Multiplan, Inc. et al v. Holland et al

Filing 311

Memorandum Opinion and Order Concerning Request for Interest and Penalties re 291 Judgment, Signed by District Judge Louis Guirola, Jr on 06/14/2018 (Guirola, Louis)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
MULTIPLAN, INC. and PRIVATE
HEALTHCARE SYSTEMS, INC.
v.

PLAINTIFFS/
COUNTER-DEFENDANTS
CAUSE NO. 1:14CV315-LG-RHW

STEVEN W. HOLLAND, doing
business as Physical Therapy
Clinic of Gulfport

DEFENDANT/
COUNTERCLAIMANT

MEMORANDUM OPINION AND ORDER CONCERNING
HOLLAND’S REQUEST FOR INTEREST AND PENALTIES
BEFORE THE COURT are the post-trial briefs [299, 301, 310] submitted by
the parties concerning the amount of interest and penalties, if any, to which Steven
W. Holland is entitled as a result of the jury verdict in this case. For the following
reasons, the Court finds that Holland is entitled to recover prejudgment interest in
the amount of eight percent per annum, calculated according to the actuarial
method, from September 29, 2014. Holland is also entitled to post-judgment
interest at a rate equal to the weekly average 1-year constant maturity Treasury
yield, as published by the Board of Governors of the Federal Reserve System, for the
calendar week preceding March 30, 2018.
BACKGROUND
This lawsuit arose out of a dispute between Holland, a physical therapist,
and two preferred provider organizations (PPOs), PHCS and Multiplan.

Holland has argued throughout this litigation that PHCS and Multiplan wrongfully
applied Holland’s discount rate to workers’ compensation claims. Holland claims
that these discounts constituted a breach of contract, because his contract with
PHCS required insurers to provide direction or steerage of patients but Mississippi
workers’ compensation statutes and regulations effectively eliminate direction or
steerage. Following a five-day trial, a jury found in favor of Holland as to his
breach of contract claim. Pursuant to the parties’ stipulation as to the amount of
contractual damages, this Court entered a [291] Judgment awarding Holland
$14,329.25. The parties now ask the Court to determine whether Holland is
entitled to recover additional damages, including interest and penalties pursuant to
the Mississippi Workers’ Compensation Fee Schedule.
Prior to trial, the parties entered into the following stipulation concerning
post-trial damages calculations to be decided by the Court:
1. The issues of whether, and if so, how the regulations of the
Mississippi Workers Compensation Commission (“MWCC”) are to be
employed in the calculation of damages to be awarded on Holland’s
breach of contract claim with respect to the forty-six (46) claims at
issue in the case with discounts totaling $14,329.25 (identified in the
attached spreadsheets by claim number), should Holland prevail
at trial on such claim, are ones exclusively of law and therefore to be
decided by the Court, and not by the jury. In the event that the jury
renders a verdict in Holland’s favor on his breach of contract claim, the
parties will provide legal authority and argument on these legal issues
through such briefing as the Court then directs. The parties expressly
reserve all of their respective rights and arguments with respect to
such issues, including the right to appeal any ruling of the Court on
the same.
2. If, following the parties’ submissions (and such argument as the
Court entertains), the Court determines that application of the MWCC

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regulations is appropriate in this case, the parties have agreed upon
various alternative calculations that reflect the following:
a. Whether interest of 1.5% per month per the MWCC
regulations is to be applied to the unpaid claim balances
reflecting the discounts found to have improperly taken;
b. Whether such interest is to be simple or compounded;
c. Whether a 10% penalty is to be applied once (at the end of the
relevant period) on the total (unpaid balance plus interest,
whether simple or compounded); or
d. Whether such penalty is to be applied every month to the
unpaid claim balances reflecting the discounts found to have
improperly taken.
3. The spreadsheets provided to the Court set forth the arithmetic
results of the various combinations of the items set forth in paragraph
2 above if the Court finds the MWCC regulations to be applicable.
Based on its determinations, the Court will select one of the resulting
totals.
4. The spreadsheets provided to the Court reflect the following:
1. 1.5% interest compounded monthly with 10% penalty applied,
monthly = $197,529.23.
2. 1.5% interest compounded monthly with 10% penalty applied
once = $41,914.94.
3. 1.5% simple interest with 10% penalty applied, monthly =
$122,486.52.
4. 1.5% simple interest with 10% penalty applied once =
$31,286.58.
5. If the Court determines that the MWCC regulations are not
applicable, then prejudgment interest as provided by applicable law
shall be included in any judgment entered by the Court.
(Pretrial Order 14-15, ECF No. 278).
DISCUSSION
Holland argues that, pursuant to the MWCC regulations, he is entitled to
1.5% interest, compounded monthly with a 10% penalty applied monthly, which
would result in an award of an additional $197,529.23. The 2010 version of the

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MWCC regulations, which was admitted as an exhibit at trial pursuant to the
stipulation of the parties, provides:
Properly submitted bills not fully paid within thirty (30) days of receipt
by the payer shall automatically include interest on the unpaid balance
at the rate of one and one-half percent (1.5%) per month from the due
date of any unpaid remaining balance until such time as the claim is
fully paid and satisfied. Properly submitted bills not fully paid within
sixty (60) days of receipt will be subject to an additional penalty equal
to ten percent (10%) of the unpaid remaining balance, including
interest as herein provided.
(Trial Ex. P-36 15).1 However, according to the trial evidence Holland did not follow
the procedure required by the MWCC regulations for seeking reconsideration of the
amount he was paid for the workers’ compensation claims at issue. (Trial Ex. P-7;
Multiplan/PHCS Mem., Ex. A 3, ECF No. 296-1). First, he was required to file a
written request for reconsideration within thirty days “from receipt of the
explanation of review or other written documentation evidencing the basis for the
dispute.” (Id. at 18). He was then required to file a “Request for Resolution of
Dispute” with the MWCC within twenty days following the payer’s response to a
request for reconsideration of any matter in dispute. (Trial Ex. P-7; Holland’s Ex. B
19, ECF No. 299-2). Essentially, Holland asks the Court to award interest and
penalties here, under MWCC regulations that have been foreclosed due to his
procedural noncompliance. Holland has cited no Mississippi statute or case
authority that has approved such a proposition.

Holland has submitted the 2007 version of the regulations, which contains an
identical provision concerning interest and penalties. (See Holland’s Ex. B 13, ECF
No. 299-2).
1

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Under Mississippi law, statutes that are penal in nature must be strictly
construed. Saucier v. Coldwell Banker JME Realty, 644 F. Supp. 2d 769, 779 (S.D.
Miss. 2007). While “Workers’ Compensation claims, and the laws that govern
them, are to be construed broadly and liberally in favor of the claimant,” this liberal
construction does not apply to provisions for the imposition of penalties. Miss.
Transp. Comm’n v. Dewease, 691 So. 2d 1007, 1016 (Miss. 1997) (citing DeLaughter
v. S. Cent. Tractor Parts, 642 So. 2d 375, 379 (Miss. 1994); V. Dunn, Mississippi
Workmen’s Compensation, § 305 (3d ed. 1982)). This Court sees no reason to treat a
penal regulation any differently than a penal statute. Because Holland did not
comply with the portions of the MWCC regulations governing reconsideration and
dispute resolution, the MWCC regulationsl cannot used here to assess interest and
penalties.
“State law governs the award of prejudgment interest in diversity cases.”
GuideOne Elite Ins. Co. v. Mount Carmel Ministries, 676 F. App’x 269, 281 (5th Cir.
2017) (quoting Meaux Surface Prot., Inc. v. Fogleman, 607 F.3d 161, 172 (5th Cir.
2010)). Miss. Code Ann. § 75-17-1 states that the legal rate of interest on all
contracts shall be eight percent per annum, calculated according to the actuarial
method. Furthermore, Miss. Code Ann. § 75-17-7 provides:
All judgments or decrees founded on any sale or contract shall bear
interest at the same rate as the contract evidencing the debt on which
the judgment or decree was rendered. All other judgments or decrees
shall bear interest at a per annum rate set by the judge hearing the
complaint from a date determined by such judge to be fair but in no
event prior to the filing of the complaint.

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Since the PHCS contract did not specify an interest rate, the Court finds that
Holland is entitled to recover interest in the amount of eight percent per annum,
calculated according to the actuarial method from September 29, 2014, the date on
which Holland filed his initial counterclaim against Multiplan and PHCS. (Ans. &
Counterclaim, ECF No. 16).
Holland is also entitled to recover post-judgment interest pursuant to 28
U.S.C. § 1961(a), which provides:
Interest shall be allowed on any money judgment in a civil case
recovered in a district court. Execution therefor may be levied by the
marshal, in any case where, by the law of the State in which such court
is held, execution may be levied for interest on judgments recovered in
the courts of the State. Such interest shall be calculated from the date
of the entry of the judgment, at a rate equal to the weekly average 1year constant maturity Treasury yield, as published by the Board of
Governors of the Federal Reserve System, for the calendar week
preceding[ ] the date of the judgment.
The original [291] Judgment was entered in this case on March 30, 2018; therefore,
Holland is entitled to post-judgment interest “at a rate equal to the weekly average
1-year constant maturity Treasury yield, as published by the Board of Governors of
the Federal Reserve System, for the calendar week preceding” March 30, 2018.
IT IS, THEREFORE, ORDERED AND ADJUDGED that Steven W.
Holland is entitled to recover prejudgment interest in the amount of eight percent
per annum, calculated according to the actuarial method from September 29, 2014.
IT IS, FURTHER, ORDERED AND ADJUDGED that Steven W. Holland
is entitled post-judgment interest at a rate equal to the weekly average 1-year

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constant maturity Treasury yield, as published by the Board of Governors of the
Federal Reserve System, for the calendar week preceding March 30, 2018.
SO ORDERED AND ADJUDGED this the 14th day of June, 2018.
s/

Louis Guirola, Jr.

LOUIS GUIROLA, JR.
UNITED STATES DISTRICT JUDGE

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