Mo. SC upholds ruling in favor of health care providers

JEFFERSON CITY, Missouri (Legal Newsline) - The Missouri Supreme Court has affirmed the grant of summary judgment to a group of defendant health care providers, ruling that the plaintiffs had not shown they were damaged by the health care provider's alleged improper surgical billing to the plaintiff's respective insurers.

Judge Mary R. Russell wrote the majority opinion of the 3-2 court, and Chief Justice Richard B. Teitelman authored a dissent. Russell was joined by Judges Zel M. Fischer and Laura Denvir Stith, while Teitelman was joined by Judge Patricia Breckenridge. Judges George W. Draper and Paul C. Wilson did not participate.

Plaintiffs Alice Roberts, Kevin Hales, and Christy and Tim Millsap brought suit against multiple health care providers alleging that they were victims in a scheme of improper surgical billing by Dr. Richard Coin and his business, Reconstructive Microsurgery Associates.

Roberts and Hales and the Millsaps' child were treated by Dr. Coin and they had treatments at facilities of other named defendants. Due to improper coding of Dr. Coin's surgical procedures, allegedly fraudulent overcharges were billed to Roberts' and Hales' employers' workers' compensation insurers and the to Millsaps' private health insurer, according to the opinion.

None of the Plaintiffs were billed for the overcharges because the billings were sent directly to the insurers. However, Plaintiffs had entered into contracts with their insurers in which they were to be personally liable for any treatment costs not covered by insurance or other third-party payors.

RMA and Dr. Coin pleaded guilty to federal charges related to creating billing overcharges by using improper coding and the plaintiffs later brought suit, asserting that they were harmed by the scheme.

"Defendants moved for summary judgment, arguing that Plaintiffs lacked standing and could not show that they suffered any injury-in-fact or damages that were necessary to the proof of their claims. The circuit court granted summary judgment in favor of Defendants on all claims," the opinion states.

The court found that Plaintiffs had not presented any evidence that they had suffered damages due to the Defendants' alleged overcharges. The court noted that the "failure of proof of damages" was relevant to the issue of "standing" and it stated that a suit against the Defendants could be properly brought by "someone who has actually been injured."

The Plaintiffs appealed to the state's highest court.

"As an initial matter, this Court addresses Plaintiffs' arguments that summary judgment was not proper on the basis that they lacked standing," Judge Russell wrote. "This Court notes that the circuit court did not base its judgment on findings related to Plaintiffs' standing in this case but rather expressly articulated that its decision was based on Plaintiffs' failure of proof of damages.

"Nonetheless, standing remains in debate among the parties. When standing is questioned, this Court must determine the issue of standing before examining the substantive issues in the case, as a lack of standing would require dismissal.

"The essence of standing is that the party seeking relief has a personal interest at stake in the dispute, even if that interest is attenuated, slight or remote... Considering the standards for establishing standing, this Court finds that Plaintiffs have sufficiently demonstrated that they have standing in this action.

"Plaintiffs' assertions of their potential liability for the alleged overcharges demonstrate a legally cognizable interest in this litigation and a threatened injury. Establishing standing by showing such a threatened injury, however, does not establish that Plaintiffs established the requisite damages element necessary for their claims to survive summary judgment."

Having settled the question of the Plaintiffs' standing, Judge Russell moved on to the issue of "damages."

"Plaintiffs concede that they have not suffered an injury-in-fact or damages by way of being billed for any overcharges," Russell wrote. "Instead, Plaintiffs ask this Court to declare that they have established damages by showing that they have potential liability for their treatment costs because they contracted to pay any costs not paid by their insurers.

"They argue that legal liability for potential damages is sufficient to survive Defendants' motions for summary judgment. This Court, however, is not persuaded by Plaintiffs' assertions that they suffered damages merely by entering an agreement to pay if their insurers did not.

"Plaintiffs seek to recover monies for alleged overcharges that they did not pay and would not have to pay if Defendants improperly charged them. This Court agrees with the circuit court that Plaintiffs cannot proceed with claims to 'recover money that incontrovertibly they never lost.'"

Plaintiffs had advanced an argument that the trial court erred in determining they did not suffer damages because that finding is a violation of the collateral source rule.

"Application of the collateral source rule prevents an alleged tortfeasor from attempting to introduce evidence at trial that the plaintiff's damages will be covered, in whole or in part, by the plaintiff's insurance or another source.

"Plaintiffs contend that the collateral source rule prevented the circuit court in this case from considering, when it was measuring Plaintiffs' damages, that the alleged overcharges were paid by Plaintiffs' insurers and not by Plaintiffs.

"In this case, there was no collateral source of payments to Plaintiffs for their damages, as Plaintiffs did not suffer damages. The circuit court did not err in determining that the collateral source rule is inapplicable in this case, as the rule cannot create damages for Plaintiffs where none existed."

Finally, the Plaintiffs had argued that although their insurers had actually paid the overcharges, the insurers' remedy to collecting the overcharges paid was to seek subrogation from a Plaintiffs" award of judgment.

"Plaintiffs maintain that insurers are akin to billing agents for patients, as the patients remain ultimately liable for their treatment costs. Plaintiffs argue that a patient's claim against a provider remains with the patient, unless the claim is expressly assigned to an insurer," the opinion states.

"Contrary to Plaintiffs' assertions, however, subrogation and assignment are not relevant concepts in this case. Here, Plaintiffs never had legal title to any claims related to their insurers' payments for alleged overcharges. The trial court did not err in finding that the insurers were the 'owners of any claims' in this case.

"For the foregoing reasons, the circuit court's judgment is affirmed."

"The principal opinion holds that summary judgment was appropriate because, as a matter of law, the plaintiffs failed to assert a viable damages claim," wrote Chief Justice Teitelman in his dissent. "The opinion concludes that a claim of potential legal liability for medical overbilling fails as a matter of law to state a viable claim for damages because an insurance company paid the bill.

"I respectfully dissent because, as the plaintiffs allege, they in fact are exposed to potentially crushing legal liability for the fraudulent overbilling of the defendants in this case.

"The plaintiffs contracted with the health care providers for medical services. The health care providers billed the plaintiffs, and the plaintiffs' insurance company paid the bill. It then was discovered that the bills reflected fraudulent overcharges.

"The principal opinion notes that those plaintiffs with private insurance contractually are required to pay any costs not paid by their insurers but assumes that there can be no cognizable damages because the plaintiffs' damages here are purely speculative and did not materialize. This assumes that the plaintiffs' claim of potential damages is simply an absence of damages and begs the question of whether potential liability is sufficient.

"For purposes of summary judgment analysis, it is just as plausible to characterize the plaintiffs' claim of potential damages as an issue pertaining to the amount of damages sustained as a result of the overbilling.

"This should be clarified through further litigation... This is particularly true given the fact that there appears to be nothing preventing the insurance companies from filing suit to recoup the overcharges from the patients.

"If further litigation establishes conclusively that the plaintiffs' claim of potential liability is in fact purely speculative, then an appropriate judgment could be entered at that time. In the meantime, I would allow the case to proceed."