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PRESBYTERIAN v. PRUDENTIAL INSURANCE COMPANY OF AMERICA

March 30, 2004.

RUSH PRESBYTERIAN — ST. LUKE'S MEDICAL CENTER, Plaintiff
v.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant



The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge

MEMORANDUM OPINION

This matter is before the court on Plaintiff Rush Presbyterian-St. Luke's Medical Center's ("Rush") motion for summary judgment and on Defendant The Prudential Insurance Company of America's ("Prudential") motion for summary judgment. For the reasons stated below we grant Rush's motion for summary judgment on Count I and grant Prudential's motion for summary judgment on Count II.

BACKGROUND

  Plaintiff Rush is a non-for-profit corporation. Defendant Prudential is an Page 2 insurance company. In August of 1993, Rush and Rush Prudential Health Plans, Rush Prudential HMO, Inc., and Rush Prudential Insurance Company (collectively "Unicare Group") entered into a Medical Service Agreement ("MSA"). The MSA included attachment B which established the rates at which Rush was to be reimbursed by the Unicare Group for various services Rush provides to patients. Attachment B to the MSA underwent several revisions, the last revision occurring on February 1, 1998, was incorporated into the MSA pursuant to the Sixth Amendment to the MSA. In December of 1999, Wellpoint Health Networks, Inc. acquired the Unicare Group from Rush, Rush affiliates and Prudential, and in connection with the acquisition, assumed all liabilities for certain disputed claims related to any breach of the MSA by the Unicare Group.

  Prudential, Rush and Wellpoint entered into a Settlement Agreement on November 20, 2001. On November 21, 2001, the agreement was amended whereby Prudential agreed to assume any and all liabilities for certain disputed claims and pay Rush 50% of the amounts of the disputed claims upon entry of a final, non-appealable judgment which specifies the amounts of the disputed claims payable under the MSA. The parties agree that amounts have been paid on each of the claims in question, but disagree on whether Rush is entitled to any further payments. The dispute in each count of Rush's complaint is purely a matter of contract interpretation.

  In Count I, the issue is whether the $110,000 case rate specified by the MSA Page 3 for a bone marrow transplant reimburses Rush only for inpatient services related to the transplant, as asserted by Rush, or whether the case rate reimburses Rush for both inpatient and outpatient services relating to the transplant, as asserted by Prudential. Attachment B, Section A to the MSA consists of four separate subsections: (1) Transplantation; (2) All Other Inpatient Services; (3) Outpatient Services and (4) Skilled Nursing Facility. Rush contends that the organizational structure of the MSA shows that the transplant case rate covers inpatient services only. Prudential relies on the language "Covered Hospital Services" within Section A to Attachment B, which the MSA defined in part as "inpatient and outpatient services . . . not including long term care services" to support its contention that the case rate covers both inpatient and outpatient services.

  In Count II, the primary issue is which section of the fee schedule applies to those patients who were treated at the J.R. Bowman Center ("JRB") for extended care inpatient services. Rush asserts that because the inpatient services provided to JRB patients were a continuation of the services that they were receiving at Rush, they should be reimbursed according to the MSA provision that covers "inpatient services" (i.e., the stop loss provision). Under the stop loss provision, Rush claims that Prudential is obligated to reimburse Rush 66% of the charges it incurred providing inpatient services to JRB patients. Alternatively, Prudential asserts that JRB is a skilled nursing facility which therefore entitles Rush to reimbursement pursuant to a $450 per diem rate. The parties both contest the status of JRB, Rush Page 4 claiming that it is a post-acute care facility which provides post-hospital inpatient recovery and rehabilitation services and Prudential claiming that it is a skilled nursing facility.

  Rush has brought a breach of contract claim based on an alleged breach of a Medical Service Agreement ("MSA") for failure to reimburse Rush for various services provided to insured patients. In Count I, Rush seeks to recover from Prudential $65,783.83 on charges submitted for services provided to 9 patients (John Does I-IX) who underwent bone marrow transplants at Rush Presbyterian-St. Luke's Medical Center under Section A.3 of the MSA. In Count II, Rush seeks to recover $370,324.89 on charges submitted for "extended care services" provided to 12 patients (John Does X-XXI) at Rush's' J.R. Bowman Center under Paragraph 2(A) of Attachment B of the MSA.

  The parties are before the court based upon diversity jurisdiction. 28 U.S.C. § 1332(a)(1). Rush claims that it is a non-for-profit corporation organized pursuant to the laws of Illinois and is located in Chicago, Illinois. Prudential claims that it is a New Jersey company with its principal place of business in Newark, New Jersey.

  LEGAL STANDARD

  Summary judgment is appropriate when the record reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In seeking a grant of summary judgment the Page 5 moving party must identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the non-moving party's case." Id. at 325. Once the movant has met this burden, the non-moving party cannot simply rest on the allegations or denials in the pleadings, but, "by affidavits or as otherwise provided for in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). The court must consider the record as a whole, in a light most favorable to the non-moving party, and draw all reasonable inferences that favor the non-moving party. Anderson, 477 U.S. at 255; Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000). Page 6

  DISCUSSION

  The parties' dispute regarding both claims in this case is purely a matter of contract interpretation. Summary judgment is particularly appropriate in cases involving the interpretation of contractual documents. Metalex Corp. v. Uniden Corp. of America, 863 F.2d 1331, 1333 (7th Cir. 1988). Where a contract is unambiguous, a court must determine its meaning as a matter of law, and where the contract is ambiguous the contract's meaning becomes a factual question and the interpretation of the contract and resolution of the ambiguity is left to the trier of fact. Id.; Illinois Conference of Teamsters and Employers Welfare Fund v. Mrowicki, 44 F.3d 451, 459 (7th Cir. 1994) The lack of ambiguity within the express terms of a contract "forecloses any genuine issue of material fact." Ryan v. Chromalloy American Corp., 877 F.2d 598, 602 (7th Cir. 1989). If the court determines that the relevant provisions of the contract are unambiguous, the court "need not consider extrinsic evidence" and should declare the meaning of the provisions. Id.

  The language within a contract must be "interpreted according to its plain, ordinary, and popular meaning." Bourke v. Dun & Bradstreet Corp., 159 F.3d 1032, 1038 (7th Cir. 1998)(quoting O'Rourke v. Access Health, Inc., 668 N.E.2d 214, 220 (Ill.App. Ct. 1996)); See also International Business Lists, Ltd. V. American Tel. & Tel. Co., 878 F. Supp. 102, 106 (N.D. Ill. 1994)(stating that "[c]ourt's interpreting contracts must give effect to the parties' intent, and that intent is best determined by Page 7 reference to the plain meaning of the words the parties used."). The court must presume that "contracting parties intend[ed] all portions of their contract to carry meaning and no portion was meant to be mere surplusage." Shelten v. Schmidt Implement Co., 647 N.E.2d 1071, 1074 (Ill.App. Ct. 1995). Another rule of contract interpretation is "that a document should be read to give effect to all its provisions and to render them consistent with each other." Mastrobuono v. Shear son Lehman Hutton, Inc., 514 U.S. ...


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