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

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

June 13, 2018

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 consider Bristol Anesthesia Services, P.C.'s (“Bristol Anesthesia” or “plaintiff”) motion to amend the judgment to award prejudgment interest, [Doc. 148], and motion for attorneys' fees, [Doc. 149]. The defendant, Carilion Clinic Medicare Resources, LLC, d/b/a MajestaCare (“MajestaCare” or “defendant”) filed one document to respond to both motions, [Doc. 152]. Bristol Anesthesia replied. [Docs. 153, 154]. Both motions are now ripe for disposition, and will be considered in turn below.

         I. BACKGROUND

         Following a bench trial in this matter, the Court found that Bristol Anesthesia was entitled to the amount MajestaCare allowed for payment between the dates of July 9, 2012 and August 26, 2013 under an implied-in-fact contract theory. [Doc. 144 at 12]. After claims readjudication, for the time period of August 27, 2013 through November 26, 2014, the Court found that Bristol Anesthesia was entitled to the DMAS fee schedule rate of $12.84 per unit of anesthesia services billed under a theory of quantum meruit. [Id. at 22]. The parties submitted their calculations for the amount owed for quantum meruit damages. [Doc. 142]. The Court's final judgment entered on March 30, 2018, finding that Bristol Anesthesia is entitled to $115, 385.51, which was the amount approved for payment by MajestaCare between July 9, 2012 and August 26, 2013. [Doc. 146]. All but $847.15 of that amount was paid to Bristol Anesthesia during that time period. [Defendant's Trial Exhibit 62]. The judgment also found that because MajestaCare wrongfully recouped and withheld payments from Bristol Anesthesia following its readjudication of claims, Bristol Anesthesia is entitled to $34, 834.92 in quantum meruit damages. [Doc. 146]. Bristol Anesthesia now seeks prejudgment interest, [Doc. 148], and attorneys' fees. [Doc. 149].

         II. ANALYSIS

         As an initial matter, Bristol Anesthesia argued in both motions that because MajestaCare's contract with Virginia Department of Medical Assistance Services (“DMAS”) was governed by Virginia law, such law also governs in the award of prejudgment interest and attorneys' fees. [Docs. 148, 149]. In its response, MajestaCare argues that Bristol Anesthesia “previously expressly disclaimed that the Virginia statutory authority it now cites post-judgment had any applicability in this case. …'” [Doc. 152, quoting Doc. 61 at 10]. Therefore, MajestaCare argues, Bristol Anesthesia is estopped from raising its claims under Virginia law.

         Bristol Anesthesia, as MajestaCare points out, previously argued the following: “… Tennessee law - not Virginia law - governs this dispute, which involved services provided solely in Tennessee by a provider based in Tennessee and payments directed to that provider in Tennessee.” [Doc. 61 at 10]. Now, however, Bristol Anesthesia argues that because MajestaCare was a regulated MCO in Virginia, Virginia statutory law applies to MajestaCare's behavior, ensuring “certain basic fair business practices required by [its] regulator.” [Doc. 154 at 1]. Bristol Anesthesia provides citations to Virginia statutes and cases which provide for the awarding of prejudgment interest and attorneys' fees in certain situations. These statutes, however, cannot aid the Court in making its decision, as Tennessee law is the proper choice of law for these motions.

         It is undisputed that in diversity cases, a district court's decision to award attorneys' fees and prejudgment interest is governed by state law. See AT&T Corp. v. CA Jones Management Group, LLC, 2015 WL 12532129 at *3 (W.D. Tenn. Oct. 5, 2015) (citing Eggert v. Meritain Health, Inc., 428 Fed. App'x 558, 568 (6th Cir. 2011), and Williamson v. Aetna Life Ins. Co., 481 F.3d 39, 377 (6th Cir. 2007)). It is further undisputed that all arguments raised to and claims decided by the Court throughout its analysis of dispositive motions, trial proceedings, and the final memorandum opinion and order, were pursuant to Tennessee law. MajestaCare was found to have entered into an implied-in-fact contract with Bristol Anesthesia under Tennessee law, and is liable for damages under Tennessee law's quantum meruit theory.

         In some cases, courts may apply the laws of another state if they are deemed substantive, rather than procedural in nature. State ex rel. Smith v. Early, 934 S.W.2d 655, 658 (Tenn. Ct. App. 1996). While Tennessee courts have not definitively spoken on the issue of whether the award of attorneys' fees or prejudgment interest are substantive or procedural in nature, Tennessee law would govern each category in this case. See Boswell v. RFT-TV the Theater, LLC, 489 S.W.3d 550, 557 (Tenn. Ct. App. 2016) (“Tennessee appellate courts have not explicitly addressed whether attorney's fees are a substantive or procedural matter for purposes of conflicts of law.”). If the award of such remedies is determined to be substantive, or, “that which creates duties, rights, and obligations, ” it would properly be awarded under Tennessee law, under which an implied-in-fact contract was found, and quantum meruit recovery awarded. Boswell, 489 S.W.3d at 556. If such award is deemed a matter of procedure, Tennessee law would apply even if another state's laws did govern the substantive issues. Beach Cmty. Bank v. Labry, WL 2196174 at *3 n.6 (Tenn. Ct. App. June 15, 2012).

         Further, as MajestaCare notes, the parties previously agreed that Tennessee law governs this dispute. Bristol Anesthesia never sought to recover under a third-party liability theory from MajestaCare's contract with DMAS, but now uses that contract, to which it is not a party, to claim that Virginia law applies to its post-judgment claims. This is improper. Boswell, 498 S.W.3d at 556 (applying the same substantive law post-judgment that the parties chose while contracting, and agreed during litigation, was the proper choice of law.). For these reasons, Tennessee law continues to guide the Court in determining whether the award of prejudgment interest or attorneys' fees are proper in this matter. Each of Bristol Anesthesia's motions will be discussed in turn below.

         a. Motion to Amend the Judgment to Add Prejudgment Interest

         Bristol Anesthesia attempts to argue that because the Virginia contract between MajestaCare and DMAS “governed the operations of the Defendant's health plan, ” that contract is where the Court should look in determining whether to award prejudgment interest. [Doc. 148].Bristol, relying on the contractual language in the DMAS contract and Virginia statutory authority, argues:

[P]rejudgment interest should be awarded from that last date of presentment [of proof of loss], December 16, 2014. The legal rate of interest applicable under the cited law is six (6) percent, Va. Code section 6.2-301(A), and that rate should be applied to the full amount of the judgment, $150, 220.43, from December 16, 2014 through the date judgment was entered by the Court, March 30, 2018.

[Doc. 148 at 2-3]. MajestaCare argues that Bristol Anesthesia is not entitled to prejudgment interest because Bristol Anesthesia “never asserted any claim under the Virginia Code” and “never prayed for prejudgment ...


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