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Whitley v. Baptist Health

United States District Court, E.D. Arkansas, Western Division

September 13, 2019

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 ...


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