United States District Court, E.D. Louisiana
ACADEMY OF ALLERGY & ASTHMA IN PRIMARY CARE, ET AL.
LOUISIANA HEALTH SERVICE AND INDEMNITY COMPANY, ET AL.
ORDER AND REASONS
J. BARBIER UNITED STATES DISTRICT JUDGE.
the Court is a Motion to Disqualify Counsel of
Record (Rec. Doc. 57) filed by
Plaintiff, United Biologics, L.L.C. d/b/a United Allergy
Services. Defendants, Louisiana Health Service and Indemnity
Company d/b/a Blue Cross Blue Shield of Louisiana and Allmed
Healthcare Management, Inc., have jointly filed an opposition
(Rec. Doc. 76), arguing against disqualification of their
counsel, Baker Donelson Bearman Caldwell & Berkowitz,
P.C. Movant responded with a reply (Rec. Doc. 87) to which
Defendants responded in a supplemental opposition (Rec. Doc.
88). Having considered the Motion and legal memoranda, the
record, the Parties' arguments at oral argument, and the
applicable law, the Court finds that the Motion should be
AND PROCEDURAL BACKGROUND
to Plaintiffs' complaint, this “case concerns a
conspiracy and agreement among various health insurance
company competitors . . . to restrict competition in the
relevant markets for allergy testing and allergen
immunotherapy for seasonal and perennial allergies . . . in
local areas throughout Louisiana, Kansas, and other local
markets serviced by Humana.” (Rec Doc. 1 at 1-2).
Plaintiffs are Academy of Allergy & Asthma in Primary
Care (the “Academy”) and United Allergy Services
Academy describes itself as “a 504(c)(6) non-profit
organization of over 250 member physicians” dedicated
to fostering “the ability of primary care physicians to
provide high quality, patient accessible diagnostic and
therapeutic allergy and asthma care.” (Rec. Doc. 1 at
4). One of its purposes is to promote the interests of
primary care physicians who seek to practice in the allergy
testing and immunotherapy markets. (Rec. Doc. 1 at 4). UAS is
an LLC that provides “technician and support services
for physicians practicing allergy testing and allergen immune
therapy.” (Rec. Doc. 1 at 5). In this way, “UAS
and the primary care and other physicians UAS supports,
compete directly with the businesses of board-certified
allergists.” (Rec. Doc. 1 at 5).
allege that UAS's services allow primary care physicians
to conduct cost-effective allergy skin testing and
immunotherapies from these physicians' own offices or
clinics. This allows these non-specialized physicians to
enter the allergy market for themselves, and eliminates the
need to refer patients to board-certified allergists or
outsource blood allergy tests to reference laboratories.
Plaintiffs allege UAS's entrance into the allergy market
had two major consequences: it disrupted the system of
referrals from primary care doctors to allergy specialists
and it also required health insurance companies “to pay
more upfront in preventative medicine by reaching far more
patients than board-certified allergists could in their
respective markets.” (Rec. Doc. 1 at 10). Defendants
are three health insurance companies-who pay the costs of
these services for their customers-and a company that was
hired as an independent review organization of appeals made
to Blue Cross for denying reimbursement claims. The relevant
defendants to this Motion are Blue Cross Blue Shield of
Louisiana (“Blue Cross”) and the independent
review company, AllMed Healthcare Management
(“AllMed”), who share the law firm of Baker
Donelson Bearman Caldwell & Berkowitz, P.C. (“Baker
Donelson”) as their current counsel. According to
Defendants, Blue Cross has been a client of Baker Donelson
since 2010, though Baker Donelson only began acting as
antitrust counsel in 2018.
began doing business in Louisiana in January of 2010. (Rec.
Doc. 57-2 at 2). About three years later, primary care
physicians who had contracted with UAS began informing UAS
that they had received communications from the Louisiana
State Board of Medical Examiners (the “Board”)
concerning allergy testing and immunotherapy services these
physicians had provided in late 2013 and early 2014. (Rec.
Doc. 57-2 at 2). These physicians also informed UAS of
similar communications received from Blue Cross. UAS sought
Donna Fraiche, a partner specializing in health care law at
Baker Donelson, to represent UAS and these physicians
regarding these communications. Ms. Fraiche agreed to the
representation on behalf of Baker Donelson and sent an
engagement letter and a term sheet to UAS, which the then-CEO
of UAS, Nicolas Hollis, signed on December 5, 2013. (Rec.
Doc. 57-2 at 8-10). The engagement letter states that Baker
Donelson has been engaged to represent UAS “with
respect to advices regarding [UAS's] relationship with
the [Board].” (Rec. Doc. 57-2 at 8).
January of 2014, UAS met with the Board to discuss the UAS
services that were being offered by primary care physicians.
The Board was investigating the primary care physicians for
“allegedly treating their allergy patients outside
their professional scope of practice.” (Rec. Doc. 76-2
at 3). According to Movant, a primary reason for this meeting
was to discuss an anonymous complaint that had been made to the
Board concerning UAS's allergy protocols and services.
(Rec. Doc. 57-1 at 4). Before the meeting, Baker Donelson
allegedly “review[ed] UAS's confidential
information to respond” to the anonymous
complainant's questions. (Rec. Do. 57-1 at 4). Ms.
Fraiche avers that she passed the information given to her by
UAS to the Board, per UAS's instructions. (Rec. Doc. 76-2
Fraiche served as counsel for UAS and several primary care
physicians at the meeting. Ms. Fraiche describes her and
Baker Donelson's representation at the meeting as an
effort to “convince the [Board] not to take these
primary care physicians' licenses for treating their
allergy patients as general primary care physicians.”
(Rec. Doc. 76-2 at 3). Ms. Fraiche describes the physicians
as the “primary clients” for whom UAS simply paid
the same time, Blue Cross began to deny claims made for
reimbursement for allergy testing and immunotherapy that used
UAS's protocols. In or around February of 2014, UAS asked
Ms. Fraiche to also represent UAS and the primary care
physicians in appealing these denials by Blue Cross. (Rec.
Doc. 76-2 at 5). Baker Donelson began meeting with Blue Cross
to discuss Blue Cross's investigation and audits of UAS
and its allergy protocols. For Example, on February 18, 2014,
Baker Donelson met with Blue Cross's Chief Medical
Officer, Dr. Carmouche, on UAS's behalf. (Rec. Doc. 57-1
at 4). Baker Donelson formally accepted this expanded
representation in April. In an e-mail dated April 29, 2014,
Donna Fraiche wrote to the then CEO of UAS, Nicolas Hollis:
“[O]ur firm has now been specifically engaged and
authorized to serve as your counsel to the certain physician
customers of UAS who received denials from Blue Cross
specifically related to the ordering and administration of
allergy testing and or immunotherapy as provided through
their UAS affiliation and protocols.” (Rec. Doc. 57-2
Hollis avers that, “both UAS and the contracting
physicians trusted Baker Donelson with confidential
information regarding the appeals . . . including the basis
for contesting [Blue Cross's] spurious claims of lack of
medical necessity.” (Rec. Doc. 57-2 at 4).
Communications between Mr. Hollis and Baker Donelson were
extensive; Mr. Hollis estimates that he exchanged over 500
e-mails with Baker Donelson that he regards as confidential.
(Rec. Doc. 57-1 at 4). Using this information, Baker Donelson
appealed Blue Cross's denials of reimbursement through an
internal review process. The appeals were denied. A second
level of appeal was to be handled by an independent review
organization. Plaintiffs did not know at the time that the
independent review organization was Defendant AllMed. (Rec.
Doc. 57-1 at 4). AllMed denied all of the appeals-which
Plaintiffs allege was agreed upon in-advance, as a part of
the conspiracy between health insurers in Louisiana. (Rec.
Doc. 57-1 at 5).
these appeals failed, Baker Donelson, as UAS's counsel,
reached out to the Louisiana Department of Insurance (the
“Department”) to set up a meeting with the
Department's Commissioner, James Donelon. According to a
summary of the meeting published by the Department (the
“Summary”) (Rec. Doc. 57-2 at 15-21) the meeting
was held in July of 2014; Baker Donelson appeared as
UAS's legal counsel as did the firm Bracewell &
Giuliani L.L.P. Mr. Hollis acted as UAS's company
representative. Dr. Carmouche and Dr. Dwight Brower-the
Medical Director at Blue Cross-acted as the representatives
of Blue Cross. Sheldon Faulk, Senior In-house Counsel of Blue
Cross, appeared as Blue Cross's attorney. At the meeting,
Dr. Brower informed the commissioner that the independent
reviewer had upheld every appeal. However, Movant alleges
that “Dr. Brower concealed any agreement with AllMed
and denied any agreement with outside allergist
organizations.” (Rec. Doc. 57-1 at 5).
Summary-which Baker Donelson helped prepare-demonstrates that
the critical issue in this meeting was whether Blue Cross had
appropriately denied claims for reimbursement. Blue Cross
argued to the Department that its rejection of reimbursement
to the primary care physicians using UAS's protocols was
justified for three reasons: (1) safety, (2) efficacy, and
(3) costs. UAS responded to each of these arguments at
length. For example, UAS attempted to rebut Blue Cross's
arguments that UAS allergy testing and therapy protocols are
ineffective by arguing:
Blue Cross does not cite any adverse events under the UAS
protocol and does not refer to any complaints by patients or
treating physicians, other than competitor physicians who are
upset that they may lose business to their PCP colleagues.
UAS sincerely believes the objections are competitor driven
and that certain physicians have used unfounded complaints
about safety and efficacy to convince Blue Cross Louisiana
not to pay those physicians' competitors.
(Rec. Doc. 57-2 at 20). The Department took no action after
September of 2014, Baker Donelson communicated to the
Department that Blue Cross's “actions were
threatening UAS's ability to continue to operate in the
state of Louisiana.” (Rec. Doc. 57-1 at 6).
Specifically, in an e-mail Ms. Fraiche sent to the Department
on September 29, 2014 (Rec. Doc. 87-3), Ms. Fraiche mentions
an impromptu meeting she had with Dr. Carmouche, in which she
discussed the antitrust ramifications of Blue Cross's
conduct. A few days later, UAS learned from Baker Donelson
that Blue Cross had demanded Baker Donelson withdraw from
representing UAS and its contracting physicians, because
Baker Donelson was representing Blue Cross on an unrelated
matter. (Rec. Doc. 57-1 at 5). Baker Donelson then withdrew
as UAS's counsel. In 2015, UAS stopped doing business in
Louisiana because its contracting physicians in the state
could not receive reimbursement from third-party payors, such
initiated this litigation in January of 2018, after allegedly
discovering acts of collusion on the part of Defendants.
Counsel for UAS first became aware that Baker Donelson would
be representing Blue Cross in this antitrust matter on
February 26, 2018. Counsel for UAS called Baker Donelson
regarding a possible conflict on March 8, 2018. (Rec. Doc.
57-3 at 1-2). The subsequent back-and-forth communications
between UAS's current counsel and Baker Donelson
regarding the alleged conflict of interest never resolved the
issue to the satisfaction of either party and eventually
culminated in the instant Motion to Disqualify Counsel, filed
June 1, 2018. Part of the reason for UAS's delay in
filing a motion to disqualify appears to be that it did not
have access to its client file. UAS first requested its
client file on April 6, 2018. UAS did not receive its file
from Baker Donelson until July 9, 2018. (Rec. Doc. 87-2 at
the Motion to Disqualify was filed, Baker Donelson submitted
a motion to dismiss on behalf of Blue Cross (Rec. Docs. 40).
In that motion and its accompanying memorandum, Blue Cross
defended itself from antitrust allegations by arguing that
Blue Cross's decision to deny claim appeals was justified
by concerns of safety and the efficacy of treatment. (Rec.
Doc. 40-1 at 14). These legitimate concerns, Blue Cross
argues in its motion, are the only reasonable explanation of
Blue Cross's decisions to deny reimbursement claims.
Thus, Plaintiffs' antitrust allegation that the payors
illegally conspired to deny claims in order to avoid paying
for preventative care is implausible and subject to
UAS filed its amended complaint, Baker Donelson submitted new
motions to dismiss on behalf of AllMed (Rec. Doc. 64) and
Blue Cross (Rec. Doc. 74). In these motions-still pending
before the Court-Baker Donelson maintains that Blue Cross
denied reimbursement claims out of concern for the
“safety and efficacy of [the UAS] allergy testing and
treatment” protocols. (Rec. Doc. 74-1 at 9).
motion to disqualify is a substantive motion that affects the
rights of parties; analysis of the motion is therefore
subject to the standards that have developed under federal
precedents. In re American Airlines, Inc., 972 F.2d
605, 610 (5th Cir. 1992). Attorneys practicing before this
Court are subject to the Rules of Professional Conduct of the
Louisiana State Bar Association, because these are the
professional standards have been adopted by our Local Rules.
L.R. 83.2.10. Nevertheless, “how these rules
are to be applied are questions of federal law.”
Id. at 610 (emphasis added). Furthermore, the Local
Rules and the Rules of Professional Conduct are not the
“sole authorit[ies] governing a motion to
disqualify.” Id. (citing In re Dresser
Industries, Inc., 972 F.2d 540, 543 (5th Cir. 1992)).
Courts also consider the ABA's Model Rules of
Professional Conduct and the ABA's Model Code of
Professional Responsibility. Parker v. Rowan Companies,
Inc., No. CIV.A. 03-0545, 2003 WL 22852218, at *2 (E.D.
La. Nov. 25, 2003) (J. Vance) (citing Horaist v.
Doctor's Hospital of Opelousas, 255 F.3d 261, 266
(5th Cir. 2001)). Additionally, “[a] Court must take
into account not only the various ethical precepts adopted by
the profession but also the societal interests at
stake.” F.D.I.C. v. U.S. Fire Ins. Co., 50
F.3d 1304, 1314 (5th Cir. 1995). The relevant provisions of
the Rules of Professional Conduct provide:
Rule 1.9. Duties to Former Clients
(a) A lawyer who has formerly represented a client in a
matter shall not thereafter represent another person in the
same or a substantially related matter in which that
person's interests are materially adverse to the
interests of the former client unless ...