Justia Contracts Opinion Summaries

This case arose due to the failure of a New Jersey couple to pay for their adult son’s stay at a Pennsylvania nonprofit residential facility. It primarily raised a choice-of-law issue in relation to the two states’ filial-support statutes. Alexander Schutt (“Alex”), born in 1986, had severe mental and physical disabilities, including autism and obsessive-compulsive disorder. Alex's parents lived in New Jersey. In 2001, Alex was placed at Melmark, a non-profit residential care facility for intellectually and physically disabled persons, in Delaware County, Pennsylvania. Once Alex turned 21, the Princeton Regional School District stopped paying for his care at Melmark; at that point, payment for his care shifted to the New Jersey Department of Human Services, Division of Developmental Disabilities (NJ-DDD). In July 2011, NJ-DDD informed the Parents Alex would have to be relocated because the agency disapproved Melmark’s rates. NJ-DDD stated that the Parents, as guardians, should pick Alex up at Melmark and NJ-DDD would provide him with an emergency placement pursuant to New Jersey law. Parents did not retrieve Alex from Melmark. In December 2011, NJ-DDD wrote to Parents, stating it would fund Alex’s residence on a permanent basis at an identified facility in New Jersey beginning in January 2012. Unsatisfied, the Parents asked NJ-DDD instead to continue paying for Alex’s care at Melmark. NJ-DDD denied the request and advised the Parents it would stop paying Melmark as of December 31, 2011. Parents filed an administrative appeal in New Jersey in an effort to keep Alex at Melmark. NJ-DDD granted extensions of time to allow for Alex’s transfer to a New Jersey facility, but the agency ultimately informed Parents it would make no further payments to Melmark after March 31, 2012. When that date arrived, neither Parents nor NJ-DDD accepted custody of Alex, leaving Melmark to care for him uncompensated. Nevertheless, Parents continued to pay for off-campus speech classes, art classes, and equestrian therapy for Alex, all of which took place in Pennsylvania. In addition, Parents continued to visit Alex at Melmark almost every weekend even after NJ-DDD’s payments ceased. The Pennsylvania Supreme Court's resolution of the choice-of-law issue vitiated the trial court's basis for concluding the parents did not, in the individual capacity, appreciate Melmark's services. "[I]n weighing the equities, we conclude that it would be inequitable for Parents to retain the benefits they received from Melmark without paying for them. Thus, Melmark has established all three prerequisites for its equitable claims." As such, the Court held the Superior Court erred in finding the trial court properly denied relief on Melmark's equitable claims. View "Melmark, Inc. v. Schutt" on Justia Law

Plaintiff-petitioner Charissa Schultz was injured in a 2015 car accident in which the other driver failed to stop at a stop sign. The other driver’s insurance company settled for its $25,000 policy limit, and Schultz made a demand on her own uninsured/underinsured motorist benefits under her GEICO policy, which also had a $25,000 limit. In April 2017, after months of correspondence and apparent review of an MRI performed on Schultz in April 2015, GEICO offered Schultz its full policy limit, and it did so without requesting that she undergo an independent medical examination (“IME”). Indeed, GEICO’s claim logs reveal that at the time GEICO decided to offer Schultz its policy limits, it “concede[d] peer review wouldn’t be necessary,” indicating an affirmative decision not to request an IME. A few months later, Schultz filed the present lawsuit asserting claims for bad faith breach of an insurance contract and unreasonable delay in the payment of covered benefits. GEICO denied liability, disputing the extent and cause of Schultz’s claimed injuries and asserting that causation surrounding the knee replacement surgeries was “fairly debatable” because Schultz had preexisting arthritis, which GEICO claimed may independently have necessitated her surgeries. To establish its defense, GEICO ordered the IME and the district court granted that request. The Colorado Supreme Court concluded GEICO’s conduct had to be evaluated based on the evidence before it when it made its coverage decision and that, therefore, GEICO was not entitled to create new evidence in order to try to support its earlier coverage decision. The Court also concluded the district court abused its discretion when it ordered Schultz to undergo an IME over three years after the original accident that precipitated this case and a year and a half after GEICO had made the coverage decision at issue. View "Schultz v. GEICO Casualty Company" on Justia Law

This case was one in a longstanding dispute between major health services providers operating in Western Pennsylvania: UPE, a/k/a Highmark Health and Highmark, Inc. (collectively, Highmark) and UPMC (University of Pittsburgh Medical Center). Highmark and UPMC separately entered into Consent Decrees with the Commonwealth's Office of Attorney General (OAG). In this case, an issue arose concerning the obligations imposed by the Consent Decrees relative to UMPC's attempt to terminate ten hospital Medicare Acute Care Provider Agreements it had with Highmark. Pertinent here, UPMC's Consent Decree required it to treat Highmark's Medicare Advantage Plan consumers as in-network through the end date of the Consent Decree. UPMC allowed Provider Agreements with Highmark to renew annually in satisfaction of its in-network obligation. UPMC informed Highmark in accordance with the notice provisions, it would terminate the Provider Agreements on December 31, 2018, but would nonetheless continue to comply with all terms and obligations of those agreements through June 30, 2019, pursuant to the Decree runout provision. Highmark filed for an injunction and to hold UPMC in contempt. The Commonwealth granted OAG's petition to enforce, rejecting UPMC's contention that the six-month runout provision of the Provider Agreements satisfied its obligation to remain in "contract" with Highmark. The Pennsylvania Supreme Court reversed, finding the runout provision of the Provider Agreement satisfied UPMC's obligation to contract for in-network access to its facilities for Highmark's MA Plan subscribers through June 30, 2019. View "Pennsylvania v. UPMC, et al" on Justia Law

When Charlotte Fischer moved into a nursing home, she received an admissions packet full of forms. Among them was an agreement that compelled arbitration of certain legal disputes. The Health Care Availability Act (“HCAA” or “Act”) required such agreements contain a four-paragraph notice in a certain font size and in bold-faced type. Charlotte’s agreement included the required language in a statutorily permissible font size, but it was not printed in bold. Charlotte’s daughter signed the agreement on Charlotte’s behalf. After Charlotte died, her family initiated a wrongful death action against the health care facility in court. Citing the agreement, the health care facility moved to compel arbitration out of court. The trial court denied the motion, and the court of appeals affirmed, determining the arbitration agreement was void because it did not strictly comply with the HCAA. At issue was whether the Act required strict or substantial compliance. The Colorado Supreme Court held "substantial:" the agreement at issue her substantially complied with the formatting requirements of the law, notwithstanding the lack of bold type. View "Colorow Health Care, LLC v. Fischer" on Justia Law

The Supreme Court affirmed the denial of Appellant’s motion to dismiss or stay proceedings and compel arbitration, holding that the issue of whether the arbitration agreement in this case was enforceable was properly decided by the district court and not an arbitrator.Thomas Cullinane, as special administrator for the estate of his mother, Helen Cullinane, filed a wrongful death action against Appellant, Beverly Enterprises - Nebraska, Inc., doing business as Golden LivingCenter - Valhaven (GLCV). GLCV filed a motion to dismiss or stay proceedings and compel arbitration in accordance with the terms of a written arbitration agreement between GLCV and Helen. GLCV asserted that Eugene Cullinane, Helen’s husband, while acting as Helen’s attorney in fact, signed the agreement when he and Helen were admitted to the facility. The district court found that Eugene’s execution of the arbitration agreement could not be binding upon Helen, nor her estate, and thus dismissed GLCV’s motion. The Supreme Court affirmed, holding that the district court did not err in determining that the arbitration agreement was not binding upon Helen or her estate. View "Cullinane v. Beverly Enterprises - Nebraska, Inc." on Justia Law

Sports Medicine performed shoulder surgery on “Joshua,” who was covered by a health insurance plan, and charged Joshua for the procedure. Because it did not participate in the insurers’ network, Sports Medicine was not limited to the insurer’s fee schedule and charged Joshua $58,400, submitting a claim in that amount to the insurers on Joshua’s behalf. The claim form indicated that Joshua had “authorize[d] payment of medical benefits.” The insurer processed Joshua’s claim according to its out-of-network cap of $2,633, applying his deductible of $2,000 and his 50% coinsurance of $316, issuing him a reimbursement check for the remaining $316, and informing him that he would still owe Sports Medicine the remaining $58,083. Sports Medicine appealed through the insurers’ internal administrative process and had Joshua sign an “Assignment of Benefits & Ltd. Power of Attorney.” Sports Medicine later sued for violations of the Employee Retirement Income Security Act (ERISA), and breach of contract, citing public policy. The district court dismissed for lack of standing because Joshua’s insurance plan included an anti-assignment clause. The Third Circuit affirmed, holding that the anti-assignment clause is not inconsistent with ERISA and is enforceable. View "American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield" on Justia Law

The trial court did not err in dismissing Plaintiffs’ action for lack of subject matter jurisdiction due to Plaintiffs’ failure to exhaust administrative remedies in seeking damages for denied Medicaid reimbursement claims.The court of appeals reversed the trial court’s order, ruling that the trial court erred in dismissing Plaintiffs’ complaint without resolving certain factual issues and that Plaintiffs sufficiently demonstrated that it would be futile to pursue administrative remedies. The Supreme Court reversed, holding that the court of appeals erred in reversing the dismissal of Plaintiffs’ claims where Plaintiffs failed to exhaust their administrative remedies prior to filing suit and failed to demonstrate futility of the available remedies at this time. View "Abrons Family Practice & Urgent Care, PA v. North Carolina Department of Human Services" on Justia Law

The trial court did not err in dismissing Plaintiffs’ action for lack of subject matter jurisdiction due to Plaintiffs’ failure to exhaust administrative remedies in seeking damages for denied Medicaid reimbursement claims.The court of appeals reversed the trial court’s order, ruling that the trial court erred in dismissing Plaintiffs’ complaint without resolving certain factual issues and that Plaintiffs sufficiently demonstrated that it would be futile to pursue administrative remedies. The Supreme Court reversed, holding that the court of appeals erred in reversing the dismissal of Plaintiffs’ claims where Plaintiffs failed to exhaust their administrative remedies prior to filing suit and failed to demonstrate futility of the available remedies at this time. View "Abrons Family Practice & Urgent Care, PA v. North Carolina Department of Human Services" on Justia Law

Appellant BCBSM, Inc. (“Blue Cross”) denied respondent James Linn’s insurance claim because the requested treatment was not considered medically necessary under the parties’ health-plan contract. After Blue Cross denied the claim, an external-review entity determined that the treatment was, in fact, medically necessary for Linn’s condition. Blue Cross paid the claim, but Linn and his wife sued Blue Cross for breach of contract. The district court granted summary judgment for Blue Cross, concluding that the treatment was not medically necessary under the contract’s plain terms and that Blue Cross fulfilled its contractual obligations when it paid for the treatment following the external review. The court of appeals reversed. Because the Minnesota Supreme Court concluded: (1) external-review decisions were independent determinations of medical necessity that did not supersede contractual definitions of medical necessity; and (2) the health-plan contract plainly excluded coverage for Linn’s claim for treatment, the Court reversed. View "Linn v. BCBSM, Inc." on Justia Law

This case turned on whether an attorney-in-fact made a “health care decision” by admitting her principal to a residential care facility for the elderly and, in the process, agreeing to an arbitration clause. The trial court found she acted outside the scope of her authority under the power of attorney, and the arbitration clause this appeal seeks to enforce was void. The issue this case presented for the Court of Appeal’s review centered on the scope of two statutes, the Power of Attorney Law (Prob. Code, sec. 4000 et seq. (PAL)), and the Health Care Decisions Law (Prob. Code, sec. 4600 et seq. (HCDL)), in light of the care a residential care facility for the elderly agreed to provide, and actually provided, in this instance (Health & Saf. Code, sec. 1569 et seq.). For resolution, the Court had to parse the authority of two of the principal’s relatives, one holding a power of attorney under the PAL and one holding a power of attorney under the HCDL. The Court concluded admission of decedent to the residential care facility for the elderly in this instance was a health care decision, and the attorney-in-fact who admitted her, acting under the PAL, was not authorized to make health care decisions on behalf of the principal. As a result of this conclusion, the Court affirmed the trial court’s denial of a motion by the residential care facility to compel arbitration. Because the attorney-in-fact acting under the PAL did not have authority to make health care decisions for her principal, her execution of the admission agreement and its arbitration clause are void. View "Hutcheson v. Eskaton Fountainwood Lodge" on Justia Law