Judge Denies Summary Judgment for Both Parties in Contract Breach Suit

Judge Lucy H. Koh of Northern District of California on Friday denied summary judgment to both the plaintiff and the defendants in a suit regarding alleged breaches of implied-in-fact contract and express contract.

According to the court, plaintiff California Spine and Neurosurgery Institute, in March and July 2018, provided spinal surgeries purported to be “medically necessary” to three patients who were beneficiaries of plans by the defendant, United Healthcare Insurance Co. The plaintiff was an out-of-network provider under the defendant’s health plans, the court noted.

The defendant told those insured under its plans to present an identification card to medical providers “’to assure medical providers that they would be paid for medical care … at a percentage of the usual and customary value for such care,’” according to the plaintiff’s second amended complaint. “Furthermore, the patients’ employer published a summary of the benefits of patients’ medical plans and noted that the plans paid 70% of eligible expenses for care from out-of-network providers,” the court said.

The plaintiff claimed in the complaint that upon speaking to the defendant’s client service representatives, the representatives articulated that United “carried the financial responsibility” to cover the three patients’ medical services “at 70% of the usual and customary value for such care.” Further, the defendant allegedly sent letters to the plaintiff for the three patients authorizing the coverage. After the plaintiff submitted claims for payment for these services, however, the defendant purportedly underpaid the plaintiff by at least $206,909.66, the judge explained.

After the plaintiff’s first and second complaints partially survived dismissal, the defendant filed a counterclaim against the plaintiff, alleging that United, in fact, overpaid the plaintiff for the services in question by $98,140, the court explained. Both the plaintiff and the defendant filed a motion for summary judgment against one another on the same day, Nov. 20, 2020.

The defendant’s motion sought summary judgment — or, alternatively, partial summary judgment — on the plaintiff’s allegations in the second amended complaint: breach of implied-in-fact contract and breach of express contract. United’s underpinning argument was that there was “no genuine issue of material fact regarding whether a contract existed” between the parties, pointing to the ambiguity of whether the alleged communications between the plaintiff and United to verify and authorize coverage constitute existence of a contract. The judge disagreed, stating that the plaintiff’s claims of benefits verification calls and authorization letters between the parties do concern material fact and are sufficient in demonstrating that a contract exists.

The judge also dismissed the plaintiff’s claim for summary judgment against the counterclaim of the defendant, arguing that the plaintiff has not sufficiently shown reason for why the defendant’s counterclaim “cannot show the essential elements of money had and received,” which refers to “wherever one person has received money which belongs to another, and which in equity and good conscience should be paid over to the latter.” The judge also noted that the defendant’s counterclaim was not untimely, as the plaintiff attempted to argue.

California Spine and Neurosurgery Institute is represented by Stephenson, Acquisto & Colman. United Healthcare is represented by Gordon Rees Scully Mansukhani.