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Multiplan, Inc. v. Holland

United States Court of Appeals, Fifth Circuit

August 28, 2019

MULTIPLAN, INCORPORATED; PRIVATE HEALTHCARE SYSTEMS, INCORPORATED, Plaintiffs-Counter Defendants - Appellees
v.
STEVEN W. HOLLAND, doing business as Physical Therapy Clinic of Gulfport, Defendant-Counter Claimant - Appellant

          Appeal from the United States District Court for the Southern District of Mississippi

          Before KING, ELROD, and ENGELHARDT, Circuit Judges.

          KURT D. ENGELHARDT, CIRCUIT JUDGE.

         This matter arises out of an agreement entered into by Steven W. Holland ("Holland"), a physical therapist who owned and operated a physical therapy clinic in Mississippi, and Private Healthcare Systems, Incorporated ("PHCS"), pursuant to which Holland became a health care provider in PHCS's preferred provider organization ("PPO") network. Several years into the agreement, after PHCS was acquired by MultiPlan, Incorporated ("MultiPlan" and, sometimes collectively with PHCS, "Appellees"), Holland began to notice and took issue with discounts applied by MultiPlan under his agreement with PHCS to charges for services he provided to patients that were covered by workers' compensation insurance. The dispute escalated into a federal lawsuit, in which Holland asserted various federal and state causes of action against PHCS and MultiPlan. Two of his claims-civil conspiracy and breach of contract-proceeded to trial before a jury. Both were dismissed after the district court granted Appellees' motions for judgment as a matter of law. Holland now appeals these rulings. He also appeals rulings by the district court prohibiting one of his attorneys from participating in trial and declining to submit the issue of punitive damages to the jury. For the reasons set forth herein, we vacate the district court's grant of judgment as a matter of law as to and dismissal of Holland's breach of contract claim. Otherwise, the challenged judgments are affirmed. We further remand this matter to the district court for further proceedings consistent with this opinion.

         Introduction

         I. Facts and Background

         Holland was a board-certified and licensed physical therapist in Mississippi, who owned and operated Physical Therapy Clinic of Gulfport. In September 2006, Holland and PHCS, a PPO, [1] entered into a "Participating Provider Agreement" ("the Agreement"), which forms the basis of this dispute. In sum, by entering into the Agreement, Holland agreed to be a health care provider in PHCS's PPO network and discount charges for services provided to patients covered by participating health plans. In exchange, PHCS promised Holland greater access to those patients resulting from them being directed- or steered-to Holland through various methods, as well as guaranteed timely payment.

         Holland maintains that his goal in entering into the Agreement was to increase his group health patient volume and that he did not anticipate that treatment he provided to workers' compensation patients would fall within the Agreement. In support of his position, Holland asserts that, due to workers' compensation regulations, insurance companies cannot direct workers' compensation patients to physical therapists and, therefore, that the essential element of "steerage" in the Agreement cannot be fulfilled in the context of workers' compensation. In any event, at the time Holland and PHCS entered into the Agreement, PHCS did not offer workers' compensation network products.

         In October 2006, MultiPlan, another PPO, acquired PHCS as a wholly-owned subsidiary. By letter dated June 26, 2007, Appellees informed Holland of the acquisition and notified Holland that MultiPlan's health plan-also known as "payor"-clients had joined PHCS's network. The letter further advised that Holland's "existing individual agreement with [PHCS would] continue[] in effect" and that MultiPlan would "direct[] members to [Holland] just as a primary PPO does."[2]

         After MultiPlan acquired PHCS, unbeknownst to Holland, it entered into contracts with other entities granting them access to certain MultiPlan network discounts. Relevant to this case, in September 2010, MultiPlan entered into a contract entitled "Client Services Agreement" with Healthcare Solutions, Incorporated ("HCI"), on behalf of itself and HCI affiliates Procura Management, Incorporated and Cypress Care, Incorporated. Since the parties refer to these entities collectively as "Procura," we will as well. According to the Client Services Agreement, Procura provides "workers' compensation and/or automobile liability benefit program[s] for its participants, and certain administrative services to its plan sponsors, customers or users, who provide workers' compensation and/or automobile liability benefit plans or other programs to their participants." Pursuant to the Client Services Agreement, Procura obtained access to PPO network discount rates designated by MultiPlan in a "Directory of Network Providers." In exchange for receiving such access, Procura agreed to pay fees to MultiPlan equal to a certain percentage of the amount Procura's clients saved on medical providers' bills due to the discounts obtained through MultiPlan.

         On approximately April 25, 2011, MultiPlan notified Holland by letter that it had acquired another company. Pertinent to this case, according to the letter, Holland was at the time participating in several "MultiPlan network products," including "MultiPlan Workers' Compensation Network." The letter further advised that "Workers' Compensation bills processed through the MultiPlan Network [would] be reimbursed at the lesser of the MultiPlan fee schedule or 15% off the state schedule."

         In September 2011, MultiPlan entered into a contract with Coventry Health Care Workers Compensation, Incorporated ("Coventry"), entitled "Network Access Agreement." According to the Network Access Agreement, Coventry contracted with PPOs to offer its clients, which included "third party administrators, self-insured employers, managed care companies, resellers, and bill review companies," access to PPO network providers. Through this agreement, Coventry obtained access to PPO discount rates designated by MultiPlan in a "Provider List" that it would send to Coventry monthly. In exchange for such access, like Procura, Coventry agreed to pay MultiPlan fees equaling a percentage of savings that its clients enjoyed as result of the Network Access Agreement. Notably, the Network Access Agreement expressly allowed Coventry's clients to "enter into agreements with downstream entities" for access to MultiPlan's designated network discount rates.

         In November or December of 2011, Holland began noticing that some explanation-of-benefits notifications ("EOBs") that he received indicated that PPO discounts had been applied to claims for treatment of certain workers' compensation patients and that MultiPlan was the source of the discounts. Holland did not believe that such discounts were proper under the Agreement and disputed them with the payors and MultiPlan, but to no avail. On June 25, 2012, Holland sent a letter to MultiPlan advising that he wanted to terminate the Agreement immediately. Due to a provision in the Agreement indicating that a cancellation would take effect 90 days after notice, Appellees terminated the Agreement on September 25, 2012.

         Ultimately, Holland determined that discounts had been applied to charges for services he provided to seven individuals who were considered injured workers under Mississippi's workers' compensation laws because of access by their insurers[3] to MultiPlan network providers through MultiPlan's contracts with Coventry and Procura. In full, MultiPlan discounted 46 claims by Holland for workers' compensation services provided in the total amount of $14, 329.25. With respect to 39 of the discounted claims, the payors were organizations that had directly contracted with Coventry for access to MultiPlan network providers or had contracted with clients of Coventry for such access. With respect to the other seven challenged claims, the payors were organizations that had directly contracted with Procura or that were indirectly affiliated with Procura through contracting with clients of Procura.

         In accordance with its agreements with Procura and Coventry, MultiPlan received fees in exchange for applying the discounts in dispute.

         II. District Court Proceedings

         For reasons not pertinent to the issues immediately before us, on August 13, 2014, Appellees filed suit against Holland in the United States District Court for the Southern District of Mississippi.[4] After initially filing a pro se response to Appellees' complaint, Holland obtained counsel and filed a counterclaim, alleging violations of RICO and asserting claims under Mississippi law for unjust enrichment, civil conspiracy, common law fraud, accounting and disgorgement, and breach of contract. In support of these claims, Holland alleged, inter alia, that Appellees had engaged in a "silent PPO" scheme in which they applied unauthorized discounts to claims for workers' compensation services; that applying these discounts violated Mississippi workers' compensation laws; that discounting claims for workers' compensation services did not satisfy the Agreement's requirement of steerage; and that MultiPlan's actions of leasing access to Holland's discount rate to outside entities was unlawful. Each of Holland's claims was dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6), except for his civil conspiracy, disgorgement and breach of contract claims. The disgorgement claim was later dismissed on summary judgment.

         On March 13, 2018, less than two weeks before the commencement of trial on the remaining claims, attorney Jeffrey Lee "Jack" Gordon ("Attorney Gordon" or "Mr. Gordon") of Florida filed an application to appear pro hac vice on behalf of Holland. During a phone conference two days later, the district court granted the application but ruled that Mr. Gordon would not be allowed to participate in trial on Holland's behalf.[5] Holland submitted a motion for reconsideration of the ruling. In support, he urged that he retained Attorney Gordon to replace Daniel Mitchell, who represented him from 2015 until he passed away in August 2017. According to Holland's affidavit, he hired both due to their extensive civil jury trial experience. As discussed in more detail below, the district court denied Holland's motion for reconsideration.

         A five-day jury trial on Holland's civil conspiracy and breach of contact claims, as well as Appellees' claims against Holland, commenced on March 26, 2018. On March 29, after all evidence had been presented, the district court heard arguments on and considered motions by both sides for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a) ("Rule 50(a)"). At that time, the court orally granted Appellees' Rule 50(a) motion as to Holland's civil conspiracy claim but denied their Rule 50(a) motion as to Holland's breach of contract claim.[6] The court followed up its oral ruling regarding Holland's civil conspiracy claim with a written opinion, the reasons of which mirrored the reasons provided by the court on the record.

         After ruling on the parties' post-trial motions, the court made an additional unprovoked ruling on the record, without hearing from either side, regarding punitive damages. Noting that "[t]here [was] no showing of malice" and "no showing of reckless disregard," the court concluded that Holland's claim for punitive damages was not justified under Mississippi law and ordered that the court would not hear additional evidence on punitive damages or submit the issue to the jury.

         Subsequently, the jury rendered a verdict in Holland's favor on his breach of contract claim. The district court later entered a judgment ordering that Holland recover $14, 329.25 from Appellees and noting that it would enter a supplemental judgment regarding interest and attorney's fees. It then ordered the parties to submit briefs regarding whether Holland was entitled to any additional damages based on the verdict, including interest and penalties under Mississippi Workers Compensation Commission regulations.

         Before the parties submitted briefs on the issue of additional damages, Appellees filed a renewed motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) ("Rule 50(b)"), or, alternatively, a new trial, with respect to Holland's breach of contract claim, arguing that the verdict was "against the overwhelming weight of the evidence." The district court granted the Rule 50(b) motion, entered an amended final judgment in favor of Appellees, and dismissed the case with prejudice.

         Holland now appeals the district court's rulings prohibiting Attorney Gordon from participating at trial on his behalf; prohibiting submission of the issue of punitive damages to the jury; granting judgment as a matter of law as to and dismissing Holland's civil conspiracy claim; and granting judgment as a matter of law as to and dismissing Holland's breach of contract claim. We consider each challenge in turn, beginning with Holland's challenge to the district court's grants of judgment as a matter of law on his civil conspiracy and breach of contract claims.

         Analysis

         I. Judgment as a Matter of Law

         A. Standard of Review

         Rule 50(a) allows a district court to grant a motion for judgment as a matter of law in a jury trial before a case is submitted to the jury with respect to a claim or defense raised in the case if "a party has been fully heard on an issue during [the] trial;" "the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue;" and "under the controlling law, [the claim or defense] can be maintained or defeated only with a favorable finding on that issue." Fed.R.Civ.P. 50(a). In the event a district court denies a Rule 50(a) motion, the movant may file a renewed motion for judgment as a matter of law within 28 days after the entry of judgment pursuant to Rule 50(b). Fed.R.Civ.P. 50(b).

         We review a district court's grant of judgment as a matter of law "de novo, applying the same standard as the district court." N. Cypress Med. Ctr. Operating Co. v. Aetna Life Ins. Co., 898 F.3d 461, 473 (5th Cir. 2018). "[T]he party moving for judgment as a matter of law can prevail only if the facts and inferences point so strongly and overwhelmingly in favor of the moving party that reasonable jurors could not have arrived at a contrary verdict." Williams v. Manitowoc Cranes, L.L.C., 898 F.3d 607, 614 (5th Cir. 2018) (internal quotation marks and citation omitted). We must examine the evidence as a whole and draw all inferences in favor of the non-moving party-here, Holland. N. Cypress Med. Ctr. Operating Co., 898 F.3d at 473. We may not weigh the evidence or make credibility determinations, since such tasks are functions of the jury. Id. ...


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