Justia Contracts Opinion Summaries

To seek redress for an opioid epidemic, characterized by the Court of Appeal as having placed a financial strain on state and local governments dealing with the epidemic’s health and safety consequences, two California counties sued (the California Action) various pharmaceutical manufacturers and distributors, including the appellants in this matter, Actavis, Inc., Actavis LLC, Actavis Pharma, Inc., Watson Pharmaceuticals, Inc., Watson Laboratories, Inc., and Watson Pharma, Inc. (collectively, “Watson”). The California Action alleged Watson engaged in a “common, sophisticated, and highly deceptive marketing campaign” designed to expand the market and increase sales of opioid products by promoting them for treating long-term chronic, nonacute, and noncancer pain - a purpose for which Watson allegedly knew its opioid products were not suited. The City of Chicago brought a lawsuit in Illinois (the Chicago Action) making essentially the same allegations. The issue presented by this appeal was whether there was insurance coverage for Watson based on the allegations made in the California Action and the Chicago Action. Specifically, the issue was whether the Travelers Property Casualty Company of America (Travelers Insurance) and St. Paul Fire and Marine Insurance Company (St. Paul) owe Watson a duty to defend those lawsuits pursuant to commercial general liability (CGL) insurance policies issued to Watson. Travelers denied Watson’s demand for a defense and brought this lawsuit to obtain a declaration that Travelers had no duty to defend or indemnify. The trial court, following a bench trial based on stipulated facts, found that Travelers had no duty to defend because the injuries alleged were not the result of an accident within the meaning of the insurance policies and the claims alleged fell within a policy exclusion for the insured’s products and for warranties and representations made about those products. The California Court of Appeal concluded Travelers had no duty to defend Watson under the policies and affirmed. View "The Traveler's Property Casualty Company of America v. Actavis, Inc." on Justia Law

The issue presented for the Oregon Supreme Court’s review was whether an adult foster care provider claiming unjust enrichment may recover the reasonable value of its services from a defendant who, through fraud, obtained a lower rate from the provider for the services. Plaintiff owned two adult foster homes for the elderly. Plaintiff had contracted with the Oregon Department of Human Services to provide services in a home-like setting to patients who qualified for Medicaid. For those patients, the rates charged would be those set by the department. Isabel Pritchard resided and received care in one of plaintiff’s adult foster homes until her death in November 2008. Because Prichard had been approved to receive Medicaid benefits, plaintiff charged Prichard the rate for Medicaid-qualified patients: approximately $2,000 per month, with approximately $1,200 of that being paid by the department. Plaintiff’s Medicaid rates were substantially below the rates paid by plaintiff’s “private pay” patients. Prichard’s application for Medicaid benefits, as with her other affairs, was handled by her son, Richard Gardner. Gardner had for years been transferring Prichard’s assets, mostly to himself (or using those funds for his personal benefit). Gardner’s misconduct was discovered by another of Prichard’s children: defendant Karen Nichols-Shields, who was appointed the personal representative for Prichard’s estate. In 2009, defendant contacted the police and reported her brother for theft. Ultimately, Gardner pleaded guilty to three counts of criminal mistreatment in the first degree. Gardner’s sentence included an obligation to pay a compensatory fine to Prichard’s estate, to which he complied. After defendant, in her capacity as personal representative, denied plaintiff Larisa’s Home Care, LLC’s claim against Prichard’s estate, plaintiff filed this action, essentially asserting Prichard had been qualified for Medicaid through fraud and that Prichard should have been charged as a private pay patient. The Oregon Supreme Court concluded that, generally, a defendant who obtains discounted services as a result of fraud is unjustly enriched to the extent of the reasonable value of the services. The Court therefore reversed the contrary holding by the Court of Appeals. Because the fraud here occurred in the context of a person being certified as eligible for Medicaid benefits, however, the Court remanded for the Court of Appeals to consider whether certain provisions of Medicaid law may specifically prohibit plaintiff from recovering in this action. View "Larisa's Home Care, LLC v. Nichols-Shields" on Justia Law

Plaintiff YDM Management Company, Inc. (YDM) appeals from a judgment of the trial court in favor of defendant Sharp Community Medical Group, Inc. (Sharp), after Sharp successfully moved for summary judgment of YDM's operative complaint. YDM purchased accounts receivable from Doctors Express, a company that operated urgent care facilities in San Diego, for services rendered to Sharp managed care members. In its role as an Independent Practice Association (IPA), Sharp provided health insurance to its managed care members, and paid claims for services provided to its members. At the time that it provided the services at issue to Sharp members, Doctors Express did not have a preferred provider contract with Sharp. Providers without a contract with an IPA were reimbursed for nonemergency medical services provided to the IPA's members at amounts significantly less than the "reasonable and customary value for the health care services rendered." However, an IPA such as Sharp was required by regulation to reimburse out of network providers for the full "reasonable and customary value" for any emergency medical services provided to its members. As the assignee of Doctors Express, YDM filed this lawsuit seeking additional reimbursement from Sharp for services provided by Doctors Express to members of Sharp's health plan, beyond the amount that Sharp had already reimbursed Doctors Express for those services. The trial court granted summary judgment in favor of Sharp. On appeal, YDM contended the trial court erred in granting summary judgment in Sharp's favor based on the declaration of a Sharp employee, and that the court erred in failing to give adequate consideration to the declaration of YDM's expert in concluding that there was no triable issue of material fact. The Court of Appeal concluded the trial court did not err in granting summary judgment in favor of Sharp. View "YDM Management Co., Inc. v. Sharp Community Med. etc." on Justia Law

In March 2016, Catholic Health Initiatives Colorado (d/b/a Centural Health – St. Anthony North Hospital) filed suit against architectural firm Earl Swensson Associates (“ESA”) after ESA designed Catholic Health’s new hospital, Saint Anthony North Health Campus (“Saint Anthony”). Catholic Health alleged that ESA breached its contract and was professionally negligent by failing to design Saint Anthony such that it could have a separately licensed and certified Ambulatory Surgery Center (“ASC”). In December 2016, Catholic Health filed its first expert disclosures, endorsing Bruce LePage and two others. Catholic Health described LePage as an expert with extensive experience in all aspects of preconstruction services such as cost modeling, systems studies, constructability, cost studies, subcontractor solicitation, detailed planning, client relations, and communications in hospital and other large construction projects. Catholic Health endorsed LePage to testify about the cost of adding an ASC to Saint Anthony. At a hearing, ESA argued that the lack of detail in LePage’s report prevented ESA from being able to effectively cross-examine him. ESA further argued that striking LePage as an expert was the proper remedy because Rule 26(a)(2)(B)(I) limits expert testimony to opinions that comply with the Rule, and LePage offered no opinions in compliance. In 2015, the Colorado Supreme Court amended Colorado Rule of Civil Procedure 26(a)(2)(B) to provide that expert testimony “shall be limited to matters disclosed in detail in the [expert] report.” In this case, the trial court concluded that this amendment mandated the exclusion of expert testimony as a sanction when the underlying report fails to meet the requirements of Rule 26. The Supreme Court concluded the amendment created no such rule of automatic exclusion. Instead, the Court held that the harm and proportionality analysis under Colorado Rule of Civil Procedure 37(c) remained the proper framework for determining sanctions for discovery violations. Because the trial court here did not apply Rule 37(c), the Court remanded for further development of the record. View "Catholic Health v. Swensson" on Justia Law

Defendant Horizon Healthcare Services, Inc., New Jersey’s largest health insurer, maintained a two-tiered provider-hospital system. Plaintiff Saint Peter’s University Hospital, Inc., and plaintiff Capital Health System, Inc. and others, commenced separate lawsuits claiming Horizon treated them unfairly and in a manner that contravened their agreements when they were placed in the less advantageous Tier 2. Plaintiffs assert Horizon’s tiering procedures were pre-fitted or wrongfully adjusted to guarantee selection of certain larger hospitals for the preferential Tier 1. The New Jersey Supreme Court was asked, by way of interlocutory appeal, to settle multiple discovery disputes that arose in the course of the litigation. The Supreme Court concluded the Appellate Division exceeded the limits imposed by the standard of appellate review both by assessing the disputed information’s relevance against the panel’s own disapproving view of the merits and by giving no apparent weight or consideration to the protections afforded by confidentiality orders. Having closely examined the record, the Supreme Court rejected the Appellate Division’s determination that the chancery judges encharged with these matters abused their discretion. It was not an abuse of discretion for the chancery judges to find the information sought was relevant to plaintiffs’ claims that Horizon violated either the network hospital agreements’ contractual terms, or the overarching implied covenant of good faith and fair dealing, when they were relegated to the less desirable Tier 2. View "Capital Health System, Inc. v. Horizon Healthcare Services, Inc." on Justia Law

Plaintiffs Managed Health Care Administration, Inc. ("MHCA"), and Alabama Psychiatric Services, P.C. ("APS") appealed the denial of their motion to compel Blue Cross and Blue Shield of Alabama ("Blue Cross") to arbitrate their claims. In 1986, Blue Cross contracted with APS, a subsidiary of MHCA, to provide mental-health services to Blue Cross's insureds. In 1991, Blue Cross's contract with APS was transferred to MHCA. In 1995, Blue Cross and MHCA entered into a new contract in which MHCA agreed to provide or arrange for mental-health services to Blue Cross's insureds. In 2006, Blue Cross and MHCA entered into yet another contract in which MHCA agreed to provide or arrange for mental-health services to Blue Cross's insureds. In late 2012, Blue Cross decided to replace MHCA, as its behavioral health benefits management vendor, with New Directions Behavioral Health, L.L.C. In 2013, Blue Cross and New Directions Behavioral Health, L.L.C. ("New Directions"), entered into a contract in which New Directions agreed to "arrange for the provision of all Covered Services to Members in accordance with the terms and conditions set forth in this Agreement," which gave New Directions authority to delegate certain services to third parties. pursuant to the authority granted it under the Blue Cross-New Directions 2013 contract and at the request of Blue Cross, New Directions entered into a contract which MHCA in which New Directions sub-delegated to MHCA certain of New Directions' obligations under the Blue Cross-New Directions 2013 contract. A disagreement arose concerning the amount of compensation MHCA was to receive for its services. In 2015, the plaintiffs sued Blue Cross and several fictitiously named defendants alleging fraudulent misrepresentation, fraudulent suppression, breach of an implied contract, and promissory estoppel, claims pertaining to plaintiffs' 2006 contract and for payments of delegated duties. After review, the Alabama Supreme Court concluded plaintiffs demonstrated they had a right to arbitration. The circuit court erred in denying the plaintiffs' motion to compel arbitration, and the Court reversed the circuit court's judgment denying the plaintiffs' motion to compel arbitration in its entirety. View "Managed Health Care Administration, Inc. v. Blue Cross & Blue Shield of Alabama" on Justia Law

Marlene Baker LaBerge, a 73-year-old woman, was a resident and patient of a 24- hour skilled nursing facility owned by Italian Maple Holdings, LLC dba La Paloma Healthcare Center (La Paloma). LaBerge's heirs, Paul LaBerge, Suzanne Marx, and Talmadge Baker (collectively Plaintiffs) sued La Paloma and Plum Healthcare, LLC (together Defendants) for elder abuse, violations of the Patient's Bill of Rights as codified at Health and Safety Code section 1430, negligence, and wrongful death. In response, Defendants filed a petition to compel arbitration based on the two arbitration agreements that LaBerge had executed. The two arbitration agreements included language required by Code of Civil Procedure section 1295, subdivision (c), requiring such agreements to include a 30-day "cooling off" period, during which the parties to the agreement may rescind it. Ten days after LaBerge signed the agreements (and therefore, prior to the expiration of the statutorily-required 30- day rescission period), LaBerge passed away. The superior court denied the petition to compel arbitration, relying on Rodriguez v. Superior Court, 176 Cal.App.4th 1461 (2009) to conclude that the agreements were not effective until the 30-day rescission period passed without either party rescinding the agreements; because LaBerge died before the expiration of the 30-day rescission period, the agreements could not be given effect. On appeal, Defendants contended the trial court’s interpretation was wrong, and the Court of Appeal should decline to follow Rodriguez because that case was factually distinguishable from this case. The Court of Appeal concluded the trial court erred in interpreting section 1295, subdivision (c), and that the arbitration agreements were valid and enforceable. Pursuant to the plain language of section 1295, subdivision (c), the terms of those agreements governed the parties' relationship upon their execution; the fact that one signatory died before the expiration of the statutory 30-day rescission period does not render the terms of the parties' agreements unenforceable in the absence of other grounds for not enforcing them. View "Baker v. Italian Maple Holdings" on Justia Law

In this declaratory judgment proceeding, petitioner Exeter Hospital, Inc. (Exeter) appealed a superior court order denying its motion for partial summary judgment as to the amount at which coverage was triggered under an umbrella policy (the policy) issued to Exeter by respondent Steadfast Insurance Company (Steadfast). In the spring of 2012, an outbreak of Hepatitis C infections among patients serviced by Exeter’s cardiac catheterization lab led investigators to discover that a technician had spread the virus to patients “through a clandestine drug diversion scheme.” The technician allegedly injected certain drugs into his body by way of intravenous needles, then reused the needles on patients, thereby infecting them with the virus. Numerous lawsuits were lodged against Exeter by affected patients. Exeter was primarily insured through a Self-Insurance Trust Agreement (SIT), which provided professional liability coverage in the amount of $1 million per medical incident, with a $4 million annual aggregate cap. Exeter also maintained the policy with Steadfast, which provided excess health care professional liability coverage. Steadfast maintained that it would pay damages only in excess of the $100,000 retained limit for each medical incident. Exeter filed this proceeding, seeking a declaration that it was not required to pay $100,000 retained limit per claim. The trial court interpreted the term “applicable underlying limit” as being a variable amount “dependent on the actual coverage remaining under [the] other [limits of] insurance,” here, the limits of the SIT. Because Exeter had paid out the limits of the SIT, the court found that the “applicable underlying limit” was zero, thereby rendering the $100,000 retained limit greater than the “applicable underlying limit.” Thus, the court determined that, pursuant to “Coverage A,” Steadfast was required “to pay damages in excess of $100,000 for each medical incident.” Exeter sought reconsideration of the court’s order, which the court denied. Although the New Hampshire Supreme Court did not agree with every underlying argument pressed by Exeter, it concluded that its overall argument regarding the interpretation of Coverage A was reasonable, and the trial court therefore erred in granting partial summary judgment as to the terms of Coverage A. View "Exeter Hospital, Inc. v. Steadfast Insurance Company" on Justia Law

Pacific Bay treated an individual who was a subscriber to a Blue Shield health plan. It submitted invoices to Blue Shield for payment for the services rendered to the subscriber. Pacific Bay contends it was underpaid and brought suit against Blue Shield to recover the additional amount it claimed to be owed. The court sustained Blue Shield's demurrer to the first amended complaint (FAC) without leave to amend, finding that Pacific Bay had not shown that it was entitled to any payment from Blue Shield. As an out-of-network, nonemergency service provider, Pacific Bay was entitled to payment for treating Blue Shield's subscriber under the terms of the applicable evidence of coverage (EOC). Pacific Bay did not allege Blue Shield paid it improperly under the EOC, nor did it argue that it could allege additional facts to support such a claim. Pacific Bay claimed it was underpaid. Against this backdrop, Pacific Bay's other allegations did not give rise to any valid cause of action. View "Pacific Bay Recovery v. Cal. Physicians' Services" on Justia Law

Plaintiff-Appellant Suture Express, Inc. appeals from the district court’s entry of summary judgment in favor of Cardinal Health 200, LLC (“Cardinal”) and Owens & Minor Distribution, Inc. (“O&M”) under Section 1 of the Sherman Antitrust Act, Section 3 of the Clayton Act, and the Kansas Restraint of Trade Act (“KRTA”). Suture Express, Cardinal, and O&M compete in the national broadline medical-and-surgical (“med-surg”) supply and distribution market. After Suture Express entered the "suture-endo" market and steadily grew its market share, Cardinal and O&M responded by instituting bundling packages in their contracts. Suture Express sued Cardinal and O&M, alleging that their bundling arrangements constituted an illegal tying practice in violation of federal and state antitrust laws. The court held that Suture Express’s federal claims failed as a matter of law because it could not establish that either Cardinal or O&M individually possessed sufficient market power in the other-med-surg market that would permit it to restrain trade in the suture-endo market. Even were this not the case, however, the court also held that: (1) Suture Express could not establish antitrust injury because it had not shown that competition itself had been harmed; and (2) Cardinal and O&M cited sufficient procompetitive justifications for the bundling arrangement to overcome any harm caused by any anticompetitive effects resulting from the bundle. Viewing the evidence in the light most favorable to Suture Express, the Tenth Circuit did not think the company could survive summary judgment under Section 1 of the Sherman Act, Section 3 of the Clayton Act, or the Kansas Restraint of Trade Act. "There simply is not enough probative evidence by which a reasonable jury could find that Cardinal’s and O&M’s bundling arrangement unreasonably restrained trade in violation of federal or state antitrust law." View "Suture Express v. Owens & Minor" on Justia Law