Tuesday, January 29, 2013

Roberts v. BJC Healthcare[1]

Opinion handed down January 29, 2013

Plaintiffs brought suit against health service providers claiming that they were victims in a fraudulent billing scheme.  The circuit court ruled that because Plaintiffs were not billed for the alleged overcharges, they were unable to prove damages, and entered judgment in favor of the health service providers.  The Supreme Court of Missouri affirmed the circuit court’s holding.

I.  Facts & Holding

Alice Roberts, Kevin Hales, and Christy and Tim Millsap (collectively "Plaintiffs") alleged that they were victims in a scheme of improper surgical billing by Dr. Richard Coin and his business.[2]  Improper coding of the surgical procedures led to allegedly fraudulent overcharges being billed to the insurers providing coverage for the patients’ care.[3]  The patients were not billed for the alleged overcharges, but before the medical treatments in question, the patients entered into contracts with the insurers to be held personally liable for any treatment costs not covered by insurance or other third-party payors.[4]  As a result, Coin and his business pleaded guilty to federal charges related to creating billing overcharges by using improper coding.[5]

Plaintiffs brought suit under the Missouri Merchandising Practices Act (“MMPA”), alleging they were harmed by the overcharging scheme.[6]  Defendants moved for summary judgment, arguing the patients lacked standing and could not show that they suffered any injury-in-fact or damages necessary to prove their claims because their insurance companies, and not them, had paid the alleged overages.[7]  The circuit court granted summary judgment in favor of the healthcare defendants, finding that although the Plaintiffs had standing, they failed to present any evidence that they had suffered damages because of the alleged overcharges.[8]  The circuit court additionally rejected Plaintiffs’ arguments that the collateral source rule or subrogation principles established their claim’s validity.[9] 

On appeal, the Supreme Court of Missouri concurred with the circuit court’s reasoning and affirmed the judgment for the Defendants.[10]  The Court agreed that Plaintiffs have standing, as their “assertions of their potential liability for the alleged overcharges demonstrates a legally cognizable interest in the litigation and a threatened injury.”[11]  However, the Court held that “establishing standing by showing such a threatened injury does not establish that the Plaintiffs established the requisite damages element necessary for their claims to survive summary judgment.”[12]  The Court noted that no damages were found because “Plaintiffs’ insurers were billed for and paid the alleged overcharges, and Plaintiffs’ potential liability remained a speculative harm that did not materialize.”[13]  Since Plaintiffs did not show that they suffered any damages, the Court held summary judgment was proper.[14]

The Court additionally held that the circuit court did not err in determining that the collateral source rule is inapplicable in this case, noting that the collateral source rule “cannot create damages for the patients where none existed.”[15]  Further, the circuit court did not err in finding that subrogation and assignment are not relevant concepts in this case, as the Plaintiffs never had legal title to any claims related to their insurers’ payments for alleged overcharges.[16]

II. Legal Background

A. Standing

When standing is questioned, the Supreme Court of Missouri must determine the issue of standing before examining the substantive issues in the case, as a lack of standing will require dismissal.[17]  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.”[18]  Plaintiffs must show they have “some legally protectable interest in the litigation so as to be directly and adversely affected by its outcome.”[19]

B. Damages

It is well recognized that establishing damages is an essential element of a claim, and a defendant may establish a right to summary judgment by showing that the plaintiff is unable to produce sufficient evidence to establish one or more of the essential elements of the claim.[20]  Further, a plaintiff cannot prove damages with claims to “recover money that incontrovertibly they never lost.”[21]

C. The collateral source rule

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.[22]  The policy behind the rule is that a wrongdoer should not enjoy reduced liability because an insurance company or other source shielded the person he harmed from expenditures.[23]

D. Subrogation and assignment

Claims that are “assigned” are those in which the assignor gives all the rights of the matter to the assignee, such that an insurer that is “assigned” a claim receives legal title to the claim and the exclusive right to pursue the alleged tortfeasor.[24]  The insured plaintiff in a subrogation matter, on the other hand, retains the legal title to the claim, and the insurer pursues a remedy by seeking subrogation from the proceeds recovered by the insured plaintiff’s litigation.[25]

III. Comment

The Court’s rationale is persuasive and sound.  Surely, the Plaintiffs have no injury stemming from not paying the overcharge.  The only injury present belongs to the insurers, who are fully capable of bringing suit to recover.  This holding helps clarify the proof needed to establish damages.  If potential liability was enough to satisfy an essential element of a claim, the courts would likely be saturated with frivolous suits even more so than they already are.

-  Cody Reinberg

[1]  No. SC92700 (Mo. Jan. 29, 2013), available at http://www.courts.mo.gov/file.jsp?id=59613. The West reporter citation is Roberts v. BJC Health System, 391 S.W.3d 433 (Mo. 2013) (en banc).
[2]  Id. at 1-2.
[3]  Id at 2.
[4]  Id.
[5]  Id.
[6]  Id. at 3.
[7]  Id.
[8]  Id.
[9]  Id. at 4.
[10]  Id. at 1.
[11]  Id. at 5-6
[12]  Id. at 6.
[13]  Id.
[14]  Id.
[15]  Id. 7-8.
[16]  Id. 8-9.
[17]  See Farmer v. Kinder, 89 S.W.3d 447, 451 (Mo. banc 2002).
[18]  Ste. Genevieve Sch. Dist. R-II v. Bd. of Alderman of Ste. Genevieve, 66 S.W.3d 6, 10 (Mo. banc. 2002).
[19]  Id.
[20]  See Hoffman v. Union Elec. Co., 176 S.W.3d 706, 707 (Mo. banc 2005).
[21] Cf. Freeman Health System v. Wass, 124 S.W.3d 504, 506-509 (Mo. App. 2004).
[22]  See Smith v. Shaw, 159 S.W.3d 830, 832 (Mo. banc 2005).
[23]  Id.
[24]  Keisker v. Farmer, 90 S.W.3d 71, 74 (Mo. banc 2002).
[25]  Id.