and Center asked Medical Defs.’ Mot. for Summ. J. Ex. 8, Letter from PGBA to Medical Center (Oct. 16, 2009), ECF No. 24-11 at 2. The letter included the Claim Detail spreadsheet previously provided by PGBA to Medical Center. Id. at 5-10. When Medical Center did not submit the refund after sixty days, PGBA withheld $117,979.40 from 7 the amount due on Medical Center’s current claim and applied it against the overpayments. Defs.’ Mot. for Summ. J. Ex. 9, Letter from PGBA to Medical Center (Nov. 19, 2009), ECF No. 24-12 at 2. PGBA requested that Medical Center send a check for $7,980.54 to cover the remaining balance on the overpayments. Id. Medical Center again refused to send a refund check for the overpayments, and PGBA withheld the remaining balance of $7,980.54 due on Medical Center’s current claim, resulting in full payment by Medical Center for the overpayments. Defs.’ Mot. for Summ. J. Ex. 10, Letter from PGBA to Medical Center (Nov. 21, 2009), ECF No. 24-13 at 2. DISCUSSION Medical Center asserts various theories of recovery under Georgia law for Defendants’ alleged wrongful offset of the overpayments, including claims based upon the voluntary payment doctrine, breach of contract, conversion. brings a claim against PGBA for Medical Center also tortious contractual and business relationships. interference with Defendants seek summary judgment on all claims.1 1 As explained below, the Court grants summary judgment on the state law grounds asserted by Defendant. Defendants also seek summary judgment on the alternative basis that Medical’s Center’s claims are preempted, but the Court finds it unnecessary to reach the preemption issue because Defendants are entitled to summary judgment even if Medical Center’s claims are not preempted. 8 I. Medical Center’s Claim Under the Voluntary Payment Doctrine Medical Center alleges in its Complaint that it is entitled to recover the amount offset by Defendants under the voluntary payment doctrine. Under Georgia law, the voluntary payment doctrine provides that: Payments of claims made through ignorance of the law or where all the facts are known and there is no misplaced confidence and no artifice, deception, or fraudulent practice used by the other party are deemed voluntary and cannot be recovered unless made under an urgent and immediate necessity therefor or to release person or property from detention or to prevent an immediate seizure of person or property. O.C.G.A. § 13-1-13. payment doctrine Medical Center argues that the voluntary makes the overpayments nonrefundable to Defendants because Defendants voluntarily made the payments to Medical Center. Defendants respond that the voluntary payment doctrine is inapplicable Medical because Center the Hospital specifically Agreement authorized between HMHS to HMHS and offset overpayments against future payments otherwise due to Medical Center. Medical Center acknowledges that the Hospital Agreement and the TRICARE regulations give Defendants the right to offset overpayments. Pl.’s Mem. of Law in Supp. of Its Resp. to Defs.’ Mot. for Summ. J. 10, ECF No. 29 [hereinafter Pl.’s Mem.]. The Court finds that because a contractual agreement exists between Medical Center and HMHS providing for the offset of overpayments 9 against future claims, the voluntary payment doctrine does not make the overpayments nonrefundable to HMHS. v. Aycock, 188 Ga. 46, 49, 2 S.E.2d See Speed Oil Co. 666, 667-68 (1939) (reasoning that where the plaintiff gas station attendant agreed to pay his employer an amount of money sufficient to cover the amount stolen by “bandits” and the employer agreed to reimburse the attendant if he was found not at fault, the employer could not rely on the previous version of O.C.G.A. § 13-1-13 to prevent repayment of the funds); Lewis v. Colquitt Co., 71 Ga. App. 304, 30 S.E.2d 801, 806 (1944) (finding that the previous version of O.C.G.A. § 13-1-13 did not apply because there was an understanding that the deposit at issue was paid “on the condition that it was to be refunded, if it should ultimately be determined that the payment was improperly demanded.”). The authority cited by Medical Center in support of its claim under the voluntary payment doctrine, Liberty National Life Insurance Co. v. Radiotherapy of Georgia, P.C., 252 Ga. App. 543, 557 S.E.2d 59 (2001), is distinguishable because there was no agreement in Liberty National Life Insurance Co. that allowed the plaintiff to recover the overpayments. Cf., Liberty Nat’l Life Ins. Co., 252 Ga. App. at 545-546, 557 S.E.2d at 61-62 (concluding the voluntary payment doctrine prevented the plaintiff from recovering the difference between the defendant’s billed charges and the “reasonable and customary” amount allowed 10 under the insurance policies because the plaintiff voluntarily paid the defendants billed charges). Accordingly, Defendants are entitled to summary judgment on Medical Center’s claim under the voluntary payment doctrine. II. Medical Center’s Breach of Contract and Conversion Claims Medical Center argues that Defendants breached the Hospital Agreement by failing to pay Medical Center’s future claims and converted funds by wrongfully withholding the payment of claims currently due and payable to Medical Center. “The elements for a breach of contract claim in Georgia are the (1) breach and the (2) resultant damages (3) to the party who has the right to complain about the contract being broken.” Norton v. Budget Rent A Car Sys., Inc., 307 Ga. App. 501, 502, 705 S.E.2d 305, 306 (2010) (internal quotation marks omitted). of conversion, Medical Center must show To prove a claim “(1) title to the property or the right of possession, (2) actual possession in the other party, (3) demand for return of the property, and (4) refusal by the other party to return the property.” Johnson v. First Union Nat’l Bank, 255 Ga. App. 819, 823, 567 S.E.2d 44, 48 (2002). Medical Center’s theory of recovery under either claim hinges on Medical Center’s assertion that Defendants wrongfully offset the overpayments. The undisputed evidence presented by Defendants establishes the following: (1) Medical Center agreed 11 that payment for services under the Hospital Agreement could not exceed 100% of the maximum allowable amount under CHAMPUS/TRICARE, (2) that the Hospital Agreement allowed HMHS to deduct monies that may otherwise be due to Medical Center from any outstanding monies that Medical Center owed to HMHS for any reason, and (3) that PGBA could overpayments against future claims. Medical Center concedes that the Defendants to offset overpayments. offset the amount of As previously mentioned, Hospital Agreement Pl.’s Mem. 10. allowed Thus, to succeed on either the breach of contract or conversion claim, Medical Center must show it was not actually overpaid under TRICARE for the services rendered. The create a Court concludes genuine actually made pointed the overpayments fact that dispute overpayments Court resulted to Medical Center on issue to Medical evidence from the an has of whether Center. demonstrating “[i]ncorrect failed HMHS Defendants that application government fee schedules for outpatient care,” to the of Letter from PGBA to Medical Center (Sept. 16, 2009), ECF No. 24-10 at 2, and that overpayments occurred because each “claim was incorrectly keyed/coded which caused it to process at a higher allowable rate,” id. at 9. In light of this evidence, the Court rejects Medical Center’s contention provide an adequate that explanation 12 Defendants for why have each failed claim to was erroneously paid to Medical Center. The Court finds that Medical Center has failed to create a genuine factual dispute as to whether HMHS made overpayments amount listed for each claim. to Medical Center in the As a result, summary judgment is proper on Medical Center’s breach of contract and conversion claims. III. Tortious Interference Relationships Medical Center also with Contractual asserts a claim and Business for tortious interference with contractual and business relationships against PGBA. To prevail on a claim for tortious interference with contractual or business relationships, a plaintiff must show: (1) improper action or wrongful conduct by the defendant without privilege; (2) the defendant acted purposely and with malice with the intent to injure; (3) the defendant induced a breach of contractual obligations or caused a party or third parties to discontinue or fail to enter into an anticipated business relationship with the plaintiff; and (4) the defendant’s tortious conduct proximately caused damage to the plaintiff. J. Kinson Cook of Ga., Inc. v. Heery/Mitchell, 284 Ga. App. 552, 556-57, 644 S.E.2d 440, 446 (2007). tortious interference, one must be “In order to be liable for a stranger to both the contract at issue and the business relationship giving rise to and underpinning the contract.” Atlanta Mkt. Ctr. Mgmt., Co. v. McLane, 269 Ga. 604, 609, 503 S.E.2d 278, 283 (1998). “[T]hus, all parties to an interwoven contractual agreement cannot be 13 liable for tortious interference with any of the contracts or business relationships arrangement.” that underlie such contractual J. Kinson Cook of Ga., Inc., 284 Ga. App. at 557, 664 S.E.2d at 446. “Where a defendant has a financial interest in one of the parties to the contract or in the contract, the defendant is relationship, contract.” not even a stranger though to it is the contract not a or signatory business to the Tidikis v. Network for Med. Commc’ns & Research, LLC, 274 Ga. App. 807, 813, 619 S.E.2d 481, 486 (2005). The Court finds PGBA was not a stranger to the Hospital Agreement or to the business relationship between Medical Center and HMHS under demonstrates that Georgia PGBA law. was a The undisputed subcontractor to the evidence Hospital Agreement providing administrative services to HMHS, including claims administration Biefeld Aff. ¶ 3. services under the TRICARE program. The evidence also demonstrates PGBA acted in its capacity as a subcontractor under the Hospital Agreement when it offset the overpayments. See Letter from PGBA to Medical Center (Nov. 19, 2009), ECF No. 24-12 (notifying Medical Center that PGBA withheld $117,979.40 from the amount due on Medical Center’s current claim and applied the amount against the overpayments); Letter from PGBA to Medical Center (Nov. 21, 2009), ECF No. 24-13 at 2 (notifying Medical Center that PGBA withheld $7,980.54 from the amount 14 due on Medical Center’s current claim and applied the amount against the overpayments). Accordingly, Defendants are entitled to summary judgment on Medical Center’s tortious interference claim. CONCLUSION Based on the foregoing, Defendants’ Motion for Summary Judgment (ECF No. 24) is granted. IT IS SO ORDERED, this 10th day of August, 2012. S/Clay D. Land CLAY D. LAND UNITED STATES DISTRICT JUDGE 15
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