Wagner et al v. Summit Air Ambulance et al

Filing 77

ORDER denying 67 Motion to Dismiss. Signed by Judge Brian Morris on 4/20/2018. (NOS)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BUTTE DIVISION

STAN and RAINY WAGNER, on
Behalf of Themselves and All Others
Similarly Situated,

CV-17-57-BU-BMM

Plaintiffs,
ORDER
vs.
SUMMIT AIR AMBULANCE, LLC,
REACH AIR MEDICAL SERVICES,
LLC, and DOES I-X,
Defendants.
REACH AIR MEDICAL SERVICES,
LLC.
Counterclaim and
Third Party Claim-Plaintiff,
vs.
HEALTH CARE SERVICE
CORPORATION d/b/a BLUE CROSS
AND BLUE SHIELD OF MONTANA
and STAN AND RAINY WAGNER,
Counterclaim and
Third-Party Claim Defendants.

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Reach Air Medical Services (“Reach”) filed its Amended Third-Party Claim
against Health Care Service Corporation d/b/a Blue Cross and Blue Shield of
Montana (“BCBSMT”) on February 7, 2018. (Doc. 66.) Reach alleges that the
course of conduct between Reach and BCBSMT gives rise to an implied-in-fact
contract. BCBSMT filed the instant Motion to Dismiss pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure on February 12, 2018. (Doc. 68.) The
Court conducted a motion hearing on March 14, 2018. (Doc. 73.)
BACKGROUND
Reach’s Amended Complaint against BCBSMT arises from Reach’s
transportation of Stan and Rainy Wagners’ minor son by fixed-wing air ambulance
from Bozeman, Montana to Denver, Colorado for medical treatment. Reach
operates emergency air ambulance services from several operations bases in
Montana and throughout the western United States. Reach does not dispatch its air
ambulances until third-party medical professionals or first responders request its
emergency transport services. The law requires that Reach transport patients
regardless of their ability to pay as Reach provides an emergency service.
BCBSMT operates as a health insurance company that provides health coverage to
its members in Montana, including the Wagners.
Reach transported the Wagners’ minor son on August 27, 2015. Reach billed
the Wagners for its services. The bill totaled $109,590.00. Reach subsequently
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reduced the bill to $62,990.38 to correct what it claimed to have been a billing
error. BCBSMT paid $22,933.00 upon receipt of the claim from Reach. BCBSMT
explained that this amount reflected its obligations under the Wagners’ health plan.
Reach accepted this payment. Reach proceeded to seek the remaining balance of
the bill from the Wagners.
The Wagners initiated an action to challenge Reach’s claim regarding the
outstanding balance on July 18, 2017. In response, Reach filed a counterclaim
against the Wagners and a third-party claim against BCBSMT for breach of an
implied contract. Reach alleges an underpayment of $40,057.38. BCBSMT seek to
dismiss Reach’s claim on the basis that the provision of medical services without
more does not give rise to an implied contract claim between the provider and the
health plan.
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of a
complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In evaluating a
12(b)(6) motion, the Court “must take all allegations of material fact as true and
construe them in the light most favorable to the nonmoving party.” Kwan v.
Sanmedica Int’l, 854 F.3d 1088, 1096 (9th Cir. 2017) (quoting Turner v. City and
County of San Francisco, 788 F.3d 1206, 1210 (9th Cir. 2015)). The complaint
must allege sufficient facts to state a plausible claim for relief to survive a motion
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to dismiss. Taylor v. Yee, 780 F.3d 928, 935 (9th Cir. 2015). Federal courts
generally view “with disfavor” Rule 12(b)(6) dismissals. Rennie & Laughlin, Inc.
v. Chrysler Corp., 242 F.3d 208, 213 (9th Cir. 1957). “A case should be tried on
the proofs rather than the pleadings.” Id.
DISCUSSION
Montana law recognizes that implied contracts are just as valid as express
contracts. Mont. Code Ann. § 28-2-103. The only difference being that implied
contracts come into being, and are manifested, by conduct, rather than a written
contract. Id. Four elements must exist to establish an implied contract: (1)
identifiable parties capable of contracting; (2) the parties consent; (3) a lawful
object; and (4) a sufficient cause or consideration. Mont. Code Ann. § 28-2-102.
BCBSMT argues that Reach’s Amended Complaint fails to support any
inference that BCBSMT intended to enter into a contract with Reach. BCBSMT
possessed no knowledge of Reach’s transport of the Wagners’ son until after the
transport had taken place. Reach and BCBSMT did not discuss price, an essential
term, at any time before it had provided the services.
Reach contends that implied-in-fact contracts arise from parties’ course of
conduct in a variety of contexts, including healthcare. The cases cited by Reach
prove persuasive at this juncture. For example, the Court in Chiron Recovery
Center, LLC v. AmeriHealth Hmo of New Jersey, Inc., 2017 WL 4390169 at *4-5
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(S.D. Fla. 2017), determined that Chiron stated a claim for an implied-in-fact
contract sufficient to meet the Rule 12(b)(6) pleading standard.
Chiron contacted Magellan, who acted as AmeriHealth’s agent regarding
pre-authorization of medical treatments. Id. at 1. Chiron rendered substance abuse
treatment to patients insured by AmeriHealth based on Magellan’s authorization.
AmeriHealth stopped paying Chiron. Id. Chiron pleaded facts sufficient to allege
that an implied-in-fact contract existed regarding the understanding between the
two companies: AmeriHealth’s transmittal of authorization codes for treatment; the
statements that the treatments were medically necessary; advice on how to expedite
payment; and course of dealing, including prior payment. Id. at 5. Likewise, the
courts in San Joaquin General Hospital v. United Healthcare Insurance Company,
2017 WL 1093835 at *3 (E.D. Cal. 2017), and Queen’s Medical Center v. Kaiser
Foundation Health Plan, Incorporated, 948 F. Supp. 2d 1131, 1146 (D. Haw.
2013), determined that the pleadings were sufficiently definite to plead the creation
of an implied-in-fact contract sufficient to survive a motion to dismiss.
Reach’s complaint, taken as true, alleges that an implied-in-fact contract
exists in light of the course of dealing between Reach and BCBSMT. Reach
alleges that they possess an obligation under the law to transport Wagners’ son
regardless of the Wagners’ ability to pay. (Doc. 66 at 37.) Reach alleges that
BCBSMT knew that its members may need emergency air ambulance services and
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that Reach sometimes could be the most convenient provider. Id. Reach further
alleges that BCBSMT did nothing to ensure that its members refrained from using
Reach’s services. Id. at 38. BCBSMT advises its members to seek emergency care
for life-threatening medical conditions on its website. Id.
Reach additionally alleges that Reach has billed BCBSMT for the usual and
customary rate on multiple occasions and that BCBSMT has paid that rate in full
for other air ambulance transports that have arisen in Montana in the last five
years. Id. at 39. Reach finally alleges that BCBSMT remained fully aware of the
rates charged by Reach for its services. Id. at 38. The Court must construe these
allegations in the light most favorable to Reach, as the nonmoving party. These
allegations, taken as true, provide that an implied-in-fact contract exists between
Reach and BCBSMT.
BCBSMT argues that it never consented to be bound by an implied-in-fact
contract. (Doc. 68 at 10.) Montana law requires consent of the parties for a contract
to exist. Mont. Code Ann. § 28-2-102. The Court must examine “whether the
parties have mutually consented to a contract.” Bitterroot Int’l Sys., Ltd. v. Western
Star Trucks, Inc., 2007 MT 48, ¶ 33, 336 Mont. 145, 153 P.3d 627. This inquiry
should evaluate whether a “reasonable person, based upon the objective
manifestation of assent, and all the surrounding circumstances, would conclude
that the parties intended to be bound by the contract.” Id.
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The Court determined in Bitterroot that no genuine issue of material fact
existed regarding whether Western objectively manifested its intent to be bound to
a contract when it sent a letter on April 25, 1996. Id. at ¶ 34. Bitterroot additionally
manifested its intent to assent to the offer by taking actions in reliance on the letter.
Id. at ¶ 36. Bitterroot took the following actions in reliance: Bitterroot (1) signed
the April 25 letter; (2) installed computer and telecommunications equipment; (3)
hired, trained, and placed a full-time employee at Western’s headquarters; and (4)
hauled freight for two years according to the terms and rates of a Transportation
Logistics Proposal referenced in the April 25 letter. Id.
Reach’s alleges consent through BCBMT publicly holding itself out as
willing to pay for emergency air ambulance services. Reach alleges that it has
transported BCBSMT members in the past years with the expectation that it would
receive its usual and customary rate. (Doc. 66 at 39.) BCBSMT cannot escape the
allegations of all the surrounding circumstances at this stage by arguing that it
lacked knowledge of the transport of the Wagners’ son until after the transportation
had taken place. Reach alleges that BCBSMT reasonably knew that Reach would
transport people insured by BCBSMT. BCBSMT knew generally of the charges
for such a transport based on its previous dealing with Reach. Id. at 38.
Notification after the transport does not appear to eliminate BCBSMT’s ability to
consent.
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The Court, at this time, must take the allegations in Reach’s Amended
Complaint as true. These allegations potentially could support an implied-in-fact
contract between Reach and BCBSMT. Reach alleges that it “fulfilled its
obligations under the implied contract by providing services and supplies from
which BCBSMT and the Wagners benefitted.” Id. at 39. Reach has alleged
sufficient facts to demonstrate that the parties consented and intended to enter into
a contract that could be sufficiently enforceable, and, subsequently, breached.
The Court will entertain summary judgment motions upon further
development of the record. A more fully developed record will allow the Court to
evaluate Reach’s implied contract theory in context. As noted in Bitterroot, courts
have deemed persuasive in implied contract cases, actions taken in reliance.
Bitterroot, and the other cases cited by Reach including Chiron, San Joaquin, and
Queen’s Medical Center, present more fully developed factual records than the
case here. The development of the record will reveal the extent, if any, to which
the parties’ conduct ripened into an implied-in-fact contract.
ORDER
Accordingly, IT IS HEREBY ORDERED that BCBSMT’s Motion to
Dismiss (Doc. 67) is DENIED.
DATED this 20th day of April, 2018.

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