Complete Medical Solutions, L.L.C. VS Health Net Federal Services, L.L.C.

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STATE OF LOUISIANA RT COi OF APPEAL FIRST IRCUIT Z G NUMBER 2013 CA 0367 COMPLETE MEDICAL SYSTEMS L C f r VERSUS HEALTH NET FEDERAL SERVZCES L C Judgment Rendeared November 1 2013 X Y X X K X X Appealed from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana Docket Number C614023 The Honorable Timothy E Kelley Judge Presiding x ea Fxie ir r Michael A Patterson Counsel for Plaintiff Appellant Baton Complete Medical Solutions L C Rouge LA James C Percy David M Kerth Counsel for Defendant Appellee Health Net Federal Services L C Baton Rouge LA BEFORE WHIPPLE C WELCH AND CRAIN JJ J WHIPPLE C J This matter is before us appeaa y plaintdff omplete Medical Solutions L frorz a jud the trial court ranting summary judgment C xof men in favor of the defendant Health N Federal rzvflces L ar dismissing t d scYaims with prejudice plaintiff For the reasons Yhat follow wre aftitxn FACTS AND PRHISTORY CEDtiRAL This appeal arises from a judgr x in ccnnection with an invoice ent xidered bearing 5762 and dated March 23 al l xni was issued by Coznplete Medieal h Solutions L CMS to 1 Neti Feder SL Health Net C itealt slL C and demanded pa fox cert fees ass u 9 ixnizs c software and sn ciated i h f an annual maintenaalce fe for dSN 16 t 1 CMS is a taling 516 SQ 965 software development company that along witki several ita development partners was in the process ofcYeveioping a soitivare pacicage designed to provide the Veterans Administration VA z a fee basis al system Health Net ith ime is a company that held severai contr zvith tb VA to provade repricing cts e services On April 12 2011 N Exee C David R Fenig i 3ealc 1 atzvk c i s un rsent a letter to Robin H CVIS xecutAvv dz rt s racknowledging that Health strat in r Net was in receipt of invoice 76 ar clv fhat Health N w pay the ds ra t ould annual maintenance ee far th ti 1 sLf in he a of 21 IS rvare t n o 50 in 639 that Health Net had agreed to uibut zze that H Net never agreed to ase rcl ting aith compensate CMS for any other goads or services sei forth in the invoice including the additional 14 unzts of software Mr Feniger iurther set forth the reasons why Health Net r agreed ta puxchase the additional i9 unrts of ever According to the a of David R Feniger Executive Counsel for Health Net Ffidavit is process repricing the of compactng VA allowable rate ba on fees charged by non ed VA health care providers to rates that the contracY xmay have establi with health care hed providers svho are part of their netivork L software and concluded that other iAan a na n he amount of 20 ment 50 639 Health Net will not comp CMS for Yhe remainder ofthe invoice nsate On May 11 20ll approxIlmately on nionth later af receiving no e er response from CMS Health Net sznt CMS a che in the amou of 20 k z 50 639 accompanied by a cover letter rrom 1r 1Feni vhic at tnat the enclosed ex hs d check represented payment in fuli for z refereraced in your cott7pany s ar s invoice no 5762 Importantly the check aise contained the notation PAYMENT IN FLTLL CMS subs en and depc Yh check ntly rsed qa cic sited e On July 24 2012 CMS fiied tYr instazit s against Iealth Net contending e ait that in reliance upon Health Net reth it would pay CM for the s rese t tation S development of repricing software in addition t VISN 16 CMS had included the a repricing software as axi additional featwre in its fe basis claims system to be provided to the VA Thus CMS sought judgm against Health IVet for the ent attendant costs incurred for providzns these goods and ser i he remaining ices e unpaid costs shown on invoice 5762 ealth N ans it pe asserting c vere e ition various affirmatzsre defensES includ the erctrine of aecord arxd atisfaction zmg which it contends precludes r tc ladged y CMS herein ri e la eave s r On Octo 9 2012 Health PvA 4i1ed a znc for summary judgment er tinr contending that CMS c a k Net Pre b by the d of s laizns auistl alr i ed rz octrine accord and satisfaction and thereby seeking srnisaal f all cdaims asserted by CMS in its petition The znotior was heard Ys the tnal court on 7anuary 7 fore 2013 At the conclusion f the h t trial court ranted Health Net ring ie s motion for summary judgment and dis MS claims with prejudice A issed s judgment was signed on January I 1 2013 According to the mazkings on the ack of the checic the check was pr an eessed deposited by CNIS on May 13 2011 CMS now appeals contending that the trial court erred in 1 finding that Health Net met its burden of proving a11 of the essential elements of the accord and satisfaction doctrine and 2 applying the doctrine of accord and satisfaction to dismiss CMS claims against Healtta Net orA a znotian for summary judgment s DISCti SSION Summary Judgment A motion for summary judgment ic a procedural device used to avoid a full scale trial when there is no genuine issus of material fact for all or part of the relief prayed for by a litigant All Crane T of Geargia Inc v Vincent ental 0116 2010 La App 1 Cir 9110110 47 So 3d 1024 1 writ denied 2010 27 2227 La 11 49 So 3d 387 A motion for summary judgment should 10 19 only be granted if the pleadings depositions answers to interrogatories and admissions together with thz affidavits if any show tnat there is no genuine issue as to material fact ard that the movant is entitled to summary udgment as a matter of law LSA art 966 P C 2 B The burden of proof on a motion for summary judgment remains with the movant However if the movant will not bear ihe burden of proofat trial on the matter that is before the cour on the motion for summary judgment the s movant burden on the motlon does not reGuire him to n all essential egate elements of the adverse s party claim action or defense but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party claim action or defense Thereafter if the s adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial there is no genuine issue of material fact P C A L ark 2 C 966 Once the morion for summary judgment has been properly supported by the moving party the failure of the non party to produce evidence of a material factual moving 4 i dispute mandates the granting of the moti LSA art 967 Pu v nC P Bh St Tammanv Parish School Board 2007 La App 1 Cir 8 994 1856 08 21 So 2d 95 97 on rehearing writ denied 2008 La 11 996 So 2d 2316 08 21 1ll3 When a rnotion for summary judgi is made and supported as lent provided above an adverse party rr not rest on the mere allegations ar a denials of his pleading Instead his respo by affidavits or as otherwise ase provided above must set forth specific facts showing that there is a genuine issue for triaL If he does not so respond s judgment if appropriate unmary shall be rendered against him LSA art 467 P C B In determining whether summary judgment is appropxiate appellate courts review evidence de nova nnder the same criteria that govern the trial s court determination of whe sumr her iiary judgment is appropriate Sanders v Ashland Oil Inc 96 La Appo l Cir 5 696 So 2d 1031 1035 1751 97 20 writ denied 97 La 10 703 Sa 2d 29 Because it is the applicable 19ll 97 31 substantive law that determines materiality whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to this case Christakis v Clipper Constructon L 2012 La App l Cir C 1638 13 26 4ll7 So 3d 168 170 Accord and Satisfaction The doctrine of accord and satisfactiQn esYops a creditor from suing on a compromised debt River Bend Capital L v Llovd of London 2010 C s 1317 La App 4 Cir 4I13 63 So 3d 1092 1094 writ denied 2011 11 0986 La 6 64 So 3d 219 Far there to be a valid accord and satisfaction of a 11 24 debt or claim there must be 1 a disputed claim 2 a tender of a check for less than the amount of the claim by the debtor and 3 an acceptance of the tender by the creditor Harrin v Aetna Life and Casualtv Com 441 ton any So 2d 1255 1256 La App l Cir 1983 McClellaiid v Securitv Industrial 5 Insurance Company 426 So 2d 66 669 La App 1 Cir 1982 writ 670 denied 430 So 2d 94 La 1983 Essential to finding that a val accord and satisfaction occurred is a zd showing that the creditor understood that the payment was tendered in full settlement of the dispute n R v State Farm lvlutual Automobile Insurance any 0961 0962 Com 2010 2010 La App l Cir 12 68 So 3d 563 10 22 569 writ denied 2011 La 4 60 So 3d 1250 Thus an accord and 0172 11 1 satisfaction is not present if there is no evidence that the creditor was fully informed of the nature of the compromise offer by the debtor Harrintgon v Aetna Life and Casualty Campany 441 So 2d at 1256 However the unilateral action by a creditor in altering an endorsement from payment in full to partial payment and negotiating the altered instrument will not change the legal import of its acceptance by the creditor as an acknowledgement of payment in full satisfaction of the obligation Casualty Com any 441 So 2d at 1257 Harrington v Aetna Life and Accord and satisfaction is an affirmative defense and must be specially pled in the answer See LSA P C art 1005 First Municipal IState 422 So 2d 1182 1185 La Corp easin v App l Cir 1982 writs denied 427 So 2d 867 ll97 La 1983 The doctrine of accord and safrsfacYion was codified by La Acts 2007 No 138 1 with the creation ofI 3079 which provides C SA art A compromise is also made when the clazmant of a disputed or unliquidated claim regardless of the extent of his claim accepts a payment tha tthe other party tenders with the clearly expressed written condition that acceptance of the payment will extinguish the obligation This article was not intended to change the law but to simply give recognition to the validation by the Louisiana jurisprudence of the dispute settling mechanism known at common law as accord and satisfaction C art 3D79 comment a 6 LSA Assignment of Err 1V One r crnber In its first assigmment of error CMS c that the Yria court erred in xitends finding that Health Net rxiet its buz fpravirz aI1 of the essential elements den necessary to obtain dismissal of f xi plaia claims based on the doctrine of accard and satisfaction In support af its motion for su judg Health Net presented the xiary nrient following exhibits 1 Health Net first requests for admission propounded to s CMS 2 CI quote dated September 29 Q06 3j C iravoice 5762 s 2S s 1S dated March 23 2011 4j Iealth Net Apri1 12 20ll letter 7o C 5 s MS Health Net May 1 201 i cc letter to C1VIS and check in the annount of s var 50 639 20 6 a c of Health N check in the amount of 20 to py s t 50 639 CMS after it had been endorsed and deposited f CMS respo to Health s ses s Net first requests for admiesion and 8 the affidavit cf David R Feniger Executive Counsei to Healkh Net To prove iL was entitled to judgment as a rraatter ca 1aw Health Net relied on CMS invoice S wF included the following char s 62 ich es 1 EDI Interface Fee fo 19 r c softwar in the amount of nits f 4 00 050 00 424 950 1 74 each 2 PGF Encr Software I Fee for 19 uniis of sof in the ption icense vare amount of 72 3 eacc and 00 00 276 804 l 3 Repricing DI Interface Annual iYfaintenance Fee VISN i 6 in the amount of 20 SQ 639 Health Net furthex relied on its April 12 2011 letter to CMS responding to invoice 5762 and dzsputing the charges set forth therein as follows Health Netj is in receipt of gour company invoice no 5762 in s the amount Interface of U 5 965 516 tfor the Repricing EDI 1 Exce Annual Maintenance F for VASN 16 in the amount of e 50 639 20 which Healkh Net agreed to pay pursuant to the Purchase Order dated October 27 2006 we never agreed formally 7 or informally to comper CMS for any other goods or sate The services including the atems set iorth in this invoice Purchase Order refer abovE incoxporated the CMS quote nced dated September 29 2006 wh exc relates to VISN 16 ch usively software and interface fees As is clear firom a review of the Purchase Order and th CMS quUte Heal Net never agreed to h purchase any software or licensing fees other than for VISN 15 Nor would Health Ivet have a to sach coznpensatiora because ed r 1 the wark performed by CMS uas rnade t A hardware located on A property id 2 the VA repeatedly communicated to Hea1 Net th such wark veas the responsibility h t of the EDI ontractor to wharn CMS vas the subcon not traator Health Ne4 Accordingly other than a payment in the amount of 50 639 20 Health Net vill not eompensate CMS for the remainder of the invoice Emphasis adde Health Net furthe relied Qn th 1VIay i 1 2011 ccaver letter attached to its check wherein Health Net stated Attached hereto please nd a eheck in the arnount of 2J 50 639 representing payment in fuNl for charges referenced in your s company invaice no 5 Emphasis added 62 Should you have any questions pl feel free to c ne ase ntact As additional support Health Net rei n a cc of its ck ter for less aed p eck dered than the amount of th claim witr the notati AXMENT IN FLTLL on its e nI face as well as a aopy of the check af it had beer neg d deposited ex tiated by CMS Based on the document and the rec as a whoie on review ve agee or with the trial court that Heaith Ivet establa5hed hat the n el for cessary ments dismissal of the su under the doctrixie of accor dand satisfaction Health Net s April 1 2011 letter L CMS clearly sets forth that it was disputin tne charges set forth in invoice 5762 Thus Health Net s a check far signifcantly endered less than the amount of the total charges itemized in the invoice More the ver tendered partial payment by INet un was acc and ealth disputedly pted ted depos bv GMS 8 We note that CMS countered Health Net morion for su s mary judgment offering the following exhibits in support 1 the affidavit of Steven R Arter a managing member of C14iS 2 Health Net pnrchase order dated October 25 2006 and terms and conditioxis 3 CMS invoice 5726 dated s November 25 2009 4 CMS April 6 21J11 fax to Health Net of invoice s 5762 dated March 23 2011 and quot dated September 29 2006 5 CMS s invoice 5769 dated March 1 2012 6 the affidavit of Ferdinand 7 Jefferson CMS member 7 CMS invoice 5762 dated March 23 2011 containing the s notation partial payment and 8 the affidavit of Robin Hart Executive Administrator of CMS However we find no merit to CMS contention that Health Net failed to s satisfy its burden of proving that it was entxtled to judgment as a matter of law and that material issues of fact remain as to whether CMS understoo that the i check tendered by Health Net was in full and final satisfaction of the entire invoiced amount or was pzyment in full for the VISN 16 annual maintenance fee Specifically CMS contends that the check tendered by Health Net was ambiguous arguing that it is just as plausible that th PAYMENT IN FiTLL e reference on the check could have meant payment in full for the VISN 16 annual maintenance fee rather than payment in full for the entire invoice We disagree Although the creditor must understand the restrictive endorsement if he is to be bound by the doctrine of accord and satisfaction this does not mean the To 3 the extent that CMS relies on McClelland v Securitv Indush Insurance Companv 426 So 2d 665 669 a App 1 Cir 1982 writ denied 430 So 2d 94 La 670 1983 we find that McClelland is procedurally distinguishable from the instant case and not dispositive herein In particulaz in MeClelland the plainfiff who was uneducated and uninformed established without evidentiary objection th she had been misinformed as to t the basis for the check ithat it was being issued as a premium refund in full settlement e even after defendanYs agent had informed her the policy would be honored and the claim paid Thus McClelland differs fxom this case both factually and procedurally 9 s creditor statement I did not understand would be sufficient to destroy the efficacy of the endorsement Rather the test is whether the language is sufficiently clear to apprise the negotiator of the maker sntent to tender the amount in full seYtlement E v Jon Chemicals Inc 363 So 2d 1263 pling T 1265 La App 4th Cir 1978 In E lin the court determined that the payee action in scratching out s the restrictive endorsement written by the maker strongly suggested that he was fully aware of the nature of the tender The court further held that even if he were not the endorsement was stated in such a way that any reasonable reader would fully understand that the check was endered zn full payment of all claims Thus this court concluded that plaintiff accepted the offer to compromise by negotiating the check Eppling v Jon Chemicals Inc 363 T So 2d at 1265 1266 To the eatent that CMS relies on RTL Corporation v Manufacturer s Enterprises Inc 429 So 2d 855 La 1983 anci Fischbach and Moore Inc v Cajun Electric Power Cooperative Inc 799 F 194 5 Cir 1986 we note that 2d those cases are factually distinguishable from the instant case In RTL Corporation upon receipt of an invoice the debtor responded by sending a letter to the creditor wherein he challenge several items on the invo as well as the ce method of calculation The creditor then proposed that the debtor pay the undisputed amount of charges When the creditor was presented with a check marked payment in full he immediately called the debtor and insisted that the check be considered only a partial payment and requested a meeting with the debtor to discuss the remainder The debtor assented to their treatment of the check as partial payment and to again meet with them to discuss the remainder Although the debtor agreed that the creditor insisted that the check be considered partial payment the debtor testified that the creditor silently let the demand pass 10 without rej ecting or acceding to it It was not until after the creditor received the s debtor implied acceptance of the creditor proposal that the creditor substituted s the words partial payment for payment in fulP on the check stub and deposited the check RTL Corporation v Manufacturer sEnterprises Inc 429 So 2d at 857 856 The court concluded finding that the parties subsequent negotiations on the remaining areas of dispute indicate that they did not consider this check as the final resolution of their differences RTL Corparation v Manufacturer s Enterprises Inc 429 So 2d at 857 In the instant case however there was no such proposal by CMS or an acceptance thereof by Health Net prior to its negotiation of the check or after receiving Health Net letter explaining that it s would not pay for the additional items Moreover in Fischbach although the letter that accompanied the check indicated that it was in full and final settlement the check did not contain a payment in full restrictive endorsement and a notation on the check stub provided that it was in payment of two specifically identified invoices Upon receipt the creditor sent a letter confirming that it was accepting the check as payment ofthe two invoices but that it was not accepting the check in satisfaction of any other claims Based upon inconsistencies in the transmittal letter and the check stub concerning the purpose ofthe payment the court found material issues of fact that precluded a summary judgment based on accord and satisfaction Fishbach and Moore Inc v Electric Power Cooperative Inc 799 F 2d at Cajun 196 195 These facts are also distinguishable from the facts in the case at hand Considering the April 12 20ll letter from Health Net expressly disputing all charges except the VISN 16 annual maintenance fee the cover letter that accompanied the check which clearly stated that the attached check in the amount of 20 represent payment in full far charges referenced in 50 639 ed s CMS invoice no 5762 and the check marked PAYMENT IN FULL we 11 reject CMS contention that material facts remain to preclude summary judgment s because it did not understand that the payment was cendered in fizll settlement of the dispute By negotiating the check marked PA4 IN FLTLL and in MENT doing so without any objection C is deeaned to have accepted Health Net 1S s offer made in settlernent of the clairn The plain v on the face of the check ording made it clear that this was not an unc9nditio tender See River Bend Capital 1 a C L v Lloyd of London 63 So 3d at 1096 cf L v Nissan Motor s eray Corporation in U 2005 La t1 Cir 31 306 950 So 2d 707 710 A S 2051 p the signing and negotiating of a ck alone is suf to es the eck cient sh abli requirements of a valid compromise agreement under LSA art 3071 that C could form the basis for plea of ees judicata where the check indicated it tlhat was in full payment Thus these arguments lack merit Assignment of Error Number Two In its second assignment of err CMS conrends that since matters of ar knowledge and antent are matetiai and ar at issue herein stam judginent is tiary not appropriate To the extenz har C Gontends th its undersian and IS at ng intent are material factuai i retnain i disgute we note that on review sues Yhat a of the grant of sr judgment khe or Tactual issues relevant to the mznary y defense of accord and satisfaction are whether twas 1 a disputed claim ere 2 a tender of a check for less than the amou ofthe claim by the debtor and t 3 an acceptance of the tender by tthe ereditor See River Bend Capital L Ce v Lloyd of London 63 So 3d at 1096 s Here CMS was expressly informed or aware 1 that Health Net was not going to pay the remaining charges in CMS invoice 5762 2 that 711e check tendered represented payment in full tor the charges contained in CMS invoice 5762 and 3 that the check bore the notation 45 IN FUI While PAYMENT L 12 we recognize that there can be no accord and satisfaction if the written notice is insufficient to put the creditor on nctice c raature of Lhe cotnpromise being Fth offered Ryan v State Farm Nlutual Automobile lnsurarxce Company 68 So 3d at 569 we find the written notice sen y INet was clear and sufficient lth z The Apri1 12 2011 Ietter from Heal i cornbin Ie dwitk t cover letter e accompanying the check combiti ivith the ron Yhe front o the check c ion ota establish that CMS was fully informed of tl nature fthe payment by Health e Net SpecificaLy on review ve find th evidence set forth by Health Net established that CMS was sufficientl informed of the basis and nature of the payment by Health Net and that after being infotmed of the bas for the check s CMS negotiated the heck Thas u fnd no nnaterial factual issues remain as e to the elements set forth above Accordingly this assignment of b5 C1v1S aiso lacks merit error CONCLUSION For the above and foregoing reasoz the January 1 I 2013 jndgrnent ofthe s trial court granting summary judgment ira fa of Healfh Net Federal Services or C L and dismissir alI claims asserted by Complete IVledical Solutions L g C is hereby affirmed Costs of tllis appeal are ssessed t the pPaintiff appellant Complete Medical Solutions L C AFFIRMED 13

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