United States District Court, E.D. Arkansas, Western Division
BRIAN WHITLEY, Individually and on Behalf of All Others Similarly Situated PLAINTIFF
v.
BAPTIST HEALTH; BAPTIST HEALTH HOSPITALS; DIAMOND RISK INSURANCE LLC; CONTINENT AL CASUALTY COMPANY; ADMIRAL INSURANCE COMP ANY; ADMIRAL INDEMNITY COMPANY; IRONSHORE INDEMNITY, INC.; and IRONSHORE SPECIALTY INSURANCE COMPANY DEFENDANTS
MEMORANDUM OPINION AND ORDER
D .P.
MARSHALL JR. UNITED STATES DISTRICT JUDGE.
1.
The parties have done their discovery on Whitley's claims
and class-related issues. Whitley now seeks certification of
a class, while Baptist seeks to end the case on summary
judgment. Here are the material facts, taken in the light
most favorable to Whitley where genuinely disputed. Woods
v. Daimler Chrysler Corporation, 409 F.3d 984, 990 (8th
Cir. 2005).
2. In
November 2013, Whitley, a Little Rock firefighter, was badly
injured in a car wreck. He was treated at Baptist. On
admission, he signed a form, which included an assignment of
insurance benefits. No.120-13 at 2. The provision is in the
margin.[1] The parties' arguments center on the
provision's opening sentences: an across-the-board
assignment of all rights in applicable liability insurance;
and a term about who Baptist could seek payment from first.
More on all this in a moment. Baptist provided Whitley
approximately $18, 000 in medical care. No.58-1 at 16.
Whitley
had insurance from his employer through QualChoice. Baptist
did not send QualChoice a bill immediately for Whitley's
original care. He had been hit by a driver going the wrong
way on Interstate 440. The liability of a third party was
thus gin clear. In those circumstances, Baptist's policy
was to code the primary insurance for the charges as
"RevClaims," and the patient's insurance as
secondary insurance. That was done. RevClaims collects on
bills for Baptist. It filed an approximately $18, 000 lien
the month after Baptist's initial care of Whitley.
No.130-4 at 6. The hospital's policy in these likely
third party liability situations such as Whitley's had
another layer. If the lien was not resolved within a few
months, Baptist would also file a claim with the
patient's health insurance. That window was usually six
months. Someone made a mistake on Whitley's first round
of charges; the claim was sent to QualChoice after the claim
period expired; and QualChoice rejected it, declining to pay
any benefits for those charges, which would have been covered
but for a small co-pay, based on Baptist's tardy
submission .No.120-3 at 33 & 36.
Whitley
needed more medical care. In January 2014, some two months
after the accident, he returned to Baptist, signed an
identical admissions agreement, and incurred approximately
$46, 000 of charges. No. 58-1 at 17-18. Baptist increased its
lien to approximately $64, 000. No. 130-4 at 7.
A few
months later, in May 2014, Progressive - who insured the
driver who had run into Whitley -offered Whitley's lawyer
a policy-limits settlement of $50, 000. No. 58-1 at 10-14.
The lien stood between Whitley and the money. Ark. Code Ann.
§ 18-46-112. At that point, Baptist's $64, 000 lien
exceeded the offer, so all the money would have flowed to the
hospital. Settlement talks stalled.
Baptist
met its 180-day deadline to submit a claim to QualChoice for
the second round of Whitley's care. QualChoice paid that
claim in the fall of 2014 -Baptist received approximately $7,
000. Based on the reduced rates created by the
Baptist/QualChoice provider agreement, the hospital took an
approximately $38, 000 hit on the bill. No. 120-3 at 34-35.
Even
though QualChoice paid the agreed amount for Baptist's
care of Whitley, the hospital did not reduce its lien. At the
end of 2014, the hospital renewed its lien for the full
amount, approximately $64, 000. No.130-4 at 8. Baptist did
the same thing in May of 2015. No. 130-4 at 9. At the end of
2015, approximately two years after Whitley's first round
of care, Baptist reduced the lien to approximately $19, 000
-the full initial bill, plus a co-pay for the second round of
care. No. 130-4 at 10. In mid-2016, Baptist's lien
expired by operation of law. Ark. Code Ann. §
18-46-106(a). Whitley filed this case a month later. Baptist
released the lien in the spring of 2017. No. 130-4 at 11-15.
At some
point thereafter, Whitley accepted Progressive's $50, 000
settlement offer. The money was divided between Whitley and
his lawyers, but Whitley has refused to give Baptist any
specifics on the division. No. 116-2 at 20-22.
3. The
parties' interlaced arguments on both motions require the
Court to rule on some issues of Arkansas law. All these
points go to whether Baptist violated the Arkansas Deceptive
Trade Practices Act, tortiously interfered with a contract,
broke a contract, or was unjustly enriched in its handling of
charges in these circumstances.
First,
the Court rejects Whitley's argument that the assignment
provision in Baptist's admission agreement is invalid
because tort claims cannot be assigned. The first sentence of
this part of the agreement provides - "I hereby assign
any and all rights and benefits to which I may be entitled
arising out of any healthcare or liability insurance policy,
Medicare or Medicaid to Baptist Health."No.120-13 at
2. This sweeping provision is aimed at all potential
insurance, but can become superfluous where a lien is
perfected. Unliquidated tort claims for personal injuries may
not be assigned. Southern Farm Bureau Casualty Insurance
Co. v. Wright Oil Co., 248 Ark. 803, 809, 454 S.W.2d 69,
72 (1970). Whitley is right about that. But, in Stuttgart
Regional Medical Center v. Cox, 343 Ark. 209, 33 S.W.3d
142 (2000), the Court assumed that this kind of
admission-agreement assignment was valid. Put that precedent
to one side. The dispositive point is that the Medical,
Nursing, Hospital, and Ambulance Service Lien Act, ARK. CODE
ANN. §§ 18-46-101 et seq., creates a right
in the complying healthcare provider to collect for its
services through a lien on "any claim, right of action,
and money to which the patient is entitled because of that
injury. ..." ARK. Code Ann. § 18-46-104(2). In
circumstances like Whitley's, the statute does all the
material legal work, not any assignment.
Second,
the Court is not persuaded by Whitley's generalized
attack on the Medical Lien statute. The Arkansas Supreme
Court rejected a similar effort in Stuttgart
Regional. Whitley is right that the statute's
purpose was to ensure treatment of indigents injured by
others, giving those who provided medical care some security
in any future tort recovery. Buchanan v. Beirne Lumber
Co., 197 Ark. 635, 124 S.W.2d 813, 815 (1939). The
statute's plain words, though, reach further than this
prompting purpose, which is not unusual. This Court predicts
that, when squarely faced with the issue, the Arkansas
Supreme Court would not limit the Medical Lien statute to
treatment of patients who have no health insurance.
Blankenship v. USA Truck, Inc., 601 F.3d 852, 856
(8th Cir. 2010). The Supreme Court would instead follow
Stuttgart Regional: In general, a medical provider
can give notice and stand on its lien, even if there is some
applicable coverage floating around.
Third,
in the admission agreement, Whitley also authorized
''the full and undiscounted pursuit of payment on my
account from any available liability insurance party or
third-party source before submission of my account for
payment to my own health insurance company or to Medicare or
Medicaid."No.120-13 at 2. The fighting word is
"before." Whitley was injured in the wreck,
prompting some suggestion that he didn't understand this
authorization. His capacity was not impaired in any way,
though, when he signed the same agreement before his second
round of treatment. Absent circumstances not present here,
Arkansas law holds Whitley to his agreement, even if he
didn't read it, or have a lawyer's understanding of
it, before he signed. Carmichael v. Nationwide Life
Insurance Co., 305 Ark. 549, 552, 810 S.W.2d 39, 41
(1991).
Whitley
resists this pre-submission authorization, saying that the
Baptist/QualChoice provider agreement did not allow patients
to make a different deal about payments with healthcare
providers. Whitley argues from § 4.9(d) of the provider
agreement. This is the last part of a four-part provision
about billing covered patients. No. 84 at ¶ 000355-56
(under seal). The entire provision is in the
margin.[2]
Whitley
overreads the last part. Baptist and QualChoice agreed to
specific terms that protected Whitley and other
"members'' against direct requests to
pay the bills, subject to inapplicable exceptions for
co-payments and a few other things. Section 4.9(d) prevented
Baptist and Whitley from agreeing otherwise at some later
point; section 4.9(d) did not bar Whitley from agreeing to
Baptist's request for authorization to go after a third
party, the man who hit him, before submitting a claim to
QualChoice.
Fourth,
§ 4.9's adamantine insulation of Whitley (and
others) with their own insurance against most direct claims
by Baptist (and other healthcare providers) is a significant
benefit flowing from the Baptist/QualChoice agreement.
Baptist argues hard that Whitley has no breach claim based on
the provider agreement because he was neither a party to it
nor a third-party beneficiary of it. Whitley was not a party.
And, as Baptist says, Arkansas law presumes that parties make
contracts only for their mutual benefit. Perry v. Baptist
Health,358 Ark. 238, 244, 189 S.W.3d 54, 58 (2004).
Baptist also points to a provision of the provider agreement,
which it says makes plain that its business relationship with
QualChoice was solely about their mutual business, not
benefitting folks situated like Whitley. Section 7.6 is
entitled "Independence of the
Parties.'' It says, "QualChoice is
independent of Facility. Nothing in the Agreement shall be
deemed to create a relationship of employer and employee or
principal and agent or any relationship other than ...