California Spine and Neurosurgery Institute v. United Healthcare Insurance…

Background

California Spine and Neurosurgery Institute sued United Healthcare Insurance Company and Does 1 through 25 for breach of an implied-in-fact contract and breach of an express contract. The provider alleged that United’s benefit-verification calls, identification cards, and authorization letters assured the provider that it would receive at least 70% of the usual and customary value of medically necessary spine surgeries provided to patients D.B., L.M., and M.B. The provider alleged that United substantially underpaid its claims and owed $206,909.66, plus interest and other costs.

United filed a counterclaim for money had and received, a claim seeking return of money allegedly received by one party that, in fairness, belongs to another. United alleged that it overpaid the provider by $98,140 for services provided to D.B.

The court had previously dismissed the provider’s quantum meruit claim with prejudice. That claim is not at issue in the summary-judgment rulings described here.

Legal standard

Summary judgment is proper only when the evidence shows that there is no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment as a matter of law. The court may not decide witness credibility or weigh conflicting evidence at this stage. It must view disputed evidence in the light most favorable to the party opposing the motion.

United’s motion for summary judgment

United sought summary judgment on the provider’s implied-in-fact and express contract claims. Under California law, a breach-of-contract claim requires a contract, the plaintiff’s performance or an excuse for nonperformance, the defendant’s breach, and resulting damages. An implied-in-fact contract has the same elements as an express contract, but the promise is inferred from conduct rather than stated in words.

The court held that the benefit-verification calls and authorization letters together created a genuine dispute about whether United intended to enter a contract with the provider. Although United cited cases finding that benefit-verification calls alone were insufficient to establish a contract, United also sent letters expressly authorizing the specific services. The letters stated that, after review of the information submitted and the plan documents, the services were covered by the plan. The letters contained disclaimers, but United did not argue that the limited circumstances described in those disclaimers applied here.

The court also found a genuine dispute about whether the parties agreed that United would pay 70% of the usual and customary rate. United argued that it never agreed to pay 70% of the provider’s billed charges. The court explained that the provider was instead claiming an agreement to pay 70% of the usual and customary value of the services. Because the evidence included testimony and notes stating that reimbursement would be based on the usual and customary rate, the court denied United’s motion for summary judgment.

Provider’s motion on United’s counterclaim

The provider sought summary judgment on United’s money-had-and-received counterclaim. The provider argued that United could not prove an overpayment, that the money was intended for the patient’s benefit rather than United’s, that United had not first requested repayment, that the counterclaim was untimely, that it violated a decision involving an employee-benefits claim, and that United had prevented the provider from seeking payment from D.B.

The court found factual disputes about whether United overpaid the provider for D.B.’s treatment. The provider said United paid only $60,330.30, while United cited a remittance document showing total payments of $153,000, including $92,669.70 applied by reducing an overpayment on a claim involving patient M.H. The court also rejected the provider’s argument that United could not bring the claim because the money benefited D.B. rather than United. It explained that an insurer or other third party may bring a money-had-and-received claim even when the insured or payee received the direct benefit.

The court further held that a prior repayment request was not required for this type of claim. It rejected the provider’s deadline argument because United brought a common-law money-had-and-received counterclaim, not a reimbursement request under the cited California Insurance Code provision. The court applied a two-year limitations period and found that the counterclaim was filed within that period. It also concluded that the cited decision involving the Employee Retirement Income Security Act did not apply because neither party asserted an Employee Retirement Income Security Act claim here. Finally, the court found that the provider had not shown why its alleged inability to pursue D.B. eliminated factual disputes about United’s counterclaim.

Disposition

The court denied the provider’s motion for summary judgment and denied United’s motion for summary judgment. The opinion therefore did not resolve the parties’ contract claims or United’s counterclaim as a matter of law.