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.
