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HCA Health Services of Virginia, Inc. v. Coresource, Inc.

United States District Court, E.D. Virginia, Richmond Division

December 4, 2019

HCA HEALTH SERVICES OF VIRGINIA, INC., d/b/a HENRICO DOCTORS' HOSPITAL, Plaintiff,
v.
CORESOURCE, INC., et al., Defendants.

          OPINION

          JOHN A. GIBNEY, JR. UNITED STATES DISTRICT JUDGE

         In 2015, a child died at Henrico Doctors' Hospital[1] following complications from a premature birth. The Hospital later sought to recover the costs of the child's extensive medical care from the child's insurance provider, CoreSource, Inc. ("CoreSource"). In this breach of contract action, the Hospital alleges that CoreSource underpaid and wrongly imposed a penalty on the Hospital for the costs of the child's medical treatment. The Hospital participates in a network of national preferred provider organizations administered by Multiplan, Inc. ("Multiplan"), which connects health care providers to insurers. To become part of Multiplan's network, the Hospital and Multiplan entered into a Participating Facility Agreement (the "PFA"). The Hospital contends that the PFA imposes an obligation on Multiplan to require CoreSource to comply with the terms of the PFA, including correctly paying the Hospital.

         Multiplan has moved to dismiss for failure to state a claim, arguing that the Hospital has not identified any provision of the PFA that it breached and that the PFA insulates it from liability. Because the Hospital plausibly pleads that Multiplan breached the PFA, the Court will deny Multiplan's motion to dismiss.

         I. FACTS ALLEGED IN THE AMENDED COMPLAINT

         The Hospital and Multiplan entered into the PFA on August 1, 2002. Under the PFA, the Hospital agreed to provide healthcare services and accept reimbursement from Multiplan's "Payors" or "Clients" at a reduced rate. As a Multiplan Client, CoreSource has access to Multiplan's PPO Network, which includes the Hospital. CoreSource pays Multiplan to access the PPO Network "based upon on a percentage of the discount CoreSource receives from the billed charges of Participating Providers in the Multiplan PPO Network." (Dk. No. 19, at ¶ 17.)

         In 2015, a child died in the Hospital's neonatal intensive care unit following a premature birth. When the Hospital sought reimbursement from CoreSource, CoreSource paid the Hospital $586, 484.60 less than the Hospital spent on the child's care. CoreSource explained that it reduced the Hospital's reimbursement in part due to "billing errors" and as an "authorization penalty." (Id. at ¶¶ 26-27.)

         The Hospital relies on two provisions of the PFA to support its claim against Multiplan. First, section 3.1(a) of the PFA provides, "[t]he Payor shall pay the Participating Provider for such services rendered in accordance with the terms and under the express conditions of this Agreement." (Dk. No. 25-1, at § 3.1(a).)[2] According to the Hospital, section 3.1(a) means that "Multiplan agreed to require [CoreSource] to compensate the Hospital 'in accordance with the terms and under the express conditions' of the PFA." (Dk. No. 19, at ¶ 13.) Second, section 4.1(i) of the PFA provides, "Multiplan warrants that its Client contracts obligate Payors to comply with all requirements and responsibilities in [the PFA]." (Dk. No. 25-1, at § 4.1(i).) In other words, Mutliplan "represented to the Hospital that its contracts with Clients... obligate Payors to comply with all requirements and responsibilities in the PFA." (Dk. No. 19, at ¶ 13.)

         Multiplan has moved to dismiss for failure to state a claim, arguing that the Hospital has failed to identify any provision of the PFA that Multiplan breached and that the PFA shields it from liability.

         II. DISCUSSION [3]

         To state a claim for breach of contract under Virginia law, a plaintiff must plead facts showing "(1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage caused by the breach of that obligation." Filak v. George, 267 Va. 612, 619, 594 S.E.2d 610, 614 (2004). Multiplan argues that the Hospital has not identified any provision of the PFA that it breached. Id.

         The Hospital contends that Multiplan breached sections 3.1 (a) and 4.1 (i) of the PFA. First, the Hospital asserts that section 3.1(a) imposes an obligation on Multiplan to require CoreSource to pay the Hospital "in accordance with the terms and under the express conditions" of the PFA. (Dk. No. 19, at ¶ 13.) Second, the Hospital argues that section 4.1 (i) obligates Multiplan to require CoreSource "to comply with all requirements and responsibilities in the PFA." (Id.)

         The Hospital alleges that Multiplan breached sections 3.1(a) and 4.1(i) when it failed to require CoreSource to correctly reimburse the Hospital. Taken as true, the Hospital's allegations plausibly show that Multiplan breached sections 3.1(a) and 4.1(i) of the PFA.

         Multiplan argues that section 4.1(f) of the PFA insulates it from liability in this case. Section 4.1(f) of the PFA provides, "Multiplan shall not be responsible or liable for any claims decisions or for the payment of any claims submitted by any provider . . . [and] shall not be an insurer, guarantor, or underwriter of the responsibility or liability of any Client." (Dk. No. 25-1, at § 4.1(f).) The Hospital does not allege that Multiplan qualifies as "an insurer, guarantor, or underwriter of the responsibility or liability" of CoreSource. (Id.) Instead, the Hospital merely seeks to hold Multiplan liable for allegedly breaching its obligations under sections 3.1(a) and 4.1(i) of the PFA. Multiplan, therefore, cannot use section 4.1(f) as a shield to avoid liability at this juncture. See Sarasota Cty. Pub. Hosp. Dist. v. Multiplan, Inc., No. 8:18-cv-252, 2018 WL 4698459, at *4 n.4 (M.D. Fla. Oct. 1, 2018) (rejecting a similar argument advanced by Multiplan as "misguided").

         Although the Court "takes no position on the ultimate validity of [the Hospital's] claim, .. . the Court cannot at this juncture conclude that [the Hospital] is not entitled to relief." Seneca Ins. Co. v. Shipping Boxes I, LLC,30 F.Supp.3d 506, 511 (E.D. Va. ...


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