Date: 09-18-2024

Case Style:

Jo Ann Blackwell, et al. v. Mary Black Health System, LLC, et al.

Case Number: 6088

Judge: J. Mark Hayes, II

Court: Circuit Court, Spartanburg County, South Carolina

Plaintiff's Attorney:

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Defendant's Attorney: James Lynn Werner and Katon Edwards Dawson, Jr.

Description:

Spartanburg, South Carolina health insurance lawyer represented the Plaintiff.

In this case, Insureds received medical treatment at Mary Black for injuries they sustained in automobile accidents. Insureds allege Providers sought payment for their services by submitting medical bills to Insureds and asserting liens against their third-party automobile accident claims instead of submitting medical bills to Insureds' health insurance carriers.

Blackwell originally filed the complaint as a class action against Providers on January 20, 2017. After obtaining leave from the circuit court, Blackwell amended the complaint in April 2020 to add Owens and Brooks as plaintiffs.

Blackwell, who stated she had valid health insurance through MedCost at the time of her accident, received treatment at Mary Black that resulted in $33,093.65 in medical bills. She alleged Providers refused to submit the medical bills to MedCost and instead sought collection by asserting liens against her potential

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third-party automobile accident claim. Brooks alleged she had valid health insurance through Medicare at the time that she received treatment at Mary Black, and her treatment resulted in $9,982.44 in medical bills. Brooks further alleged Providers asserted liens against her third-party automobile claim instead of turning the medical bills over to Medicare for payment. Brooks stated Providers agreed to settle Brooks's account if she paid fifty percent of the medical bills, or $4,991.22. Brooks alleged Providers agreed to accept only the reduced payment after asserting a lien against her third-party recovery in her personal injury case and reviewing the settlement offer in that case. Similarly, Owens alleged he had valid health insurance coverage through CIGNA when he received medical treatment at Mary Black that resulted in a bill for $9,086.76. He alleged Providers refused to submit his medical bills to CIGNA and agreed to settle for fifty percent of the original bill after asserting a lien against his third-party recovery in his personal injury case and reviewing the settlement offer in that case. All Insureds alleged their health insurance carriers would have paid their medical bills had Providers submitted those bills to their respective carriers.

Insureds' amended complaint included claims for tortious interference with a contractual relationship, unjust enrichment, and injunctive relief. In their tortious interference with a contractual relationship claim, Insureds alleged they had "a valid business expectancy and/or contractual relationship" with their health insurance carriers that Providers knew or should have known about. They alleged Providers "intentionally and improperly inferred [sic] with and caused a disruption of the business expectancies and/or contractual relationships" between Insureds and their health insurance carriers. Insureds alleged Providers acted without justification and caused damages to Insureds, who paid premiums for health insurance but received no benefit. In their unjust enrichment cause of action, Insureds alleged Providers were unjustly enriched when they received "the benefits of proceeds to which they were not entitled" after billing Insureds for their medical expenses instead of their health insurance carriers. They alleged payment should have been made by the health insurance carriers and the amount paid should have been determined by the contracts between the carriers and Providers.

Insureds' cause of action for injunctive relief alleged Providers were required to send medical bills directly to the Insureds' health insurance carriers and to honor the carriers' contractual discounts for Mary Black's services. They allege Providers failed to honor the contractual discounts or its commitment to send Insureds' bills to the health insurance carriers. Insureds stated Providers attempted to increase their profit by seeking payment from Insureds directly despite the fact that they were "precluded from seeking payment for covered services from [sources other

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than Insureds' health insurance carriers]." Insureds requested the circuit court find Providers violated the terms of Providers' agreements with the health insurance carriers, declare the practice invalid and void as a matter of law, and enter a permanent injunction enjoining Providers from continuing the practice.

In June 2020, Providers moved to dismiss the amended complaint or, in the alternative, to stay the case and compel arbitration. Providers argued the amended complaint failed to allege sufficient facts to constitute a tortious interference with contractual relationship claim; Brooks's claims fell under the Medicare Act, which required them to initially seek payment from any applicable auto or liability policy coverage; Blackwell failed to state a claim for unjust enrichment and was barred from enforcing the agreement between MedCost and Mary Black (the MedCost Agreement) as a third-party beneficiary; Owens's claims were barred by the statute of limitations; and Brooks's and Owens's claims were barred by the voluntary payment doctrine.

In addition, Providers argued Owens's claims against CHSPSC must be resolved through arbitration because he was attempting to enforce the agreement between Mary Black and CIGNA (the CIGNA Agreement), which included an arbitration clause. Section 6.2.1 of the CIGNA Agreement stated, in part,

Any disputes between the parties arising with respect to the performance or interpretation of the Agreement shall first be resolved in accordance with the dispute resolution process outlined in the Administrative Guidelines. In the event the dispute is not resolved through that process, either party may request in writing that the parties attempt in good faith to resolve the dispute promptly by negotiation between designated representatives of the parties who have authority to settle the dispute. If the matter is not resolved within 60 days of a party's written request for negotiation, either party may initiate arbitration by providing written notice to the other party.

Section 6.2.2 of the CIGNA Agreement went on to state, in part, "Arbitration shall be the exclusive remedy for the resolution of disputes arising under this Agreement." Providers argued that if the circuit court found CHSPSC was a party to the CIGNA Agreement, then Owens must arbitrate his claims pursuant to the terms of the CIGNA Agreement because he intended to enforce the terms of the agreement. Insureds filed a response in opposition to Providers' motions to dismiss, and the circuit court heard the motions.

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In September 2020, the circuit court issued an order denying Providers' Rule 12(b)(6) motions and their motion to compel arbitration against Owens. The circuit court held the terms of the CIGNA Agreement did not obligate Owens to participate in arbitration because he was not a party to the CIGNA Agreement. The circuit court found the arbitration provision stated it did not apply to third parties or "class" matters and, therefore, Owens was not required to arbitrate his claims. The circuit court also noted the agreement was for three years but contained a year-to-year renewal and found no decision could be made as to whether the agreement was in effect based on the information provided.

As to Providers' Rule 12(b)(6), SCRCP, motions to dismiss, the circuit court found the allegations included in the amended complaint were sufficient to state causes of action against CHSPSC and PASI and there was no prohibition against referring to Providers collectively. The circuit court found Insureds stated sufficient facts to assert a claim for tortious interference with a contractual relationship in the amended complaint because Insureds' allegations could reasonably be construed to mean Providers' conduct resulted in a breach of the contract between Insureds and their health insurance carriers. It also found Brooks's claims did not fail under the Medicare Act. The circuit court stated it would have to go outside the amended complaint to determine if Providers were required to seek payment from any applicable liability coverage before seeking payment from Medicare and presume facts not alleged in the amended complaint to find the at-fault driver in the automobile accident had a valid insurance policy from which Providers could collect. The circuit court also stated it could not accept the voluntary payment doctrine as a defense at this stage of litigation when it was bound to accept Insureds' theories of liability as fact in ruling on a Rule 12(b)(6) motion and Insureds alleged Owens and Brooks were extorted to make the payments involuntarily. The circuit court also found it could not dismiss Blackwell's claim for unjust enrichment because a reasonable inference could be made that it would be inequitable to allow Providers to be unjustly enriched by retaining "the benefits of their wrongful billing practices while attempting to collect a higher amount from [Insureds]."

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Blackwell v. Mary Black Health Sys., 6088, Appellate Case 2020-001613 (S.C. App. Sep 18, 2024)

Outcome: Affirmed

Plaintiff's Experts:

Defendant's Experts:

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