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Christie Clinic, P.C. v. MultiPlan

January 26, 2009

CHRISTIE CLINIC, P.C., INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
MULTIPLAN, INC., A NEW YORK CORPORATION, UNICARE LIFE AND HEALTH INSURANCE COMPANY, A TEXAS CORPORATION, AND UNITED HEALTH CARE INSURANCE COMPANY, A SUBSIDIARY OF UNITED HEALTH GROUP, A MINNESOTA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge

OPINION

This case is before the court for ruling on Plaintiff's Motion for Class Certification Pursuant to Rule 23(a) and (b)(3) (#70). This court has carefully reviewed Plaintiff's Motion, Memorandum in Support (#71) and supporting exhibits, as well Defendants' Joint Memorandum in Opposition to Plaintiff's Motion to Certify the Class (#100) and supporting exhibits. Following this court's careful and thorough review, Plaintiff's Motion for Class Certification (#70) is DENIED. In addition, Defendants' Motion for Leave to File Reply Brief (#116) and Defendants' Joint Partial Motion to Dismiss (#104) are GRANTED.

FACTS

On March 11, 2008, Plaintiff, Christie Clinic, P.C., individually and on behalf of others similarly situated, filed its Complaint (#1) against Defendants, MultiPlan, Inc. (MultiPlan), Unicare Life and Health Insurance Company (Unicare), and United Health Care Insurance Company, a subsidiary of United Health Group (United). Plaintiff alleged that it is a health care provider, that is, a corporation engaged in providing health care services performed by licensed physicians and nurse practitioners. Plaintiff alleged that MultiPlan is a Preferred Provider Organization Administrator, that is, a company that works as an intermediary between health care providers and health insurance companies to create a Preferred Provider Organization (PPO) network. Defendants United and Unicare are health insurance companies, that is, companies that reimburse health care providers for services rendered to the companies' insureds. In its Complaint, Plaintiff referred to the health insurance companies as "payors."

The parties in this suit are related to each other through a PPO arrangement. A PPO is designed to manage the provision of health care services through arrangements between health care providers (such as Plaintiff), payors (such as United and Unicare) and a PPO Administrator (such as MultiPlan), who establishes this PPO arrangement. Plaintiff alleged that, in PPO arrangements, health care providers agree to offer a discount rate to patients who are insured by payors in the network. Plaintiff alleged that, in return, payors with access to the discount rate must provide incentives to patients that "steer" them to the health care providers. Plaintiff alleged that, in this way, health care providers are compensated for the discount rate by an increase in the volume of patients.

Plaintiff stated that its Complaint was brought on behalf of healthcare physicians, hospitals and patients who entered into agreements to participate in the MultiPlan PPO. Plaintiff alleged that MultiPlan entered into an agreement with Plaintiff and the other members of the class. Plaintiff alleged that, in the agreement, MultiPlan guaranteed that it would market its provider network, which offers financial incentives such as reduced deductibles and co-insurance to patients who use "in network" providers, only to Plaintiff and the physicians and hospitals in the class. Plaintiff alleged that the purpose of the agreement was to increase the volume of business that Plaintiff and the other members of the class would receive. Plaintiff alleged that, in return, Plaintiff and the other members of the class agreed to provide medical services to MultiPlan patients at discounted rates. Plaintiff alleged that, in blatant disregard of its promise to market its network patients only to payors who provided financial incentives, MultiPlan secretly contracted with payors Unicare and United allowing access to the providers but allowing disincentives to patients to see providers. Plaintiff alleged that Defendants, however, retained the contractual discounts as if they had provided incentives for patients to see in network physician providers. Plaintiff alleged that, as a result, Plaintiff and the other members of the class received reduced payments for medical services without receiving the increased volume of patients that was to be the "benefit of the bargain." Plaintiff alleged that Defendants thereby increased their profits at the expense of Plaintiff and the Class.

Plaintiff alleged that this conduct by Defendants was part of a "Silent PPO" scheme. Plaintiff stated that a Silent PPO "is the illegitimate appropriation of discounted reimbursement amounts by payors who do not offer a preferred provider or exclusive provider policy to patients and/or who do not offer any financial incentive mechanism (e.g. reduced co-payments, reduce [sic] deductibles, or reduced premiums) to steer or channel patients to preferred providers for receipt of medical services." Plaintiff alleged that it was harmed by this scheme because payors accessed the discount rate but patients paid co-payments higher than co-payments for in-network services. Therefore, Plaintiff received reduced payments for medical services without receiving the increased volume of patients that was to be the benefit of their bargain.

In Count I, Plaintiff alleged that Defendants engaged in a civil conspiracy. In Count II, Plaintiff alleged breach of contract. In its breach of contract count, Plaintiff acknowledged that its December 15, 2004 agreement with MultiPlan contained the following provision: "However, Complimentary [sic] Network Clients['] Benefit Programs may make payment for Covered Services at an out of network level." Plaintiff alleged that MultiPlan explained that there were "soft" incentives in place in their Network and "explicitly promised that they would resolve the issue of 'soft' incentives." Plaintiff alleged that MultiPlan failed to take any action to resolve the issue of "soft" incentives in violation of its contract with Plaintiff and the other providers in the class. In Count III, Plaintiff alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act. In Count IV, Plaintiff alleged unjust enrichment. In its Complaint, Plaintiff also sought an accounting and injunctive relief.

Defendants filed Motions to Dismiss (#21, #24, #30) challenging the sufficiency of Plaintiff's Complaint. On September 10, 2008, Magistrate Judge David G. Bernthal entered three Reports and Recommendations (#64, #65, #66). Judge Bernthal agreed with Defendants that Plaintiff's allegations of misrepresentations by MultiPlan were "averments of fraud" so that the particularity requirements of Rule 9(b) of the Federal Rules of Civil Procedure applied to the allegations. Judge Bernthal therefore recommended striking the language that referred to misrepresentations from Paragraph 62 and Paragraph 68 of the Complaint. Judge Bernthal stated that, if Plaintiff wished to include averments of fraud in its claims, it must amend the Complaint to allege the misrepresentations with particularity as required by Rule 9(b). Judge Bernthal concluded, however, the Plaintiff's claims of civil conspiracy and breach of contract did not depend solely on allegations of misrepresentation, so he did not recommend dismissing those claims in their entirety. Judge Bernthal also concluded that Plaintiff's claim for unjust enrichment and claim for an accounting should not be dismissed. Judge Bernthal did recommend dismissing Plaintiff's claim brought under the Illinois Consumer Fraud and Deceptive Business Practices Act because Plaintiff failed to allege that the Consumer Fraud claim implicated consumer protection concerns. Judge Bernthal also noted that Plaintiff did not respond to Defendants' arguments that Plaintiff was not entitled to injunctive relief, attorney fees or punitive damages. Judge Bernthal therefore recommended dismissing Plaintiff's injunctive relief claim and Plaintiff's requests for attorney fees and punitive damages as to all Defendants.

On September 24, 2008, Defendants filed Partial Objections (#75, #76) to the Reports and Recommendations. Plaintiff filed Motions to Strike Defendants' Partial Objections (#83, #84) and a Response to Defendants' Partial Objections (#91). Plaintiff did not, however, file any of its own Objections to the Reports and Recommendations. On October 15, 2008, this court entered an Order (#93). Following careful de novo review of Judge Bernthal's reasoning, Defendants' Partial Objections and Plaintiff's Response, this court accepted Judge Bernthal's Reports and Recommendations in their entirety.*fn1 This court therefore struck the language in Paragraph 62 and Paragraph 68 of the Complaint regarding misrepresentations. This court also dismissed Plaintiff's claim pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act as well as Plaintiff's claim for injunctive relief and requests for attorney fees and punitive damages. Pursuant to Judge Bernthal's recommendation, the dismissals were without prejudice and Plaintiff was allowed 14 days to file an amended complaint to correct the deficiencies noted by Judge Bernthal.

In the meantime, on September 18, 2008, Plaintiff filed a First Amended Complaint (#68), a Motion for Class Certification (#70) and a Memorandum of Law in Support (#71). Plaintiff asked this court to certify the following proposed class:

All licensed medical providers (physicians and hospitals) who were and/or are (a) parties to a Multiplan Participating Primary PPO Provider Agreement; and (b) unknowingly and without their consent had Multiplan preferred provider discounts taken against payments for medical services rendered to out-of-network patients, with losses of market share resulting from a failure to provide the corresponding incentives (i.e., steerage).*fn2 On September 23, 2008, Plaintiff filed a Second Amended Complaint (#73). After this court's Order (#93) accepting Judge Bernthal's Reports and Recommendations, Plaintiff filed a Third Amended Complaint (#97) on October 29, 2008. The Third Amended Complaint (#97) is identical in most respects to Plaintiff's prior complaints. However, the Third Amended Complaint did eliminate the reference to a patient class and deleted the claim brought pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act.

On November 10, 2008, Defendants filed a Joint Memorandum in Opposition to Plaintiff's Motion to Certify Class (#100) with numerous and lengthy exhibits. On November 13, 2008, Defendants filed a Joint Partial Motion to Dismiss (#104) and Memorandum in Support (#105). Defendants argued that, although Plaintiff deleted its Illinois Consumer Fraud and Deceptive Business Practices Act claim, Plaintiff failed to remove from its Third Amended Complaint (#97) other claims and allegations this court had already dismissed, including claims for punitive damages, injunctive relief, and attorney fees, as well as two specific items in paragraphs 62 and 68 of the Third Amended Complaint alleging fraud and misrepresentation. Defendants stated that Plaintiff had done absolutely nothing to alter its pleadings regarding these claims to correct the deficiencies found by the court. Defendants argued that these claims should be dismissed with prejudice. Plaintiff filed a Response to Defendants' Joint Partial Motion to Dismiss (#108) on November 24, 2008. Plaintiff argued that it amended the claims which had been dismissed without prejudice. On December 5, 2008, Defendants filed a Motion for Leave to File a Reply Brief in Further Support of Defendants' Joint Partial Motion to Dismiss (#116). Defendants argued that a Reply Brief is justified under the circumstances here because Plaintiff had chosen to defend claims it had previously abandoned. Defendants attached their proposed Reply Brief.

ANALYSIS

I. MOTION FOR LEAVE TO FILE

Defendants have asked this court for leave to file a Reply Brief in further support of their Joint Partial Motion to Dismiss. Plaintiff has not responded to Defendants' Motion for Leave to File (#116). Therefore, pursuant to Rule 7.1(B)(2) of the Local Rules of the Central District of Illinois, this court "presume[s] there is no opposition to the motion." This court also agrees with Defendants that a Reply Brief is justified under the circumstances here and will be helpful to the court. Accordingly, Defendants' Motion for Leave to File (#116) is GRANTED. The clerk is hereby directed to file Defendants' Reply Brief, which is attached to Defendants' Motion as Exhibit A. This court will consider Defendants' Reply Brief in ruling on Defendants' Joint Partial Motion to Dismiss.

II. JOINT PARTIAL MOTION TO DISMISS

Defendants argued that this court should dismiss, with prejudice, portions of Plaintiff's Third Amended Complaint. Specifically, Defendants contended that certain language in paragraphs 62 and 68 of the Third Amended Complaint, as well as Plaintiff's claims for injunctive relief, attorney fees and punitive damages must be dismissed with prejudice.

In its Response, Plaintiff acknowledged that this court ordered stricken the language regarding alleged misrepresentations in paragraph 62 and paragraph 68 of Plaintiff's Complaint and further acknowledged that this court dismissed Plaintiff's claim for injunctive relief and its requests for attorney fees and punitive damages. Plaintiff pointed out, however, that the dismissals were without prejudice and Plaintiff was allowed to amend its Complaint within 14 days. Plaintiff stated that it did just that and filed its Third Amended Complaint within 14 days of this court's Order. Plaintiff also argued that, contrary to Defendants' argument, it did not re-plead its dismissed claims verbatim and stated that a "careful reading of the Third Amended Complaint clearly shows that the Third Amended Complaint is different." However, Plaintiff did not point out any specific differences in its allegations in the Third Amended Complaint or provide any explanation regarding how the changed allegations corrected the deficiencies in the claims which led to the Order dismissing them.

In their Reply Brief, Defendants argued that Plaintiff made no substantive changes to its dismissed claims in its Third Amended Complaint. Defendants set out a comparison of the allegations in the original Complaint and the Third Amended Complaint. This court agrees with Defendants that Plaintiff's minor changes to its allegations included in the Third Amended Complaint do not, in any way, address or correct the deficiencies which led to this court's Order striking certain allegations and dismissing certain claims. This court further agrees with Defendants that Plaintiff included, in paragraph 62 and paragraph 68 of its Third Amended Complaint, the same allegations of misrepresentation which this court struck from paragraph 62 and paragraph 68 of its original Complaint. In its Response, Plaintiff made no attempt to explain its blatant disregard of this court's Order. Therefore, the ...


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