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Multiplan, Inc. v. Holland

United States District Court, S.D. Mississippi, Southern Division

February 6, 2018

MULTIPLAN, INC. and PRIVATE HEALTHCARE SYSTEMS, INC. PLAINTIFFS/ COUNTER-DEFENDANTS
v.
STEVEN W. HOLLAND, doing business as Physical Therapy Clinic of Gulfport DEFENDANT/ COUNTERCLAIMANT

          MEMORANDUM OPINION AND ORDER DENYING THE PARTIES' MOTIONS FOR SUMMARY JUDGMENT

          LOUIS GUIROLA, JR., UNITED STATES DISTRICT JUDGE.

         BEFORE THE COURT are the [208] Motion for Summary Judgment filed by the plaintiffs/counterdefendants Multiplan, Inc., and Private Healthcare Systems, Inc. (“PHCS”), and the [212] Motion for Partial Summary Judgment filed by the defendant/counterclaimant Steven W. Holland, doing business as Physical Therapy Clinic of Gulfport. The parties have fully briefed the Motions.[1] After reviewing the submissions of the parties, the record in this matter, and the applicable law, the Court finds that the Motion filed by Multiplan and PHCS should be granted in part and denied in part, and Holland's Motion should be denied.

         INTRODUCTION

         This lawsuit arose out of a dispute between a physical therapist and two preferred provider organizations (PPOs). The Eleventh Circuit has explained:

In essence, a PPO is a network of health care providers organized to offer medical services at discounted rates. The PPO providers furnish their services at discounted rates because they expect to receive a higher volume of patients, i.e., participants in the welfare benefit plan offered by the insurance company. The increase in the volume of patients is a result of third party payors, who pay the bills for medical services plan participants receive, directing plan participants to providers in the PPO network through marketing materials and financial incentives. Because third party payors, such as insurance companies, are financially responsible for the costs of a plan participant's covered medical care, it is in the third party payor's best interest for the plan participant to receive medical care from a provider who has promised to accept a discounted fee. The use of financial incentives and other measures to direct plan participants to providers in the PPO is known in the health care industry as “steerage.”

HCA Health Servs. of Georgia, Inc. v. Employers Health Ins. Co., 240 F.3d 982, 987 (11th Cir. 2001), overruled on other grounds by Doyle v. Liberty Life Assur. Co., 542 F.3d 1352 (11th Cir. 2008). “A silent PPO is a term of art for a kind of PPO abuse. Essentially, a silent PPO occurs when a payor receives a PPO discount to which he is not entitled.” Roche v. Travelers Prop. Cas. Ins. Co., No. 07-CV-302-JPG, 2008 WL 2875250, at *1 (S.D. Ill. July 24, 2008).

         FACTS

         The parties do not dispute the following facts:

1. Holland was at all material times a board-certified licensed physical therapist in the state of Mississippi.
2. Holland owned and operated a small-business physical therapy practice, Physical Therapy Clinic of Gulfport (“PT Clinic of Gulfport”), located in Gulfport, MS.
3. Holland was the only physical therapist at PT Clinic of Gulfport, and he performed all patient care.
4. Multiplan and PHCS operated as PPOs.
5. Holland entered into a “PHCS Participating Professional Agreement” with PHCS, which had an effective date of September 1, 2006.
6. At the time Holland entered into the PHCS Agreement, he understood it to apply to standard group health insurance. Consistent with that understanding, PHCS did not offer workers' compensation network products at the time the agreement was entered into.
7. On October 18, 2006, Multiplan acquired PHCS as a wholly owned subsidiary.
8. Subsequent to Multiplan's acquisition of PHCS, Multiplan and PHCS continued to operate as separate corporations.
9. At all material times subsequent to Multiplan's acquisition of PHCS, the PHCS Network continued to exist as the PHCS Network, and PHCS continued to operate and maintain the PHCS Network. Likewise, subsequent to its acquisition of PHCS, Multiplan operated and/or maintained the Multiplan Network.
10. On or about June 26, 2007, PHCS sent a letter to Holland stating that Multiplan had acquired PHCS on October 18, 2006, and that PHCS was “expanding [Holland's] PHCS relationship to include participation with Multiplan on a complimentary basis.” (See Holland's Mot., Exhibit 13 to Ex. B, ECF No. 228-2). In the section entitled “Changes to Your Contract, ” the letter stated that Holland's “existing individual agreement with [PHCS] continues in effect.” (Id.)
11. On or about September 20, 2010, Multiplan entered into a contractual agreement with Healthcare Solutions, Inc., on behalf of itself and its affiliates Cypress Care, Inc., and Procura Management, Inc. Under this agreement, Procura is required to pay fees to Multiplan in exchange for renting access to the PPO discount rates designated by Multiplan in the Directory of Network Providers created by Multiplan and made available to Procura and its clients on Multiplan's website and distributed in a monthly file.
12. On April 25, 2011, Multiplan sent a letter to Holland stating that Multiplan had acquired Viant, Inc. in March 2010 and had since been “finalizing [its] plan to integrate Viant's Beech Street network into Multiplan's network offerings.” In the section entitled “Your Participation with Multiplan, ” the letter states, among other things, that “[y]our individual contract with Multiplan continues in effect, ” and that “[o]ver the next 6-24 months, commercial clients accessing Beech Street will move their health plan members to Multiplan's network products which will significantly expand your access to patients.” (Compl., Ex. B, ECF No. 1-3).
13. On or about September 1, 2011, Multiplan entered into a contractual agreement with Coventry Healthcare Workers' Compensation, Inc. Under this agreement, Coventry pays fees to Multiplan in exchange for renting access to the PPO discount rates designated by Multiplan in a “Provider List” it sends to Coventry on a monthly basis.
14. In approximately November or December 2011, Holland began noticing that certain EOBs accompanying payments he received from workers' compensation payers reflected that PPO discounts had been applied to claims for workers' compensation services, and that Multiplan was identified as the source of the PPO discounts.
15. Holland disputed the discounts, but his efforts were unsuccessful.
16. After multiple unsuccessful attempts to resolve the disputes personally, Holland retained Kevin Barrett, doing business as Quest Financial Recovery Services, ...

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