Connecticut General Life Insurance Company et al v. Southwest Surgery Center, LLC
Filing
216
MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 10/3/2018. Mailed notice(gel, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Connecticut General Life Insurance
Company and Cigna Health and Life
Insurance Company,
Plaintiff,
Case No. 14 CV 08777
v.
Judge John Robert Blakey
Southwest Surgery Center, LLC,
d/b/a Center for Minimally Invasive
Surgery,
Defendant.
MEMORANDUM OPINION AND ORDER
Plaintiff Connecticut General Life Insurance Company and Cigna Health and
Life Insurance Company (Cigna), a managed care company responsible for
administering health and welfare benefit plans, brings this action against Southwest
Surgery Center, LLC (CMIS), an out-of-network health care provider. Cigna seeks a
declaratory judgment that CMIS has engaged in fee-forgiving practices that have
eliminated Cigna’s obligation to pay or otherwise reimburse CMIS for services
provided. Additionally, Cigna asserts claims of recoupment of overpayments received
by CMIS; fraudulent misrepresentation; and negligent misrepresentation. CMIS
counterclaims to recover more than $4 million in billed charges on reimbursement
claims that Cigna denied, and asserts claims for promissory estoppel, fraud, and
violations of the Illinois Consumer Fraud Act.
1
Cigna moves to dismiss Count III of CMIS’ second amended counterclaim
[159], and for summary judgment on all counts of CMIS’ second amended
counterclaim [143]. CMIS moves for partial summary judgment on Counts II, III,
and IV of Cigna’s Complaint [151], and for partial summary judgment on claims
where there is no evidence of fee-forgiveness or Cigna is equitably estopped [154].
For the reasons explained below, this Court: (1) denies Cigna’s motion to
dismiss Count III of CMIS’ second amended counterclaim; (2) grants summary
judgment to Cigna on all counts of CMIS’ second amended counterclaim; (3) grants
in part, and denies in part, CMIS’ motion for summary judgment on Counts II, III,
and IV of Cigna’s complaint; and (4) denies CMIS’ motion for partial summary
judgment on claims where there is no evidence of fee-forgiveness or Cigna is equitably
estopped.
I.
Background
The following facts come from Cigna’s statement of facts [144]; CMIS’ response
to Cigna’s statement of facts and additional facts [172]; Cigna’s response to CMIS’
statement of additional facts [197]; CMIS’ statements of facts [153] [156]; Cigna’s
responses to CMIS’ statements of facts and additional facts [175] [179]; and CMIS’
responses to Cigna’s statements of additional facts [192] [193].
A. The Parties
Cigna provides claims administration and insurance services for health benefit
plans that employers sponsor to provide health care coverage to employees and their
dependents. [144] ¶ 4. As part of the administration of these plans, Cigna provides
2
coverage for both “in-network” and “out-of-network” health care providers. Id. ¶ 5.
In-network providers often contract with Cigna to provide medical services to plan
members for a negotiated set of fees as payment in full for covered services, while
out-of-network providers set their own fees. Id. Cigna says that out-of-network
providers generally charge higher amounts than in-network providers and that,
under its plans, members generally pay a higher deductible and lower coinsurance
when they select care from out-of-network providers. Id. ¶¶ 5, 7. CMIS, on the other
hand, says that out-of-network providers may charge higher or lower amounts than
in-network providers, and that whether a plan member pays higher or lower
deductibles, coinsurance, and copayments depends upon a variety of factors. [172]
¶¶ 5, 7.
CMIS is an ambulatory surgical center located in Mokena, Illinois. [156] ¶ 5.
CMIS was a contractual in-network provider for Cigna for many years. [197] ¶ 1. As
an in-network provider, CMIS agreed to accept payment at negotiated contract rates
that were often less than its usual billed or standard rates. [156] ¶ 9. In May 2010,
Cigna and CMIS terminated their contract, and CMIS thereafter became an out-ofnetwork provider with no direct contractual relationship with Cigna. Id. ¶¶ 19–20.
As an out-of-network provider, CMIS was not required to accept discounted
reimbursement rates and was free to bill patients for the balance between any
amount Cigna paid and CMIS’ charges. Id. ¶¶ 21–22.
3
B. Fee-Forgiveness
Cigna asserts that some out-of-network providers engage in fee-forgiveness
schemes, where they do not bill patients for deductibles, copayments, or coinsurance.
[144] ¶ 9. Cigna says fee-forgiving, while lowering the out-of-pocket expenses for plan
members, inflates the overall cost of healthcare for plans and their plan members
because it annuls members’ incentives to use in-network services. Id.
Cigna says that its plans discourage fee-forgiving practices by: (1) excluding
coverage for “charges which [the patient is] not obligated to pay or for which [the
patient is] not billed or for which [the patient] would not have been billed except that
[the patient] were covered under this plan”; and (2) limiting coverage to “Covered
Expenses,” which are expenses actually incurred by the patient after he becomes
insured. Id. ¶ 10.
C. CMIS’ Claims Submissions to Cigna
Cigna alleges that, since 2009, CMIS engaged in a fee-forgiveness scheme,
pursuant to which it filed claims with Cigna for inflated and inaccurate charges while
waiving patient cost shares to gain an unfair advantage over Cigna’s in-network
providers. See [1].
CMIS says that it submitted each of its claims at issue to Cigna on a “UB04
form,” which asks for CMIS’ total charges for each of the billing codes related to one
of CMIS’ services. [153] ¶¶ 10, 13. CMIS says that it truthfully and accurately listed
its total charges on each UB04 form, and sent each form to Cigna, who then
4
adjudicated the claim, notified the patient of the patient’s cost share, and sent
payment to CMIS for Cigna’s share. Id. ¶¶ 14–15.
Cigna says, however, that CMIS submitted its reimbursement claims to Cigna
via electronic transmissions to Cigna’s claims processing platforms, not UB04 forms.
[175] ¶¶ 10, 15, 21. The claims processing platform required CMIS to list, among
other things, patient demographic data, billed charges corresponding to each service
code, and the total amount of billed charges. [175-2] ¶ 5.
D. Cigna’s Investigation Into CMIS’ Billing Practices
Around May 2011, Cigna’s Special Investigation Unit (SIU) began
investigating CMIS’ billing practices. [144] ¶ 11. In June 2012, Cigna sent to CMIS
an audit letter requesting CMIS’ out-of-network billing policies and ledgers on 10
Cigna members treated at CMIS’ facility.
Id. ¶ 14. CMIS did not respond to this
letter, so Cigna sent a second audit letter in July 2012, asking how CMIS collects
payments from Cigna members, and whether, as a non-contracted facility, CMIS
collects payments on members’ full out-of-network cost shares. Id. ¶ 15. CMIS does
not dispute that Cigna sent these audit letters, but says that, as an out-of-network
provider, it had no obligation to provide Cigna with any information regarding its
billing policies or patient payments ledgers. [172] ¶¶ 14–15.
Cigna says that, because CMIS did not provide any information in response to
Cigna’s audit letters, in August 2012, SIU flagged CMIS and began denying CMIS’
claims. [144] ¶ 18. Between August 1, 2012 and February 28, 2013, Cigna denied
5
over $600,000 of CMIS’ billed charges; between March 1, 2013 and December 31,
2013, Cigna denied over $1.4 million of CMIS’ billed charges. Id. ¶¶ 18–19.
E. CMIS’ Insurance Verification Calls to Cigna
CMIS bases its counterclaims upon pre-service communications with Cigna,
primarily insurance verification calls CMIS’ employees made to Cigna’s customer
service number. [144] ¶ 26. CMIS alleges that, during the verification calls, Cigna’s
representatives promised to pay the billed charges that CMIS would submit after it
provided services to plan members. Id.
CMIS employees Vikki Thomas, Jennifer Cook Szoldatits, Angela Bazan, and
Isadora Sevilla made the verification calls to Cigna. Id. ¶ 27. Szoldatits, Bazan, and
Sevilla testified that Cigna never promised or guaranteed that Cigna would pay
CMIS for its services during these calls. [145-26] at 16; [145-27] at 21; [145-28] at 15.
Thomas testified that she did not recall whether Cigna’s representatives promised or
guaranteed payment for CMIS’ services. [145-29] at 17.
Between 2005 and February 2013, the following disclaimer played at the
beginning of every call that CMIS made to Cigna:
The following information does not guarantee coverage or payment. The
governing document for a patient’s coverage is their Summary Plan
Description. Payment for services will be based on medical necessity,
plan provisions, and eligibility at the time of service.
[144] ¶¶ 21, 23. And, since February 2013, the following disclaimer played at
the beginning of every call that CMIS made to Cigna:
By continuing with this call, you understand, accept and agree that the
following covered services information does not guarantee coverage or
payment and is subject to all benefit plan provisions. Please refer to the
6
Summary Plan Description for coverage. Payment for services will be
based on medical necessity, plan provisions, including limitations and
exclusions, and eligibility at the time of service.
Id. ¶¶ 22, 23.
F. Procedural History
Cigna filed its complaint against CMIS in November 2014 seeking, among
other things: (1) a declaratory judgment that it need not reimburse CMIS under the
Cigna plans because CMIS waived patients’ cost shares, making its claims subject to
the plans’ fee-forgiveness exclusion; and (2) recovery of $800,000 it paid to CMS before
August 2012.
[1].
The complaint additionally asserts claims for recoupment;
fraudulent misrepresentation; negligent misrepresentation; and violations of the
Illinois Consumer Fraud and Deceptive Practices Act (ICFA).
Id.
This Court
dismissed Cigna’s ICFA claim in October 2015. [47] at 17–19.
CMIS filed its counterclaim in December 2014, and subsequently filed an
amended counterclaim in January 2018. [16]; [125]. Its amended counterclaim,
which is based upon Cigna’s purported refusal to pay CMIS’ claims after Cigna
flagged CMIS, asserts causes of action for promissory estoppel, fraud, and violations
of the ICFA, and requests prejudgment interest. [125].
In May 2018, this Court granted Cigna’s motion to dismiss CMIS’ ICFA claim
[140]. One month later, CMIS filed a second amended counterclaim, which realleged
an ICFA claim. [142].
7
II.
Legal Standard
A. Rule 12(b)(6) Motion to Dismiss
Under Rule 12(b)(6), this Court must construe the complaint in the light most
favorable to the plaintiff, accept as true all well-pleaded facts and draw all reasonable
inferences in its favor. Yeftich v. Navistar, Inc., 722 F.3d 911, 915 (7th Cir. 2013). To
survive a motion under Rule 12(b)(6), the complaint must “state a claim to relief that
is plausible on its face.” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A claim has “facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A wellpleaded complaint may proceed even if it appears that “actual proof of those facts is
improbable, and that a recovery is very remote and unlikely.” Twombly, 550 U.S. at
556. Rule 12(b)(6) limits this Court’s consideration to “allegations set forth in the
complaint itself, documents that are attached to the complaint, documents that are
central to the complaint and are referred to in it, and information that is properly
subject to judicial notice.” Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013).
B. Summary Judgment
Courts should grant summary judgment when the moving party shows that no
genuine dispute exists as to any material fact and the evidence weighs so heavily in
the moving party’s favor that the moving party “must prevail as a matter of law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); see also Fed. R. Civ. P. 56.
A genuine dispute as to a material fact exists when, based upon the evidence, a
8
reasonable jury could return a verdict for the non-moving party. Anderson, 477 U.S.
at 248. To show a genuine dispute as to a material fact, the non-moving party must
point to “particular materials in the record,” and cannot rely upon the pleadings or
speculation. Olendzki v. Rossi, 765 F.3d 742, 746 (7th Cir. 2014).
At summary judgment, courts must evaluate evidence in the light most
favorable to the non-moving party and must refrain from making credibility
determinations or weighing evidence. Rasho v. Elyea, 856 F.3d 469, 477 (7th Cir.
2017).
The moving party bears the burden of establishing the lack of genuine
disputes as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
III.
Analysis
A. Cigna’s Motion to Dismiss
To prevail on its ICFA counterclaim, CMIS must plead and prove: “(1) a
deceptive act or practice by the defendant; (2) the defendant intended that the
plaintiff rely on the deception; (3) the deceptive act occurred in a course of conduct
involving trade or commerce; and (4) actual damage to the plaintiff; (5) proximately
caused by the deceptive act.” Philadelphia Indem. Ins. Co. v. Chicago Title Ins. Co.,
771 F.3d 391, 402 (7th Cir. 2014). Where, as here, the parties are two businesses who
are not consumers, the claim proceeds only if “the alleged conduct involves trade
practices addressed to the market generally or otherwise implicates consumer
protection concerns.” Downers Grove Volkswagen v. Wigglesworth Imps., Inc., 546
N.E.2d 33, 41 (Ill. App. Ct. 1989).
9
This Court dismissed CMIS’ ICFA claim once before because CMIS alleged
“only the harm CMIS suffered by excusing patients from payments it assumed it
could recover from Cigna,” and therefore, Cigna’s alleged conduct did not implicate
consumer protection concerns.
[140] at 9.
Following this Court’s order, CMIS
amended its counterclaim and added the allegation that, if “Cigna does not pay CMIS’
claims, CMIS will be forced to enforce the patient guarantees and collect its billed
charges from the patient consumers, resulting in hundreds of thousands of dollars
being passed on to CMIS’ patients.” [142] ¶ 74. Cigna contends that this Court should
dismiss the ICFA claim again because CMIS’ new allegation is based upon only a
“speculative possibility” that consumers may be harmed in the future, and not actual,
existing harm to consumers. [198] at 1.
This Court disagrees. Cigna cites no authority holding that the consumer
protection nexus can only be met by pleading actual, existing harm. To the contrary,
CMIS need only plausibly allege that Cigna’s conduct “implicates consumer
protection concerns.” Frazier v. U.S. Bank Nat. Ass’n, No. 11 C 8775, 2013 WL
1385612, at *4 (N.D. Ill. Apr. 4, 2013); cf. 3Com Corp. v. Elecs. Recovery Specialists,
Inc., 104 F. Supp. 2d 932, 939 (N.D. Ill. 2000) (consumer nexus test not met where
there was no allegation of “collateral impact on consumer protection concerns.”).
Here, CMIS alleges that Cigna’s purported conduct has some collateral effect
on consumers—namely, CMIS will have to pass costs onto its customers if Cigna does
not pay its claims. [142] ¶ 74. Passing on costs to customers is a recognized consumer
protection
concern.
See
Beatty
v.
10
Accident
Fund
Gen.
Ins.
Co.,
No.
317CV01001NJRDGW, 2018 WL 3219936, at *11 (S.D. Ill. July 2, 2018) (plaintiff
doctor adequately alleged “implication of consumer protection concerns” against
insurer by stating that insurer’s unpaid interest charges may shift to the doctor’s
patients); Walsh Chiropractic, Ltd. v. StrataCare, Inc., 752 F. Supp. 2d 896, 913 (S.D.
Ill. 2010) (holding that a consumer nexus is met where complaint alleged facts from
which the court could infer that patients of medical providers may be subject to fee
increases as a result of the defendant’s alleged fraud on the medical providers).
Thus, viewing CMIS’ allegation as true, which this Court must for the purposes
of a Rule 12(b)(6) motion, this Court finds that CMIS has plausibly alleged a
consumer protection nexus. This Court denies Cigna’s motion to dismiss CMIS’ ICFA
counterclaim.
B. Cigna’s Motion for Summary Judgment
Cigna moves for summary judgment on all counts of CMIS’ second amended
counterclaim [143], which asserts causes of action for promissory estoppel, fraud, and
violations of the ICFA [142].
1. Promissory Estoppel
To recover for promissory estoppel, CMIS must prove that: (1) Cigna made an
“unambiguous promise” to CMIS; (2) CMIS relied on such promise; (3) CMIS’ reliance
was expected and foreseeable by Cigna; and (4) CMIS relied on the promise to its
detriment. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 566 (7th Cir. 2012) (citing
Newton Tractor Sales, Inc. v. Kubota Tractor Corp., 906 N.E.2d 520, 523–24 (Ill.
2009)).
11
CMIS’ promissory estoppel claim is based upon Cigna representatives’
statements during pre-service verification calls. [142] ¶¶ 22–45. CMIS asserts that,
through these verifications of coverage and eligibility for benefits, Cigna
unambiguously promised to pay CMIS for services CMIS ended up providing to its
customers. Id. ¶ 31. In moving for summary judgment, Cigna argues that CMIS
cannot recover for promissory estoppel because it cannot prove two elements:
unambiguous promise and reasonable reliance. [143-1] at 13.
This Court need not reach the “reasonable reliance” element, because it finds
that CMIS fails to adduce any evidence of an “unambiguous promise.” Indeed, the
undisputed evidence shows that there were four CMIS employees who made the
verification calls; three out of the four CMIS employees making verification calls to
Cigna testified affirmatively that Cigna never promised or guaranteed that it would
pay CMIS for its services. [145-26] at 16; [145-27] at 21; [145-28] at 15. The fourth
CMIS employee testified that she did not recall Cigna ever promising or guaranteeing
payment for CMIS’ services. [145-29] at 17. CMIS does not point to any other
evidence suggesting that Cigna made any promises—outside of the verification
calls—to pay. 1 Thus, the record is devoid of any evidence that Cigna made any
unambiguous promises to pay CMIS’ billed charges.
In its response, CMIS argues that its employees believed that Cigna’s
verification of coverage amounted to a promise to pay. [171] at 24. But whether the
1
This Court granted CMIS leave to cite “additional authority” in the form of uncertified transcripts
from five different verification calls. [213]. This Court has reviewed the transcripts and finds that
none of them reveal that Cigna unambiguously promised to pay later billed charges; at best, they show
only that Cigna verified the nature of certain coverage and benefits. See [210-1]–[210-5].
12
employees believed that Cigna would pay remains irrelevant, as they did not testify
that Cigna actually promised to pay.
Moreover, CMIS conflates verification of
eligibility and benefits with promise of payment. Courts have held that a mere
verification of coverage and benefits is insufficient to constitute an unambiguous
promise of payment. See Advanced Ambulatory Surgical Ctr., Inc. v. Connecticut Gen.
Life Ins. Co., 261 F. Supp. 3d 889, 896 (N.D. Ill. 2017) (declining to “transform Cigna’s
mere verification of a patient’s benefits into a promise to pay for services.”); DAC
Surgical Partners P.A. v. United Healthcare Servs., Inc., No. 4:11-CV-1355, 2016 WL
7157522, at *4 (S.D. Tex. Dec. 7, 2016) (noting that “verification [of benefits] was not
the same as a promise of payment”).
CMIS also points to the testimony of its owner and Rule 30(b)(6) witness, Dr.
Patrick Sweeney, its former CEO, Michael Cherny, and its office manager, Mary
Kerrigan, who all testified that they believed that Cigna’s verifications of coverage
constituted unqualified promises of payment. [171] at 24. None of these witnesses,
however, have any personal knowledge of what Cigna’s representatives said on the
verification calls, because they did not make the calls. [144] ¶ 33. Thus, their
subjective beliefs that Cigna promised payment are entirely founded upon
speculation, and therefore fail to raise a triable issue of fact. Joseph P. Caulfield &
Assocs., Inc. v. Litho Prods., Inc., 155 F.3d 883, 888 (7th Cir. 1998) (witness’s
deposition and affidavit testimony were on issues where he “plainly lacked personal
knowledge,” and were thus too speculative to raise triable issues of fact).
13
Without any evidence that Cigna made any unambiguous promises to pay,
CMIS’ promissory estoppel claim fails as a matter of law. See Advanced Ambulatory,
261 F. Supp. 3d at 896 (N.D. Ill. 2017) (granting summary judgment against medical
center on its promissory estoppel claim, where “all the evidence indicates that Cigna
agents did not explicitly promise or agree to reimburse [the center].”); Centro Medico
Panamericano, Ltd. v. Laborers’ Welfare Fund of Health & Welfare Dep’t of Const. &
Gen. Laborers’ Dist. Council of Chicago & Vicinity, 33 N.E.3d 691, 694–95 (Ill. App.
Ct. 2015) (affirming grant of summary judgment where party failed to adduce any
evidence of an unambiguous oral promise); cf. Connecticut Gen. Life Ins. Co. v. Grand
Ave. Surgical Ctr., Ltd., 181 F. Supp. 3d 538, 545 (N.D. Ill. 2015) (denying summary
judgment on promissory estoppel claim where there was some evidence that insurer
promised to pay a “specific percentage of . . . billed charges.”). This Court grants
summary judgment to Cigna on CMIS’ promissory estoppel counterclaim.
2. Fraud
On its fraud claim, CMIS must prove by clear and convincing evidence that
Cigna: (1) made a false statement of material fact; (ii) knew or believed the statement
was false; (3) intended and did induce CMIS to reasonably rely and act upon the
statement; and (4) CMIS suffered damages from that reliance. Ass’n Ben. Servs., Inc.
v. Caremark RX, Inc., 493 F.3d 841, 852 (7th Cir. 2007) (citing Williams v. Chicago
Osteopathic Health Sys., 654 N.E.2d 13, 619 (Ill. App. Ct. 1995)).
Additionally,
“promissory fraud, involving a false statement of intent regarding future conduct, is
14
generally not actionable under Illinois law unless the plaintiff also proves that the
act was a part of a scheme to defraud.” Id. at 853.
Like its promissory estoppel counterclaim, CMIS bases its fraud claim upon
statements Cigna representatives made during verification calls. [142] ¶¶ 46–62.
Specifically, CMIS alleges that (1) Cigna “knew at the time it verified eligibility and
coverage” that it would not pay CMIS for services; and (2) Cigna knew its
representations about eligibility and coverage were false at the time they made them
because “it knew it would not pay CMIS.” Id. ¶¶ 54–55.
The parties dispute whether CMIS alleges plain fraud or promissory fraud.
See [143-1] at 25; [171] at 29–30. CMIS contends that it brings an ordinary fraud
claim because it alleges that Cigna said coverage was available when, in fact,
coverage was not available because it knew it would never pay CMIS. [171] at 30.
Cigna, on the other hand, argues that because CMIS’ alleged harm arises from the
nonpayment of CMIS’ claims, CMIS’ fraud counterclaim falls within the contours of
a promissory fraud claim. [196] at 27–28.
In viewing the allegations contained in CMIS’ counterclaim, this Court finds
that the fraud claim is based upon the premise that Cigna had already decided to flag
CMIS’ account and deny claims it submitted, and that, because Cigna had allegedly
already decided that it would deny CMIS’ claims, Cigna’s calls verifying eligibility
and benefits constituted misrepresentations because they falsely implied that Cigna
would pay CMIS’ claims in the future. [142] ¶¶ 53–62. In short, CMIS does not
contend that Cigna’s statements about benefits and eligibility were false, but rather
15
that they implied a promise of future conduct—payment for CMIS’ services. As such,
CMIS brings a promissory fraud counterclaim. See, e.g., Advanced Ambulatory, 261
F. Supp. 3d at 898 (“Because [the medical provider] does not claim that Cigna’s
statements about a plan member’s benefits were themselves false or fraudulent, but
instead that they implied a promise of future conduct, [medical provider]’s fraud
count is thus one for promissory fraud.”); Zic v. Italian Gov’t Travel Office, 149 F.
Supp. 2d 473, 477 (N.D. Ill. 2001) (promissory fraud involves “false promises of future
payment to induce a party to provide services”) (emphasis added).
A claim for fraud, promissory or otherwise, requires proof that “at the time the
allegedly fraudulent statement was made, it was an intentional misrepresentation.”
Caremark, 493 F.3d at 853 (emphasis in original). For purposes of promissory fraud,
this means that CMIS must prove that: (1) Cigna promised to pay CMIS for its
services, and (2) at the time Cigna promised to pay, it had no intention to do so. See
id. (promissory fraud requires proof that “when the promise was made, the promisor
had no intent to fulfill it.”).
Here, CMIS faces the same barriers of proof it did with its promissory estoppel
claim, because it cannot marshal any evidence that Cigna ever promised to pay CMIS
for its services. Absent such evidence, CMIS’ promissory fraud claim fails as a matter
of law. See, e.g., Advanced Ambulatory, 261 F. Supp. 3d at 898 (granting summary
judgment on promissory fraud claim where there was no evidence of Cigna’s “promise
to pay” during verification phone calls).
This Court grants summary judgment to
Cigna on CMIS’ promissory fraud counterclaim.
16
3. ICFA
CMIS’ remaining counterclaim alleges an ICFA violation.
As with the
promissory estoppel and fraud claims, CMIS does not actually contend that Cigna
provided false information regarding coverage as it relates to eligibility and
benefits—indeed, its second amended counterclaim contains no such allegation. See
generally [142]. Rather, CMIS’ ICFA counterclaim is again based upon the premise
that Cigna’s verification of eligibility and benefits equated to a promise to pay, and
that Cigna is liable because it did not in fact pay. Id. ¶ 65 (alleging that Cigna
misrepresented that patients were eligible and covered for services when, in fact,
Cigna “had no intention of paying for the services.”), ¶ 67 (alleging that Cigna’s
purported misrepresentations about eligibility and coverage harmed CMIS because
it deceived CMIS into believing Cigna would pay for the services).
To prevail on its ICFA counterclaim, CMIS must set forth “some evidence
raising a genuine issue of material fact” that Cigna “intended to induce” CMIS’
reliance upon Cigna’s alleged misrepresentations or omissions.
Great Lakes
Reinsurance (UK) v. 1600 W. Venture, LLC, 261 F. Supp. 3d 860, 866 (N.D. Ill. 2017).
In its response, however, CMIS fails to set forth any specific evidence of Cigna’s intent
to induce CMIS’ reliance. It states in a conclusory manner that Cigna failed to “fully,
completely, and accurately answer providers’ questions about coverage,” and argues
that the natural consequence of Cigna’s actions was that CMIS would rely upon that
information. [171] at 35. But, as discussed above, CMIS’ contention is not actually
17
that CMIS misrepresented the extent of a customer’s eligibility or benefits, 2 but
rather that CMIS implied through its verifications of eligibility and benefits that it
would pay for CMIS’ services.
CMIS’ ICFA counterclaim is therefore flawed for the same reasons as its other
counterclaims: CMIS has no evidence that Cigna ever made any false statement
regarding payment.
In fact, the evidence shows that, since 2005, disclaimers
preceded every call that CMIS placed to Cigna, which made clear that any
information CMIS received on the calls did not equate to a guarantee of “coverage or
payment.” [144] ¶¶ 21–23. On this record, no fact-finder could reasonably conclude
that Cigna intended to induce CMIS’ reliance upon any purported misrepresentations
or material omissions. See, e.g., Krause v. GE Capital Mortg. Serv., Inc., 731 N.E.2d
302, 311–12 (Ill. App. Ct. 2000) (affirming summary judgment on ICFA claim where
the undisputed evidence established that the defendant made “full and accurate
disclosure[s]” and “did not conceal, suppress, or hide any material facts.”).
CMIS’
ICFA counterclaim fails as a matter of law. 3
C. CMIS’ Motion for Partial Summary Judgment on Counts II, III, and
IV of Cigna’s Complaint
Count II of Cigna’s complaint seeks recoupment of overpayments it made to
CMIS as a result of CMIS’ alleged fee-forgiving practices. [1] ¶¶ 60–70. Counts III
2
Even if it were, CMIS has not set forth any evidence that Cigna actually gave false information (or
omitted material information) regarding a customer’s eligibility or benefits.
3
Because this Court grants summary judgment to Cigna on all counts of CMIS’ second amended
counterclaim, it also necessarily finds that CMIS is not entitled to any prejudgment interest.
Accordingly, this Court need not consider the merits of the parties’ arguments on this issue.
18
and IV assert state-law causes of action for fraudulent misrepresentation and
negligent misrepresentation, respectively. Id. ¶¶ 71–80, 81–90.
CMIS moves for partial summary judgment on Counts II through IV of Cigna’s
complaint on two bases. First, CMIS argues that, based upon the Supreme Court’s
decision in Montanile v. Board of Trustees of National Elevator Industry Health
Benefit Plan, 136 S. Ct. 651 (2016), Cigna cannot recover any money that arise from
its payments to CMIS for patients with coverage under ERISA-governed plans. [152]
at 5–8. Second, CMIS contends that it is entitled to summary judgment on Cigna’s
misrepresentation claims because there is no evidence that CMIS ever made any
misrepresentation or omission of material fact. Id. at 8–11. This Court addresses
each argument in turn below.
1. Recovery of Payments Pursuant to ERISA-Governed Plans
Section 502(a) of ERISA authorizes plan fiduciaries of ERISA-governed plans,
like Cigna, to bring suits “to obtain other equitable relief . . . to enforce . . . the terms
of the plan.” 29 U.S.C. § 1132(a)(3). In Montanile, the Supreme Court held that plan
fiduciaries who seek recovery based on an equitable lien by agreement may assert the
lien “only against specifically identified funds that remain in the defendant’s
possession or against traceable items that the defendant purchased with the funds.”
136 S. Ct. at 658.
CMIS argues that Montanile bars all of Cigna’s claims that seek recoupment
of payments it issued pursuant to ERISA-governed plans because the undisputed
evidence shows that CMIS did not keep the payments in a “separate, identifiable
19
fund.” [152] at 8; [194] at 2–4. In response, Cigna concedes that Montanile mandates
summary judgment to CMIS on Count II of Cigna’s complaint to the extent that it
seeks equitable restitution under Section 502(a) of ERISA for funds paid pursuant to
ERISA-governed plans. [173] at 14.
Cigna disagrees, however, that Montanile bars it from recouping payments it
made under ERISA-governed plans where it seeks recovery pursuant to its state-law
misrepresentation claims (Counts III and IV of its complaint). Id. at 14–15. Cigna
argues that, because these claims arise under state law, do not seek equitable relief
under ERISA, and are not based solely on the terms of the patients’ ERISA-governed
plan, Montanile is inapplicable. Id. Thus, the legal dispute before this Court is
whether Cigna may recoup payments it made for ERISA-governed plans where it
seeks recovery under state-law claims, not Section 502(a) of ERISA.
In Montanile, the Supreme Court held only that a plan fiduciary may not sue
to attach a plan participant’s general assets under Section 502(a) of ERISA, because
the suit is not one for “appropriate equitable relief.” 136 S. Ct. at 653–54, 662. The
Court said nothing about a plan beneficiary’s right to recover legal damages based
upon state-law claims where those claims arise independently from any right to
recover equitable damages under ERISA. See generally Montanile, 136 S. Ct. 651.
Here, under Counts III and IV of its complaint, Cigna seeks recovery for CMIS’
alleged tortious conduct, and the ERISA-based plans are merely the context in which
CMIS committed the alleged torts. Under these circumstances, Cigna is free to
pursue recoupment relating to those ERISA-based plans under its state-law tort
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claims. See Trustees of AFTRA Health Fund v. Biondi, 303 F.3d 765, 781–82 (7th Cir.
2002) (where the ERISA-based plan was merely the “context” in which the alleged
fraud was committed, plan fiduciary was “entitled under Illinois law to sue in tort to
recover damages for that fraud.”); Aetna Life Ins. Co. v. Humble Surgical Hosp., LLC,
No. CV H-12-1206, 2016 WL 7496743, at *3 (S.D. Tex. Dec. 31, 2016) (holding that
insurer maintained common-law rights to recoup overpayments relating to ERISAbased plans because the “plans are merely the context of [the provider]’s fraud.”),
appeal dismissed sub nom. Aetna Life Ins. Co. v. Humble Surgical Hosp., L.L.C., No.
17-20123, 2017 WL 3753665 (5th Cir. Apr. 5, 2017).
Accordingly, this Court grants summary judgment to CMIS on Count II of
Cigna’s complaint only to the extent it seeks equitable recoupment under Section
502(a)(3) of ERISA for payments Cigna made under ERISA-governed plans.
2. Fraudulent and Negligent Misrepresentation
For both misrepresentation claims, Cigna must prove that CMIS made a false
statement of material fact. Kopley Grp. V., L.P. v. Sheridan Edgewater Properties,
Ltd., 876 N.E.2d 218, 228 (Ill. App. Ct. 2007) (fraudulent and negligent
misrepresentation share all common elements except for the defendant’s mental
state).
CMIS argues that it is entitled to summary judgment on Cigna’s
misrepresentation claims because there is no evidence that CMIS made any false
statement. [152] at 8–11. CMIS’ argument is based entirely upon its contention that
Cigna’s claim forms, UB04 forms, ask only that CMIS describe services provided to
21
the patient and for CMIS’ total charges for those services, and not for the amount of
money CMIS intended, or expected, to collect from the patient or Cigna. Id. at 9.
And, CMIS contends that the total charges it listed for each claim truthfully and
accurately reflected CMIS’ actual charges. Id. at 10.
Cigna, however, disputes that CMIS submitted its charges on UB04 forms,
contending instead that CMIS submitted all of its charges via electronic submission
to its claims processing platform that required CMIS to list, among other things,
patient demographic data, billed charges corresponding to each service code, and the
total amount of billed charges. [175] ¶¶ 10, 15, 21; [175-2] ¶ 5.
Cigna says that
CMIS’ electronically submitted charges were false because they included amounts
that CMIS had no intention of collecting from patients. [173] at 8.
The parties’ dispute about the method in which CMIS submitted its charges
precludes summary judgment on the misrepresentation claims, because whether
CMIS made any false statement depends upon its disclosure obligations in the first
place. If, for instance, Cigna’s claims submissions process required CMIS to disclose
that it waived patients’ cost shares, then a fact-finder could reasonably conclude that
CMIS did make false statements if it waived patients’ cost shares and failed to reveal
that to Cigna. Conversely, if Cigna’s claims submissions process did not require any
such disclosures, then CMIS may not have made any misrepresentation at all, even
if it did waive patients’ cost shares. On this record, however, this Court cannot
determine as a matter of law that Cigna’s claims submissions process did not impose
a requirement upon CMIS to make those disclosures. See, e.g., Aetna Life Ins. Co. v.
22
Huntingdon Valley Surgery Ctr., 703 F. App’x 126, 134 (3d Cir. 2017) (vacating grant
of summary judgment on insurer’s fraud claim where the billing form was ambiguous
as to medical provider’s disclosure obligations; thus, there was an issue of fact as to
whether medical provider submitted fraudulent bills when it listed “total charges”
without deducting waived patient fees or informing insurer that it routinely provided
such waivers). Accordingly, this Court denies summary judgment on Counts III and
IV of Cigna’s complaint.
D. CMIS’ Motion for Partial Summary Judgment on Fee-Forgiveness
and Equitable Estoppel
CMIS moves for partial summary judgment on another ground, arguing that
there is no evidence of fee-forgiveness for some of the claims CMIS submitted to
Cigna, and that Cigna should be equitably estopped from enforcing fee-forgiveness
for other claims. [155].
1. Claims in Exhibits A-C
First, CMIS argues that, for the claims listed on Exhibits A-C of its motion,
there is no evidence that CMIS discounted the patients’ share. [155] at 11–13. Cigna,
on the other hand, urges that summary judgment should be denied because there is
compelling evidence that CMIS did discount and waive patients’ cost shares for these
claims. [178] at 12–13.
For the claims listed in Exhibit A, CMIS contends that it was still an innetwork participating provider in Cigna’s network. [155] at 11. CMIS says that there
is no evidence that it ever (1) billed the patient for anything other than the in-network
share that Cigna assigned to these claims, or (2) discounted the patient’s share for
23
these claims. Id. at 11–12. But Cigna contends that there is actual evidence that
CMIS did discount and waive cost shares owed by the patients in Exhibit A. In
support, Cigna produces a table identifying multiple Exhibit A claims for which a
patient had a cost share greater than what CMIS actually collected from that patient.
[179] ¶ 54. This Court finds that, based upon this evidence, a fact-finder can draw a
reasonable inference that CMIS did waive patients’ cost shares for the claims in
Exhibit A.
Similarly, for the claims in Exhibit B, CMIS contends that it did not discount
the patients’ cost shares, and rather only invoiced patients for amounts that Cigna
approved. [155] at 12–13. Cigna disputes this, too, and again produces a table
showing those Exhibit B claims for which CMIS collected less than the full cost
shares. [179] ¶ 60. Here again, a reasonable fact-finder could find that CMIS waived
patients’ cost shares for the claims in Exhibit B.
For the claims listed in Exhibit C, CMIS says that Cigna determined that the
patient’s share of CMIS’ charges was zero, so CMIS could not have waived any portion
of the patient’s cost share. [155] at 13. Cigna, however, says that the cost shares
associated with Exhibit C claims were necessarily zero because Cigna denied those
claims. [178] at 17–18; [179] ¶ 64. Cigna argues that its ultimate denial of claims
does not mean that CMIS did not waive patients’ cost shares. This Court agrees,
because even if Cigna ultimately denied the claims that CMIS submitted, it does not
necessarily follow that CMIS did not waive its patients’ cost shares at the outset.
Viewing the facts in the light most favorable to Cigna, this Court finds that even
24
though Cigna ultimately determined that none of CMIS’ submitted charges were
covered, CMIS could still have overstated charges (while writing off patients’ cost
shares) when it sent the actual claims to Cigna.
This Court thus finds genuine issues of material fact as to whether CMIS
engaged in fee-forgiveness for the claims in Exhibits A-C, and as such, denies CMIS’
motion as to those claims. 4
2. Claims in Exhibit D
Exhibit D to Cigna’s motion contains a list of claims with dates of service after
August 2012. CMIS argues that Cigna is equitably estopped from denying coverage
for the claims in Exhibit D, because Cigna flagged CMIS that month, yet its
representatives continued to provide CMIS with verifications of eligibility and
benefits. [155] at 14–15.
Equitable estoppel requires proof that:
(1) the other person misrepresented or concealed material facts; (2) the
other person knew at the time he or she made the representations that
they were untrue; (3) the party claiming estoppel did not know that the
representations were untrue when they were made and when they were
acted upon; (4) the other person intended or reasonably expected that
the party claiming estoppel would act upon the representations; (5) the
party claiming estoppel reasonably relied upon the representations in
good faith to his or her detriment; and (6) the party claiming estoppel
would be prejudiced by his or her reliance on the representations if the
other person is permitted to deny the truth thereof.
4 Cigna also argues that summary judgment should be denied because CMIS relies almost entirely upon
the affidavit of Dr. Sweeney, which Cigna contends is deficient in several respects. [178] at 8–12.
Because this Court finds that there is other evidence creating a triable issue regarding whether CMIS
engaged in fee-forgiveness, it need not determine whether Dr. Sweeney’s affidavit meets the
requirements under Rule 56(c)(4).
25
W. Bend Mut. Ins. Co. v. Procaccio Painting & Drywall Co., 794 F.3d 666, 679 (7th
Cir. 2015) (quoting Geddes v. Mill Creek Country Club, Inc., 751 N.E.2d 1150, 1157
(Ill. 2001)).
CMIS argues that equitable estoppel applies because Cigna continued to verify
coverage after it flagged CMIS in August 2012, and therefore Cigna’s statements
confirming that coverage was available were false. [155] at 14–15. This argument is
merely a regurgitation of CMIS’ arguments in opposition to summary judgment on
its counterclaims. As explained above, CMIS’ counterclaims fail as a matter of law
because there is no evidence that Cigna ever promised to pay billed charges, and its
confirmations of coverage and benefits did not amount to promises to pay. See Section
III.B, supra. For that reason, this Court denies summary judgment for the claims
listed in Exhibit D.
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IV.
Conclusion
For the reasons explained above, Cigna’s motion to dismiss Count III of CMIS’
second amended counterclaim [159] is denied; Cigna’s motion for summary judgment
on CMIS’ second amended counterclaim [143] is granted; CMIS’ motion for partial
summary judgment on Counts II-IV of Cigna’s complaint [151] is granted in part, and
denied in part; and CMIS’ motion for partial summary judgment on claims where
there is no evidence of fee-forgiveness or Cigna is equitably estopped [154] is denied.
All dates and deadlines stand.
Date: October 3, 2018
ENTERED:
____________________________
John Robert Blakey
United States District Judge
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