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Mounce v. CHSPSC, LLC

United States District Court, W.D. Arkansas, Fayetteville Division

October 1, 2017

JESSICA MOUNCE, Individually and on Behalf of All Others Similarly Situated PLAINTIFF



         Currently before the Court are Defendants CHSPSC, LLC (“CHSPSC”), Northwest Arkansas Hospitals, LLC (“the Hospital”), and Professional Account Services, Inc.'s (“PASI”) Motion for Summary Judgment (Doc. 44), and Plaintiff Jessica Mounce's Motion for Class Certification (Doc. 42).[1] The Court held a hearing on both Motions on November 3, 2016, at which time the parties presented oral argument to the Court.

         Defendants argue in their Motion for Summary Judgment that Ms. Mounce's individual claims must be dismissed because she voluntarily paid the hospital bill at issue in the case, and in doing so, gave up the right to file any lawsuit concerning the lien. Defendants also argue that Ms. Mounce's substantive claims for violations of the Arkansas Deceptive Trade Practices Act (“ADTPA”), Ark. Code Ann. § 4-88-101 et seq., common-law tortious interference with business expectancy/contract, and unjust enrichment should be dismissed on the merits. Defendants point out that if summary judgment is granted and the Court dismisses Ms. Mounce from the lawsuit, her Motion for Class Certification will become moot, as she is the only named plaintiff in the case and the only person identified as having an interest in serving as class representative.

         In response to the Motion for Summary Judgment, Ms. Mounce concedes that she directed her attorney to negotiate with PASI, the billing agent of the Hospital, for a reduction in the hospital bill associated with the lien that had been filed against her unliquidated tort claim; however, she argues that her payment to PASI was not voluntary and therefore should not preclude her from bringing this lawsuit. She further contends that her substantive claims have merit and that she is a proper representative of a class of more than 850 individuals who are similarly situated. In her Motion for Class Certification brought pursuant to Federal Rule of Civil Procedure 23, she explains why she believes the Court should certify a class of former patients of the Hospital, such as herself, who had what she characterizes as improper or illegal liens asserted against their third-party tort claims. Defendants respond that a class action would not be an efficient and effective mechanism for resolving these patients' claims-if indeed the claims have merit-and that, in any event, Ms. Mounce would not be an appropriate class representative.

         Below, the Court will set forth the background facts at issue in the case, and then it will take up Defendants' Motion for Summary Judgment, followed by Ms. Mounce's Motion for Class Certification. For the reasons explained herein, the Motion for Summary Judgment (Doc. 44) is DENIED, and the Motion for Class Certification (Doc. 42) is GRANTED.

         I. BACKGROUND

         Jessica Mounce, individually and on behalf of an Arkansas class of persons similarly situated, filed a lawsuit (Doc. 3) in Washington County Circuit Court on June 3, 2015, alleging violations of the ADTPA and claims for tortious interference, unjust enrichment, and injunctive relief against the Hospital where she sought treatment for injuries, and against two other companies affiliated with the Hospital.[2] The case was removed to this Court by Defendants on August 18, 2015, and an Amended Complaint (Doc. 39) was filed on February 10, 2016. The Amended Complaint omits a separate cause of action for injunctive relief, but is otherwise substantially similar to the original Complaint.

         A. Treatment at the Hospital

         The circumstances leading up to the filing of this case began when Ms. Mounce was injured in an automobile accident on November 27, 2013. She was not at fault. The driver who caused the accident was insured by Horace Mann Insurance (“Horace Mann”), and Ms. Mounce engaged an attorney named Jeff Slaton to assist her in pursuing a tort claim against the driver. Ms. Mounce did not seek medical attention immediately after the accident. Instead, she waited until November 30, 2013, to visit the emergency room at Northwest Medical Center in Springdale, Arkansas. During intake, she handed her health insurance card to a Hospital employee.

         Ms. Mounce's health insurance at the time was provided through the George's Inc. Medical Plan (“the George's Plan” or “the Plan”), an ERISA-based employer benefit plan that assumes responsibility for paying the health care services incurred by its members. See Doc. 51-3, Dep. of Benjamin Butler, p. 6. The George's Plan contracted with Arkansas Blue Cross and Blue Shield (“Blue Cross”) as the Plan's Claims Administrator. According to the Plan, employees and their dependents participate in a Preferred Provider Organization (“PPO”), in which participating medical service providers agree to accept PPO allowances and charge persons who are covered under the Plan certain reduced rates for services. (Doc. 51-1, p. 46).

         Ms. Mounce, as a person covered under the Plan, was also considered a “member” of Blue Cross's True Blue PPO Network Agreement (“the Provider Agreement”) (Doc. 50-23, pp. 2-3) (defining a “member” as “any person who satisfies the eligibility requirements and financial obligations to qualify for coverage of health care services under a Health Plan, including but not limited to . . . any . . . health benefit plan, whose sponsor or claims administrator has entered into any PPO Network access agreement with [Blue Cross] . . . .”; and specifying that hospitals who enter into Blue Cross's Provider Agreement “agree to provide Covered Services to Members”). Blue Cross, as Claims Administrator of the George's Plan, negotiated the Provider Agreement with the Hospital. Id. at 2. The Provider Agreement sets forth a discounted payment schedule for medical services rendered to Blue Cross's members. See Id. at 21 (showing rates applicable to the Hospital). Further, Blue Cross's corporate representative confirmed in a deposition that Blue Cross considered Ms. Mounce to be a member, and would have processed and paid the Hospital's bill for her medical treatment from November of 2013, had the bill been submitted by the deadline established in the Provider Agreement. See Doc. 55-8, Dep. of Benjamin Butler, pp. 2-3.

         Ms. Mounce testified that after she gave her health insurance card to the Hospital employee who was performing intake, the employee asked whether her injuries had resulted from a car accident, and Ms. Mounce confirmed that they had. See Doc. 44-1, Dep. of Jessica Mounce, p. 14. The employee then asked Ms. Mounce who was at fault in the accident and whether the other driver had insurance, and the employee recorded the information Ms. Mounce provided. Id. At some point, Ms. Mounce was presented with a form called "Conditions of Admission and Consent to Medical Treatment" (“Admission Form”) (Doc. 42-14), which all patients must read and sign. The first paragraph of the Admission Form states the following:

I hereby assign and authorize payment directly to the Facility, and to any facility-based physician, all insurance benefits, sick benefits, injury benefits due because of liability of a third party, or proceeds of all claims resulting from the liability of a third party, payable by any party, organization, et cetera, to or for the patient unless the account for this Facility, outpatient visit or series of outpatient visits is paid in full upon discharge or upon completion of the outpatient series. If eligible for Medicare, I request Medicare services and benefits. I further agree that this assignment will not be withdrawn or voided at any time until the account is paid in full. I understand that I am responsible for any charges not covered by my insurance company.

Id. at 3.

         According to Ms. Mounce, she was told by someone at the Hospital that her bill would be submitted to her health insurer, Blue Cross, for direct payment. See Doc. 44-1, p. 21. She believed this would be the case. Id. at 20, 25. She also signed the Admission Form, as evidenced by her recollection that she “sign[ed] a paper that sa[id] that they're going to submit the claim [to insurance].” Id. at 26. To Ms. Mounce, the Admission Form “clearly indicated” to her that she “would only be responsible for charges not covered by her insurance company.” (Doc. 49, pp. 20-21). She came to this conclusion after reading the last sentence of the first paragraph of the Admission Form, which states: “I understand that I am responsible for any charges not covered by my insurance company.“ (Doc. 42-14, p. 3 (emphasis added)).[3]

         B. The Hospital's Billing Policy for Tort Victims

         The parties agree that the Hospital never submitted Ms. Mounce's bill to Blue Cross for payment. Instead, the Hospital followed a special billing policy used in auto accident cases, which the Hospital's Assistant Chief Financial Officer, Susan Parker, explained in her deposition. Ms. Parker testified that in non-auto accident cases, it is the policy of the Hospital to obtain the health insurance information of the patient and then have PASI bill the patient's health insurance company. (Doc. 50-24, Dep. of Susan Parker, p. 9). However, in auto accident cases where it is suspected that the patient's injuries were caused by another party, the Hospital's policy is to allow PASI to determine whether to seek payment from a different source than health insurance. Id. at 10. See also PASI's Standard Patient Accounting User's Manual (Doc. 42-11, p. 6 (explaining patient registration and billing procedures to be followed when a patient advises “there is automobile insurance or liability involved”)).

         Defendants believe that, under the Hospital's Provider Agreement with Blue Cross, as well as under its provider agreements with other major health insurance companies, PASI is not required to bill a patient's health insurance as “primary” if the patient was the victim of an auto accident and the patient was not at fault. In such a situation, Defendants consider it proper to bypass the usual process of making a claim against the patient's health insurance company and instead assert a medical lien against the patient's unliquidated third-party tort claim, in the full, undiscounted amount of the hospital bill. See Doc. 50-24, Dep. of Susan Parker, p. 23 (“[W]e have under Blue Cross Blue Shield [a Provider Agreement] saying Blue Cross Blue Shield is not primary, you can file a medical lien. And so that's what we did.”).

         The corporate representative for PASI, Michael Lynch, testified that he also understood that the policy of the Hospital was for PASI “to pursue third-party auto insurance [claims] primary over the [patients'] health insurances.” (Doc. 50-21, Dep. of Michael Lynch, p. 3 (emphasis added)). He further acknowledged that the major health insurers-Blue Cross, Humana, Coventry, Aetna, Cigna, and UHC-are all treated the same by PASI in this respect: regardless of which health insurance company provides coverage, the patient will not receive the benefit of the provider agreement that was negotiated between the insurance company and the Hospital if her medical treatment resulted from injuries sustained in an accident, and she was not at fault. Id. at 3-4. In that scenario, PASI's policy is to treat the patient as if she had no primary health insurance coverage at all, and then assert a lien in the full amount of the medical bill against her unliquidated tort claim. Id. at 8.

         In Ms. Mounce's case, because she informed the Hospital during intake that she had been involved in a car accident and that she was not at fault, her medical bill was not submitted to Blue Cross for payment. Instead, PASI prepared a Notice of Hospital Lien on or about January 9, 2014, which stated:

The undersigned hereby gives notice for and on behalf of, Northwest Medical Center Springdale, located at 609 West Maple Ave., Springdale, AR 75765 (hereinafter “Hospital”), that the Hospital has furnished hospital care, treatment and/or maintenance, all of which was medically necessary, to the following patient: JESSICA MOUNCE . . . from 11/30/13 to 11/30/13 due to injuries sustained in and/or by a motor vehicle or other liability accident, on or around 11/30/13 and the amount due for these services is $6104.96, a sum that is a reasonable charge for the hospital care, services, treatment and/or maintenance rendered the above referenced patient.
The person(s), firm(s), corporation(s) or insurance companies claimed by the patient or his/her legal representative to be liable for damages arising from the illness or injuries cared for, treated and/or maintained by the hospital is/are:
The Hospital, therefore, hereby creates a lien up to the maximum allowable amount of any obtained or recovered damages which the patient or his/her legal representative may receive or be entitled to receive, whether by judgment, settlement or compromise, from any and all causes of action, suits, claims, counterclaims or demands accruing to the patient, all in accord with the provisions of the laws of the State of AR.

(Doc. 44-6).

         C. The Arkansas Hospital Lien Act

         Defendants believe the unique billing practice it reserves for its tort-victim patients is legal in light of the provisions of the Arkansas Medical, Nursing, Hospital, and Ambulance Service Lien Act, Ark. Code Ann. § 18-46-101 et seq. (“Arkansas Hospital Lien Act” or “the Act”). The Act states that if a hospital renders services to a patient who has been injured through the fault or neglect of another, the hospital shall have a lien “[o]n any claim, right of action, and money to which the patient is entitled because of that injury . . . .” Ark. Code Ann. § 18-46-104. Ms. Mounce argues that Defendants are using the Act as a sword, rather than the shield the legislature intended it to be, by treating patients with insurance as if they were uninsured, and then asserting improper liens against their tort claims. She maintains that the Hospital's policy not only deprives accident victims of the benefits of their health care coverage, but creates a situation where liens are being asserted, but no underlying debts are owed.

         D. Payment of the Bill and Release of the Lien

         Ms. Mounce's attorney, Jeff Slaton, engaged in a series of communications with PASI representatives regarding the lien. When Mr. Slaton was deposed in this case, he testified that he believed the Hospital's lien was wrongful at the time it was first asserted, and that the Hospital owed a contractual duty to bill Blue Cross before filing a lien against Ms. Mounce's tort claim. Mr. Slaton testified that before he became aware that PASI had filed a lien, he wrote a letter to PASI, (Doc. 44-5), requesting an itemized bill for Ms. Mounce's treatment. He also demanded in the letter that the Hospital submit the bill to Blue Cross for payment, as he knew from similar experiences he had with other clients that it was sometimes the Hospital's practice not to bill the patient's health insurance company. See Id. Mr. Slaton closed the letter by threatening to bring a class action lawsuit against PASI if these issues were not resolved to his satisfaction. Id.

         After the lien was officially filed by the Washington County Circuit Clerk on February 24, 2014, Mr. Slaton had several conversations with PASI representatives in which he admits to "yelling and screaming" at them that the lien was wrongful. (Doc. 44-4, Dep. of Jeff Slaton, p. 17). He also left a voicemail for PASI representative Elona Rowe, again stating his position that the lien was wrongful. Ultimately, Ms. Mounce agreed to a $16, 000.00 settlement of her third-party tort claim, and she gave Mr. Slaton authority to resolve the outstanding hospital lien so that her settlement check would be released. Id. at 14.

         On December 8, 2014, a PASI representative faxed Mr. Slaton a letter offering to reduce the lien amount by 50% and settle the Hospital's bill for $3, 052.48. Id. at 17-18. Mr. Slaton accepted the offer on Ms. Mounce's behalf sometime in the second week of December of 2014, explaining in his deposition that he felt “forced” to do so because the settlement check from Horace Mann would have been “tied up” had the lien not been resolved. Id. at 14. He also stated that he felt that paying even half the billed amount was “wrongful, as it was still a substantial amount larger than what [he] believed would have been owed by a Blue Cross member after adjustments and any co-insurance amounts that would have been owed.” Id. at 15. In other words, Mr. Slaton-never having seen the Provider Agreement or been apprised of its terms-believed that Ms. Mounce owed some amount of money to the Hospital at the time the lien was settled, but not as much as PASI had demanded. Mr. Slaton sent a cover letter and checks totaling $3, 052.48 to PASI on January 20, 2015. (Doc. 44-7). The Hospital filed a Release of Hospital Lien with the Circuit Court Clerk of Washington County, Arkansas, on January 28, 2015. (Doc. 44-8). This lawsuit was filed on June 3, 2015, in state court, and removed to this Court on August 18, 2015.


         A. Motion for Summary Judgment

         The standard of review for summary judgment is well established. Under Rule 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The Court must review the facts in the light most favorable to the opposing party and give that party the benefit of any inferences that logically can be drawn from those facts. Canada v. Union Elec. Co., 135 F.3d 1211, 1212-13 (8th Cir. 1997). The moving party bears the burden of proving the absence of a genuine dispute of material fact and that it is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Nat'l. Bank of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602, 606 (8th Cir. 1999). Once the moving party has met its burden, the non-moving party must “come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(c)).

         In order for there to be a genuine issue of material fact, the non-moving party must produce evidence “such that a reasonable jury could return a verdict for the nonmoving party.” Allison v. Flexway Trucking, Inc., 28 F.3d 64, 66 (8thCir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “The nonmoving party must do more than rely on allegations or denials in the pleadings, and the court should grant summary judgment if any essential element of the prima facie case is not supported by specific facts sufficient to raise a genuine issue for trial.” Register v. Honeywell Fed. Mfg. & Techs., LLC, 397 F.3d 1130, 1136 (8th Cir. 2005) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)).

         B. Motion for Class Certification

         Pursuant to Rule 23, certifying a class action requires a two-step analysis. First, a class action may be maintained if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a)(1)-(4). Second, a class action will be deemed appropriate if a court finds that questions of law or fact common to class members predominate over questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. Fed.R.Civ.P. 23(b)(3).

         An implicit requirement for any class certification inquiry involves a court's assessment as to the ascertainability of the class. The description of a proposed class must be sufficiently definite to permit class members to be identified by objective criteria. See Sandusky Wellness Ctr., LLC v. Medtox Sci., Inc., 821 F.3d 992, 996-97 (8th Cir. 2016). "The requirement that a class be clearly defined is designed primarily to help the trial court manage the class. It is not designed to be a particularly stringent test, but plaintiffs must at least be able to establish that the general outlines of the membership of the class are determinable at the outset of the litigation." Bynum v. Dist. of Columbia, 214 F.R.D. 27, 31 (D.D.C. 2003).

         The district court retains “broad discretion in determining whether to certify a class, recognizing the essentially factual basis of the certification inquiry and . . . the district court's inherent power to manage and control pending litigation.” In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 616 (8th Cir. 2011) (internal quotations and citations omitted).


         A. Recent Amendments to the ADTPA

         Before discussing the merits of the pending Motions, the Court must pause to address a matter that became relevant only after the parties submitted their briefing and oral argument. Effective August 1, 2017, the Arkansas legislature amended the ADTPA. The law now prohibits an individual from bringing a class-action claim under that statute “unless the claim is being asserted for a violation of the Arkansas Constitution.” Ark. Code Ann. § 4-88-113(f)(1)(B). Another amendment to the law changes one of the elements required to prove an individual claim. Before, an individual claimant was only required to show proof of “actual damage or injury as a result of an offense or violation as defined in this chapter . . . ” Ark. Code Ann. § 4-88-113(f) (effective July 30, 1999). But post-amendment, a claimant must show that “he or she suffered an actual financial loss proximately caused by his or her reliance on the use of a practice declared unlawful under this chapter.” Ark. Code Ann. § 4-88-113(f)(2) (effective Aug. 1, 2017).

         In analyzing whether each of these amendments should be given retroactive effect with respect to the claims in the instant case, the Court has reviewed the Arkansas Supreme Court's opinion in Bean v. Office of Child Support Enforcement, 340 Ark. 286, 296 (2000). The Bean Court explained that in Arkansas, an amendment to an existing law is generally presumed to apply prospectively, rather than retrospectively, unless otherwise stated in the text of the amendment itself. However, an exception to this rule arises when an amendment is considered procedural or remedial in nature, rather than substantive. A procedural or remedial amendment will be given retroactive effect, even if the legislature did not specify that intent in the text of the amendment. Id. at 297.

         With respect to the recent amendments to the ADTPA, the legislature has not explicitly stated that they are to be given retroactive effect. Thus, the Court must consider whether the changes are either procedural or remedial in nature. In general, when an amendment to a law provides a new or more appropriate remedy to enforce an already existing right or obligation, the change is considered procedural; but when an amendment “disturb[s] vested rights, or create[s] new legal obligations, ” the change is considered substantive. Id. To determine whether an amendment is remedial, a court must consider “the spirit which promoted its enactment, the mischief sought to be abolished, and the remedy proposed.” Id.

         Here, the Court finds that one of the amendments-the one that now requires proof of both actual financial loss and proximate causation-is substantive, in that it could deprive a claimant of the ability to assert a cause of action that she could have asserted under the former version of the Act. Because the amendment is substantive, it should only be given prospective effect. As for the other amendment-the one that eliminates a claimant's ability to bring a class action under the ADTPA-it does not appear to be remedial in nature, since the Court cannot imagine what “mischief [the legislature] sought to be abolished” by foreclosing a group of individuals from efficiently banding together to litigate their low-dollar, yet factually similar, claims against a company that violates the ADTPA.

         Instead it seems more reasonable that the class-action amendment to the ADTPA is procedural in nature. Even so, that amendment should not be given retrospective application due to the Supreme Court's holding in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393, 409 (2010). In Shady Grove, the Court determined that Rule 23, which is, of course, a federal rule of procedure, trumps any state law that is also procedural in nature and that conflicts with it. As Justice Scalia, writing for the Court, explained, a plaintiff litigating in federal court “may bring his claim in a class action if he wishes, ” as “Rule 23 automatically applies ‘in all civil actions and proceedings in the United States district courts.'” Id. at 400 (quoting Fed.R.Civ.P. 1) (emphasis in original).[4]

         B. Motion for Summary Judgment

         1. Voluntary Payment Rule

         Under Arkansas law, “[w]hen one pays money on demand that is not legally enforceable, the payment is deemed voluntary.” Douglas v. Adams Trucking Co., Inc., 345 Ark. 203, 212 (2001) (quotation and citation omitted). Defendants argue that Ms. Mounce's individual claims must be dismissed due to the operation of this voluntary payment rule, since she and her attorney believed PASI's lien to be illegal, but nonetheless negotiated a 50% reduction of the bill, and then paid it. While the circumstances surrounding this ...

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