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AmeriHealth Caritas Louisiana, Inc. v. Promise Hospital of Ascension, Inc.

United States District Court, M.D. Louisiana

March 16, 2018

AMERIHEALTH CARITAS LOUISIANA, INC.
v.
PROMISE HOSPITAL OF ASCENSION, INC.

          RULING AND ORDER

          JUDGE JOHN W. DEGRAVELLES UNITED STATES DISTRICT COURT

         This matter comes before the Court on the Motion for Summary Judgment (Doc. 27) filed by Plaintiff AmeriHealth Caritas Louisiana, Inc. (“AmeriHealth Caritas” or “Plaintiff”). Defendant Promise Hospital of Ascension, Inc. (“PHA” or “Defendant”) opposes the motion. (Doc. 31.) AmeriHealth has filed a reply. (Doc. 34.) Oral argument is not necessary. The Court has carefully considered the law, the facts in the record, and the arguments and submissions of the parties and is prepared to rule.

         For the following reasons, AmeriHealth Caritas' motion is granted. There is no dispute as to the terms of the written Agreement between the parties. Because Louisiana law requires that any contract between the parties be in writing, PHA must demonstrate a modification to the Agreement (or at least a question of material fact on the issue) through written evidence. PHA has failed to do so. As a result, the Court will enforce the plain and unambiguous language of the Agreement as written, and AmeriHealth Caritas is entitled to summary judgment in the amount of $936, 777.31, plus pre- and post-judgment interest.

         I. Relevant Factual Background

         A. AmeriHealth Caritas

         In 2011 and again in 2014, AmeriHealth Caritas was selected by the Louisiana Department of Health (“LDH”) through a competitive bid process to provide services under the state's Medicaid managed care program currently known as Healthy Louisiana. (Statement of Uncontested Material Facts Supporting Motion for Summary Judgment (“SUMF”), Doc. 27-1 at 1; Statement of Contested Material Facts (“SCMF”), Doc. 31-1.)[1] AmeriHealth Caritas has provided managed Medicaid plan services to Louisiana for nearly six years, under contracts with LDH effective February 1, 2012. (SUMF, Doc. 27-1 at 1; SCMF, Doc. 31-1.) In order to provide these services, AmeriHealth Caritas has built its provider network by bringing in providers who had previously participated in Louisiana Medicaid and also by reaching out to other Medicaid eligible providers that were not then under contract with AmeriHealth Caritas. (SUMF, Doc. 27-1 at 1-2; SCMF, Doc. 31-1.)

         B. Negotiation of the Agreement

         In 2012, as part of this process, Kelli Nolan, an AmeriHealth Caritas representative, contacted PHA in efforts to potentially recruit PHA into the AmeriHealth Caritas network. (SUMF, Doc. 27-1 at 2; SCMF, Doc. 31-1.) PHA is a wholly-owned subsidiary of Promise Healthcare, Inc. (“Promise Healthcare”), a Florida-based “specialty post-acute care health system operating 16 facilities across 8 states.” (SUMF, Doc. 27-1 at 2; SCMF, Doc. 31-1.)

         At an April 24, 2012 meeting, which appears to be the only in-person meeting between representatives of PHA and AmeriHealth Caritas relative to the Hospital Services Agreement entered into between the parties, effective June 6, 2012 (the “Agreement”), Kelli Nolan, of AmeriHealth Caritas' Provider Network Management team met with Laura Begnaud, Leslie Sherman and Trina Arcenaux of PHA. (SUMF, Doc. 27-1 at 2; SCMF, Doc. 31-1.) This meeting was a relatively brief meeting where Ms. Nolan provided basic information about AmeriHealth Caritas, and items such as specific per diem rates were not discussed. (SUMF, Doc. 27-1 at 2; SCMF, Doc. 31-1.)

         Following the April 24, 2012 in-person meeting, AmeriHealth Caritas provided PHA with its standard Hospital Services Agreement for its review and consideration. (SUMF, Doc. 27-1 at 2; SCMF, Doc. 31-1.) Members of AmeriHealth Caritas' provider network management team, like Kelli Nolan, were only authorized to recruit providers into the network under the standard Hospital Services Agreement terms. (SUMF, Doc. 27-1 at 2-3; SCMF, Doc. 31-1.) Pursuant to AmeriHealth Caritas protocols, in order to deviate from the standard Hospital Services Agreement terms, the AmeriHealth Caritas provider network management team would need to obtain approval from the Market President of any proposed deviations. (SUMF, Doc. 27-1 at 3; SCMF, Doc. 31-1.)

         PHA's CEO, Richard Knowland, an experienced hospital executive, reviewed the proposed Hospital Services Agreement for key terms, including the rate that PHA was to be paid under the Agreement. (SUMF, Doc. 27-1 at 3; SCMF, Doc. 31-1.) Had Mr. Knowland noted a key term in the contract that differed from what he thought it should be, he would have addressed it with the AmeriHealth Caritas representative. (SUMF, Doc. 27-1 at 3; SCMF, Doc. 31-1.) To date and despite numerous requests for the same, no documents evidencing communications from Mr. Knowland to an AmeriHealth Caritas representative with respect to the terms of the Agreement have been specifically identified or produced in the course of this litigation. (SUMF, Doc. 27-1 at 3; SCMF, Doc. 31-1.) Mr. Knowland's supervisor, Bryan Day, Senior Vice-President of Operations for Promise Healthcare, also reviewed the Agreement, which PHA considered to be a “fairly standard agreement” prior to PHA's execution of the Agreement. (SUMF, Doc. 27-1 at 3; SCMF, Doc. 31-1.)

         At all times pertinent hereto, it was standard practice for PHA to have all contracts reviewed by counsel. (SUMF, Doc. 27-1 at 3-4; SCMF, Doc. 31-1.) Typically, for contracts like the Agreement at issue here, contracts were reviewed by corporate counsel for Promise Healthcare. (SUMF, Doc. 27-1 at 4; SCMF, Doc. 31-1.) Here, the Agreement was reviewed by corporate counsel after it had already been reviewed by Mr. Knowland and Mr. Day. (SUMF, Doc. 27-1 at 4; SCMF, Doc. 31-1.) Prior to approval of the Agreement, Mr. Knowland spoke to an attorney in Promise Healthcare's legal department who reviewed the Agreement for key terms, including rate. (SUMF, Doc. 27-1 at 4; SCMF, Doc. 31-1.)

         Ultimately, the Agreement was approved by corporate counsel following review, and Mr. Knowland executed the Agreement on behalf of PHA on June 6, 2012. (SUMF, Doc. 27-1 at 4; SCMF, Doc. 31-1.) The Agreement was subsequently signed on behalf of AmeriHealth Caritas by Rebecca Engleman on October 15, 2012. (SUMF, Doc. 27-1 at 4; SCMF, Doc. 31-1.)

         C. Terms of the Agreement

         Under the Agreement, PHA was to render services to members enrolled with AmeriHealth Caritas under the “Louisiana Medicaid Coordinated Care Networks- Prepaid Program, Medicare Advantage Program and such other programs as [AmeriHealth Caritas and providers] mutually agreed upon.” (SUMF, Doc. 27-1 at 5; SCMF, Doc. 31-1.) Under Section 3.2 of the Agreement, PHA agreed to be paid commensurate with the rates established in the “Hospital Services Payment Schedule set forth in Appendix A-1.” (SUMF, Doc. 27-1 at 5; SCMF, Doc. 31-1.) Appendix A-1 to the Agreement provides that PHA was to be compensated for Plan Benefits rendered to Members “in accordance with the terms of [the] Agreement at a rate of 100% of the published Louisiana Medicaid Fee-for- Service rate in effect on the date of service.” (SUMF, Doc. 27-1 at 5; SCMF, Doc. 31-1.)

         The Louisiana Department of Health makes the Medicaid Fee-for-Service rate in effect on the date of the service as referenced in Appendix A-1 publicly available to providers like PHA. (SUMF, Doc. 27-1 at 5; SCMF, Doc. 31-1.) The Louisiana Medicaid Fee-for-Service fee schedules referenced in Appendix A-1 to the Agreement identify all registered Louisiana Medicaid hospital providers by Medicaid provider number, facility name and hospital type, and, for each such hospital, the fee schedule provides a rate type and indicates whether any such facility is rural. (SUMF, Doc. 27-1 at 5; SCMF, Doc. 31-1.) The fee schedule clearly indicates that PHA is classified as a Long Term Acute Care (LTAC) hospital and its rates under the schedule are calculated as such. (SUMF, Doc. 27-1 at 5; SCMF, Doc. 31-1.)

         Under the Agreement, PHA was to be reimbursed at 100% of the rate shown on the Medicaid Fee-for-Service schedule in effect on the date of service. During the time period at issue in the lawsuit, PHA was to be reimbursed as follows under the applicable Medicaid Fee-for-Service schedules: (a) $575.05 for LTAC services billed prior to August 1, 2012; (b) $553.77 for LTAC services billed from August 1, 2012 to February 1, 2013; and (c) $548.23 for LTAC services billed in all pertinent periods after February 1, 2013. (SUMF, Doc. 27-1 at 6; SCMF, Doc. 31-1.) Based on the Agreement and these rates, AmeriHealth Caritas asserts that, under the Louisiana Medicaid Fee-for-Service schedules in effect during the time of the charges at issue herein, the rate that PHA was to receive varied as the Fee-for-Service schedule was updated. (SUMF, Doc. 27-1 at 5.) PHA, on the other hand, contends that the “rate that PHA was to receive” was modified by a subsequent agreement. (SCMF, Doc. 31-1 at 1.)

         Under the Agreement, upon completion of the services, PHA would file a claim for payment with AmeriHealth Caritas outlining the facility's billed charges for the patient during a particular stay. (SUMF, Doc. 27-1 at 6; SCMF, Doc. 31-1.) The claim from PHA would not set forth the per diem rate payable under the Agreement. (SUMF, Doc. 27-1 at 6; SCMF, Doc. 31-1.) Upon receipt of the claims from PHA, AmeriHealth Caritas' electronic claims payment system directed payment of the rates that the logic instructed it to pay for the submitting facility. (SUMF, Doc. 27-1 at 6; SCMF, Doc. 31-1.)

         D. AmeriHealth Caritas' Alleged Overpayments to PHA

         Over the period from April, 2012 to February, 2013, PHA was paid at $1, 587.47 per diem for services billed; and for services from February 2013 to July of 2013 PHA was paid at a rate of $1, 722.88 per diem; and for services rendered after that date, PHA was paid at a rate of $1, 767.67 per diem, all roughly triple the rate set forth for LTAC providers in the applicable fee schedule. (SUMF, Doc. 27-1 at 6-7; SCMF, Doc. 31-1; AmeriHealth Caritas' Reply Brief, Doc. 34 at 3 n. 10.)

         In the summer of 2013, the actuarial department for AmeriHealth Caritas discovered it had, in its opinion, overpaid certain providers. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.) It was later discovered that the alleged overpayments to certain providers was due, according to AmeriHealth Caritas, to a human error that caused the incorrect Medicaid Fee-for-Service rate to be assigned to certain providers. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.)

         A review of the alleged overpayments to PHA revealed that PHA was paid at the rural hospital per diem rate. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.) The Louisiana Medicaid Fee-for-Service schedules identify certain providers as rural hospitals, but at no time pertinent to this lawsuit was PHA considered a rural hospital. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.)

         AmeriHealth Caritas asserts that, as a result of the alleged overpayments, PHA was overpaid by a total of $936, 777.31. (SUMF, Doc. 27-1 at 7.) Conversely, PHA maintains that it was paid what was due under the contract, as modified. (SCMF, Doc. 31-1.)

         PHA has acknowledged that the amounts set forth in the documentation AmeriHealth Caritas sent PHA with AmeriHealth Caritas' demand were consistent with what PHA had in fact been paid by AmeriHealth Caritas. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1; Dep. of Trina Arceneaux, Doc. 27-6 at 37-40.)

         Pursuant to its contract with LDH, AmeriHealth Caritas was required to recoup any amounts paid in error, including overpayments such as those it contends were made to PHA. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.) Under the Agreement, PHA had an obligation to “comply with all policies and requirements set forth in the Provider Manual and the DHH Contract, for the detection and prevention of fraud and abuse.” (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.)

         Subsequently, AmeriHealth Caritas reached out to the providers to whom it had paid amounts in excess of the agreed to per diem rates. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.) Of the providers that were allegedly overpaid, all providers (with the exception of PHA) made arrangements to repay the amounts, whether through cash payments or credits on future claims. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.) AmeriHealth Caritas finds it noteworthy that Promise Healthcare's other subsidiary in Baton Rouge, Promise Hospital of Baton Rouge, Inc., was, according to AmeriHealth Caritas, overpaid, and Promise Hospital of Baton Rouge, Inc., made arrangements to satisfy the alleged overpayment amounts owed to AmeriHealth Caritas. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1 at 1.)

         When e-mails and phone calls by AmeriHealth Caritas to PHA made to recoup the alleged overpayments to PHA proved unsuccessful, AmeriHealth Caritas submitted demand letters, putting PHA on notice of the need to repay the alleged overpayments as early as August 27, 2013. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.) AmeriHealth Caritas submitted amicable demand for the full amount of the alleged overpayments to PHA of $936, 777.31 by letter dated March 21, 2014, which letter was accompanied by a spreadsheet detailing the overpayments. (SUMF, Doc. 27-1 at 7; SCMF, Doc. 31-1.) After numerous unsuccessful efforts to recoup the alleged overpayments, AmeriHealth Caritas retained legal counsel to assist with collection of the overpayments to PHA, and demand for payment was made yet again on December 11, 2014. (SUMF, Doc. 27-1 at 7-8; SCMF, Doc. 31-1.)

         PHA responded to the demand by stating that it was paid at the correct rate, as it had negotiated a higher rate than the one set forth in the fully executed Agreement between PHA and AmeriHealth Caritas. (SUMF, Doc. 27-1 at 9; SCMF, Doc. 31-1.) Despite numerous requests both before and after the institution of this lawsuit, PHA has failed and/or refused to provide any documentation to support its position that AmeriHealth Caritas had agreed to pay it any rate other than that which was set forth in the Agreement. (SUMF, Doc. 27-1 ...


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