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Opelousas General Hospital Authority v. Fairpay Solutions, Inc.

Court of Appeals of Louisiana, Third Circuit

June 13, 2017

OPELOUSAS GENERAL HOSPITAL AUTHORITY, A PUBLIC TRUST, D/B/A OPELOUSAS GENERAL HEALTH SYSTEM AND ARKLAMISS SURGERY CENTER, L.L.C.
v.
FAIRPAY SOLUTIONS, INC.

         APPEAL FROM THE TWENTY-SEVENTH JUDICIAL DISTRICT COURT PARISH OF ST. LANDRY, DOCKET NO. 12-C-1599-C HONORABLE ALONZO HARRIS, DISTRICT JUDGE

          Darrell W. Cook, Stephen W. Davis, Darrell W. Cook & Associates COUNSEL FOR: Appellant - Fairpay Solutions, Inc.

          Gerald A. Melchiode, Renee S. Melchiode, Melchiode Marx King, LLC COUNSEL FOR: Appellant - Fairpay Solutions, Inc.

          Thomas A. Filo, Somer G. Brown, Cox, Cox, Filo, Camel & Wilson, LLC COUNSEL FOR: Appellee - Opelousas General Hospital Authority, A Public Trust, d/b/a Opelousas General Health System and ArkLaMiss Sugery Center, LLC

          Patrick C. Morrow, James P. Ryan, Morrow, Morrow, Ryan & Bassett COUNSEL FOR: Appellee - Opelousas General Hospital Authority, A Public Trust, d/b/a Opelousas General Health System and ArkLaMiss Sugery Center, LLC

          John S. Bradford, William B. Monk, Stockwell, Sievert, Viccellio, Clements & Shaddock, L.L.P. COUNSEL FOR: Appellee - Opelousas General Hospital Authority, A Public Trust, d/b/a Opelousas General Health System and ArkLaMiss Sugery Center, LLC

          Stephen B. Murray, Stephen B. Murray, Jr., Arthur M. Murray, Nicole Murray-Ieyoub, Murray Law Firm COUNSEL FOR: Appellee - Opelousas General Hospital Authority, A Public Trust, d/b/a Opelousas General Health System and ArkLaMiss Sugery Center, LLC

          R. Bray Williams, Williams Family Law Firm COUNSEL FOR: Appellee - Opelousas General Hospital Authority, A Public Trust, d/b/a Opelousas General Health System and ArkLaMiss Sugery Center, LLC

          Court composed of Sylvia R. Cooks, Billy Howard Ezell and Van H. Kyzar, Judges.

          SYLVIA R. COOKS JUDGE

         The Defendant in this matter is Mitchell International, Inc. who was the successor by merger to FairPay Solutions, Inc. FairPay is a company that provides a service to insurance providers, essentially processing the bills received by insurance providers from medical providers. FairPay uses computer coding to review all bills for the insurance providers to ensure that everything is paid properly. FairPay contends its process "ensures that its customers avoid making overpayments, or paying duplicative, or double charges included in the bills."

         It was asserted by the Plaintiffs, Opelousas General Hospital Authority and a class of numerous Louisiana hospitals and ambulatory surgery centers, that FairPay's recommendations to its insurance providers were too low in cases of workers' compensation claims. The Plaintiffs sued FairPay under the Louisiana Racketeering Act, alleging FairPay had recommended fraudulent reductions to the Plaintiffs outpatient workers' compensation medical bills. FairPay denied that assertion, but did eventually execute a Settlement Agreement between the parties on August 17, 2012. Included in the Settlement Agreement was a reference to the Future FairPay Pricing Methodology (hereafter FFPM), which specifically detailed how FairPay would review bills submitted by Plaintiffs' medical providers in workers' compensation claims. A fairness hearing was held at which the parties agreed the Settlement Agreement was both fair and an accurate depiction of the intent of all parties involved. The trial court approved the Settlement Agreement, and after a competitor appealed, this court affirmed the trial court's final approval. Opelousas Gen. Hosp. Auth. v. Fairpay Solutions, Inc., 13-17 (La.App. 3 Cir. 7/3/13), 118 So.3d 1269.

         FairPay asserts the FFPM is intended to govern how it recommends payment to its insurance providers. Plaintiffs maintained the FFPM was non-mandatory, and could be utilized prospectively by FairPay and their clients. Plaintiffs contended the Settlement Agreement did not require FairPay or its clients to use the FFPM, but noted Paragraph 11.5 of the Settlement Agreement clearly provided if FairPay or its clients did not correctly utilize the FFPM, then neither would be provided the protections of the Settlement Agreement.

         FairPay maintained it complied with the FFPM in all respects, but in 2013, counsel for Plaintiffs brought to FairPay's attention numerous complaints from class members that FairPay repriced bills were being reimbursed at an amount below the target 72% of billed charges, which was the goal in utilizing the FFPM. In accordance with the Settlement Agreement, Plaintiffs' counsel forwarded the disputed bills to FairPay and waited the requisite thirty days before filing any workers' compensation claims for underpayment.

         At the request of Plaintiffs' counsel, FairPay ran yearly reimbursements for Louisiana and discovered the average reimbursements were at 69% of billed charges, rather than the 72% set forth in the Settlement Agreement. FairPay agreed to adjust the 95% multiplier in the FFPM to 98%, thereby increasing the reimbursements due to the Settlement Class.

         To attempt to determine how FairPay was repricing its bills, the Plaintiffs sent fifty-three (53) bills to FairPay requesting a full analysis. FairPay complied with this request. The results indicated seventeen (17) of the bills were repriced in accordance with the FFPM, but thirty-six (36) were not. According to Plaintiffs, the thirty-six (36) bills in question contained items that were not paid at all. These non-paid items were primarily comprised of drug and radiology charges.

         The Plaintiffs filed a Motion to Enforce Settlement Agreement based on its belief that FairPay had consistently misapplied the agreed upon FFPM, which resulted in improperly reduced payments and/or non-payments for specific billed items. In response, FairPay filed a Motion to Enforce Settlement Agreement for Contempt Citation, Injunctive Relief and Attorneys' Fees. Specifically, Fairpay sought to stay over eighty claims being filed by Plaintiffs in workers' compensation courts in ...


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