CHICAGO — A federal judge in Chicago has shut down a try by a group of doctors and hospitals sue Blue Cross in Chicago courtrooms for allegedly violating a Texas insurance payment law, rejecting "artful" arguments by the plaintiffs to keep the lawsuit in a court system renowned for being friendly to plaintiffs.
At issue is the Texas Prompt Pay Act (TPPA), which the hospitals, emergency facilities and physician groups say Health Care Service Corporation and Blue Cross Blue Shield of Texas violated by underpaying, paying late or failing to pay claims for emergency care. The plaintiffs said the issue dates to at least Nov. 8, 2009. They initially sued in Cook County Circuit Court. The complaint was removed to federal court in December 2013. Chicago-based HCSC licenses Blue Cross operations in five states, including Texas and Illinois.
In March 2017, Judge Robert Gettleman granted Blue Cross’ motion for partial summary judgment, which led to “a lengthy and contentious discovery process,” according to an opinion Gettleman filed April 6. That resulted in another round of dueling motions for summary judgment and a request from the plaintiffs for the judge to reconsider his refusal to send the case back to state court.
The hospital and health care provider plaintiffs said they waived the assignment of benefits under the federal Employee Retirement Income Security Act, making a state court, like the Cook County Circuit Court, the proper venue for their case. Judge Gettleman, however, called those waivers “an attempt to artfully plead the complaint by disguising the federal claims.” He denied the motion to reconsider remanding the complaint to Cook County court, which has routinely been rated by legal reform groups as a jurisdiction that heavily favors plaintiffs
The plaintiffs are represented in the action by attorneys J. Todd Trombley and Alexander B Klein III, of The Klein Law Firm, of Houston, as well as attorney Carlton E. Odim, of Chicago.
Blue Cross most recently requested summary judgment in their favor. The insurer said the Texas law doesn’t provide penalties to out-of-network providers because they lack a contracted rate. Blue Cross also argued ERISA pre-empts the plaintiffs' Texas state law claims relating to benefits for members of plans fully insured under the federal law, and that the complaint fails to establish liability under the Texas law.
Concerning penalties for out-of-network providers, Gettleman wrote the TPPA has “no method to calculate the penalty” to be paid to such entities and as such penalties aren’t available. He further explained that 5,474 of the 8,577 benefit claims at issue are through plans that fall under ERISA governance. He said a 2016 U.S. Fifth Circuit Court of Appeals opinion in Health Care Service Corporation v. Methodist Hospital of Dallas established the TPPA is inapplicable to such claims.
As out-of-network providers, Gettleman said, the plaintiffs lack a contract with Blue Cross, and absent such an agreement “there is no independent legal duty distinct from the patients’ rights under the ERISA plans.” As such, the plaintiffs can only be paid based on benefits in each patient’s plan, and Blue Cross is entitled to summary judgment on those claims.
Regarding an establishment of liability, Blue Cross argued the plaintiffs failed to show they submitted “clean claims” that were “payable” and also that Blue Cross failed to pay, paid late or denied the claims partially or in full. Gettleman said Blue Cross filed a statement of facts to which the plaintiffs were supposed to provide an itemized response, but instead offered general denials or specific denials that lack citations to introduced evidence.
“Some of the responses do indicate that the statement is controverted by a 13-page, single-spaced, declaration of (Emerus) CEO and former Vice President of Finance, (Dr. H. D. Kirby), but do not indicate a page or paragraph number of that declaration,” Gettleman wrote. “Most of the responses are not even that detailed.”
Calling it an “utter failure to comply with the rules,” Gettleman said he was justified in striking the response and fully admitting Blue Cross’ submission. He further wrote that Kirby’s declaration “is replete with hearsay, contains statements of which he has no personal knowledge and, for the most part is inadmissible.”
Finding no remaining factual dispute, Gettleman denied the plaintiffs’ motion for summary judgment and granted Blue Cross’ motion, ending the litigation.
Blue Cross and HCSC have been represented by attorneys Martin J. Bishop, Meredith Ann Shippee and Thomas C. Hardy, of Reed Smith LLP, of Chicago.