Dedicato Treatment Center, Inc v. Independence Blue Cross

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 27, 2021
• Docket: 21-55194
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION DEC 27 2021 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

DEDICATO TREATMENT CENTER, No. 21-55194 INC., a California corporation, D.C. No. 2:19-cv-03657-SB-SK Plaintiff-Appellant,

v. MEMORANDUM*

INDEPENDENCE BLUE CROSS BLUE SHIELD OF PENNSYLVANIA, INC., DBA Personal Choice, a Pennsylvania Corporation,

Defendant-Appellee.

Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding

Submitted December 9, 2021** Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Before: W. FLETCHER and RAWLINSON, Circuit Judges, and LIBURDI,*** District Judge.

Dedicato Treatment Center (“Dedicato”) appeals the district court’s grant of

summary judgment to Independence Blue Cross Blue Shield of Pennsylvania

(“Independence”) in this action. Dedicato is a substance abuse treatment center

that provided treatment to two patients enrolled in Independence’s health insurance

plan. For those patients, Dedicato was an out-of-network provider. Prior to

admitting these two patients for treatment, Dedicato completed a “verification of

benefits” (“VOB”) procedure with Independence “to verify that the patient[s]

[were] in fact covered under a health insurance policy that [would] pay for

prospective treatment.” During the process, Dedicato was assured that it would be

paid “100% of the allowable rate” for its services.

After providing treatment to both patients, Dedicato billed Independence

$108,400 for services provided to one and $243,900 for services provided to the

other. Independence paid Dedicato, respectively, $25,081.50 and $47,551.84 for

each patient’s treatment. When Independence refused to pay more, Dedicato filed

a complaint against Independence seeking the balance of these payments. The

district court granted Independence’s motion for summary judgment, rejecting all

*** The Honorable Michael T. Liburdi, United States District Judge for the District of Arizona, sitting by designation. 2 seven of Dedicato’s legal theories for the same overarching reason: Dedicato’s

claims relied on its unsupported and legally insufficient “assumption” it would be

paid billed charges.

We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the district

court’s grant of summary judgment de novo and apply the same standard as the

district court did. See Delta Sav. Bank v. United States, 265 F.3d 1017, 1021 (9th

Cir. 2001). We may affirm the district court’s grant of summary judgment on any

ground supported by the record. See Campidoglio LLC v. Wells Fargo & Co., 870

F.3d 963, 973 (9th Cir. 2017). We affirm the district court’s grant of summary

judgment to Independence on all counts.

We assume, without deciding, that some contractual obligation between

Dedicato and Independence existed because Independence was willing to pay

Dedicato for services rendered. However, the parties contest the numerical amount

owed under this obligation. Both identify “100% of the allowable rate” as the

payment amount, but advance three different theories for what this phrase refers to

— 100% of the billed rate, 100% of some “reasonable” rate, and 100% of the rates

listed in Independence’s internal fee schedule for out-of-network providers.

The first interpretation was rejected by the district court, and Dedicato

largely abandons this theory on appeal. To the extent Dedicato raises this

3 argument again, we find this interpretation unsupported by the record. Dedicato’s

own expert witness, Kyle McHenry, agreed that “there’s no real industry standard

that an insurer is just going to pay whatever a provider charges,” and that, when

Dedicato charges billed rates, it “do[es]n’t really expect to receive that full

amount.” Without objective support, Dedicato’s mere subjective assumption that it

would be paid the full billed rates is insufficient to support a contractual obligation

to pay those rates. Titan Grp., Inc. v. Sonoma Valley Cnty. Sanitarian Dist., 164

Cal. App. 3d 1122, 1127 (Cal. Ct. App. 1985).

Dedicato has waived the second argument. In this court, “an issue will

generally be deemed waived on appeal if the argument was not raised sufficiently

for the trial court to rule on it.” Armstrong v. Brown, 768 F.3d 975, 981 (9th Cir.

2014) (citation omitted). Dedicato did not raise the argument that “allowable rate”

refers to some “reasonable” rate sufficiently for the lower court to rule on it.

Before the district court, it repeatedly requested its “fully billed charges.”

Moreover, even if this argument were not waived, it is unsupported by the record.

We hold that the final interpretation — that “100% of the allowable rate”

refers to 100% of the rate determined by an internal fee schedule — is correct

because it is unambiguously supported by the record. McHenry explicitly testified

that the allowable rate is an “internal figure” that insurers derive from a fee

4 schedule. In the joint memo regarding Independence’s motion for summary

judgment, Dedicato itself stated that McHenry testified that “100% of the

allowable rate” refers to Independence’s “own internal ‘proprietary’ fee schedule,”

not some other rate.

Applying this interpretation, Dedicato’s claims all fail because it is

undisputed that Independence paid 100% of the amount listed on its internal fee

schedule. Independence therefore did not breach any contractual obligation,

whether explicit or implied, to Dedicato. It also did not breach a duty of good faith

and fair dealing; it fulfilled any promise that Dedicato reasonably relied on; it

provided quantum meruit payment for any services Dedicato provided; and it did

not engage in unfair competitive practices.

AFFIRMED.