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Bristol Anesthesia Services, P.C. v. Carilion Clinic Medicare Resources, LLC

United States District Court, E.D. Tennessee, Greeneville

September 13, 2017

BRISTOL ANESTHESIA SERVICES, P.C., Plaintiff,
v.
CARILION CLINIC MEDICARE RESOURCES, LLC, d/b/a MAJESTACARE, Defendant.

          MEMORANDUM OPINION AND ORDER

          J. RONNIE GREER UNITED STATES DISTRICT JUDGE

         This matter is before the Court to address two motions for summary judgment. The plaintiff, Bristol Anesthesia Services, P.C. (“Bristol Anesthesia”), filed a motion for partial summary judgment as to Counts One and Two of the complaint. [Doc. 52]. The defendant, Carilion Clinic Medicare Resources, d/b/a MajestaCare (“MajestaCare”), responded to the motion, [Doc. 67], and Bristol Anesthesia filed a “supplement.” [Doc. 70]. Also before the Court is MajestaCare's motion for summary judgment as to all counts of the complaint. [Doc. 56]. Bristol Anesthesia responded to the motion for summary judgment, [Doc. 61], and MajestaCare replied. [Doc. 71]. The matters are ripe for review.

         I. Factual Background

         Bristol Anesthesia is a medical practice that provided anesthesia services to the enrollees in the MajestaCare's managed care organization (“MCO”). [Doc. 66 ¶¶ 1, 2]. Bristol Anesthesia provided these services from 2012 to November 2014 at Bristol Regional Medical Center (“BRMC”). [Id.]. Bristol Anesthesia's medical professionals are the only anesthesiologists at BRMC; however, Certified Registered Nurse Anesthetists also provide anesthesia services at BRMC. [Doc. 59 ¶ 4; Doc. 60 ¶ 4]. MajestaCare had a contract with the Virginia Department of Medical Assistance Services (“DMAS”) to provide care to Virginia Medicaid participants. [Doc. 59 ¶ 2]. DMAS was required to approve MajestaCare's provider network prior to enrolling Virginia Medicaid enrollees, and did so in mid-2012. [Id. ¶¶ 7, 8]. Bristol Anesthesia was never in MajestaCare's approved provider network. [Id. ¶ 9].

         The parties had no written contract regarding rates for anesthesia services provided nor was Bristol Anesthesia under any contract with DMAS to determine rates for services provided. [Id. ¶ 9]. MajestaCare hired a third party, Aetna, to administer the billing system for MajestaCare operations. [Id. ¶ 5]. Aetna developed an algorithm to calculate the appropriate payment for services such as anesthesia services provided by Bristol Anesthesia. Anesthesia claims are generally billed in either “base units” or “time units.” [Id. ¶ 11]. Time units are measured in either 10 or fifteen-minute increments. [Id., Doc. 60 ¶ 11]. The total number of units for a particular procedure is then multiplied by a “conversion factor, ” expressed in dollars. [Doc. 59 ¶11]. The DMAS regulated conversion factor was $12.84 per unit from 2012 to 2014. [Id. ¶ 12].

         As of January 1, 2012, federal regulations required reporting anesthesia services only in minutes and these services could no longer be reported in units. [Id. ¶ 18]. When Aetna developed the algorithm for anesthesia services, Aetna failed to change the calculation from “units” to minutes as required by the changed regulations. [Id. at 19]. MajestaCare argues that this mistake in the algorithm “resulted in minutes being calculated as if they were time units (15-minute increments), in turn resulting in the time unit used to adjudicate claims being 15 times greater than it should have been.” [Id.]. By October 2013, the mistake was noticed and corrected in the algorithm. [Id. ¶ 29]. By November 5, 2013, Bristol Anesthesia and similarly situated service providers were notified of the error and of MajestaCare's intention to “fix the errors going forward and recoup past overpayments within the last 12 months.” [Id. ¶¶ 28, 29].

         Before the time that the mistake in the algorithm was found, Bristol Anesthesia accepted payments from MajestaCare for services provided to its enrollees. [Id. at ¶ 21, 22; Doc. 60 ¶ 25]. The parties agree that some of these payments were below the standard billing rate of Bristol Anesthesia. [Doc. 59 ¶ 21, 22; Doc. 60 ¶ 21, 22]. Bristol Anesthesia presented some deposition testimony that some of the bills were paid in full. [Doc. 60 ¶25; Teed Depo. at 69, 70]. According to MajestaCare, after November 2013 it began submitting remittance payments that were adjusted pursuant to the corrected algorithm and “re-adjusted past reimbursement claims (going back one year from notice), and applying overpayments to newly submitted reimbursement claims to resolve the overpayments.” [Doc. 59 ¶ 30]. Bristol Anesthesia states that “MajestaCare did not pay Bristol Anesthesia's claims during the referenced [recoupment] process but instead, provided certain minimal credit, below Virginia Medicaid rates, toward an asserted overpayment amount.” [Doc. 60 ¶ 32].

         On January 16, 2015, Bristol Anesthesia brought suit against MajestaCare for breach of implied-in-fact contract, quantum meruit, and wrongful recoupment asking for compensatory damages of $368, 393.70, the difference between Bristol Anesthesia's standard billing amount and the rate actually paid by MajestaCare. MajestaCare brought a counterclaim for unjust enrichment and restitution based on the same facts as described above. These counterclaims are not the subject of either motion.

         MajestaCare is in the process of “winding up” its business. MajestaCare made a required filing with the Virginia Bureau of Insurance (“VBI”) for the quarter ending September 30, 2015, after Bristol Anesthesia filed this suit. [Doc. 66 ¶ 4]. This statement was signed by Donna Littlepage (“Littlepage”), president of Carillion Clinic. [Id. ¶ 5]. MajestaCare reported to the VBI that it had $1, 256, 317 of unpaid claims among its liabilities. [Id. ¶ 8]. This reported amount of liability included Bristol Anesthesia's claim for $368, 393.70, the subject of this suit. [Id. ¶ 12]. As of MajestaCare's VBI filing on September 30, 2016, Bristol Anesthesia's claim of $368, 393.70 is the only remaining claim listed in the liabilities line, all other liabilities have been paid. [Id. ¶ 13]. The $368, 693.70 claim by Bristol Anesthesia, listed as a liability on the quarterly statement, is not noted or marked as “contingent.” [Id. ¶ 10].

         Littlepage submitted a declaration stating, “since the filing of this lawsuit in January 2015, [Carilion Clinic] has listed Bristol Anesthesia's asserted claim as a liability or “claim” in its Quarterly Statements, and out of an abundance of caution has reserved for it.” [Littlepage Declaration ¶ 3]. Littlepage also declared that MajestaCare notified the VBI that the claim is “contested and is the subject of ongoing litigation.” [Id.]. Littlepage further declared that MajestaCare has “always contested” this claim and “never intended to represent it to the [VBI] or anyone else as anything different than a contested claim.” [Id. ¶ 4]. According to Littlepage's declaration, MajestaCare gains no benefit from reporting Bristol Anesthesia's claim as uncontested because had the contingent nature of the claim been found to be “remote, ” MajestaCare could have suspended quarterly reporting to VBI altogether. [Id. ¶ 7].

         India Thomas, the Regional Practice Director of Carilion Clinic, filed a declaration stating that in October 2016, she contacted the VBI and explained that the “only outstanding claim at issue was the subject of a pending suit.” [Thomas Declaration ¶3]. The opening email states, “The only item that is outstanding is a remaining claim that is in a legal dispute for our Medicaid plan.” [Doc. 66-1].

         II. Legal Standard

         Summary judgment is proper where the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In ruling on a motion for summary judgment, the Court must view the facts contained in the record and all inferences that can be drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Nat'l Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence, judge the credibility of witnesses, or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

         The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To refute such a showing, the non-moving party must present some significant, probative evidence indicating the necessity of a trial for resolving a material factual dispute. Id. at 322. A mere scintilla of evidence is not enough. Anderson, 477 U.S. at 252; McClain v. Ontario, Ltd., 244 F.3d 797, 800 (6th Cir. 2000). This Court's role is limited to determining whether the case contains sufficient evidence from which a jury could reasonably find for the non-moving party. Anderson, 477 U.S. at 248-49; Nat'l Satellite Sports, 253 F.3d at 907. If the non-moving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to summary judgment. Celotex, 477 U.S. at 323. If this Court ...


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