Neil Gilmour, Tr. for the Grantor Trusts of Victory Parent Co. v. Conn. Gen. Life Ins. Co. (In re Victory Med. Ctr. Mid-Cities, LP)

601 B.R. 739
CourtUnited States Bankruptcy Court, N.D. Texas
DecidedMay 13, 2019
DocketCase No. 15-42373-mxm-11 Jointly Administered; Adversary No. 17-4000-mxm
StatusPublished
Cited by1 cases

This text of 601 B.R. 739 (Neil Gilmour, Tr. for the Grantor Trusts of Victory Parent Co. v. Conn. Gen. Life Ins. Co. (In re Victory Med. Ctr. Mid-Cities, LP)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Neil Gilmour, Tr. for the Grantor Trusts of Victory Parent Co. v. Conn. Gen. Life Ins. Co. (In re Victory Med. Ctr. Mid-Cities, LP), 601 B.R. 739 (Tex. 2019).

Opinion

Mark X. Mullin, United States Bankruptcy Judge

On April 24, 2019, the Court held a hearing on the competing motions for summary *741judgment filed by the Plaintiff and the Defendants. One of the hotly contested issues in this fraudulent-transfer suit is whether the Chapter 11 Debtors received reasonably equivalent value in connection with a prepetition settlement agreement they signed with the Defendants. Each party has moved for full or partial summary judgment on this issue. The summary-judgment record establishes that there are no material contested subsidiary facts on this issue and that the Debtors received reasonably equivalent value in the exchange. Therefore, the Court grants the Defendants' motion for summary judgment regarding reasonably equivalent value and denies the Plaintiff's motion for partial summary judgment.

I. JURISDICTION AND VENUE

The Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This proceeding is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(H) and (O). Venue is proper pursuant to 28 U.S.C. § 1409(a).

II. FACTS1

A. Historical relationship between the parties

Connecticut General Life Insurance Company and Cigna Corporation (together, " Cigna ") administers or insures health benefit plans.2 The Debtors (together, "Victory ") operated medical centers throughout Texas for several years.3 Victory alleges it treated hundreds of patients who were insured or covered by health benefit plans insured or administered by Cigna.4 At all relevant times, Victory was "out-of-network" with Cigna, which means there was no agreement between Cigna and Victory regarding the procedures that would be covered under the Cigna administered or insured plans, or the amount Victory would receive on such claims submitted to Cigna.5 For this reason, Victory knew and expected it would only be paid a percentage of the amounts it was billing to Cigna.6

B. The 2013 Lawsuit

Victory contends Cigna refused payment on approximately $22.5 million of healthcare service claims submitted by Victory-claims that Victory now values at $9,840,145.7 Victory had been submitting claims for reimbursement to Cigna for a period of time. In 2013, however, Cigna investigated Victory's business practices and concluded that the claims for reimbursement Victory submitted to Cigna were not, in fact, eligible for reimbursement under the plans Cigna administered or insured.

*742More specifically, the majority of the plan documents for the health benefit plans Cigna administers or insures exclude "charges for services that would not have been made in the absence of the plan or for which the patient is not legally obligated to pay."8 Linda Halik, an investigator in Cigna's Special Investigations Unit ("SIU "), was directed to investigate, among other things, whether the claims Victory submitted to Cigna fell within the scope of that exclusion. As a part of her investigation, Ms. Halik requested information concerning Victory's business practices and select patient ledgers.9 She then sent verification of service (or survey) letters to Victory patients.10 Her investigation took months.11 Cigna sent more than a hundred verification of service letters to Victory patients within a two-year period.12 Ms. Halik received approximately fifty-five returned verification of service letters, and according to Cigna, in the majority of those responses, the patients stated that Victory did not bill for its services and/or told the patients that they were not responsible for any charges.13 Ms. Halik's investigation, according to Cigna, "showed overwhelming proof" that Victory was not collecting anything from its patients.14

According to the Plaintiff, in contrast, Cigna's decision to investigate for fee forgiving was based entirely on how much Cigna had paid, and Cigna used unreliable and vague survey questions and responses as a pretext to push Victory to go in-network with Cigna.15 Suffice it to say, the issue of whether Victory was engaged in fee forgiving has been contested at all relevant times, including now and when Victory and Cigna settled the issue prior to the bankruptcy filing.

According to Cigna, based on the investigation, Ms. Halik concluded that Victory was, in fact, engaged in fee forgiving.16 Ms. Halik conveyed the results of her investigation to her supervisor, who in turn elevated the matter to Cigna's in-house counsel, William Welch II, who ultimately agreed that evidence showed that Victory was engaged in fee forgiving.17 As a result, Cigna placed Victory in the "fee forgiveness protocol" in 2013. The "fee forgiveness protocol" or "flag" stopped claims submitted by Victory from being paid automatically by Cigna, and generated a warning in the claims-processing system to alert the claims processor to look further into such claims.18 The flag communicated to the claims processor that the SIU recommended that such claims be denied.19 The claims processor would then look for certain circumstances that would supersede SIU's recommendation, such as if the member had already met his or her cost share, the particular claim was not medically necessary, or the patient's plan did not have out-of-network benefits.20 The *743claims processer would also have the discretion to override SIU's recommendation.21 Ultimately, once the flag was placed, virtually all claims Victory submitted to Cigna were denied (unless the recommendation was overridden), and Victory was sent an explanation of benefits explaining this result.22

After Cigna began denying the claims submitted by Victory, on June 6, 2013, Victory Medical Center Mid-Cities, L.P. and Victory Medical Center Plano, L.P., among other plaintiffs, filed a lawsuit against Cigna in federal district court (the "2013 Lawsuit ").23 Victory sought recovery against Cigna for unpaid claims under ERISA, among other claims.24

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Cite This Page — Counsel Stack

Bluebook (online)
601 B.R. 739, Counsel Stack Legal Research, https://law.counselstack.com/opinion/neil-gilmour-tr-for-the-grantor-trusts-of-victory-parent-co-v-conn-txnb-2019.