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Franklin Parish Hospital Service District No 1 v. Fox Everett A Division of HUB International Solutions, LLC

United States District Court, W.D. Louisiana, Monroe Division

May 24, 2018

FRANKLIN PARISH HOSPITAL SERVICE DISTRICT NO. 1 and FRANKLIN MEDICAL CENTER EMPLOYEE BENEFIT PLAN AND TRUST
v.
FOX-EVERETT A DIVISION OF HUB INTERNATIONAL SOLUTIONS, LLC

          KAREN L. HAYES MAG. JUDGE

          RULING

          TERRY A. DOUGHTY JUDGE

         Plaintiffs Franklin Parish Hospital Service District No. 1 and Franklin Medical Center Employee Benefit Plan and Trust, (hereinafter collectively “Franklin Medical Center”) brought this lawsuit against the medical plan's third-party administrator Fox-Everett A Division of HUB International Solutions, LLC (hereinafter “Fox-Everett”) alleging discrepancies in claims handling. Pending before the Court is a Motion for Summary Judgment filed by Defendant Fox-Everett [Doc. No. 22] on the issue of attorney's fees. Plaintiff Franklin Medical Center has filed an Opposition [Doc. No. 25]. For the following reasons, the Motion for Summary Judgment is DENIED.

         I. FACTS:

         Plaintiff Franklin Medical Center entered into an agreement with Defendant Fox-Everett to administer Franklin Medical Center's self-insured employee benefit Plan. During the term of the agreement, Franklin Medical Center became concerned that duplicate payments to healthcare providers for employee healthcare claims were being directed by Fox-Everett. These concerns were based, in part, by providers returning payments for claims which had previously been remitted through Fox-Everett, and by Fox-Everett's website portal data.

         Upon discovery of the apparent discrepancies, Franklin Medical Center requested an explanation and a comprehensive accounting of payments from Fox-Everett, a performance objective required of Fox-Everett pursuant to the terms of the agreement. Franklin Medical Center contends that Fox-Everett failed to provide the explanation or the comprehensive accounting requested. Prior to initiating the instant proceeding, Franklin Medical Center contends it again requested that Fox-Everett fulfill its duties under the terms of the agreement, to no avail.

         Franklin Medical Center asserts that, as the result of meaningful responses from counsel for Fox-Everett through the discovery process after the lawsuit was filed, the concerns which initially drove Franklin Medical Center to initiate the instant matter were finally addressed. Therefore, the claims asserted against Fox-Everett regarding discrepancies in claims handling are not being pursued by Franklin Medical Center. Nevertheless, Franklin Medical Center is seeking attorney's fees, contending that the utter lack of response from Fox-Everett, which was required of it by the agreement, necessitated Franklin Medical Center's filing this lawsuit. Franklin Medical Center states that, in the face of completely failing to respond to reasonable requests from Franklin Medical Center, Fox-Everett now responds by stating “you had everything you needed to figure it out”, and that is insufficient. Franklin Medical Center asserts that Fox-Everett owed a duty imposed by the agreement, it failed to fulfill that duty, and that failure led to this point.

         Because Franklin Medical Center's claim against Fox-Everett is based on Fox-Everett's breach of the agreement due to its nonperformance under the terms of the agreement, Franklin Medical Center argues that the plain language of the agreement requires indemnification to Franklin Medical Center for its expenses, including reasonable attorney's fees.

         Fox-Everett, on the other hand, contends that Franklin Medical Center is not entitled to attorney's fees under the indemnification agreement. Fox-Everett contends that, after it provided Franklin Medical Center with a new copy of information that had been previously provided throughout the relationship and that was at all times already in Plaintiffs' possession, Franklin Medical Center agreed to dismiss their substantive claims because they concluded there were no factual basis for them. Fox-Everett asserts that the reason for Franklin Medical Center's confusion about alleged overpayments was apparently a misunderstanding of information in a web portal provided by Fox-Everett that allowed Franklin Medical Center to access medical claim information. Fox-Everett states that Franklin Medical Center nevertheless blames Fox-Everett for their own misimpression, and now, even though they have admitted they had no claim, based on information that has always been in their possession, they seek attorney's fees from Fox-Everett.

         Fox-Everett contends that the only potential source for an award of attorney's fees is the service agreement, and that the indemnity provision of the service agreement does not apply to direct claims between the parties.

         Fox-Everett has now moved for summary judgement. The motion is fully briefed, and the Court is prepared to rule.

         II. LAW AND ANALYSIS

         A. Standard of Review

         Under Federal Rule of Civil Procedure 56(a), “[a] party may move for summary judgment, identifying each claim or defense--or the part of each claim or defense--on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The moving party bears the initial burden of informing the court of the basis for its motion by identifying portions of the record which highlight the absence of genuine issues of material fact. Topalian v. Ehrmann, 954 F.2d 1125, 1132 (5th Cir. 1992); see also Fed. R. Civ. P. 56(c)(1) (AA party asserting that a fact cannot be . . . disputed must support the assertion by . . . citing to particular parts of materials in the record . . .). “fact is Amaterial” if proof of its existence or nonexistence would affect the outcome of the lawsuit under ...


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