Amerigroup Texas, Inc. v. True View Surgery Center, L.P., D/B/A Town Park Surgery Center
Opinion
ACCEPTED 14-15-00086-CV FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS 10/30/2015 4:19:45 PM CHRISTOPHER PRINE CLERK No. 014-15-00086-CV ______________________________________ FILED IN IN THE 14th COURT OF APPEALS FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS HOUSTON, TEXAS 10/30/2015 4:19:45 PM CHRISTOPHER A. PRINE ______________________________________ Clerk
AMERIGROUP TEXAS, INC.
Appellant v.
TRUE VIEW SURGERY CENTER, L.P., d/b/a TOWN PARK SURGERY CENTER
Appellee ______________________________________
BRIEF OF APPELLEE ______________________________________
Strasburger & Price, LLP CHARLES “SCOTT” NICHOLS State Bar No. 14994100 JACK G. CARNEGIE State Bar No. 03826100 909 Fannin Street, Suite 2300 Houston, Texas 77010 Telephone: (713) 951-5600 Facsimile: (713) 951-5660 scott.nichols@strasburger.com jack.carnegie@strasburger.com ATTORNEYS FOR APPELLEE
Appeal from Cause No. 2012-73820, in the 157th Judicial District of Harris County, Texas
ORAL ARGUMENT REQUESTED
2155944.4/SPH/27768/0101/103015 TABLE OF CONTENTS
Page No.
TABLE OF CONTENTS ............................................................................................i
TABLE OF AUTHORITIES ....................................................................................iv
STATEMENT REGARDING ORAL ARGUMENT ..............................................ix
NOTE REGARDING RECORD CITATIONS ........................................................ix
ISSUES PRESENTED............................................................................................... x
I. STATEMENT OF FACTS .............................................................................. 1
II. SUMMARY OF ARGUMENT ....................................................................... 6
III. ARGUMENT AND AUTHORITIES ............................................................. 9
A. Standard of Review ............................................................................... 9
B. Amerigroup’s Claims Are Barred By The Statute Of Frauds. ............ 10
1. The sole basis for Amerigroup’s claims is an alleged oral agreement. ................................................................................. 11 2. Town Park has never admitted that the contract alleged by Amerigroup, or anything remotely similar, exists. .............. 18 3. The agreement alleged by Amerigroup is barred by the statute of frauds because a contract “relating to medical care” made by a “health care provider” must be in writing. ...................................................................................... 21 (a) Town Park is a “health care provider.” .......................... 21 (b) The alleged oral agreement “relates to medical care.” ............................................................................... 22 (c) Amerigroup’s attempts to avoid the statute of frauds fail. ....................................................................... 24 (i) Amerigroup ignores the plain language of the statute. ............................................................. 24 (ii) Amerigroup has no “history” or case law supporting its argument. ....................................... 27 i 2155944.4/SPH/27768/0101/103015 (iii) Town Park’s argument does not lead to “absurd results.” ................................................... 28 (iv) Amerigroup’s “performance” is inconsistent with the alleged oral agreement. .......................... 31 (v) Town Park’s invoices do not satisfy the statute of frauds. ................................................... 33 (vi) Amerigroup’s “voidable, not void” argument is frivolous. ........................................... 34 4. The agreement alleged by Amerigroup involves an alleged promise by one to answer for the debt of another and is therefore barred by the statute of frauds......................... 35 (a) Amerigroup was answering for the debt of another. ...... 36 (b) The “leading object” doctrine does not apply. ............... 37 C. Amerigroup Cannot Recover Because the Alleged Agreement Was Not Entered Into by Someone With Actual or Apparent Authority to Make a Blanket Fee Agreement On Behalf of Town Park. .......................................................................................... 39
1. The burden of proof was on Amerigroup to prove actual or apparent authority. ................................................................ 40 2. Amerigroup presented no evidence that the unidentified person who supposedly entered into the alleged blanket fee agreement had actual or apparent authority to do so on behalf of Town Park............................................................. 42 (a) No evidence of actual authority. ..................................... 42 (b) No evidence of apparent authority. ................................ 45 D. Amerigroup Cannot Recover For Breach Of Contract Because Town Park Did Not Fail To Comply With Any Alleged Contract Term...................................................................................... 50
1. The alleged agreement does not address reimbursement of overpayments. ....................................................................... 50 2. The alleged agreement does not address billing methodology.............................................................................. 51 E. The Trial Court Did Not Err in Granting Summary Judgment Based on the Statute of Limitations as to the Additional 109 Claims on Which Amerigroup First Sought Recovery in 2014. ......... 54 ii 2155944.4/SPH/27768/0101/103015 F. Amerigroup Has Abandoned Its Equitable Causes of Action and Waived Any Claimed Error in Granting Summary Judgment on Those Causes of Action. ................................................ 56
G. The Trial Court Did Not Err in Granting Summary Judgment on Amerigroup’s Equitable Claims Based on the Statute of Limitations........................................................................................... 57
1. Unjust enrichment and money had and received are governed by the two-year statute of limitations. ...................... 57 2. The statute of limitations began to run when the money was paid..................................................................................... 59 IV. CONCLUSION AND PRAYER ................................................................... 60
CERTIFICATE OF COMPLIANCE ....................................................................... 61
CERTIFICATE OF SERVICE ................................................................................ 62
iii 2155944.4/SPH/27768/0101/103015 TABLE OF AUTHORITIES
Page(s) CASES 2616 S. Loop L.L.C. v. Health Source Home Care, Inc., 201 S.W.3d 349 (Tex. App.—Houston [14th Dist.] 2006, no pet.) ................... 42
American Bank & Trust Co v. Freeman, 560 S.W.2d 444 (Tex. Civ. App.—Beaumont 1977, writ ref’d n.r.e.) ............... 41
Amoco Prod. Co. v. Smith, 946 S.W.2d 162 (Tex. App. – El Paso 1997, no pet.) ........................................ 59
Banfield v. Davidson, 201 S.W. 442 (Tex. Civ. App.—Galveston 1918, no writ) ................................ 35
Buck v. Blum, 130 S.W.3d 285 (Tex. App. – Houston [14th Dist.] 2004, no pet.) .................... 26
Capstone Healthcare Equipment Services, Inc. v. Quality Home Health Care, Inc., 295 S.W.3d 696 (Tex.App.-Dallas 2009, pet. denied) ....................................... 55
City of Keller v. Wilson, 168 S.W.3d 802 (Tex.
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ACCEPTED 14-15-00086-CV FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS 10/30/2015 4:19:45 PM CHRISTOPHER PRINE CLERK No. 014-15-00086-CV ______________________________________ FILED IN IN THE 14th COURT OF APPEALS FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS HOUSTON, TEXAS 10/30/2015 4:19:45 PM CHRISTOPHER A. PRINE ______________________________________ Clerk
AMERIGROUP TEXAS, INC.
Appellant v.
TRUE VIEW SURGERY CENTER, L.P., d/b/a TOWN PARK SURGERY CENTER
Appellee ______________________________________
BRIEF OF APPELLEE ______________________________________
Strasburger & Price, LLP CHARLES “SCOTT” NICHOLS State Bar No. 14994100 JACK G. CARNEGIE State Bar No. 03826100 909 Fannin Street, Suite 2300 Houston, Texas 77010 Telephone: (713) 951-5600 Facsimile: (713) 951-5660 scott.nichols@strasburger.com jack.carnegie@strasburger.com ATTORNEYS FOR APPELLEE
Appeal from Cause No. 2012-73820, in the 157th Judicial District of Harris County, Texas
ORAL ARGUMENT REQUESTED
2155944.4/SPH/27768/0101/103015 TABLE OF CONTENTS
Page No.
TABLE OF CONTENTS ............................................................................................i
TABLE OF AUTHORITIES ....................................................................................iv
STATEMENT REGARDING ORAL ARGUMENT ..............................................ix
NOTE REGARDING RECORD CITATIONS ........................................................ix
ISSUES PRESENTED............................................................................................... x
I. STATEMENT OF FACTS .............................................................................. 1
II. SUMMARY OF ARGUMENT ....................................................................... 6
III. ARGUMENT AND AUTHORITIES ............................................................. 9
A. Standard of Review ............................................................................... 9
B. Amerigroup’s Claims Are Barred By The Statute Of Frauds. ............ 10
1. The sole basis for Amerigroup’s claims is an alleged oral agreement. ................................................................................. 11 2. Town Park has never admitted that the contract alleged by Amerigroup, or anything remotely similar, exists. .............. 18 3. The agreement alleged by Amerigroup is barred by the statute of frauds because a contract “relating to medical care” made by a “health care provider” must be in writing. ...................................................................................... 21 (a) Town Park is a “health care provider.” .......................... 21 (b) The alleged oral agreement “relates to medical care.” ............................................................................... 22 (c) Amerigroup’s attempts to avoid the statute of frauds fail. ....................................................................... 24 (i) Amerigroup ignores the plain language of the statute. ............................................................. 24 (ii) Amerigroup has no “history” or case law supporting its argument. ....................................... 27 i 2155944.4/SPH/27768/0101/103015 (iii) Town Park’s argument does not lead to “absurd results.” ................................................... 28 (iv) Amerigroup’s “performance” is inconsistent with the alleged oral agreement. .......................... 31 (v) Town Park’s invoices do not satisfy the statute of frauds. ................................................... 33 (vi) Amerigroup’s “voidable, not void” argument is frivolous. ........................................... 34 4. The agreement alleged by Amerigroup involves an alleged promise by one to answer for the debt of another and is therefore barred by the statute of frauds......................... 35 (a) Amerigroup was answering for the debt of another. ...... 36 (b) The “leading object” doctrine does not apply. ............... 37 C. Amerigroup Cannot Recover Because the Alleged Agreement Was Not Entered Into by Someone With Actual or Apparent Authority to Make a Blanket Fee Agreement On Behalf of Town Park. .......................................................................................... 39
1. The burden of proof was on Amerigroup to prove actual or apparent authority. ................................................................ 40 2. Amerigroup presented no evidence that the unidentified person who supposedly entered into the alleged blanket fee agreement had actual or apparent authority to do so on behalf of Town Park............................................................. 42 (a) No evidence of actual authority. ..................................... 42 (b) No evidence of apparent authority. ................................ 45 D. Amerigroup Cannot Recover For Breach Of Contract Because Town Park Did Not Fail To Comply With Any Alleged Contract Term...................................................................................... 50
1. The alleged agreement does not address reimbursement of overpayments. ....................................................................... 50 2. The alleged agreement does not address billing methodology.............................................................................. 51 E. The Trial Court Did Not Err in Granting Summary Judgment Based on the Statute of Limitations as to the Additional 109 Claims on Which Amerigroup First Sought Recovery in 2014. ......... 54 ii 2155944.4/SPH/27768/0101/103015 F. Amerigroup Has Abandoned Its Equitable Causes of Action and Waived Any Claimed Error in Granting Summary Judgment on Those Causes of Action. ................................................ 56
G. The Trial Court Did Not Err in Granting Summary Judgment on Amerigroup’s Equitable Claims Based on the Statute of Limitations........................................................................................... 57
1. Unjust enrichment and money had and received are governed by the two-year statute of limitations. ...................... 57 2. The statute of limitations began to run when the money was paid..................................................................................... 59 IV. CONCLUSION AND PRAYER ................................................................... 60
CERTIFICATE OF COMPLIANCE ....................................................................... 61
CERTIFICATE OF SERVICE ................................................................................ 62
iii 2155944.4/SPH/27768/0101/103015 TABLE OF AUTHORITIES
Page(s) CASES 2616 S. Loop L.L.C. v. Health Source Home Care, Inc., 201 S.W.3d 349 (Tex. App.—Houston [14th Dist.] 2006, no pet.) ................... 42
American Bank & Trust Co v. Freeman, 560 S.W.2d 444 (Tex. Civ. App.—Beaumont 1977, writ ref’d n.r.e.) ............... 41
Amoco Prod. Co. v. Smith, 946 S.W.2d 162 (Tex. App. – El Paso 1997, no pet.) ........................................ 59
Banfield v. Davidson, 201 S.W. 442 (Tex. Civ. App.—Galveston 1918, no writ) ................................ 35
Buck v. Blum, 130 S.W.3d 285 (Tex. App. – Houston [14th Dist.] 2004, no pet.) .................... 26
Capstone Healthcare Equipment Services, Inc. v. Quality Home Health Care, Inc., 295 S.W.3d 696 (Tex.App.-Dallas 2009, pet. denied) ....................................... 55
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) ................................................................................ 9
Cohen v. McCutchin, 565 S.W.2d 230 (Tex. 1978) ........................................................................11, 33
Cooper Petroleum Co. v. LaGloria Oil & Gas Co., 436 S.W.2d 889 (Tex. 1969) .............................................................................. 38
Cox Engineering, Inc. v. Funston Mach. and Supply Co., 749 S.W.2d 508 (Tex. App.—Fort Worth, 1988, no writ) ................................. 33
Dracopoulas v. Rachal, 411 S.W.2d 719 (Tex. 1967) .............................................................................. 20
Dynegy, Inc. v. Yates, 345 S.W.3d 516 (Tex. App.—San Antonio 2011, pet. granted), rev’d on other grounds, 422 S.W.3d 638 (Tex. 2013) ...................................................... 35
iv 2155944.4/SPH/27768/0101/103015 Dynegy, Inc. v. Yates, 422 S.W.3d 638 (Tex. 2013) .............................................................................. 35
Eland Energy, Inc. v. Rowan Oil & Gas, Inc., 914 S.W.2d 179 (Tex. App.—San Antonio 1995, writ denied) ......................... 34
Elledge v. Friberg-Cooper Water Supply Corp., 240 S.W.3d 869 (Tex. 2007) .............................................................................. 58
Evans v. Shaw, 268 S.W. 1037 (Tex. Civ. App.—Waco 1925, no writ) ..................................... 35
Exxon Corp. v. Breezevale, Ltd., 82 S.W.3d 429 (Tex. App.—Dallas 2002, pet. denied)...................................... 32
First Nat. Bank v. Slaton Independent School Dist., 58 S.W.2d 870 (Tex.Civ.App. –Amarillo 1933, writ dism’d)............................ 41
Four Seasons Nursing Center v. Weber Medical Systems, LLC, 04-74614 (E. D. Mich. September 28, 2005) ..................................................... 26
Gaffar v. Kamal, No. 05-10-00560-CV, 2011 Tex. App. LEXIS 5714 (Tex. App.-Dallas July 27, 2011, no pet.)......................................................................................... 59
Gaines v. Kelly, 235 S.W.3d 179 (Tex. 2007) .............................................................................. 46
Haas Drilling Co. v. First Nat’l Bank, 456 S.W.2d 886 (Tex. 1970) .............................................................................. 38
Hancock v. Chicago Title Ins. Co., 635 F.Supp.2d 539 (N.D. Tex. 2009) ................................................................. 58
Hermann Hosp. v. MEBA Medical & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988) ...................................................................... 19, 30
IRA Res., Inc. v. Griego, 221 S.W.3d 592 (Tex. 2007) .............................................................................. 41
Jeffery v. Walden, 899 S.W.2d 207 (Tex.App. —Dallas 1993), rev’d in part on other grounds, 907 S.W.2d 446 (Tex. 1995) ............................................................... 25
v 2155944.4/SPH/27768/0101/103015 Kinney v. Palmer, No. 04-07-00091-CV, 2008 Tex. App. LEXIS 4632; 2008 WL 2515696 (Tex. App. – San Antonio 2008, no pet.)............................................................ 56
Kirby Highland Lakes Surgery Ctr., L.L.P. v. Kirby, 183 S.W.3d 891 (Tex. App.—Austin 2006, no pet.) .......................................... 26
LeTourneau Lifelike Orthotics & Prosthetics, Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348 (5th Cir. 2002) .............................................................................. 31
Lincoln Nat. Life Ins. v. Brown Schools, 757 S.W.2d 411 (Tex. Civ. App.—Houston [14th Dist.] 1988, no writ) ..........................................................................................30, 31, 51
Lippincott v. Whisenhunt, 462 S.W.3d 507 (Tex. 2015) .............................................................................. 28
Mercer v. Daoran Corp., 676 S.W.2d 580 (Tex. 1984) .............................................................................. 19
Merry Homes, Inc. v. Luc Dao, 359 S.W.3d 881 (Tex. App.-Houston [14th Dist.] 2012, no pet.) ................58, 59
Mission Linen Supply, Inc. v. Sandy's Signals, Inc., 2-07-014-CV, 2007 Tex. App. LEXIS 5968; 2007 WL 2152070 (Tex. App.-- Fort Worth, July 26, 2007) ...................................................................... 41
Morales v. Trans World Airlines, Inc., 504 U.S. 374, 112 S.Ct. 2031 (1992).................................................................. 26
Rakowski v. Committee to Protect Clear Creek Village Homeowners’ Rights, 252 S.W.3d 673 (Tex.App.-Houston [14th Dist.] 2008, pet. denied) ................ 19
Robertson v. Melton, 131 Tex. 325, 115 S.W.2d 624, 118 A.L.R. 1505 (1938) .................................. 20
Rourke v. Garza, 530 S.W.2d 794 (Tex. 1975) .............................................................................. 46
Stovall & Assocs. v. Hibbs Fin. Ctr., Ltd., 490 S.W.3d 790 (Tex. App.—Dallas 2013, no pet.) ....................................31, 32
Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211 (Tex. 2002)............................................................................. 9, 10
vi 2155944.4/SPH/27768/0101/103015 Tanglewood Terrace, Ltd. v. City of Texarkana, 996 S.W.2d 330 (Tex. App.-Texarkana 1999, no pet.) ...................................... 59
Tenaska Frontier Partners, Ltd. v. Sullivan, 273 S.W.3d 734 (Tex.App.-Houston [14th Dist.] 2008, no pet.) ....................... 27
Texas Dept. of Public Safety v. Abbott, 310 S.W.3d 670 (Tex.App.-Austin 2010, no pet.).............................................. 26
TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432 (Tex. 2011) .............................................................................. 28
Thomas Reg’l Directory Co., v. Dragon Prods., Ltd., 196 S.W.3d 424 (Tex. App.—Beaumont 2006, pet. denied) .......................45, 46
Tran v. Luu, No. 12-06-19,092-CV, 2014 Tex. App. LEXIS 3956; 2014 WL 1410345 (Tex. App. -- Waco 2014, no pet.) ...................................................................... 56
Verizon Employee Benefits Committee v. Frawley, 655 F.Supp.2d 644 (N.D. Tex. 2008) ................................................................. 59
Verizon Employee Benefits Committee v. Frawley, No. 3:05-CV-2105-P ECF, 2007 WL 2051113 (N.D. Tex. 2007) ..................... 59
Walker Ins. Servs. v. Bottle Rock Power Corp., 108 S.W.3d 538 (Tex. App.—Houston [14th Dist.] 2003, no pet.) ................... 42
White v. Harrison, 390 S.W.3d 666 (Tex. App.--Dallas 2012, no pet.) ............................................ 20
Williams v. Unifund CCR Partners, 264 S.W.3d 231 (Tex. App.—Houston [1st Dist.] 2008, no pet.) ...................... 50
York Group, Inc. v. Horizon Casket Group, Inc., 2007 U.S. Dist. LEXIS 49778 (S.D. Tex. July 10, 2007) .................................. 34
STATUTES 29 U.S.C. § 1132(a)(1)(B) .................................................................................29, 31
TEX. BUS. & COM. CODE ANN. § 2.201 .................................................................... 33
TEX. BUS. & COM. CODE § 26.001 ........................................................................... 33
vii 2155944.4/SPH/27768/0101/103015 TEX. BUS. & COM. CODE § 26.001(a) ....................................................................... 10
TEX. BUS. & COM. CODE § 26.01(a)(1) .................................................................... 35
TEX. BUS. & COM. CODE § 26.01(b)(2) ..........................................x, 8, 11, 35, 36, 37
TEX. BUS. & COM. CODE § 26.01(b)(8) ............................. x, 8, 11, 21, 24, 25, 26, 27
TEX. CIV. PRAC. & REM. CODE § 16.003(a) ............................................................. 57
TEX. CIV. PRAC. & REM. CODE § 16.004............................................................54, 58
TEX. CIV. PRAC. & REM. CODE §74.001................................................................... 26
TEX. CIV. PRAC. & REM. CODE § 74.001(11)(A) ..................................................... 22
TEX. CIV. PRAC. & REM. CODE § 74.001(12) .....................................................22, 25
TEX. CIV. PRAC. & REM. CODE § 74.001(19) .....................................................22, 23
TEX. CIV. PRAC. & REM. CODE § 74.001(a)(13) ....................................................... 26
TEX. CIV. PRAC. & REM. CODE§ 16.068.............................................................54, 55
TEX. OCC. CODE § 151.002 ................................................................................22, 23
TEX. OCC. CODE § 151.002(13) ............................................................................... 23
RULES
TEX. R. CIV. P. 65 .................................................................................................... 56
Tex. R. Civ. P. 166a(i) ............................................................................................... 9
Tex. R. Civ. P. 166a(c)............................................................................................. 10
viii 2155944.4/SPH/27768/0101/103015 STATEMENT REGARDING ORAL ARGUMENT
Appellee, Town Park, respectfully submits that oral argument is
unnecessary. The facts and law are straightforward. Amerigroup alleges Town
Park orally agreed to accept a particular amount for certain a medical procedure
performed on Amerigroup’s policyholders and breached by failing to reimburse
supposed overpayments. There was no such agreement. But even if there were,
(1) the alleged agreement would be unenforceable under the statute of frauds; (2)
there was no evidence the alleged agreement was entered into by anyone with
authority to enter into such a blanket fee agreement; (3) there is no allegation or
evidence that the alleged agreement included a term requiring reimbursement of
overpayments; therefore it would not be a breach of contract to fail to return
claimed overpayments. Any potential remedies would be equitable and those have
been abandoned and are barred by the statute of limitations.
NOTE REGARDING RECORD CITATIONS
A number of the materials were filed in the trial court under seal. The
original Clerk’s Record did not contain the sealed materials and had to be
supplemented. As a result, the record is somewhat fragmented.
For example, Appellee’s Second Motion for Summary Judgment at issue in
this appeal is located at CR 501, but only with Exhibits A, C and D. The motion is
also located in the Supplemental Clerk’s Record beginning in Volume III, p. 165,
with Exhibits B, E, and G in Volume IV, p. 190-250, and Exhibits F and H in ix 2155944.4/SPH/27768/0101/103015 Volume V, p. 259-264. Similarly, Appellee’s first Motion for Summary Judgment
is located at CR 127 with Exhibits A, D, E, F and G, and in the Supplemental
Clerk’s Record beginning in Volume I, p. 16, with Exhibits B and C at Volume II
p. 30-82.
Appellee has attempted to include citations to all relevant portions of the
record to assist the Court in identifying the complete documents.
ISSUES PRESENTED
Did the trial court err in granting summary judgment in favor of Town Park?
Does the alleged oral agreement for Amerigroup to pay, and Town Park to
accept, a certain dollar amount for Town Park’s facilities fee for a particular
surgical procedure constitute an “an agreement, promise, [or] contract … relating
to medical care … made by a … health care provider as defined in Section 74.001,
Civil Practice and Remedies Code,” such that it falls within the Statute of Frauds,
TEX. BUS. & COM. CODE § 26.01(b)(8)?
Does the alleged verbal agreement for Amerigroup to pay, on behalf of its
insureds, Town Park’s facilities fee for services rendered to those insureds,
constitute “a promise by one person to answer for the debt … of another person”
(i.e. the patients to whom the services were rendered) such that it falls within the
Statute of Frauds, TEX. BUS. & COM. CODE § 26.01(b)(2)?
Did Amerigroup present sufficient evidence to raise a genuine issue of
material fact as to whether the unidentified person who supposedly entered into the x 2155944.4/SPH/27768/0101/103015 alleged verbal agreement on behalf of Town Park had actual or apparent authority
to enter into a blanket fixed fee agreement for an indefinite term?
When a party pays less than the amount charged, but later contends that it
mistakenly paid more than it intended to pay, is it a breach of contract for the other
party to fail to refund the alleged overpayment when there is no contractual term
addressing reimbursement of alleged overpayments?
Are plaintiff’s breach of contract claims barred by the four year statute of
limitations to the extent they relate to individual payments made for particular
patients more than four years before the claims were added to the lawsuit?
Did plaintiff abandon all claims other than breach of contract, and waive any
claimed error in granting summary judgment on those other claims, by filing an
amended pleading that included no causes of action except breach of contract?
Are plaintiff’s claims for equitable relief barred by the two-year statute of
limitations?
xi 2155944.4/SPH/27768/0101/103015 I. STATEMENT OF FACTS Amerigroup Texas, Inc. (“Amerigroup”) is a publicly-traded, for-profit
health maintenance organization that has contracted with the Texas Health &
Human Services Commission, or “Texas Medicaid,” to manage payments for
members’ healthcare services. Because Amerigroup is a for-profit entity,
Amerigroup alone, and not Texas Medicaid, determines the amount it pays on any
given claim. While Amerigroup may opt to use the Medicaid fee schedule as a
guide for reimbursements, it is under no obligation to do so and its decision of how
much to pay has no effect on Medicaid or the taxpayers. Supp. CR 62-63 (Second
MSJ, Ex. B at p. 116. ll. 20-25, p. 117, ll. 1-22). Amerigroup reimburses different
providers for the same services at rates that differ from the Medicaid fee schedule
and differ among providers. Supp. CR 59-60 (Second MSJ, Ex. B at p. 110, ll. 1-7,
p. 111, ll. 1-21).
True View Surgery Center, L.P. d/b/a Town Park Surgery Center (“Town
Park”) is a licensed ambulatory surgical center that furnishes the facility services
where various medical procedures are performed, including the dental surgery
procedures at issue in this case. Supp. CR 259, 262 (Second MSJ at Ex. F). These
services include arranging the anesthesiologists’ services and providing the
operating room, labs, supplies, and nursing—essentially everything except the
dentist’s services. Supp. CR 66-67 (Second MSJ at Ex. B at p. 127, ll. 1- 17, p.
128, ll. 1- 2).
1 2155944.4/SPH/27768/0101/103015 Generally speaking, health care providers, including both doctors and
facility providers like Town Park, can be characterized as being “in-network” or
“out-of-network.” It is important to understand this distinction. An “in-network”
provider is one that has contracted with a health insurer like Amerigroup to accept
pre-agreed amounts for particular services. Although an in-network provider
typically agrees to accept a discounted rate, it benefits by receiving an increased
volume of procedures.
An out-of-network provider has no contract with the insurer to accept a pre-
agreed rate for particular services, and invoices at its own chosen rate for services
rendered. That is not to say insurers pay the provider’s invoiced rate; the amount
insurers pay for services rendered to their insureds by out-of-network providers is
based on the terms of the insurance plan with the insureds, and not on any
contractual agreement with the provider.
It is undisputed that Town Park was out-of-network with Amerigroup; Town
Park had not contracted to accept a pre-agreed rate. See Appellant’s Br. at 6-7.
Between 2006 and 2010, a number of Amerigroup policyholders underwent
dental surgery at Town Park. The procedure was referred to as the “41899”
procedure, after the procedure code assigned to it.1 Amerigroup alleges that the
1 CR 527 (Ex. A at ¶ 8). 41899 is the code for “unlisted procedure, dentoalveolar structures,” which for these claims means dental surgery including the treatment of teeth and sometimes treatment of abscess and replacement with implants. The procedures for these claims were performed by a dental surgeon, the patients required anesthesia, and they occurred in a surgery center which provided the nursing care, among other things. 2 2155944.4/SPH/27768/0101/103015 41899 procedures were performed by several dentists, and that Dr. Patrick Ralph
performed the majority of the procedures at issue. CR 527, Supp. CR 64-65
(Second MSJ at Ex. A at ¶ 8; Ex. B at p. 123, ll. 23 – 25, p. 124, ll. 1 – 7). Town
Park furnished the facility services necessary for the procedures to be performed.
Town Park had its patients sign a Patient Authorization & Responsibility
Form under which the patients acknowledged that they were financially
responsible for the charges, but Town Park billed Amerigroup directly. Supp. CR
259-61. Town Park’s billed charges ranged from $6000 to $9000 per procedure
and Town Park submitted its invoices directly to Amerigroup. Amerigroup then
determined the amount payable.
Amerigroup never paid Town Park’s full billed charges. Instead, it
reimbursed Town Park anywhere from $1,800 to $4,800 less than Town Park’s
invoices. According to Amerigroup’s latest petition, 239 of Amerigroup’s insured
members underwent the “41899” dental procedure from December 21, 2008
through September 2010, and Amerigroup paid $4,200.00 for 25 patients, $5040
for one patient, $6,142.50 for 18 patients and $6300 for the remaining 194 patients.
CR 497 (Fourth Amended Petition ¶11). Around the same time, however,
Amerigroup’s average per-claim payment to another provider for the same 41899
code was $12,820. Supp. CR 58-59 (Second MSJ at Ex. B at p. 108, ll. 8-10, p.
110, ll. 5-13).
3 2155944.4/SPH/27768/0101/103015 On March 21, 2011, long after the original claims and reimbursements,
Amerigroup began sending letters to Town Park demanding that Town Park refund
most of what it had been paid for the procedures during the prior three years.
Amerigroup vaguely claimed the amounts had been “paid in error.” See, e.g., CR
13, 18, 23, 28. None of the letters claimed that there had been any prior agreement
by Town Park to accept a particular pre-agreed rate for its services in connection
with the 41899 procedures. On the contrary, Amerigroup recognized that Town
Park was a “non-participating [i.e. out-of-network] facility.” CR 28.
On December 18, 2012, Amerigroup filed suit against Town Park claiming
that, “due to a clerical oversight,” it had overpaid Town Park for 130 “41899”
procedures. CR 2-3, 7-8. Amerigroup alleged that “[t]he ‘99’ code indicates a
nonspecific code, which only requires reimbursement off the state fee schedule,”
and sought to recoup all but $611 per procedure. Id. While the Original Petition
alleged that “Amerigroup reimbursed Town Park at this reduced flat rate for
years,” the reality is that Amerigroup had never reimbursed Town Park based on
the Medicaid fee schedule. Supp. CR 44-45 (Ex. B p. 29, ll. 1-16, p. 30, l. 1.) In
fact, from 2006 through the end of 2008, the time period pre-dating the claims at
issue in this suit, Amerigroup typically reimbursed Town Park anywhere from
$3412 to $6142. See Supp. CR 1059.2
2 Reimbursements generally increased over time as one might expect due to inflation. 4 2155944.4/SPH/27768/0101/103015 By its Third Amended Petition, Amerigroup sought to recover all but $630
per procedure and had modified its legal theories to include breach of contract,
money had and received, recoupment, and unjust enrichment. CR 100-103.
Town Park moved for summary judgment in January 2014 contending,
among other things, that Amerigroup’s unjust enrichment and money had and
received claims were barred by the statute of limitations, and that its claim for
recoupment failed because Town Park had not sued Amerigroup for damages
against which Amerigroup’s claims may be offset. CR 127. See also Supp. CR.
16 (MSJ), Supp. CR. 31, 81 (Exhibits B and C), CR 291 (Reply to Response). The
trial court granted partial summary judgment on the unjust enrichment and money
had and received claims, and noted that Amerigroup had withdrawn its recoupment
claim. CR 327. This left only Amerigroup’s breach of contract claim.
On November 14, 2014, Amerigroup filed its Fourth Amended Petition
eliminating all causes of action except breach of contract, but adding another 109
claims dating back to December 2008. CR 495. The same day, Town Park filed a
Third Amended Answer adding additional affirmative defenses. CR 492. By this
point, Amerigroup claimed that, at some unknown time “before September 2009,”
some unidentified person at Town Park verbally agreed by telephone to accept
100% of the Medicaid reimbursement rate for the 41899 procedures on patients
covered by Amerigroup, but that on 239 separate occasions between 2008 and
5 2155944.4/SPH/27768/0101/103015 2010, Amerigroup “mistakenly reimbursed Town Park at an inflated rate ….” CR
496-97 (Fourth Amended Petition ¶¶ 9, 11).
Town Park then filed its Second Motion for Summary judgment addressing
Amerigroup’s breach of contract claim. CR 501 (with Exhibits A, C and D). See
also Supp. CR 165; Supp. CR 190-250 (sealed Exhibits B, E, and G); Supp. CR
250-265 (Exhibits F-H); CR 594 (reply to response). After an oral hearing, the
court granted summary judgment. CR 641.
II. SUMMARY OF ARGUMENT Amerigroup’s claims are founded solely on an alleged oral agreement for
Amerigroup to pay, and Town Park to accept, 100% of the Medicaid rate for all
41899 procedures performed on patients insured by Amerigroup. There was no
such agreement. CR 538 (Ex. B); Supp. CR 254-55 (Ex. G at p. 211, ll. 15, p. 212,
ll. 15). While Amerigroup consistently reimbursed Town Park anywhere from
$1,800 to $4,800 less than the amount Town Park invoiced, Amerigroup never paid
the amount it now claims was agreed. Supp. CR 44-45 (Ex. B p. 29, ll. 1-16, p. 30,
l. 1.) Thus, this is not a case of a few “mistaken overpayments.”
By Amerigroup’s own account, the single telephone call during which the
agreement allegedly was made originated simply to obtain authorization for one
dental surgeon, Dr. Ralph, to perform a single procedure on a single patient on a
single date of service. Supp. CR 231, 234 (Ex. E at p. 38 ll. 3-23, p. 41, ll. 9-13).
The call was not initiated to obtain a blanket agreement to accept Medicaid rates.
6 2155944.4/SPH/27768/0101/103015 Supp. CR 231, 234 (Ex. E at p. 38 ll. 3-23, p. 41, ll. 9-13). Somehow Amerigroup
contends this alleged conversation, which took place at an unknown time with an
unknown person at Town Park, created a blanket contract for Town Park to accept
the Medicaid rate for all 41899 procedures for the indefinite future.
Amerigroup has no idea when the alleged telephone call took place. It has
no documentation of the supposed agreement. Supp. CR 222 (Second MSJ at Ex.
B at p. 188, ll. 1-6.) And, although Amerigroup sued to recover payments as far
back as December 2008, its petition vaguely alleged only that the agreement was
made “[s]ometime before September 2009.” CR 496 (Fourth Amended Petition
¶9). Amerigroup witnesses, however, could not even state what year the supposed
agreement was made. Supp. CR 230-31 (Second MSJ at Ex. E at p. 37 ll. 1 - 25, p.
38 ll. 1 - 3.)
Amerigroup also has no idea who made this supposed agreement on behalf
of Town Park. Not only is it unable to identify the person by name, it cannot state
the position or title of the person, or even the department where he supposedly
worked. Supp. CR 230-31, 243 (Second MSJ at Ex. E at p. 37 ll. 1 - 25, p. 38 ll. 1
– 3, p. 100 ll. 4-16.).
Thus, there is no evidence that the alleged agreement exists or was made by
someone with authority at Town Park to enter into a blanket fee agreement. Even
if such an agreement had been made, however, it would be unenforceable under
two separate provisions of the statute of frauds. 7 2155944.4/SPH/27768/0101/103015 First, the alleged agreement is one made by a health care provider relating to
medical care. Such agreements fall within the statute of frauds, and fail as a matter
of law when there is no written memorandum complete in every material detail
signed by the party to be charged. TEX. BUS. & COM. CODE § 26.01(b)(8). There is
no such written document.
Second, Town Park rendered services to its patients and payment for those
services was owed by the individual patients. An alleged agreement for
Amerigroup to pay the debt of another (i.e. the patients) also falls within the statute
of frauds. TEX. BUS. & COM. CODE § 26.01(b)(2).
Amerigroup’s claim is also precluded because the alleged agreement was not
made by anyone with actual or apparent authority to make such an agreement.
The only person with authority to make a blanket agreement to accept a particular
rate for specified procedures was Mr. Kraig Killough, who testified that he made
no such agreement. Supp. CR 254-55 (Ex. G at p. 211, ll. 15, p. 212, ll. 15).
Amerigroup cannot refute that testimony because none of Amerigroup’s witnesses
could identify who supposedly made the alleged agreement on behalf of Town
Park. Thus, even assuming someone purported to make such an agreement, it was
not someone with actual or apparent authority to do so.
Amerigroup’s breach of contract claim also fails for other equally
fundamental reasons. The only claimed breach is Town Park’s failure to reimburse
the alleged mistaken overpayments, yet there is no allegation or evidence of any 8 2155944.4/SPH/27768/0101/103015 contract term addressing reimbursement of overpayments. (Notably, in-network
agreements often do contain such terms, but the oral agreement alleged by
Amerigroup does not.) In the absence of such a contract term, the failure to
reimburse overpayments is not a breach of contract as a matter of law.
At best, Amerigroup would be relegated to equitable theories for recovering
claimed mistaken overpayments. Amerigroup, however, abandoned its equitable
legal theories, and waived any claimed error in granting summary judgment on
those causes of action, when it eliminated them from its Fourth Amended Petition.
Even apart from the abandonment, those causes of action are barred by the statute
of limitations in any event.
III. ARGUMENT AND AUTHORITIES
A. Standard of Review A defendant is entitled to summary judgment on no-evidence grounds if
there is no evidence of an essential element of the plaintiff’s claims. See Tex. R.
Civ. P. 166a(i); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). An
appellate court will affirm a no-evidence summary judgment if the record shows:
(1) there is no evidence on the challenged element; (2) the evidence offered to
prove the challenged element is no more than a scintilla; (3) the evidence
establishes the opposite of the challenged element; or (4) the court is barred by law
or the rules of evidence from considering the only evidence offered to prove the
challenged element. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005).
9 2155944.4/SPH/27768/0101/103015 A defendant is entitled to summary judgment on traditional grounds if it
conclusively negates an essential element of each of the plaintiff’s causes of action.
See Tex. R. Civ. P. 166a(c); Grant, 73 S.W.3d at 215.
B. Amerigroup’s Claims Are Barred By The Statute Of Frauds. Town Park never verbally agreed to accept Medicare rates for all 41899
procedures as alleged by Amerigroup. But even if there were such an agreement, it
would be barred by the statute of frauds.
Section 26.001(a) of the Business & Commerce Code states:
§ 26.01. Promise Or Agreement Must Be In Writing
(a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement, or a memorandum of it, is
(1) in writing; and
(2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him.
TEX. BUS. & COM. CODE ANN. §26.01(a). Section (b) of the statute describes the
types of contracts that must be in writing. Subsections b(2) and b(8) apply here.
Those sections state:
(b) Subsection (a) of this section applies to:
***
(2) a promise by one person to answer for the debt, default, or miscarriage of another person;
***
10 2155944.4/SPH/27768/0101/103015 (8) an agreement, promise, contract, or warranty of cure relating to medical care or results thereof made by a physician or health care provider as defined in Section 74.001, Civil Practice and Remedies Code. This section shall not apply to pharmacists.
TEX. BUS. & COM. CODE § 26.01(b)(2), (8).
Subsection (b)(2) applies because Amerigroup alleges an agreement between
Amerigroup and Town Park under which Amerigroup is to pay Town Park
specified amounts owed to Town Park by its patients. Thus Amerigroup alleges an
agreement to answer for the debt of another, specifically the debt the individual
patients owed to Town Park for services provided to those patients.
Subsection (b)(8) applies because the claim is based on “an agreement [or]
contract … relating to medical care … made by a … health care provider as
defined in Section 74.001, Civil Practice and Remedies Code.” Town Park is a
“health care provider” and the alleged contract clearly relates to medical care;
specifically, the 41899 dental surgeries.
1. The sole basis for Amerigroup’s claims is an alleged oral agreement. To satisfy the statute of frauds, “there must be a written memorandum which
is complete within itself in every material detail, and which contains all of the
essential elements of the agreement, so that the contract can be ascertained from
the writings without resorting to oral testimony.” Cohen v. McCutchin, 565
S.W.2d 230, 232 (Tex. 1978). In the present case, there is no written
11 2155944.4/SPH/27768/0101/103015 memorandum of the alleged agreement, much less a writing sufficient to satisfy
this standard.
The testimony of Amerigroup’s Corporate Representative, Edmund
Chidester, as well as its witness Nancy Jones, the individual who allegedly had the
conversation underlying Amerigroup’s claims, is crystal clear that the supposed
agreement to accept Medicaid rates was entirely verbal.3 As told by Ms Jones, the
agreement was made in a single telephone call with an unidentified person, after
Dr. Ralph requested authorization to perform a procedure at Town Park. Supp.
CR. 231 (Ex. E at p. 38 ll. 3-23). She testified that the alleged agreement
“originated from an authorization for a single procedure for a single patient on a
single date of service.” Supp. CR. 233 (Ex. E at p. 41, ll. 9-13). Amerigroup
contends this lone conversation established an agreement to accept the specified
Medicaid rate for all patients in the future.
Specifically, Jones testified that she first spoke with Dr. Ralph’s employee
“Rose” about Dr. Ralph’s request for authorization to perform surgery at Town
Park, and asked Rose if Town Park accepted Medicaid rates. Supp. CR. 232 (Ex.
E at p. 39, ll. 2-12). Rose said she did not know and referred Jones to “JoAnn” at
Town Park. Id. at p. 39, ll. 13 - 20. Jones testified she then called JoAnn and
asked if Town Park accepted Medicaid rates. JoAnn told her that was not within
3 See generally, Supp. CR. 190, 224 (Ex. B and E; Depositions of Edmund Chidester and Nancy Jones). 12 2155944.4/SPH/27768/0101/103015 “her scope” and referred Jones to another person. Supp. CR. 233-34 (Ex. E at p.
40, l. 16 – 41, l. 5). Jones said she then called “that other person” and explained
what she needed to find out. Id. at p. 41, ll. 6-13. Jones, however, could not
identify the other person:
Q. Okay. And so it’s your testimony that on one occasion you had a conversation with somebody at Town Park Surgery Center and that person accepted the Texas Medicaid fee schedule and you documented that?
A. Yes.
Q. Do you know the person’s name?
A. I don't remember.
Supp. CR. 228 (Ex. E at p. 34, ll. 9-15). Although Jones claimed she documented
the conversation, Amerigroup’s corporate representative testified he had not been
able to locate any such documentation. Supp. CR 43-44 (Ex. B. at p. 28, l. 18 – 29,
l. 3). Jones described the conversation with the “other person” as follows:
Q. You don't remember the exact conversation [with the “other person”]?
A. I remember explaining who I was with and that we had a request for surgery -- for dental surgery to be done at Town Park. I said, “I need to find out if you-all would accept the Texas Medicaid fee schedule.” He agreed. We had a few seconds in there where he verbalized his gratitude that we were able to work something out and to be able to approve the request coming from Dr. Ralph because they were dealing with him quite a bit. That’s about all I remember about a telephone call.
Q. Okay. And so the call originated because you had gotten a request from Dr. Ralph --
A. Right. 13 2155944.4/SPH/27768/0101/103015 Q. -- for authorization to do the procedure at Town Park Surgery Center?
A. Right.
Q. Is that correct?
A. Yes.
Supp. CR 231 (Ex. E at p. 38, ll. 4-23).
Q. All right. And then tell me what you told him [the “other person”].
A. Well, I explained who I was and that I needed to find out if they would accept the Texas Medicaid fee schedule. I needed to know that before proceeding any further as to needing a single case rate agreement. And he said that, “No, they would accept 100 percent of Medicaid rates.” Normally, the thing is a 100 percent Medicaid fee schedule minus the service area discount. I always left that service area discount off.
Q. So instead of 95 percent, you were giving them 100 percent?
A. Right.
Supp. CR 234-35 (Ex. E at p. 41, l. 19 – 42, l. 6) (emphasis added).
Thus, by Jones’ own testimony, the alleged call was only to obtain “a single
case rate agreement,” not a blanket rate agreement for the indefinite future. There
is no evidence that there was a meeting of the minds, or understanding on Town
Park’s part, that this alleged conversation related to anything more than a single
procedure, or even that the unidentified person with whom Ms Jones supposedly
spoke would have authority to establish a broader agreement.
Jones went on to testify that this was the only conversation she recalled
“regarding the rates at which Amerigroup would reimburse Town Park”:
14 2155944.4/SPH/27768/0101/103015 Q. I mean, your statement [in your affidavit] leaves open the possibility there is only one [conversation with the “other person”]. I just want to clarify. It says “After this preliminary agreement was reached, there were not many, if any, additional conversations between me and Town Park regarding the rates at which Amerigroup would reimburse Town Park.”
A. I was going on memory. I know I had the first conversation with them. I don't know when I would have had a second conversation with them.
Q. Okay. As we sit here today under oath and for the jury, you remember one conversation?
A. Yes.
Q. And none other?
A. Yes.
***
Q. So you have to swear to it, so just one?
A. One.
Supp. CR 240-41 (Ex. E at p. 83, l. 18 – 84, l. 14). Amerigroup’s corporate
representative Edmund Chidester also testified there was only one such
conversation. Supp. CR 49-50 (Ex. B at p. 36, l. 13 – 37, l. 15).
Chidester admitted Amerigroup’s entire suit was based on this supposed
verbal agreement between Nancy Jones and the unidentified “other person” at
Town Park:
Q. … The agreement to accept the flat fee based on a Texas Medicaid fee schedule is based upon what Nancy Jones reports to you about a conversation she had with a man who was supposedly employed by Town Park, whose name she can’t remember, one time?
A. Correct. 15 2155944.4/SPH/27768/0101/103015 Supp. CR 221 (Ex. B at p. 187, ll. 18 – 25).
Q. Okay. Well, I just want to be clear. If -- if -- if my client did not, in fact, hypothetically accept to be reimbursed at the Texas Medicaid fee rate, then there would be no such basis for your lawsuit, correct?
A. Correct.
Supp. CR 205 (Ex. B at p. 32, ll. 5-10).
Chidester further admitted there was no documentation of the alleged
agreement:
Q. All right. You'll agree there’s no notation anywhere in the notes about her [Jones’] discussion with an employee from Town Park? Would you agree with that?
A. That’s correct.
Q. Okay. So the long-standing agreement between Amerigroup and Town Park is based upon a conversation that Nancy Jones tells you she had with somebody at Town Park who gave the phone to a man who had authority at Town Park --
A. That's correct.
Q. -- is that correct? But that’s not documented anywhere; is that correct?
A. It's not in the notes that we looked at today, no.
Q. Is it documented anywhere else that we haven’t talked about today?
A. Not that I have seen.
Supp. CR 218 (Ex. B at p. 176, l. 10 – 177, l. 3).
Q. And to the best of our knowledge, based on the review of all the documents, there is no notation in any record regarding his [the “other person’s”] name --
A. That’s correct. 16 2155944.4/SPH/27768/0101/103015 Q. -- or even the agreement, itself, with him [the “other person”]?
A. Correct.
Supp. CR 222 (Ex. B at p. 188, ll. 1-6).
Chidester went on to admit there is no written contract between Amerigroup
and Town Park under which Town Park agreed to accept Medicaid rates:
Q. The -- the request for admissions state, “Admit that Amerigroup and Town Park have never executed a written contract.” And Amerigroup’s answer was, “Admit to the extent that Amerigroup and Town Park have never executed a Participating Provider Agreement. Otherwise, denied.”
And so I think we're in agreement that there was no Participating Provider Agreement between Amerigroup and Town Park, but you've denied it as to any other kind of a contract. Has Amerigroup and Town Park entered into any other kind of contract that you're aware of? Written --
A. No.
Supp. CR 219 (Ex. B at p. 184, ll. 11 – 23).
Q. Okay. And the next one is Request for Admission Number 4. And it states, “Admit that no written contract exists between Amerigroup and Town Park in which Town Park states its agreement to accept a flat fee for the Procedure.” And again, you wrote -- or Amerigroup did – “Admit to the extent that Amerigroup and Town Park have never executed a Participating Provider Agreement. Otherwise, denied.” Do you see that?
A. I do.
Q. An accurate answer to that request for admission would have just been “admit,” correct?
A. Correct.
Supp. CR 220 (Ex. B at p. 185, ll. 8 – 20).
17 2155944.4/SPH/27768/0101/103015 In summary, Amerigroup’s own witnesses, including its Corporate
Representative, establish that Amerigroup is basing its lawsuit solely on an alleged
telephone conversation between Nancy Jones and an unidentified person allegedly
at Town Park to obtain authorization for a single procedure by Dr. Ralph.
2. Town Park has never admitted that the contract alleged by Amerigroup, or anything remotely similar, exists. In its first defense to the statute of frauds, Amerigroup does not dispute the
statute of frauds applies, but instead argues the oral agreement is nonetheless
enforceable because “Town Park admits a contract exists.” Appellant’s Br. at 25.
Town Park does not and never has admitted the existence of a contract
remotely like the one alleged by Amerigroup in which Town Park supposedly
agreed to accept indefinitely the Medicaid rate for all 41899 procedures. Town
Park merely acknowledged certain undisputed facts: The 41899 procedures were
performed at Town Park’s facilities, Town Park submitted invoices for each patient
to Amerigroup, Amerigroup tendered amounts that were uniformly lower than
Town Park’s invoiced amounts, and Town Park accepted those tendered amounts.
Given those facts, one could conceivably argue that a series of individual
patient-specific agreements was formed under which Town Park agreed to accept
the amount actually tendered in satisfaction of Town Park’s invoice for the
particular patient. In first-year contract terms, Town Park’s invoice might be
viewed as an “offer,” Amerigroup’s tender of a different amount could be viewed
18 2155944.4/SPH/27768/0101/103015 as a “counteroffer,” and Town Park’s acceptance of the amount tendered could be
viewed as acceptance of the counteroffer with respect to the particular services
rendered to the particular patient. But even assuming that to be the case, the
invoices and payments do not constitute “a written memorandum which is
complete within itself in every material detail, and which contains all of the
essential elements of the agreement” alleged by Amerigroup. Those documents
flatly contradict the agreement alleged by Amerigroup.
Of course, another more legally correct way to construe this exchange of
invoices and payments is that no contract was formed; Amerigroup was simply
paying pursuant to the terms of its insuring agreement with its members. Town
Park accepted the tendered amount precisely because it had no contract under
which it could require Amerigroup to pay the full invoiced amount. The fact that
the out-of-network provider is not a party to the insuring agreement, or any other
contract with the insurer, is why the provider generally lacks standing to sue the
insurer without an assignment from the patient. See Hermann Hosp. v. MEBA
Medical & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988).4
This Court need not decide whether the exchange of invoices and payments
created a series of individual patient-specific contracts because, even assuming it 4 The testimony relied on by Amerigroup for the legal conclusion that there was a “contract or agreement” is “no evidence” and does not raise a fact issue that will defeat summary judgment. Mercer v. Daoran Corp., 676 S.W.2d 580, 583 (Tex. 1984). Accord Rakowski v. Committee to Protect Clear Creek Village Homeowners’ Rights, 252 S.W.3d 673, 683 n.9 (Tex.App.-Houston [14th Dist.] 2008, pet. denied). Based on the facts, the Court can determine the legal issue of whether there is one or more contracts and, if so, what those contracts may be. 19 2155944.4/SPH/27768/0101/103015 did, those contracts are nothing like the contract alleged by Amerigroup.
Moreover, any such contracts would be within §26.01(b)(2) and (b)(8) of the
statute of frauds because they involve Amerigroup paying the patients’ debts and
because they relate to medical care. Contracts that are within the statute of frauds
and required to be in writing may not be orally modified, much less transformed
into an entirely different agreement like the contract alleged by Amerigroup; i.e. a
blanket contract to accept the Medicaid rate for all 41899 procedures for an
indefinite time:
Parties to a written contract that is within the provisions of the statute of frauds:
“* * * may not by mere oral agreement alter one or more of the terms thereof and thus make a new contract resting partly in writing and partly in parol, the reason for the rule being that, when such alteration is made, part of the contract has to be proven by parol evidence, and the contract is thus exposed to all the evils which the statute was intended to remedy.” Robertson v. Melton, 131 Tex. 325, 115 S.W.2d 624, 118 A.L.R. 1505 (1938).
Dracopoulas v. Rachal, 411 S.W.2d 719, 721 (Tex. 1967). See White v. Harrison,
390 S.W.3d 666, 674 (Tex. App.--Dallas 2012, no pet.) (“an oral modification of a
written contract is enforceable under the Statute of Frauds only if the modification
does not materially alter the obligations imposed by the underlying agreement.”)5
In the present case, the oral agreement claimed by Amerigroup is undeniably
materially different than any series of individual patient-specific contracts that
5 There are extremely limited exceptions to this rule, none of which apply here. 20 2155944.4/SPH/27768/0101/103015 conceivably could have been created by an exchange of invoices and payments; it
would require Town Park to refund some 90% of the amounts previously paid by
Amerigroup. Thus, the mere exchange of invoices and payments will not allow
Amerigroup to circumvent the statute of frauds.
3. The agreement alleged by Amerigroup is barred by the statute of frauds because a contract “relating to medical care” made by a “health care provider” must be in writing. Section 26.01(b)(8) of the statute of frauds bars Amerigroup’s claims
because Amerigroup seeks to enforce “an agreement . . . relating to medical care
… made by a health care provider as defined in Section 74.001, Civil Practice and
Remedies Code.” See TEX. BUS. & COM. CODE § 26.01(b)(8).
(a) Town Park is a “health care provider.” Amerigroup does not dispute that Town Park is a “health care provider” as
defined by Section 74.001 of the Civil Practice & Remedies Code. Section
74.001(12) defines “health care provider,” in part, as follows:
(A) “Health care provider” means any person, partnership, professional association, corporation, facility, or institution duly licensed, certified, registered, or chartered by the State of Texas to provide health care, including:
(i) a registered nurse;
(ii) a dentist;
***
(vii) a health care institution….
21 2155944.4/SPH/27768/0101/103015 TEX. CIV. P. & REM. CODE § 74.001(12). The term “health care institution”
includes “an ambulatory surgery center.” TEX. CIV. P. & REM. CODE §
74.001(11)(A). Town Park is an ambulatory surgical center duly licensed,
certified, registered and/or chartered by the State of Texas to provide health care.
See Supp. CR 259, 262 (Ex. F, F-2). Thus, Town Park is a “health care provider”
and the alleged oral agreement on which Amerigroup bases its suit is an
“agreement … made by a health care provider.”
(b) The alleged oral agreement “relates to medical care.” The oral agreement alleged by Amerigroup is “an agreement … relating to
medical care” because it relates to the dental surgery and anesthesia performed on
Amerigroup’s insureds, as well as to Town Park furnishing anesthesiologists,
nursing, and other medical services, to those patients in connection with those
surgeries. This medical care could not have been provided without the facilities
and services provided by Town Park.
The Civil Practice & Remedies Code defines “medical care” as follows:
“Medical care” means any act defined as practicing medicine under Section 151.002, Occupations Code, performed or furnished, or which should have been performed, by one licensed to practice medicine in this state for, to, or on behalf of a patient during the patient's care, treatment, or confinement.
TEX. CIV. P. & REM. CODE § 74.001(19). Thus, for example, the anesthesiologists
provided by Town Park were rendering medical care when they provided the
anesthesia for the 41899 procedures.
22 2155944.4/SPH/27768/0101/103015 Section 151.002 of the Occupations Code defines “practicing medicine”:
“Practicing medicine” means the diagnosis, treatment, or offer to treat a mental or physical disease or disorder or a physical deformity or injury by any system or method, or the attempt to effect cures of those conditions, by a person who:
(A) publicly professes to be a physician or surgeon; or
(B) directly or indirectly charges money or other compensation for those services.
TEX. OCC. CODE § 151.002(13).
The dental surgeons performing the surgeries, the physicians performing the
anesthesia for the surgeries under their contract with Town Park,6 and the nurses
and other staff employed by Town Park all are engaged in the “treatment” of a
“physical disease or disorder or a physical deformity.” These activities fall within
the broad definition of “practicing medicine” under TEX. OCC. CODE §
151.002(13), and constitute “medical care” under TEX. CIV. P. & REM. CODE §
74.001(19). The agreement alleged by Amerigroup “relates to” this “medical care”
because the services provided by Town Park facilitated this medical care.
Thus, Amerigroup’s alleged oral agreement regarding payment for Town
Park’s services in connection with the 41899 procedures is “an agreement . . .
6 See Supp. CR 790-97 (Contract between Town Park and Association Anesthesiologists P.A. to provide “the essential anesthesia services at [Town Park] through its physicians (‘Anesthesiologists’) for all patients of [Town Park] in support of [Town Park’s] operating rooms…”.) While the anesthesiologists billed for their services separately, arranging for and providing these anesthesiologists were part of the services Town Park provided. 23 2155944.4/SPH/27768/0101/103015 relating to medical care … made by a health care provider” and is unenforceable
under § 26.01(b)(8) of the statute of frauds.
(c) Amerigroup’s attempts to avoid the statute of frauds fail.
(i) Amerigroup ignores the plain language of the statute. Unsupported by any authority, Amerigroup argues that §26.01(b)(8) does
not apply where “an out-of-network entity … merely provides the facilities …
where a third-party physician or surgeon provides medical care.” Appellant’s Br.
30. It concludes that:
[T]he parties’ agreement would only be subject to Section 26.01(b)(8) if someone at Town Park: (i) carried a medical license; (ii) publicly professed to be a surgeon or physician; and (iii) agreed to treat or diagnose an Amerigroup member’s disease, disorder, deformity, or injury.
Id. Notably, the anesthesiologists under contract to Town Park who provided the
anesthesia for the surgeries fit this description perfectly. See Supp. CR 790-97.
Thus, even under Amerigroup’s overly restrictive reading, §26.01(b)(8) applies.
Amerigroup’s argument is wrong in any event.
By its terms §26.01(b)(8) does not apply only to licensed physicians; it
explicitly applies more broadly to agreements made “made by a physician or
health care provider ….” (Emphasis added). Amerigroup’s argument would
render meaningless the statute’s broad reference to “health care provider,” which
includes not only “health care institutions” like Town Park but also, for example,
24 2155944.4/SPH/27768/0101/103015 registered nurses, dentists, and optometrists. See TEX. CIV. P. & REM. CODE §
74.001(12). Amerigroup’s own case law recognizes that §26.01(b)(8) applies to
dentists even though they are licensed separately from physicians. See Jeffery v.
Walden, 899 S.W.2d 207, 212 (Tex.App. —Dallas 1993), rev’d in part on other
grounds, 907 S.W.2d 446 (Tex. 1995) (applying §26.01(b)(8), and noting that
“Texas statutes define dentists as health care providers.”)
The statute also expressly states that it “shall not apply to pharmacists.” If
the statute applied only to licensed physicians, this explicit exclusion of
pharmacists would be unnecessary surplusage.
Equally important, §26.01(b)(8) does not require Town Park to provide
“medical care” itself or “practice medicine” or employ the individuals providing
the medical care. It requires only that the alleged contract is one “relating to”
medical care. As Amerigroup admits, Town Park provided the operating room,
labs, supplies, and nursing, and even arranged the anesthesiologists’ services—
essentially everything except the dentist’s services—for the surgical procedures at
issue. Supp. CR 66-67 (Second MSJ at Ex. B at p. 127, ll. 1- 17, p. 128, ll. 1- 2).
As matter of law, any agreement for Amerigroup to pay a particular rate for these
services, which were essential to perform the surgeries, “relates to” medical care.
The term “relates to” is broadly construed:
The terminology “relates to” is very broad in its ordinary usage, and we must presume that the legislature used such a broad formulation
25 2155944.4/SPH/27768/0101/103015 purposely. To conclude otherwise would be to judicially truncate the ordinary meaning of the words “relates to.”
Texas Dept. of Public Safety v. Abbott, 310 S.W.3d 670, 675 (Tex.App.-Austin
2010, no pet.) Cf Buck v. Blum, 130 S.W.3d 285, 291 (Tex. App. – Houston [14th
Dist.] 2004, no pet.) (claim that institute failed to follow procedures that would
reduce the potential for assault by doctor performing examination was a claim
“relating to medical care.”)7 Indeed, §74.001 of the Civil Practice and Remedies
Code, which governs health care liability claims and is directly referenced in
§26.01(b)(8) of the statute of frauds, recognizes that something as tangential as
“administrative services” may be “directly related to health care.” See TEX. CIV.
P. & REM. CODE § 74.001(a)(13) (defining “health care liability claim” to include
claims based on “administrative services directly related to health care”). See also
Four Seasons Nursing Center v. Weber Medical Systems, LLC, 04-74614 (E. D.
Mich. September 28, 2005) (alleged oral agreement between Nursing Center and
medical system provider to supply and install hemodialysis unit was barred by the
statute of frauds because it was an agreement “relating to medical care.”)
7 See also Kirby Highland Lakes Surgery Ctr., L.L.P. v. Kirby, 183 S.W.3d 891, 897-98 (Tex. App.—Austin 2006, no pet.) (the term “relates to” in the arbitration context has been interpreted to mean anything “having a significant relationship to the contract regardless of the label attached to the dispute” or that “touch” matters covered by the contract); Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383-84, 112 S.Ct. 2031 (1992) (in the context of statutory preemption, “The ordinary meaning of [relating to] is a broad one – ‘to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with,’ …-- and the words thus express a broad preemptive purpose.… We have said, for example, that the ‘breadth of [that provision’s] preemptive reach is apparent from [its] language,’…; that it has a ‘broad scope,’ … and an ‘expansive sweep,’…; and that it is ‘broadly worded,’ …’deliberately expansive,’… and ‘conspicuous for its breadth,’”) (citations omitted). 26 2155944.4/SPH/27768/0101/103015 In sum, the alleged agreement “relates to” medical care as a matter of law.
(ii) Amerigroup has no “history” or case law supporting its argument. Amerigroup claims that “Town Park’s interpretation of §26.01(b)(8)
contradicts the statute’s history,” but Amerigroup cites neither statutory “history”
nor any case law contradicting Town Park’s position. See Appellant’s Br. 32-33.
Instead, it cites three cases holding that claims based on an oral warranty of cure
would be barred by § 26.01(b)(8) and argues that, because it has found no case law
on point, the statute must be limited “to situations where a doctor or healthcare
provider makes a representation of specific results.” Id. None of the cases cited by
Amerigroup suggest any such limitation; nor is its argument consistent with the
statutory language, which is not limited to “warranties of cure.” See § 26.01(b)(8).
Amerigroup’s argument that “it is unlikely the Texas Legislature intended
that all contracts relating to medical care … had to be in writing,” simply ignores
the language of the statute. There is no qualifier limiting the application of the
statute to only some contracts relating to medical care, other than the requirement
that the contract be made by “a physician or health care provider.” The
legislature’s omission of other limiting terms is presumed to have been done
purposefully. See Tenaska Frontier Partners, Ltd. v. Sullivan, 273 S.W.3d 734,
738 (Tex.App.-Houston [14th Dist.] 2008, no pet.) (cited by Amerigroup) (“we
must presume that every word excluded from a statute (such as ‘some’ qualifying
27 2155944.4/SPH/27768/0101/103015 ‘postage prepaid’) was excluded for a purpose.”). Accord TGS-NOPEC
Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011) (“We presume that
the Legislature chooses a statute’s language with care, including each word chosen
for a purpose, while purposefully omitting words not chosen.”) “A court may not
judicially amend a statute by adding words that are not contained in the language
of the statute. Instead, it must apply the statute as written.” Lippincott v.
Whisenhunt, 462 S.W.3d 507, 508 (Tex. 2015).
(iii) Town Park’s argument does not lead to “absurd results.” Contrary to Amerigroup’s “absurd results” argument, it is not “Town Park’s
view” that “every payor must have a written agreement with any provider.”
Appellants’ Br. 35. Nor does Town Park’s position “oblitierat[e] a fundamental
difference in the health care industry between in-network and out-of-network
providers.” Id. On the contrary, Amerigroup’s argument that it had an agreement
for Town Park to accept a pre-agreed rate for all 41899 procedures destroys this
“fundamental difference” and contradicts its unequivocal admission that Town
Park was out-of-network.
The very essence of being “in-network” is the existence of an agreement to
accept a pre-agreed rate for particular procedures. Amerigroup’s argument that
there was an enforceable oral blanket agreement to accept a pre-agreed rate for all
41899 procedures is equivalent to alleging a verbal agreement making Town Park
28 2155944.4/SPH/27768/0101/103015 “in-network” for those procedures. Thus, Amerigroup tries to make Town Park
“in-network” while at the same time admitting that Town Park was in fact “out-of-
network.”
Nothing about Town Park’s position requires other payors to “overhaul their
business approach.” See id. Nor could they do so. As recognized by Amerigroup,
most cases involve group health plans, such as those provided by Blue Cross Blue
Shield. In those situations, payment obligations are governed by the terms of the
plan and are enforceable under ERISA by the “participant or beneficiary.” See 29
U.S.C. § 1132(a)(1)(B). Out-of-network providers set their own rates at which
they bill their patients. The amount the insurer pays is determined by the terms of
the insurance agreement (which typically constitutes an ERISA plan) between the
insurer and the patient because there is no separate agreement between the insurer
and the provider.8
Nothing requires any “overhaul.” The insurers simply pay in accord with
the terms of their plan. If the insurer fails to pay, the provider may collect from the
patient and the patient may recover from the insurer. The out-of-network provider
has no standing to recover directly from the insurer absent an assignment from the
8 It makes no difference whether the provider bills the patient and the patient seeks reimbursement from their insurer or the provider, with the patient’s agreement, bills the insurer directly as a courtesy to the patient. In either case the insurer is paying an amount it owes under its policy to cover a portion of the patient’s debt to the provider. The payment to an out-of- network provider is not being made pursuant to any contract with the provider. 29 2155944.4/SPH/27768/0101/103015 patient because there is no contract between the provider and the insurer. See, e.g.,
Hermann Hosp. v. MEBA Medical & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988).
Amerigroup’s statement that a payor makes payment to an out-of-network
provider “at its own peril since no enforceable contract exists” makes no sense
because the payor makes payment for known medical procedures at a rate
governed by its own plan with its insured.9 If the insurer overpays, it has no
contractual right to recover from the provider because it has no contract with the
provider. Depending on the facts of the case, the insurer may or may not have an
equitable right to recover an overpayment. For example, in Lincoln Nat. Life Ins.
v. Brown Schools, this Court affirmed summary judgment denying an insurer
restitution for mistaken overpayments to a hospital. This Court pointed out that the
insurer “knew its own policy payment provisions” and that the provider “has no
responsibility to determine if an insurance carrier is properly tending to its
business.” Lincoln Nat. Life Ins. v. Brown Schools, 757 S.W.2d 411, 414 (Tex.
Civ. App.—Houston [14th Dist.] 1988, no writ).
Amerigroup’s assertion that if an insurer paid nothing to an out-of-network
provider such as Town Park, the provider “would have no recourse” is equally
nonsensical. Appellant’s Br. 36. The provider’s normal recourse is to collect from
the patient who owes the debt for services rendered in the first place. If the
9 Amerigroup’s argument also implies that all providers must have a contract with the payor, which would do away with the entire out-of-network category of providers who, by definition, have no such contract. 30 2155944.4/SPH/27768/0101/103015 procedure should have been covered, a suit may be filed under ERISA by or on
behalf of the patient to recover benefits due under the terms of the plan. See 29
U.S.C. § 1132(a)(1)(B). Absent an enforceable agency or assignment agreement,
however, an out-of-network provider has no standing to assert a direct claim
against the patient’s insurer because, again, there is no contract between the
provider and the insurer. See, e.g., LeTourneau Lifelike Orthotics & Prosthetics,
Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348 (5th Cir. 2002).
While ERISA is not applicable here because Amerigroup is managing
payments for members of Texas Medicaid, the principles outlined above are the
same. Amerigroup’s agreement is with the patient. Amerigroup itself determined
the amount to pay Town Park and it typically paid thousands less than Town
Park’s invoiced amount. Those payments were made pursuant to Amerigroup’s
agreement with its members and not pursuant to any contract with Town Park. It
therefore has no contractual basis for recouping those payments from Town Park
years after the fact. Brown Schools, 757 S.W.2d at 415.
(iv) Amerigroup’s “performance” is inconsistent with the alleged oral agreement. Amerigroup argues that the alleged oral agreement falls outside the statute of
frauds “because Amerigroup (over)performed.” Appellant’s Br. 36. An oral
agreement may be enforceable despite the statute of frauds if the contract has been
performed, but only to the extent of that performance. See Stovall & Assocs. v.
31 2155944.4/SPH/27768/0101/103015 Hibbs Fin. Ctr., Ltd., 490 S.W.3d 790, 799 (Tex. App.—Dallas 2013, no pet.). To
enforce an agreement on that basis, the actions asserted to constitute performance
must be “unequivocally referable” to the alleged oral agreement and corroborate
the existence of that agreement; the actions “must be such as could have been done
with no other design than to fulfill the particular agreement sought to be enforced.”
Id. (citing Exxon Corp. v. Breezevale, Ltd., 82 S.W.3d 429, 439 (Tex. App.—
Dallas 2002, pet. denied).
Amerigroup’s performance is not “unequivocally referable” to the
agreement it alleges. Amerigroup’s “performance” flatly contradicts any alleged
agreement to accept Medicaid rates because Amerigroup consistently paid higher
rates. Indeed, Amerigroup’s own reference to “(over)performance” demonstrates
that the alleged performance differs from the terms of the alleged agreement and,
therefore, is not unequivocally referable to it.10
In addition, Amerigroup’s performance with respect to individual patients is
not unequivocally referable to any sort of agreement to accept Medicaid rates on a
blanket basis for all patients going forward. Thus, Amerigroup cannot use
performance to escape the statute of frauds.
10 If anything, Amerigroup’s performance is referable to its insuring agreement with its own members. 32 2155944.4/SPH/27768/0101/103015 (v) Town Park’s invoices do not satisfy the statute of frauds.
Town Park’s invoices do not satisfy the statute of frauds for an obvious
reason: They do not evidence an agreement to accept Medicaid rates. Thus they
do not constitute “a written memorandum which is complete within itself in every
material detail, and which contains all of the essential elements of the [alleged]
agreement, so that the contract can be ascertained from the writings without
resorting to oral testimony.” Cohen v. McCutchin, 565 S.W.2d at 232.
Cox Engineering, Inc. v. Funston Mach. and Supply Co., 749 S.W.2d 508
(Tex. App.—Fort Worth, 1988, no writ), cited by Amerigroup, is not to the
contrary. First, Cox involved the “merchant’s exception” to the statute of frauds
contained in article 2 of the UCC, which provides that a written confirmation of an
oral agreement may be sufficient unless a written notice of objection to its contents
is given within ten days. TEX. BUS. & COM. CODE ANN. §2.201. That exception
has no application to §26.001 of the Business & Commerce Code, which applies
here. Second that exception applies to “written confirmations” of an oral contract.
Town Park’s invoices in no way confirm the oral contract alleged by Amerigroup.
All of the invoices are for substantially more than Medicaid rates and therefore
directly contradict the alleged agreement.
33 2155944.4/SPH/27768/0101/103015 (vi) Amerigroup’s “voidable, not void” argument is frivolous.
Amerigroup’s argument that, under the statute of frauds, the agreement it
alleges would be voidable, not void, and is therefore enforceable unless and until
Town Park “rejects” or “repudiates” the alleged contract and returns the
consideration received is incomprehensible and frivolous. See Appellant’s Br. 38.
Amerigroup cites absolutely no case law standing for the proposition that a party
must “repudiate” an agreement that it contends does not exist before the statute of
frauds may be applied as a defense.11 Indeed, Amerigroup’s argument is circular
because it presumes the existence of the alleged agreement such that it could be
“repudiated” or “rescinded.”
There was no agreement like the one alleged by Amerigroup and, if there
were, such an oral agreement would be unenforceable under the statute of frauds.
The payments made by Amerigroup were not made pursuant to any contract with
Town Park; Town Park was admittedly out-of-network. The payments were made
pursuant to Amerigroup’s contractual obligations to its own insureds to pay their
medical expenses. Town Park is not required to “repudiate” a non-existent
agreement to have the statute of frauds bar the alleged verbal agreement.
11 In Eland Energy, Inc. v. Rowan Oil & Gas, Inc., 914 S.W.2d 179, 186 (Tex. App.—San Antonio 1995, writ denied), cited by Amerigroup, there was a written agreement but one party alleged that the description of land in the agreement was too vague to be enforced. The court found the land was adequately described. York Group, Inc. v. Horizon Casket Group, Inc., 2007 U.S. Dist. LEXIS 49778 (S.D. Tex. July 10, 2007), cited by Amerigroup for its “repudiation” argument, does not involve the statute of frauds at all. 34 2155944.4/SPH/27768/0101/103015 4. The agreement alleged by Amerigroup involves an alleged promise by one to answer for the debt of another and is therefore barred by the statute of frauds. The statute of frauds also applies to a “promise by one person to answer for
the debt … of another person.” Such an agreement must be in writing and signed
by the party to be charged to be enforceable. See TEX. BUS. & COM. CODE §
26.01(a)(1), (b)(2); Dynegy, Inc. v. Yates, 422 S.W.3d 638, 641-42 (Tex. 2013);
Dynegy, Inc. v. Yates, 345 S.W.3d 516, 523-24 (Tex. App.—San Antonio 2011,
pet. granted), rev’d on other grounds, 422 S.W.3d 638 (Tex. 2013) (citing Banfield
v. Davidson, 201 S.W. 442, 443 (Tex. Civ. App.—Galveston 1918, no writ) and
Evans v. Shaw, 268 S.W. 1037, 1037-39 (Tex. Civ. App.—Waco 1925, no writ).
In Dynegy, Yates, an attorney, alleged the existence of a verbal agreement
under which Dynegy agreed to pay the legal expenses for one of Dynegy’s former
officers who was represented by Yates. Dynegy, 422 S.W.3d at 642. The Supreme
Court found the agreement subject to the statute of frauds and unenforceable as a
matter of law. Id. at 643. Similarly here, Amerigroup’s breach of contract claim
falls within § 26.01(b)(2) of the statute of frauds because it seeks to enforce an
alleged agreement between Amerigroup and Town Park under which Amerigroup
would pay the medical expenses incurred by Town Park’s patients (like the
agreement between Dynegy and Yates to pay the legal expenses of Yates’ client),
at a certain specified rate in the Medicaid fee schedule. Thus, Amerigroup’s
breach of contract claim is barred by the statute of frauds under § 26.01(b)(2).
35 2155944.4/SPH/27768/0101/103015 (a) Amerigroup was answering for the debt of another. Amerigroup’s argument that the amounts it paid were not “the debt of
another person” is circular. Indeed, it affirmatively demonstrates that the original
debt belongs to the patient because the patient is relieved of responsibility for that
debt only when the services are actually covered. See Appellant’s Br. at 26
(Arguing that under the Texas Administrative Code, patients “are not responsible
for paying for covered services.”)12 If Amerigroup claimed the patient was not
covered and did not pay, the patient would undeniably remain responsible for
paying because it is the patient’s debt in the first instance. Thus the amount owed
for health care services rendered to Town Park’s patients is, at its core, the
patient’s debt.
This is not significantly different than private insurance. An in-network
provider has an agreement with the insurer under which the provider agrees to
accept a pre-defined amount for particular procedures. When the procedure is
covered, the insurer should pay and the patient will be relieved of the debt.
Similarly, when a provider is out-of-network, it cannot recover from the patient
amounts covered and paid by the insurer because the provider is not entitled to be
paid twice. This in no way suggests that the debt does not belong to the patient in
12 The Texas Administrative Code does not apply to Amerigroup’s claims. Indeed, Amerigroup has no standing to assert violations. See Texas Admin. Code § 371.1653(5) and (6) (permitting administrative actions or sanctions). Further, Chapter 353 of the TAC cited by Amerigroup addresses obligations of managed care organizations (Amerigroup), not providers (Town Park). 36 2155944.4/SPH/27768/0101/103015 the first place because, whether Medicaid or private insurance is involved, the
patient must pay if the insurer does not.13
The “Patient Authorization & Responsibility Form,” which is used for
Medicaid and non-Medicaid patients alike, recognizes this fact. It contains an
acknowledgement that the debt for services rendered belongs to the patients and
that they will be responsible for payment if the insurer does not provide coverage:
“I agree that I am financially responsible to pay for any charges not covered by my
insurance company and/or co-insurance, deductible, co-pay amounts that are
outstanding.” Supp. CR 261. This recognizes that the original debt belongs to the
patient such that if Medicaid or a private insurer does not pay, the patient remains
responsible.
In sum, much like the agreement alleged in Yates, the verbal agreement
alleged by Amerigroup is one which purportedly establishes a direct obligation to
Town Park to pay the patients’ debts for services rendered by Town Park.
Accordingly, the alleged agreement is barred by the statute of frauds.
(b) The “leading object” doctrine does not apply.
Amerigroup’s argument that it can avoid the §26.001(b)(2) under the
“leading object” doctrine is nothing more than an assertion that because
Amerigroup is in business to make a profit, the statute of frauds does not apply to 13 The one difference between patients covered by Medicaid and patients covered by ordinary private insurance is that, under Medicaid, out-of-network providers are prohibited from “balance billing” the patient for the portion of the full charge Medicaid does not pay. That, however, does not change the fact that the original debt is the patient’s debt. 37 2155944.4/SPH/27768/0101/103015 it. If that were the case, no commercial surety agreement would be within the
statute of frauds because all commercial sureties are in business to make a profit.
As Amerigroup’s own authority points out, “The theory of the main purpose
rule is that where the promise is made for the promisor’s own benefit and not at all
for the benefit of the third person, the reason for the statutory provision fails and
the promise should be enforced.” Cooper Petroleum Co. v. LaGloria Oil & Gas
Co., 436 S.W.2d 889, 895 (Tex. 1969). It is a narrow exception that applies only
when the main object of the arrangement subserves the promisor’s main purpose.
For example, in Haas Drilling Co. v. First Nat’l Bank, the court held that
where a bank foreclosed on a debtor’s oil lease, the bank’s oral promise to pay the
drilling company the amount the debtor owed for gas produced, so the company
would continue producing gas, was enforceable because the main purpose of doing
so was “to protect the value of the property which it had bought in at the
foreclosure sale.” Haas Drilling Co. v. First Nat’l Bank, 456 S.W.2d 886, 891
(Tex. 1970). There is nothing like that here. Instead, the “main purpose” of the
alleged oral agreement was simply to obtain authorization for dentists to perform
the 41899 procedures at Town Park’s facility; a benefit to Amerigroup’s insureds,
not to Amerigroup. Indeed, by the testimony of Amerigroup’s own witness, the
telephone conversation in which the agreement was allegedly made was initiated to
obtain authorization for Dr. Ralph to perform a procedure at Town Park, not to
obtain any direct benefit for Amerigroup. Supp. CR. 231 (Ex. E at p. 38 ll. 3-23). 38 2155944.4/SPH/27768/0101/103015 C. Amerigroup Cannot Recover Because the Alleged Agreement Was Not Entered Into by Someone With Actual or Apparent Authority to Make a Blanket Fee Agreement On Behalf of Town Park. Town Park’s Second Motion for Summary Judgment proved that the only
person with authority to make a blanket fee agreement on behalf of Town Park at
the relevant time was Kraig Killough, and he never made an agreement with
Amerigroup like the one alleged. Mr. Killough testified as follows:
Q. And because they’re out of network, there’s no agreement in place; but that out-of-network provider -- that insurance company -- says up front, “Hey, before we authorize this, we need to reach an agreement on a rate.”
A. Uh-huh.
Q. You with me?
A. Yes.
Q. And they’ll ask, “Hey, Town Park, what’s your fully billed charge for this service?” And you say, “$10,000.”
A. Okay.
Q. The out-of-network insurance company says, “I want to negotiate something south of $10,000 in order to get my business.” Who had authority in 2009, 2010 to have that conversation?
A. Myself.
Q. And that’s it?
A. That’s it.
Q. No one else in 2009, 2010 had that authority, from Town Park’s perspective?
A. Correct.
39 2155944.4/SPH/27768/0101/103015 Q. And I believe you testified earlier that nobody -- no out-of-network insurance company actually had that conversation with you?
A. Correct.
Supp. CR 254-55 (Ex. G at p. 211, ll. 15, p. 212, ll. 15). Similarly, the affidavit of
Sourabh Sanduja, who is the Senior Vice President of Altus Healthcare
Management, L.P.,14 and Administrative Director of Town Park, states:
Town Park has never entered into written or verbal agreements with Plaintiff Amerigroup Texas, Inc. (“Amerigroup”) to accept reimbursements based on the Medicaid fee schedule or any other schedule. There has never been any male employee at Town Park who entered into such an agreement.
CR 538 (Ex. B).
This evidence is sufficient to grant summary judgment in favor of Town
Park. Amerigroup presented no controverting evidence to raise a genuine issue of
material fact.
1. The burden of proof was on Amerigroup to prove actual or apparent authority. In attempting to overcome summary judgment based on lack of authority,
Amerigroup first contends that lack of authority is an affirmative defense and
therefore may not be the subject of a no-evidence summary judgment.
Amerigroup’s argument is moot because, as shown above, Town Park did not rely
simply on a lack of evidence supporting Amerigroup’s position; it affirmatively
proved the lack of authority through the testimony of Mr. Killough and Mr.
14 Altus Healthcare Management provides billing and management services to Town Park. Supp. CR 259 (Killough Aff’t). 40 2155944.4/SPH/27768/0101/103015 Sanduja. Amerigroup presented no evidence to overcome that testimony and raise
a genuine issue of material fact.
Amerigroup is wrong in any event. The case law is clear that lack of actual
or apparent authority is not an affirmative defense. As Town Park pointed out in
its Second Motion for Summary Judgment, Amerigroup had the burden of proving
authority; there is no presumption of an agency relationship. See Supp. CR 180;
IRA Res., Inc. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007). See also American
Bank & Trust Co v. Freeman, 560 S.W.2d 444 (Tex. Civ. App.—Beaumont 1977,
writ ref’d n.r.e.) (“While this authority may be express or apparent, the burden of
proof is upon him who alleges authority; in the absence of proof no presumption of
authority will be indulged.”); First Nat. Bank v. Slaton Independent School Dist.,
58 S.W.2d 870, 875 (Tex.Civ.App. –Amarillo 1933, writ dism’d) (“The burden of
proof is upon him who alleges authority; in the absence of proof no presumption of
authority will be indulged.”); Mission Linen Supply, Inc. v. Sandy's Signals, Inc., 2-
07-014-CV, 2007 Tex. App. LEXIS 5968 *10; 2007 WL 2152070 (Tex. App.--
Fort Worth, July 26, 2007) (“the burden of proof is on the party relying on the
doctrine of apparent authority to bind a principal to prove facts that will establish
apparent authority.”).15
15 Amerigroup cites no authority holding that lack of actual or apparent authority is an affirmative defense and instead relies solely on the fact that, out of an abundance of caution, Town Park pleaded lack of actual or apparent authority as a defense. See Appellant’s Br. at 40. 41 2155944.4/SPH/27768/0101/103015 Because the burden to prove actual or apparent authority was on
Amerigroup, the lack of actual or apparent authority could properly have been the
subject of a no evidence motion for summary judgment.
2. Amerigroup presented no evidence that the unidentified person who supposedly entered into the alleged blanket fee agreement had actual or apparent authority to do so on behalf of Town Park.
(a) No evidence of actual authority. Actual authority includes both express and implied authority and generally
represents the authority a principal intentionally confers upon an agent,
intentionally allows the agent to believe he possesses, or by want of due care
allows the agent to believe he possesses. 2616 S. Loop L.L.C. v. Health Source
Home Care, Inc., 201 S.W.3d 349, 356 (Tex. App.—Houston [14th Dist.] 2006, no
pet.). Actual authority is based on the principal’s written or spoken words or
conduct communicated to the purported agent. Walker Ins. Servs. v. Bottle Rock
Power Corp., 108 S.W.3d 538, 549-50 (Tex. App.—Houston [14th Dist.] 2003, no
pet.).
Amerigroup presented no evidence that the unidentified “other person” with
whom Nancy Jones supposedly spoke had actual authority to bind Town Park to an
agreement to accept reimbursement for its billed charges at Medicaid rates for any
patient, much less for all future patients.
Nancy Jones admitted this supposed “agreement” is based only on “one
conversation” with an unidentified male. 42 2155944.4/SPH/27768/0101/103015 Q. Okay. And so it’s your testimony that on one occasion you had a conversation with somebody at Town Park Surgery Center and that person accepted the Texas Medicaid fee schedule and you documented that?
A. Yes.
Q. Do you know the person’s name?
A. I don’t remember.
Supp. CR 228 (Ex. E at p. 34, ll. 9-15).
Ms. Jones allegedly spoke with this unidentified man after dialing a phone
number and extension given to her by JoAnn, another Town Park employee, but
she does not know this man’s title, role, or even in which department he worked. 16
Nor could she state an approximate time, week, month, or even year during which
this conversation may have taken place.
Q. Okay. And you said “I would have talked – I would have called her. I want to know what your actual recollection is, not what your practice is. Those are two different things, both of which are fine. But let me talk about your actual recollection of the call that you had with JoAnn Deases that resulted in what you say to be acceptance of the Texas Medicaid fee schedule. And let’s -- let me just clarify.
A. Okay.
Q. You don't know what year it was; is that correct?
A. (Shakes head.)
Q. You don't know what month it was?
16 There is no dispute that JoAnn did not have authority to make such an agreement. See CR 264. Ms. Jones and Mr. Chidester both acknowledge that fact. Supp. CR 237 (Ex. E at p. 45 ll. 5-11); Supp. CR 242 (Ex. E at p. 85 ll. 4-18). See also Supp. CR 201-03 (Ex. B at p. 27, ll. 13 – 25, p. 28, ll. 1- 25, p. 29, ll. 1- 3).
43 2155944.4/SPH/27768/0101/103015 A. No.
Q. You don't know what day of the week it was?
A. No.
Q. You don't know what time of the day it was?
A. No.
Q. You don't know who you ultimately spoke with --
A. No.
Q. -- by name --
A. No.
Q. -- or title?
A. No.
Q. Is that correct?
A. Yes.
Q. Or department?
A. Right.
Supp. CR 230-31 (Ex. E at p. 37 ll. 1 - 25, p. 38 ll. 1 - 3). See also Supp. CR 229,
238-39 (Ex. E at p. 36, ll. 8-18, p. 67, ll. 8-25, p. 68, ll. 1-18).
Ms. Jones did not even ask what the unnamed man’s role at Town Park was
-- although she acknowledges this information would be pertinent -- much less
whether he had authority to enter into reimbursement contracts on behalf of Town
Park.
Q. His role or title would be important, wouldn’t it, so that you would know that this person actually had authority to bind Town Park Surgery Center to this fee schedule? 44 2155944.4/SPH/27768/0101/103015 A. Yes, it probably was pertinent. I can’t say that I was thinking that when I was documenting it.
Supp. CR 236-37 (Ex. E at p. 44 ll. 1- 22, p. 45 ll. 1- 4). See also Supp. CR 243
(Ex. E at p. 100, ll. 4 -16).
In any event, there is no male at Town Park who would have accepted
Amerigroup’s lowball reimbursement; not on a one-time basis, and certainly not
for the indefinite future. CR 537-38 (Ex. B). There was only one person with such
authority at Town Park during the time period Amerigroup alleges this verbal
agreement came into existence—Kraig Killough. Mr. Killough did not have any
conversations with anyone from Amerigroup regarding Amerigroup’s
reimbursement rate. Supp. CR 253-55 (Ex. G at p. 210, ll. 24-25, p. 211, ll. 1-25,
p. 212, ll. 1-15).
There is thus no evidence the unnamed male who Ms. Jones alleges
answered the phone at Town Park and accepted reimbursement at the Medicaid fee
schedule had actual authority to enter into such an agreement on behalf of Town
Park. The only evidence is that he did not.
(b) No evidence of apparent authority. There also is no evidence that the unnamed male had apparent authority to
bind Town Park to an agreement relating to reimbursements. Apparent authority
arises when a principal intentionally or negligently induces a party to believe that a
person is the principal’s agent though the principal has not conferred authority on
that person. Thomas Reg’l Directory Co., v. Dragon Prods., Ltd., 196 S.W.3d 424, 45 2155944.4/SPH/27768/0101/103015 427 (Tex. App.—Beaumont 2006, pet. denied). “Because apparent authority is
based on estoppel, the principal’s conduct must be that which would lead a
reasonably prudent person to believe that authority exists.” Id. at 428. In making
the determination of whether apparent authority exists, only the conduct of the
principal is relevant. Gaines v. Kelly, 235 S.W.3d 179, 182 (Tex. 2007). The
purported agent cannot confer apparent authority on himself. “[T]he standard is
that of a reasonably prudent person, using diligence and discretion to ascertain the
agent’s authority. Thus, to determine an agent’s apparent authority we examine the
conduct of the principal and the reasonableness of the third party’s assumptions
about authority.” Id. at 182-83.
Moreover, because the doctrine of apparent authority is based on estoppel, it
is essential “that the person claimed to be estopped have had knowledge of all
material facts at the time of the conduct alleged to constitute the basis of the
estoppel.” Rourke v. Garza, 530 S.W.2d 794, 803 (Tex. 1975). For example, in
Rourke, the principal’s superintendent did not have apparent authority to enter into
an indemnity agreement where the principal did not have knowledge that the
delivery ticket the superintendent signed contained an indemnity. Similarly, here,
there is no evidence that any principal of Town Park was made aware that Jones
was seeking a blanket fee agreement from the unidentified “other person.” On the
contrary, Jones testified she called asking about a single case rate agreement for a
single procedure by Dr. Ralph. Nor is there any evidence that Town Park was 46 2155944.4/SPH/27768/0101/103015 aware of the unidentified person purporting to enter into a blanket fee agreement
for all 41899 procedures.
Amerigroup argues that apparent authority may be created “when an
employer places an employee ‘in a position in an industry or setting in which
holders of the position customarily have authority of a specific scope,’ a third party
can rely on this authority absent notice to the contrary.” Appellant’s Br. 41.
However, there is no evidence that Town Park placed the unidentified person in
such a position; there is no evidence of what position, if any, the unidentified
person held, much less that it was a position in which the individual would
customarily have authority to enter into blanket heavily discounted fee agreements.
Town Park, the principal, did not intentionally or negligently lead Ms. Jones
to believe the unnamed male had authority to bind it to a blanket agreement to
accept reimbursement at the Medicaid fee schedule. Jones testified only that when
she called JoAnn about a “single case rate agreement” for Dr. Ralph, JoAnn
referred her to the unnamed male. But that will not suffice to create apparent
authority to enter into a blanket fee agreement. JoAnn is not Town Park, Jones
knew JoAnn merely worked in the scheduling department and did not have
authority over such agreements, and Jones never informed JoAnn that she was
seeking a blanket fee agreement. Supp. CR 237, 242 (Ex. E at p. 45, ll. 5 -11; p.
85, ll. 4 -18). JoAnn, who had no authority herself, cannot have created apparent
authority for the unnamed male to bind Town Park to a blanket fee agreement. 47 2155944.4/SPH/27768/0101/103015 Amerigroup cites three documents, which it contends are evidence that
Sourabh Sanduja was the person who supposedly entered into the alleged
agreement. The first is an internal Amerigroup e-mail string dated in January
2011, which does not even mention Mr. Sanduja. Supp. CR 900-01. It adds
nothing to Nancy Jones’ testimony that she supposedly talked to some unidentified
person who supposedly agreed to accept Medicaid rates.17
The second is simply an organizational chart showing Mr. Sanduja below
Kraig Killough. Supp. CR 1019. As noted, Mr. Killough was the only person
authorized to enter into blanket fee agreements. Mr. Sanduja did not have such
authority.
The third is a screen shot for a particular individual patient dated in April
2010. The entry dated April 8, 2010 states, “It is unknown whether or not this
provider [Town Park] accepts 100% Medicare rates. It is unknown whether or not
this provider accepts 100% Medicaid rates.” Supp. CR. 1017. Thus,
Amerigroup’s own internal documents show there was no blanket agreement to
accept Medicaid rates. In fact, if there were such a blanket agreement there would
have been no need for Amerigroup to seek authorization to pay Medicaid rates for
this particular individual.
17 Notably it states that Jones talked to “an administrator there at Town Park when we started the 95% OON rates and Town Park accepted.” Thus it differs materially from her testimony that she talked with someone who agreed to accept 100% of Medicaid rates. There is no evidence that this note made in 2011 even refers to the same alleged conversation on which Amerigroup bases its claim for reimbursement going back to 2008. 48 2155944.4/SPH/27768/0101/103015 Beyond all this, Amerigroup did nothing as a reasonably prudent person to
exercise diligence and discretion to ascertain the supposed agent’s authority.
Amerigroup does not know the anonymous male’s name, title, role, or any other
identifiable information indicating he would have authority to bind Town Park to a
verbal agreement over the phone regarding heavily discounted reimbursement rates
indefinitely in the future. Not only did Ms. Jones fail to confer with anyone who
qualified at Town Park, she admits that she did not even bother to ask the
unidentified person this information.
Q. And you said you talked to an administrator there but just to confirm, your testimony is that you actually don’t know what that person’s role was; is that correct?
A. That’s correct.
Q. You were assuming it was an administrator?
A. Yes.
Q. You didn’t ask him if he was?
A. No.
Q. And he didn’t tell you that he was?
A. No.
Q. Is that correct?
A. Correct.
Supp. CR 243 (Ex. E at p. 100 ll. 4 -16).
The trial court properly granted summary judgment on Amerigroup’s breach
of contract claim because there is no evidence that the “other person” to whom Ms.
49 2155944.4/SPH/27768/0101/103015 Jones allegedly spoke had authority to bind Town Park to a blanket agreement to
accept reimbursement at the Medicaid fee schedule and no principal of Town Park
did anything to confer apparent authority on that unidentified “other person.”
D. Amerigroup Cannot Recover For Breach Of Contract Because Town Park Did Not Fail To Comply With Any Alleged Contract Term.
1. The alleged agreement does not address reimbursement of overpayments. To prove an action for breach of contract, the plaintiff must establish: (1) the
existence of a valid contract; (2) performance or tendered performance by the
plaintiff; (3) breach of contract by the defendant; and (4) damages sustained as a
result of the breach. See Williams v. Unifund CCR Partners, 264 S.W.3d 231, 235-
36 (Tex. App.—Houston [1st Dist.] 2008, no pet.). Thus, the party must identify
the term of the contract that was breached.
Because Amerigroup’s claim is that Town Park breached the alleged
agreement by failing to reimburse it for overpayments, it must establish the
existence of a contract term obligating Town Park to make such reimbursements.
In-network arrangements between providers and insurers sometimes include
provisions whereby insurers have the right to audit providers’ billing, and
providers are required to reimburse insurers where such audits evidence
overpayment. Town Park, however, was an out-of-network provider and, when
Ms. Jones was asked to recount her conversation with the “other person” who
supposedly made the agreement, she said nothing about any term addressing 50 2155944.4/SPH/27768/0101/103015 reimbursement of overpayments. See Supp. CR 231, 234-35 (Ex. E at p. 38, ll. 4-
23; p. 41, l. 19 – 42, l. 6) (quoted above). Thus, in contrast to the type of in-
network arrangement described above, there is no allegation or evidence that the
alleged agreement contained any provision under which Town Park agreed to
reimburse Amerigroup for overpayments made by mistake. Amerigroup admits
that fact when it argues “the trial court should have inferred [such a] term.”
Appellant’s Br. 47.
In the absence of any contractual term requiring reimbursement of claimed
“overpayments” it cannot be a breach of contract to refuse to return alleged
overpayments. That is not to say there is never a remedy for a mistaken
overpayment but, in the absence of a controlling contract term, any such remedy is
governed by rules of equity. See Lincoln Nat. Life Ins. Co. v. Brown Schools, Inc.,
757 S.W.2d 411 (Tex.App. —Houston [14th Dist.] 1988, no writ).
2. The alleged agreement does not address billing methodology. In its brief, Amerigroup also suggests that Town Park is somehow
responsible for Amerigroup’s claimed mistake because Town Park used an SG
“modifier” rather than an EP “modifier” with the 41899 procedure code in its
invoices. This argument is a red herring for a number of reasons.
Just as there is no evidence of a reimbursement term in the alleged contract,
there also is no evidence of a term addressing the format of Town Park’s invoices.
51 2155944.4/SPH/27768/0101/103015 If there was, Amerigroup could simply have rejected the invoices until they were
submitted as Amerigroup required.
Amerigroup is not alleging that any of Town Park’s invoices were fraudulent
or misleading. Amerigroup’s corporate representative Edmund Chidester testified:
Q. And you're not alleging fraud in this case?
A. No.
Q. And you don't believe there is any fraud?
A. No.
Q. Is that correct?
A. Correct.
Supp. CR 419 (Chidester Dep. p 63, l. 22 – 63, l. 2). He further admitted
Amerigroup’s case is solely dependent on the alleged oral agreement, which, as
noted, never mentioned billing format. Supp. CR 205 (Ex. B at p. 32, ll. 5-10).
Moreover, use of the SG modifier was entirely appropriate. The SG
modifier simply indicates that Town Park is a surgery center which, of course,
Town Park is. CR 315 (Chidester Dep. p 61, ll. 18 - 22). Contrary to
Amerigroup’s assertion, the Medicare Claims Processing Manual does not
preclude the use of the SG modifier after January 1, 2008. It states only that
ambulatory surgical centers are not required to use the modifier after January 1
2008. CR 631 (“Beginning January 1, 2008, ASCs no longer are required to
52 2155944.4/SPH/27768/0101/103015 include the SG modifier on facility claims in Medicare.”)18 The EP modifier
merely indicates that the service is associated with “THSteps,” or Texas Health
Steps which is a children’s program under Texas Medicaid that provides medical
and dental preventive care and treatment. Supp. CR 1031. Neither modifier
determines the amount of reimbursement.
Finally, use of the SG modifier did not cause Amerigroup to overpay.
Before January 1, 2008, when even Amerigroup admits use of the SG modifier was
appropriate, Amerigroup did not pay the Medicaid rate; it routinely paid from
$3412 to $5460 per procedure. See Supp. CR 1059. Conversely, Amerigroup did
not pay the Medicare rate when the EP modifier was used.19 This is true both
before and after January 1, 2008. Thus, Amerigroup cannot tie any claimed coding
issue to the alleged overpayments.
The most Chidester could say was that because of the use of the SG
modifier, Amerigroup processed Town Park’s invoices manually. Thus, an
individual at Amerigroup reviewed the invoices for the particular procedures and
18 Amerigroup does not cite to the actual Medicare Claims Processing Manual when it claims that use of the SG modifier is inappropriate after January 1, 2008. It cites to WPS Medicare, which is Wisconsin Physicians Service Insurance Corporation. See Supp. CR 1034. In light of the Medicare Claims Processing Manual, the statement relied on by Amerigroup reflects only that the use of the SG modifier is unnecessary, not that it is improper. 19 When Town Park used the EP modifier, Amerigroup typically paid nothing (which even Amerigroup does not claim was proper). See Supp. CR 1059. On at least two occasions, however, Amerigroup paid $1500 and $4200 when an EP modifier was used. See Supp. CR. 1059, 1070. Amerigroup did not pay the Medicaid rate until sometime in 2011 after it began making reimbursement demands, and then it did so even when no modifier was used. 53 2155944.4/SPH/27768/0101/103015 made a conscious decision as to the appropriate payment amount in each case. CR
315-16 (Chidester Dep. p 61, l. 23 – 62, l. 17).
The use of the SG modifier was not a breach of the alleged oral agreement,
was not improper under any applicable regulation, did not determine the
appropriate amount of payment, and did not cause any overpayment.
E. The Trial Court Did Not Err in Granting Summary Judgment Based on the Statute of Limitations as to the Additional 109 Claims on Which Amerigroup First Sought Recovery in 2014. Amerigroup filed its Fourth Amended Petition on November 14, 2014
adding 109 more claims dating from December 21, 2008 through September 11,
2010, and alleging that Town Park committed a breach of contract by failing to
reimburse Amerigroup for overpayments when they occurred. CR 495. Each of
these claims accrued more than 4 years before being made a part of this suit.
Accordingly they are barred by the 4 year statute of limitations. TEX. CIV. PRAC. &
REM. CODE § 16.004.
Section 16.068 of the Civil Practice and Remedies Code does not cause
these claims to “relate back.” That section states:
If a filed pleading relates to a cause of action, cross-action, counterclaim, or defense that is not subject to a plea of limitation when the pleading is filed, a subsequent amendment or supplement to the pleading that changes the facts or grounds of liability or defense is not subject to a plea of limitation unless the amendment or supplement is wholly based on a new, distinct, or different transaction or occurrence.
54 2155944.4/SPH/27768/0101/103015 TEX. CIV. PRAC. & REM. CODE § 16.068. Amerigroup did not merely “change the
facts or grounds of liability.” Each of the 109 new claims is “wholly based on a
new, distinct, or different transaction or occurrence.”
The payment for each patient constitutes a separate and distinct transaction.
Put simply, the billing and payment for services rendered to patient Jane Doe is a
completely distinct and different transaction or occurrence than the billing and
payment for services rendered to patient Ron Roe. The two have nothing to do
with each other. By adding 109 separate and distinct claims relating to different
patients, Amerigroup brought wholly new, distinct and different transactions into
the suit. These claims do not relate back to the filing of the original petition.
It does not matter that Amerigroup alleges an overarching continuing
contract to accept Medicaid rates: “if the terms of a continuing contract call for
fixed, periodic performance during the course of the agreement, a cause of action
for the breach of the agreement may arise at the end of each period, before the
contract is completed. … The injured party has four years from each breach to
bring suit.” Capstone Healthcare Equipment Services, Inc. v. Quality Home Health
Care, Inc., 295 S.W.3d 696, 701 (Tex.App.-Dallas 2009, pet. denied) (citations
omitted). Thus, a party may not allow repeated breaches to continue accruing
indefinitely, file suit 3 years 364 days after the last breach, and then add all prior
breaches claiming that they relate back indefinitely.
55 2155944.4/SPH/27768/0101/103015 F. Amerigroup Has Abandoned Its Equitable Causes of Action and Waived Any Claimed Error in Granting Summary Judgment on Those Causes of Action. When Amerigroup filed its Fourth Amended Petition after the trial court
granted summary judgment on Amerigroup’s equitable claims (see CR 327), the
only cause of action it alleged was breach of contract. CR 495. It dropped all of
the previously alleged equitable claims such as money had and received.
Amerigroup has therefore abandoned all of those equitable claims, and waived any
error associated with the court’s grant of summary judgment on those claims, as its
live pleading does not allege those causes of action. TEX. R. CIV. P. 65. See Tran
v. Luu, No. 12-06-19,092-CV, 2014 Tex. App. LEXIS 3956 *6-7, 2014 WL
1410345 (Tex. App. -- Waco 2014, no pet.) (“by amending her pleading and
eliminating her trespass, negligence, and nuisance claims, Tran effectively
abandoned her trespass, negligence, and nuisance claims and, thus, waived any
error concerning the trial court’s action in granting summary judgment as to these
claims.”); Kinney v. Palmer, No. 04-07-00091-CV, 2008 Tex. App. LEXIS 4632
*7; 2008 WL 2515696 (Tex. App. – San Antonio 2008, no pet.) (“by amending
their pleading and eliminating the DTPA, negligent misrepresentation, and fraud
references, the Kinneys abandoned those claims and have waived any error
concerning the trial court’s action in granting Palmer’s motion for partial summary
judgment as to these claims.”)
56 2155944.4/SPH/27768/0101/103015 Accordingly, this Court need not address the trial court’s summary judgment
as to those claims on the merits.
G. The Trial Court Did Not Err in Granting Summary Judgment on Amerigroup’s Equitable Claims Based on the Statute of Limitations. Because the alleged oral contract – even as described by Amerigroup’s own
witnesses – did not include a term requiring reimbursement of alleged
overpayments, Amerigroup alleged equitable theories of unjust enrichment and
money had and received to recover the alleged mistaken payments.
If this Court sustains the summary judgment based on the statute of frauds,
lack of authority, or waiver defenses discussed above, it need not address
Amerigroup’s argument that the court erred in granting summary judgment on
Amerigroup’s equitable claims based on the statute of limitations. If there is no
enforceable agreement limiting payment to Medicaid rates then there has been no
overpayment, and no cause of action for money had and received or unjust
enrichment exists.
In any event, the court did not err in granting summary judgment on these
claims based on the statute of limitations.
1. Unjust enrichment and money had and received are governed by the two-year statute of limitations. Both unjust enrichment and money had and received are governed by the 2
year limitations period for “taking or detaining the personal property of another.”
TEX. CIV. PRAC. & REM. CODE § 16.003(a). They are not suits on a “debt” 57 2155944.4/SPH/27768/0101/103015 governed by the 4 year statute of limitations in TEX. CIV. PRAC. & REM. CODE §
16.004.
The Texas Supreme Court has held unequivocally that the statute of
limitations for an unjust enrichment claim is two years:
The most logical reading of sections 16.003 and 16.004 is to treat “debt” actions under section 16.004 as breach-of-contract actions that fall under the four-year statute of limitations for such claims, … while construing the two-year statute’s reference to actions for “taking or detaining the personal property of another” as applicable to extra- contractual actions for unjust enrichment. This construction harmonizes the two statutes and gives meaning to each.
Elledge v. Friberg-Cooper Water Supply Corp., 240 S.W.3d 869, 871-72 (Tex.
2007) (citations omitted).
Amerigroup does not appear to dispute the fact that its unjust enrichment
claim is subject to the 2 year statute of limitations; its argument that the 4 year
statute of limitations applies addresses only its money had and received claim. See
Appellant’s Br. at 51. Money had and received, however, is simply one legal
theory for claiming unjust enrichment.20 Significantly, every case Amerigroup
cites for its argument that the 4 year statute applies to money had and received
predates Elledge.
This Court has squarely held that the statute of limitations for money had
and received claims is two years. Merry Homes, Inc. v. Luc Dao, 359 S.W.3d 881, 20 See Hancock v. Chicago Title Ins. Co., 635 F.Supp.2d 539, 560 (N.D. Tex. 2009) (“[U]njust enrichment is a theory of liability that a plaintiff can pursue through several equitable causes of action, including money had and received.”) Thus, like any other theory for claiming unjust enrichment it falls within Elledge. 58 2155944.4/SPH/27768/0101/103015 882 (Tex. App.-Houston [14th Dist.] 2012, no pet.). In doing so, this Court
considered and rejected Amoco Prod. Co. v. Smith, 946 S.W.2d 162 (Tex. App. –
El Paso 1997, no pet.), the primary authority cited by Amerigroup, in light of the
Supreme Court’s later decision in Elledge. See Merry Homes, 359 S.W.3d at 884.
The most recent case Amerigroup cites for the proposition that the 4 year
statute applies to money had and received is Verizon Employee Benefits Committee
v. Frawley, No. 3:05-CV-2105-P ECF, 2007 WL 2051113 (N.D. Tex. 2007). After
being made aware of the Elledge decision, however, that court reversed its own
prior ruling and, like this Court, held that the 2 year statute of limitations applies.
Verizon Employee Benefits Committee v. Frawley, 655 F.Supp.2d 644, 646
(N.D.Tex. 2008) (“In light of the recent Texas Supreme Court opinion which
speaks to and likely resolves this issue, the split over the limitations period
applicable to an action for money had and received should be resolved in favor of a
two-year limitations period.”). Thus the opinion relied on by Amerigroup is no
longer good law.
2. The statute of limitations began to run when the money was paid. Amerigroup’s causes of action for unjust enrichment and money had and
received accrued when Town Park received the alleged overpayments. Tanglewood
Terrace, Ltd. v. City of Texarkana, 996 S.W.2d 330, 337 (Tex. App.-Texarkana
1999, no pet.); Gaffar v. Kamal, No. 05-10-00560-CV, 2011 Tex. App. LEXIS
59 2155944.4/SPH/27768/0101/103015 5714, at *6-7 (Tex. App.-Dallas July 27, 2011, no pet.). All of the payments at
issue were received more than two years before suit was filed. Accordingly
recovery is barred by the statute of limitations.
IV. CONCLUSION AND PRAYER Appellee True View Surgery Center, L.P. d/b/a Town Park Surgery Center
respectfully requests that the judgment of the trial court be affirmed and that Town
Park be granted such other relief to which it may be entitled.
Respectfully Submitted,
STRASBURGER & PRICE, LLP
By: /s/ Jack G. Carnegie CHARLES “SCOTT” NICHOLS State Bar No. 14994100 JACK G. CARNEGIE State Bar No. 03826100 909 Fannin Street, Suite 2300 Houston, Texas 77010 Telephone: (713) 951-5600 Facsimile: (713) 951-5660 scott.nichols@strasburger.com jack.carnegie@strasburger.com ATTORNEYS FOR APPELLEE
60 2155944.4/SPH/27768/0101/103015 CERTIFICATE OF COMPLIANCE
I hereby certify that this brief is in compliance with the rules governing the length of briefs prepared by electronic means. The brief was prepared using Microsoft Word 2013. According to the software used to prepare this brief, the total word count, including footnotes, but not including those sections excluded by rule, is 14,854. The brief was prepared using “Times New Roman” 14-point font.
/s/ Jack G. Carnegie JACK G. CARNEGIE
61 2155944.4/SPH/27768/0101/103015 CERTIFICATE OF SERVICE
The undersigned counsel certifies that on the 30th day of October, 2015, a true and correct copy of the foregoing was forwarded to all known counsel of record via facsimile and e-mail in compliance with Rules 21 and 21a of the Texas Rules of Civil Procedure, as follows:
Ray T. Torgerson David W. Salton Joshua W. Wolfshohl 1000 Main St., 36th Floor Houston, Texas 77002 Telephone: (713) 226-6650 Facsimile: (713) 226-6250 rtorgerson@porterhedges.com dsalton@porterhedges.com
/s/ Jack G. Carnegie JACK G. CARNEGIE
62 2155944.4/SPH/27768/0101/103015
Amerigroup Texas, Inc. v. True View Surgery Center, L.P., D/B/A Town Park Surgery Center (Amerigroup Texas, Inc. v. True View Surgery Center, L.P., D/B/A Town Park Surgery Center) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.