Experience Infusion Center, LLC v. Texas Health + Aetna Health Insurance Holding Company, LLC et al
MEMORANDUM AND ORDER entered GRANTING 29 MOTION for Summary Judgment .(Signed by Chief Judge Lee H Rosenthal) Parties notified.(leddins, 4)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
EXPERIENCE INFUSION CENTER LLC,
AETNA LIFE INSURANCE COMPANY,
May 07, 2018
David J. Bradley, Clerk
CIVIL ACTION NO. H-17--34
MEMORANDUM AND ORDER
Experience Infusion sued Aetna Life Insurance Company under the Employee Retirement
Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., alleging that Aetna had paid for out-ofnetwork services but later recouped some of the payments on the ground that it had overpaid other
claims. Experience Infusion alleges that the initial payments were proper and seeks damages for
those offsetting recoupments.
Aetna issues employer-sponsored health-insurance plans and serves as a third-party
administrator for self-funded employee-benefit plans. Some of these plans are governed by ERISA.
Experience Infusion is an out-of-network medical provider of intravenous antibiotic-infusion
services. Most of its patients are treated by Dr. Patricia Salvato, an Aetna-network physician who
specializes in Lyme Disease treatment. Experience Infusion alleges that no providers in the Aetna
network offer these services.
The Aetna insurance plans assign to the medical-services provider the right to pursue claims
for plan benefits. Under the plans, Aetna must pay out-of-network providers a portion, usually 60
to 100 percent, of the “reasonable and customary” charges for the medical services provided to plan
Experience Infusion billed Aetna for the services it provided. Aetna reduced the bills to what
it stated were the reasonable and customary amounts, and, as set out in the plans, paid Experience
Infusion that percentage. Aetna sent Experience Infusion explanation-of-benefits statements
explaining the amounts it paid. According to Experience Infusion, Aetna did not ultimately pay the
amounts set out in those statements. Instead, Aetna offset the amounts on the ground that it had
years earlier overpaid Experience Infusion for services provided to other patients under different
Experience Infusion challenges this “recoupment” practice of offsetting payments based on
alleged overpayments made earlier for services to different patients on different plans. Experience
Infusion alleges that when it complained about these recoupments, “Aetna frequently did not provide
an explanation” or gave a general reason for why it viewed the prior payment as excessive, such as
a “lack of medical necessity” but without supporting documents. Experience Infusion’s complaint
sets out 19 examples of allegedly improper recoupments and inadequate explanations. (Docket
Entry No. 49 ¶¶ 27–86).
Experience Infusion asserted eight causes of action: (1) failure to comply with group-plan
requirements, in violation of ERISA; (2) breach of fiduciary duty under ERISA; (3) failure to
provide a full and fair review under ERISA; (4) violation of claims procedures under ERISA; (5)
violations of the Texas Prompt Pay Act, TEX. PROP. CODE § 28.002; (6) breach of contract; (7) fraud;
and (8) negligent misrepresentation. Aetna moved for summary judgment, Experience Infusion
responded, and Aetna replied. (Docket Entries No. 29, 44, 52). After the summary judgment
briefing, Experience Infusion dismissed its ERISA claims for breach of fiduciary duty, failure to
provide a full and fair review, and for violation of claims procedures, and its claims under the Texas
Prompt Pay Act. (Docket Entry No. 56, 59).
This Memorandum and Order addresses Aetna’s motion for summary judgment on the statelaw fraud and negligent-misrepresentation claims. Experience Infusion’s remaining ERISA claim
and its breach-of-contract claim are not addressed because they were asserted in an amended
complaint filed after Aetna moved for summary judgment.
Based on the pleadings, motion, response, reply, the summary judgment record, and the
applicable law, Aetna’s motion for summary judgment, (Docket Entry No. 29), is granted. The fraud
and negligent-misrepresentation claims are dismissed, leaving the ERISA and breach-of-contract
The reasons for these rulings are explained below.
The Summary Judgment Legal Standard
“Summary judgment is appropriate only if ‘there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.’” Vann v. City of Southaven, Miss., 884
F.3d 307, 309 (5th Cir. 2018) (citations omitted); see also FED. R. CIV. P. 56(a). “A genuine dispute
of material fact exists when the ‘evidence is such that a reasonable jury could return a verdict for
the nonmoving party.’” Burrell v. Prudential Ins. Co. of Am., 820 F.3d 132, 136 (5th Cir. 2016)
(quoting Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986)). “The moving party ‘bears the initial
responsibility of informing the district court of the basis for its motion, and identifying those
portions of [the record] which it believes demonstrate the absence of a genuine issue of material
fact.’” Brandon v. Sage Corp., 808 F.3d 266, 269–70 (5th Cir. 2015) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986)).
“Where the non-movant bears the burden of proof at trial, ‘the movant may merely point to
the absence of evidence and thereby shift to the non-movant the burden of demonstrating . . . that
there is an issue of material fact warranting trial.’” Kim v. Hospira, Inc., 709 F. App’x 287, 288 (5th
Cir. 2018) (quoting Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir.
2015)). While the party moving for summary judgment must demonstrate the absence of a genuine
issue of material fact, it does not need to negate the elements of the nonmovant’s case. Austin v.
Kroger Tex., L.P., 864 F.3d 326, 335 (5th Cir. 2017) (quoting Little v. Liquid Air Corp., 37 F.3d
1069, 1076 n.16 (5th Cir. 1994)). A fact is material if “its resolution could affect the outcome of the
actions.” Aly v. City of Lake Jackson, 605 F. App’x 260, 262 (5th Cir. 2015) (citing Burrell v. Dr.
Pepper/Seven UP Bottling Grp., Inc., 482 F.3d 408, 411 (5th Cir. 2007)). “If the moving party fails
to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the
nonmovant’s response.” Pioneer Exploration, LLC v. Steadfast Ins. Co., 767 F.3d 503 (5th Cir.
“When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive
a summary judgment motion by resting on the mere allegations of its pleadings.” Bailey v. E. Baton
Rouge Par. Prison, 663 F. App’x 328, 331 (5th Cir. 2016) (quoting Duffie v. United States, 600 F.3d
362, 371 (5th Cir. 2010)). The nonmovant must identify specific evidence in the record and
articulate how that evidence supports that party’s claim. Willis v. Cleco Corp., 749 F.3d 314, 317
(5th Cir. 2014). “This burden will not be satisfied by ‘some metaphysical doubt as to the material
facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.’”
Jurach v. Safety Vision, LLC, 642 F. App’x 313, 317 (5th Cir. 2016) (quoting Boudreaux v. Swift
Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005)). In deciding a summary judgment motion, the court
draws all reasonable inferences in the light most favorable to the nonmoving party. Darden v. City
of Fort Worth, 866 F.3d 698, 702 (5th Cir. 2017).
The summary judgment record includes:
Aetna’s business records containing the medical information about the plans at issue and
spreadsheets summarizing the plan information, (Docket Entry No. 29, Exs. 1-A–1-F );
an affidavit of Karen Chotiner, Aetna’s corporate representative, (Id., Ex. B);
a declaration of Jim Rutherford, Experience Infusion’s corporate representative, (Docket
Entry No. 44, Ex. A); and
an explanation-of-benefits statement that Aetna issued to Experience Infusion, (Docket Entry
No. 52, Ex. A).
Experience Infusion’s fraud and negligent-misrepresentation claims center on Aetna’s
explanation-of-benefits statements. Experience Infusion alleges that these statements contained
false, material representations that the claim amounts were payable, even though Aetna “never
intended to allow [Experience Infusion] to keep those payments.” (Docket Entry No. 49 ¶ 126).
Experience Infusion alleges that when Aetna issued the explanation-of-benefit statements, it knew
it would later recoup part of the payments to offset earlier payments that it allegedly later determined
to be excessive. (Docket Entry No. 44). Aetna seeks summary judgment on the fraud and negligentmisrepresentation claims, on the basis that the explanation-of-benefits statements accurately
represented the status of the claims when the statements issued. (Docket Entry No. 52).
The elements of a Texas fraud cause of action are: (1) a material misrepresentation; (2) that
was false; (3) when the representation was made, the speaker knew it was false or made it recklessly
without any knowledge of the truth and as a positive assertion; (4) the speaker made the
representation with the intent that the other party should act on it; (5) the party acted in reliance on
the representation; and (6) suffered injury. In re FirstMerit Bank, 52 S.W.3d 749, 758 (Tex. 2001).
The elements of a Texas claim for negligent misrepresentation are that: “(1) the
representation is made by a defendant in the course of his business, or in a transaction in which he
has a pecuniary interest; (2) the defendant supplies ‘false information’ for the guidance of others in
their business; (3) the defendant did not exercise reasonable care or competence in obtaining or
communicating the information; and (4) the plaintiff suffers pecuniary loss by justifiably relying on
the representation.” Mahmoud v. DeMoss Owners Ass’n, Inc., 865 F.3d 322, 329 (5th Cir. 2017)
(quoting Fed. Land Bank Ass’n v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991)).
Experience Infusion’s claims require a false statement or false information. The explanationof-benefits statements describe how Aetna adjudicated and paid a particular claim at a particular
time. Aetna cites record evidence explaining how it issued the explanation-of-benefits statements:
Following adjudication of a claim or batch of claims, Aetna issues an Electronic
Remittance Advice or printed Explanation of Benefits advising the provider and
member how each claim was paid, and then stores the claim data electronically.
Aetna maintains electronic claims payment data that includes numerous fields of
information such as: billed amounts; coinsurance amounts; copay amounts;
deductibles; allowed amounts; payment amounts; payor information; the name of the
program, group, or “plan sponsor”; unique claim identifiers; unique member
identification numbers; and the source of funding for the program, plan, or claim.
(Docket Entry No. 29, Ex. A). Aetna sent the statements to service providers after it paid claims,
explaining Aetna’s payment decision and calculation on each claim. The statements functioned as
receipts, setting out the services performed and the amounts paid. They are a snapshot of each
claim’s status when paid. The statements did not indicate that the payments were final or that Aetna
would not later seek to recoup, offset, or adjust part of the amount paid.
The explanation-of-benefits statements were not false when made. Experience Infusion
admits that it was paid the amounts set out in each explanation-of-benefits statement: “Aetna
engaged in a scheme where it represented to EIC an allowable amount of reimbursement, paid such
allowable amount, and then recouped most of the money paid in a subsequent fiscal year.” (Docket
Entry No. 44 at 8). The fact that Aetna later recouped payments for amounts that it alleged it had
overpaid to Experience Infusion on other claims does not make the statements describing the
amounts Aetna paid at the time false when made. Because the explanation-of-benefits statements
were not false when made, Experience Infusion’s claims for fraud and negligent misrepresentation
fail as a matter of law.
Experience Infusion’s motion for summary judgment, (Docket Entry No. 29), is granted.
SIGNED on May 7, 2018, at Houston, Texas.
Lee H. Rosenthal
Chief United States District Judge
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