IV Solutions Inc v. United Healthcare Services Inc et al

Filing 372

MINUTES (IN CHAMBERS): ORDER re: Defendant's Motion in Limine No. 1 by Judge Gary A. Feess. The motion [334, 358] is GRANTED IN PART and DENIED IN PART. Evidence regarding the basis for United's determination of reimbursement amounts, including evidence regarding the Ingenix/PHCS database is admissible. Evidence regarding the existence or substance of the New York litigation is excluded. See document for details. (smo)

LINK: 358
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-4887-GAF (MRWx)

Title

IV Solutions, Inc. V. United Healthcare Services, Inc., et al.

Present: The Honorable

Date

November 12, 2014

GARY ALLEN FEESS

Stephen Montes Kerr
Deputy Clerk

None
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None

None

Proceedings:

(In Chambers)
ORDER RE: DEFENDANT’S MOTION IN LIMINE NO. 1

This Order addresses Defendant’s Motion in Limine No. 1 to Exclude Evidence
Regarding The”Ingenix” Database, Database Actions, and Settlement.
I.
BACKGROUND
Plaintiff IV Solutions, Inc. (“IV Solutions”) is a medical provider that supplies specialty
pharmaceutical products and related in-home infusion services. Defendant United Healthcare
Services, Inc. (“United”) is a health care service business that administers ERISA plans. (Id. ¶
2.)
Despite the florid language of United’s motion, this case presents the Court with little
more than a contract dispute between two sophisticated parties. IV Solutions contends that
United, through an agent, contracted with IV Solutions for the purchase of medically necessary
“specialty blood products” for three patients, A.N., D.H. and M.S., enrolled in ERISA plans
administered by United. (Id. ¶¶ 11, 18, 28.)1 IV Solutions, which was an out-of-network
provider, contends that the needed services were not available from in-network providers, which
is why it was retained to deliver these products to the three plan participants. Because the retail
cost of the products was so expensive, IV Solutions further contends that United negotiated for
the delivery of the products and services at a high, but agreed-on discount from IV Solutions’

1

The A.N. cause of action, which consisted of a claim for interest payments on delayed payments, was
resolved on summary judgment and is no longer before the Court.
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LINK: 358
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-4887-GAF (MRWx)

Date

November 12, 2014

Title

IV Solutions, Inc. V. United Healthcare Services, Inc., et al.

normal retail price.
The agreements at issue were memorialized in written contracts that purportedly specified
the price to be paid for the products provided and services rendered. Once those agreements
were signed, United paid the agreed-on price for the delivery of their specialty products to A.N.,
but eventually balked at the high prices and refused to make any additional payments for
services provided to D.H. and M.S. United does not dispute the existence of the contracts but
vigorously disputes any obligation to pay for the services and products that IV Solutions claims
to have provided under those agreements. Among other things, United contends that: (1) IV
Solutions promised to collect deductibles and co-payments from patients D.H. and M.S. but
never billed for those amounts, or indeed any amounts; and (2) IV Solutions agreed to be subject
to the terms and conditions of the health benefit plans administered by United. United contends
that IV Solutions entered into the agreements with no intention of honoring these promises.
Accordingly, while IV Solutions seeks amounts it contends are still due and owing for services
and products it provided beneficiaries D.H. and M.S., United seeks a determination that it owes
nothing to IV Solutions and indeed that IV Solutions must re-pay amounts it received for
services rendered to the three patients.
II.
THE MOTION
A. THE “INGENIX” LITIGATION AND SETTLEMENT
In 2000 the American Medical Association, joined several years later by the New York
Attorney General, brought suit against United on the ground that its reimbursements were based
on a defective and unreliable database that yielded unreasonably low reimbursements to
providers who rendered services to health plan members. IV Solutions refers to that database as
the Ingenix Database; United refers to it as the PHCS Database. The database litigation was
settled for the payment of substantial sums of money, and an agreement to create a new database
for determining reimbursements. However, the settlements also provided that United was not
admitting the truth of any material allegations regarding the alleged defects in the database.
United cites to provisions of the agreement indicating that the settlement agreement could not be
used as evidence in any other proceeding.
IV Solutions has alleged details regarding the settlement in its fraud claim in the First
Amended Complaint and quotes the governor of New York who characterized United’s conduct
(presumably the use of the PHCS database) as a “scam” and “dishonest conduct.” The fraud
claim also references New York’s investigation into an “industry-wide” scheme to defraud
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LINK: 358
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-4887-GAF (MRWx)

Date

November 12, 2014

Title

IV Solutions, Inc. V. United Healthcare Services, Inc., et al.

consumers with a specific reference to an intended suit against United and Ingenix. Finally,
United notes that one of IV Solutions’ experts, Dr. Roby, included a discussion of the lawsuits in
his expert report. However, Dr. Roby conceded that: (1) United never conceded wrongdoing in
that litigation; and (2) that he found no evidence that the Ingenix database was used to price
products at issue in this case.
B. UNITED’S POSITION REGARDING ADMISSIBILITY
Based on the foregoing, United contends evidence regarding the Ingenix database should
be excluded. United asserts that it is not relevant to this lawsuit, that the allegations are
unproven and not similar to the allegations made here, that the evidence should be excluded
pursuant to Rule 403 because it is unduly prejudicial, confusing, and would result in the undue
consumption of court time.
C. IV SOLUTIONS’ POSITION REGARDING ADMISSIBILITY
IV Solutions opposes the motion on several grounds. First, it contends that United’s own
witness testified that the Ingenix database was in fact used to price and pay for IV Solutions’
claims in many instances. IV Solutions also presents evidence that United’s agent consulted the
Ingenix database when negotiating the contracts with IV Solutions that are at issue in this case.
Finally, IV Solutions contends that the Ingenix database “issue” is highly relevant to its claim for
breach of the covenant of good faith and fair dealing and for fraud.
D. DISCUSSION
The motion raises two separate and distinct issues: (1) should any evidence be permitted
regarding the Ingenix/PHCS database; and (2) if so, should any evidence be permitted regarding
the New York litigation regarding the adequacy of the database.
With respect to the first issue, this lawsuit involves questions regarding the
reimbursement to which IV Solutions is entitled under the terms of its agreements with United.
Therefore, evidence regarding how each party purportedly computed the reimbursement amount
is a fact that is “of consequence in determining the action.” Rule 401, Fed. R. Evid. It follows
that IV Solutions may inquire into the information used by United to determine the
reimbursement amount. Such an inquiry could properly include questioning regarding whether
or not the Ingenix/PHCS database was used by United (or its agent) to determine the
reimbursement amount. The Court sees no basis for restricting such testimony. A jury is
entitled to hear evidence as to how these two parties have come to such radically different
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LINK: 358
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-4887-GAF (MRWx)

Date

November 12, 2014

Title

IV Solutions, Inc. V. United Healthcare Services, Inc., et al.

positions regarding what is due and owing under their agreement.
But the Court is not naive. IV Solutions does not wish to use evidence of the Ingenix
database in such a benign endeavor. What it really wants to do is to show that the database was
in fact used here and then argue that it is fraudulent based on the New York litigation. That was
the obvious purpose of Paragraphs 64 and 65 of the First Amended Complaint, which quote
inflammatory language of an elected politician seeking a headline. In other words, it seeks to
use the New York litigation as a sword in the same way that United seeks to use the Board of
Pharmacy proceedings. This the Court will not permit. The New York litigation ended in a
settlement with no admission of liability. The amounts negotiated were part of a settlement
agreement that the parties agreed should not be used in other proceedings. The presentation of
evidence regarding that litigation, including the statements of politicians, would create almost
certain prejudice to United, would tend to confuse the jury, and would, because United would
have to be given an opportunity to respond to the allegations, substantially broaden this litigation
resulting in the undue consumption of time on a completely collateral matter. Evidence of the
New York litigation is therefore of questionable relevance under Rule 401 and properly
excluded under Rule 403.2
For these reasons, the motion is GRANTED IN PART and DENIED IN PART.
Evidence regarding the basis for United’s determination of reimbursement amounts, including
evidence regarding the Ingenix/PHCS database is admissible. Evidence regarding the existence
or substance of the New York litigation is excluded.

IT IS SO ORDERED.

2

The Court also bases this ruling on the authorities cited in its order of November 10, 2014. (See Docket

No. 371.)
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