Frye Reg'l Med. Ctr., Inc. v. Blue Cross Blue Shield of N.C., Inc.

2020 NCBC 33
North Carolina Business Court·Decided April 17, 2020·No. 18-CVS-783·Published

Opinion

Frye Reg’l Med. Ctr., Inc. v. Blue Cross Blue Shield of N.C., Inc., 2020 NCBC 33.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION

COUNTY OF CATAWBA 18 CVS 783

FRYE REGIONAL MEDICAL CENTER, INC.,

Plaintiff, ORDER & OPINION ON CROSS MOTIONS FOR SUMMARY

v. JUDGMENT AND BCBSNC’S MOTION TO EXCLUDE EXPERT

BLUE CROSS BLUE SHIELD OF TESTIMONY NORTH CAROLINA, INC.,

Defendant.

THIS MATTER comes before the Court on Plaintiff Frye Regional Medical Center, Inc.’s (“Frye”) Motion for Partial Summary Judgment (“Frye Motion,” ECF No. 73 [SEALED])1, and Defendant Blue Cross Blue Shield of North Carolina, Inc.’s (“BCBSNC”) Motion for Summary Judgment (“BCBSNC Motion,” ECF No. 79; collectively, the Frye Motion and the BCBSNC Motion are referred to as the “Motions”). Additionally, this matter is before the Court on BCBSNC’s Motion to Exclude Expert Testimony. (“Motion to Exclude,” ECF No. 68.)

THE COURT, having considered the Motions, the evidentiary materials filed by the parties, the briefs in support of and in opposition to the Motions, the arguments of counsel at the hearing on the Motions, and other appropriate matters of record,

1 The Frye Motion, nine briefs, and all of the evidentiary materials filed by the parties in

relation to the parties’ motions for summary judgment and BCBSNC’s Motion to Exclude Expert Testimony were provisionally filed completely under seal. Two briefs were filed under seal and in public, redacted form. The Court has determined that certain of the information contained in the provisionally filed briefs and exhibits should be unsealed as set out in this Court’s Order on Motions to Seal (ECF No. 117).

concludes that BCBSNC’s Motion should be GRANTED, in part, and DENIED, in part, and that Frye’s Motion should be DENIED, for the reasons set forth below. The Court further DENIES the Motion to Exclude.

Young, Morphis, Bach & Taylor, LLP, by Paul E. Culpepper for Frye Regional Medical Center, Inc.

Lash & Goldberg LLP, by Alan D. Lash, Justin C. Fineberg, Christopher K. Smith, and Matthew G. Frias for Frye Regional Medical Center, Inc.

Williams Mullen, by Ruth Levy, John Holton, Elizabeth C. Stone, and Keith M. Kapp for Blue Cross Blue Shield of North Carolina, Inc.

McGuire, Judge.

A. Motion to Exclude 1. Prior to considering the Motions, the Court will briefly address BCBSNC’s Motion to Exclude. On October 10, 2019, BCBSNC filed the Motion to Exclude along with a brief and evidentiary materials in support. (ECF No. 68; Br. in Supp. of Mot. to Excl., ECF No. 69 [SEALED]; Evid. in Supp., ECF No. 69.1 [SEALED].) On October 17, 2020, BCBSNC filed a public, redacted version of its brief in support of the Motion to Exclude. (Redacted Br. in Supp. of Mot. to Excl., ECF No. 82.) Pursuant to North Carolina Business Court Rule 7 and N.C. R. Evid. 702, BCBSNC seeks to partially exclude the expert testimony and expert report of Frye’s expert, Christopher Flanagan. (ECF No. 68.) On October 30, 2019, Frye filed a brief in opposition to the Motion to Exclude and evidence supporting Frye’s opposition to the Motion to Exclude. (Br. in Opp. to Mot. to Excl., ECF No. 86 [SEALED]; Evid. in Opp., ECF Nos. 86.1–86.4 [SEALED].) On November 12, 2019, BCBSNC filed a reply brief. (Reply Br., ECF No. 98 [SEALED].) The Court has thoroughly considered the

Motion to Exclude, the briefs and evidentiary materials filed in support of and in opposition to the Motion to Exclude, and other appropriate matters of record, and concludes, in its discretion, that the Motion to Exclude should be DENIED.2 I. FACTS

2. “The Court does not make findings of fact when ruling upon a motion for summary judgment. But to provide context for its ruling, the Court may state either those facts that it believes are not in material dispute or those facts on which a material dispute forecloses summary adjudication.” Ehmann v. Medflow, Inc., 2017 NCBC LEXIS 88, at *6 (N.C. Super. Ct. Sept. 26, 2017).

A. Frye, BCBSNC, and the Network Participation Agreement 3. Frye operates an acute care hospital in Hickory, North Carolina.

BCBSNC is a North Carolina corporation that provides medical insurance coverage to BCBSNC members. (Complaint, ECF No. 3, at ¶¶ 4–5.)

4. On or about January 1, 2013, Frye entered into a Network Participation Agreement (“NPA”) with BCBSNC that provided the terms and conditions under which Frye would provide medical care services to BCBSNC’s members and BCBSNC would pay agreed-to amounts for those services. (Id. at ¶ 6; “NPA,” EFC No. 80.1 at Ex. 1, pp. 1–61 [SEALED]; hereinafter all references to the NPA and its attachments are to “NPA” with appropriate page number(s).) The NPA provides that “[f]or Covered Services provided to [BCBSNC] Members . . . [Frye] will be paid in accordance with the attached Reimbursement Exhibit(s).” (NPA at p. 7 [SEALED].)

2 The Court’s denial of the Motion to Exclude is WITHOUT PREJUDICE to BCBSNC’s right to make further evidentiary motions regarding Frye’s expert evidence at trial.

The NPA provides that Frye will be paid for certain Inpatient Covered Services at a “Per Case Rate.” (ECF No. 3, at ¶ 17, 29; NPA at pp. 22–24 [SEALED].) The Per Case Rate is defined, in relevant part, as “[t]he negotiated monetary amount set forth in Attachment 1 of this Reimbursement Exhibit.” (NPA at p. 19 [SEALED].) Each “Per Case Rate” in Attachment 1 is linked to at least one Diagnostic Related Group (“DRG”). (Id. at pp. 22–24 [SEALED]; ECF No. 3, at ¶ 18.)

5. A DRG is defined as a “system of medically meaningful and statistically significant groupings of hospital admissions. Each such grouping is a DRG. Such classification is determined by principal and secondary diagnoses, surgical procedures, patient age, sex, and discharge status.” (ECF No. 3, at ¶ 18.) The DRG classifications are widely used by hospitals and insurers. See Diagnosis Related Group (DRG) Codes, FIND-A-CODE, https://www.findacode.com/drg/drg-diagnosis- related-group-codes.html (last visited Apr. 15, 2020). Pursuant to the NPA, BCBSNC agreed to pay Frye for Obesity Surgery grouped as DRG 288 at a Per Case Rate of $24,300.00. (ECF No. 3, at ¶¶ 17, 29.) DRG 288 is the grouping code for “OR procedures for obesity.” (Id. at ¶¶ 19, 30; BCBSNC Answer, ECF No. 15, at ¶ 30.) It is undisputed that “OR procedures for obesity” includes laparoscopic vertical (sleeve) gastrectomy or “bariatric surgery.” (ECF No. 3, at ¶ 19; ECF No. 15, at ¶ 19.)

B. The Coding and Invoicing Process 6. Under the NPA, Frye provided medical services to patients who were BCBSNC members. For surgical procedures, including bariatric surgery, Frye would seek pre-authorization from BCBSNC before performing the procedure. (ECF No. 3, at ¶ 20; ECF No. 15, at ¶ 20.) It is undisputed that BCBSNC authorized each of the procedures involved in the claims in this case. (Marti Aff., ECF No. 73.1 at Ex. 1, ¶ 9 [SEALED].)

7. After Frye discharged the patient, a Frye employee reviewed the patient’s record and completed a claim form (“UB-04 form”) for submission to BCBSNC seeking payment. (See, e.g., UB-04 forms, ECF No. 73.1 at Ex. 1, Exs. B, D [SEALED].) The Frye employee assigned and placed on the UB-04 form what are called “ICD-9 codes.” (ECF No. 3, at ¶ 21; Flanagan Dep., ECF No. 80.1 at Ex. 2, p. 27 [SEALED]; Marti Aff., ECF No. 73.1 at Ex. 1, ¶ 11 [SEALED].) ICD-9 refers to the International Classification of Diseases, Ninth Edition, a set of standardized codes used by hospitals and insurance providers. (ECF No. 3, at ¶ 21); see ICD-9-CM, CENTERS FOR DISEASE CONTROL AND PREVENTION, https://www.cdc.gov/nchs/icd/icd9cm.htm (last visited Apr. 15, 2020). Each patient was assigned an ICD-9 code for a medical diagnosis and an ICD-9 code for the service they received.

8. The Frye employee then entered the ICD-9 codes, and other information relevant to the patient’s diagnosis and treatment, into a software program that “mapped” the information to a particular DRG. At all times relevant to this dispute, Frye used a mapping program provided by

Free access — add to your briefcase to read the full text and ask questions with AI

Frye Reg'l Med. Ctr., Inc. v. Blue Cross Blue Shield of N.C., Inc., 2020 NCBC 33 (N.C. Super. Ct. 2020).

2020 NCBC 33 (Frye Reg'l Med. Ctr., Inc. v. Blue Cross Blue Shield of N.C., Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Anderson v. Liberty Lobby, Inc.
477 U.S. 242 (Supreme Court, 1986)
McNair v. Boyette
192 S.E.2d 457 (Supreme Court of North Carolina, 1972)
Poor v. Hill
530 S.E.2d 838 (Court of Appeals of North Carolina, 2000)
Dobson v. Harris
530 S.E.2d 829 (Supreme Court of North Carolina, 2000)
Peirson v. American Hardware Mutual Insurance Co.
102 S.E.2d 800 (Supreme Court of North Carolina, 1958)
Hensley v. National Freight Transportation, Inc.
668 S.E.2d 349 (Court of Appeals of North Carolina, 2008)
Abram v. Charter Medical Corp. of Raleigh, Inc.
398 S.E.2d 331 (Court of Appeals of North Carolina, 1990)
Gaunt v. Pittaway
534 S.E.2d 660 (Court of Appeals of North Carolina, 2000)
Brown v. Ginn
640 S.E.2d 787 (Court of Appeals of North Carolina, 2007)
DeWitt v. Eveready Battery Co., Inc.
565 S.E.2d 140 (Supreme Court of North Carolina, 2002)
Yancey v. Watkins
163 S.E.2d 625 (Court of Appeals of North Carolina, 1968)
Beachcrete, Inc. v. Water Street Center Associates, L.L.C.
615 S.E.2d 719 (Court of Appeals of North Carolina, 2005)
Hodgin v. Brighton
674 S.E.2d 444 (Court of Appeals of North Carolina, 2009)
Whirlpool Corp. v. Dailey Construction, Inc.
429 S.E.2d 748 (Court of Appeals of North Carolina, 1993)
Cleland v. Children's Home, Inc.
306 S.E.2d 587 (Court of Appeals of North Carolina, 1983)
JEFFERSON-PILOT LIFE INSURANCE CO. v. Smith Helms Mulliss & Moore
429 S.E.2d 183 (Court of Appeals of North Carolina, 1993)
Martin v. Ray Lackey Enterprises, Inc.
396 S.E.2d 327 (Court of Appeals of North Carolina, 1990)
Silver v. North Carolina Board of Transportation
267 S.E.2d 49 (Court of Appeals of North Carolina, 1980)
Whitacre Partnership v. Biosignia, Inc.
591 S.E.2d 870 (Supreme Court of North Carolina, 2004)
Phoenix Limited Partnership of Raleigh v. Simpson
688 S.E.2d 717 (Court of Appeals of North Carolina, 2009)