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Garcia v. Health Net of New Jersey

November 17, 2009

JOSEPH GARCIA, M.D.; JEFFREY GINSBURG, M.D.; KEVIN KEARNEY, M.D.; MARC KITROSSER, D.P.M.; KENNETH REMSEN, M.D.; HOWARD TAYLOR, M.D.; ROBERT BAZZINI, M.D.; JOHN CECE, M.D.; MICHAEL D'ANTON, M.D.; SHARON LI, M.D.; WILLIAM MATARESE, M.D.; LAWRENCE PIZZO, M.D.; ABAS REZVANI, M.D.; JOHN SANZONE, M.D.; JOHN SCHEIBELHOFFER, M.D.; BURTON SCHLECKER, M.D.; KENNETH GARRETT, M.D.; CLIFFORD GORDON, M.D.; JEANAE MAZZONE, D.O.; LEONARD NICOSIA, M.D.; ROBERT SCHLIEN, M.D.; LISA STEVENS, M.D.; AND ARTHUR SUFFIN, M.D., PLAINTIFFS-RESPONDENTS,
v.
HEALTH NET OF NEW JERSEY, INC., DEFENDANT/THIRD-PARTY PLAINTIFF-APPELLANT,
v.
WAYNE SURGICAL CENTER, LLC; JOSEPH BARATTA, M.D.; BRUCE CALIGARO, D.P.M.; ENDOSCOPY GROUP, LLC; RAMTIN KASSIR, M.D.; WILLIAM MATARESE, M.D.; LAWRENCE PIZZO, M.D.; ABAS REZVANI, M.D.; JOSEPH TARTA, M.D.; ALAN WASSERSTRUM, M.D.; WAYNE GYNECOLOGICAL SURGEONS, LLC; AND WSCAG INVESTMENT GROUP, LLC, THIRD-PARTY DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-37-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 5, 2009

Before Judges Rodríguez, Yannotti and Chambers.

Health Net of New Jersey, Inc. (Health Net) appeals from an order entered by the trial court on December 11, 2007, which granted summary judgment in favor of plaintiffs and third-party defendants on Health Net's claims against them, and denied its motion for summary judgment on those claims. We affirm.

The relevant facts are essentially undisputed. Wayne Surgical Center (WSC) is an ambulatory surgical center licensed by the New Jersey Department of Health and Senior Services. WSC is owned by physicians who perform procedures there on patients from the physicians' private practices. Health Net provides health insurance coverage to the physicians' patients. The physicians contracted with Health Net to provide services as part of its network; however, WSC is not part of Health Net's network of health care providers.

Health Net receives at least two insurance claims when one of its subscribers undergoes surgery at WSC. The first is a claim by the treating physician for his or her professional fees. The other is a claim by WSC for its facility fees. Since WSC is not part of the Health Net network, the subscriber is responsible for payment of "co-insurance," which is a percentage of WSC's charge.

Before undergoing surgery at WSC, each patient is required to sign a form stating that he or she is "fully responsible for 100 percent of [the center's] charge." It was, however, WSC's practice to waive the co-insurance obligation for most patients. WSC only pursued payment of co-insurance when a patient was directly reimbursed for WSC's facility charge but failed to turn over the money received to WSC.

Plaintiffs are physicians with ownership interests in WSC. In January 2006, they filed a complaint against Health Net alleging that it had unlawfully refused to renew their contracts to provide health care services as part of its insurance network. In February 2006, Health Net filed a counterclaim against plaintiffs and a third-party complaint against WSC and other physician-owners of WSC, in which it asserted claims under the Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -30, as well as claims for breach of the implied covenant of good faith and fair dealing, unjust enrichment and tortious interference with Health Net's subscriber contracts.

Thereafter, the parties filed cross-motions for summary judgment. The trial court filed a written opinion dated November 20, 2007, and corrected on November 21, 2007, in which it determined that plaintiffs and third-party defendants were entitled to summary judgment on the claims asserted against them, and Health Net was not entitled to summary judgment on its claims. The court filed another opinion dated November 30, 2007, finding that summary judgment should be granted to Health Net on plaintiffs' claims. The court entered an order dated December 11, 2007, memorializing its decisions on the motions.

This appeal followed. We granted motions to appear as amicus curiae by the Medical Society of New Jersey and the American Medical Association; the New Jersey Association of Health Plans; the Insurance Council of New Jersey and Property Casualty Insurers Association of America; and the State of New Jersey.

On appeal, Health Net raises the following issues for our consideration: 1) the trial court applied an "erroneous knowledge" standard to the IFPA claims; 2) the trial court erred by holding that insurance claims of a provider who waives payment of co-insurance do not misrepresent the provider's charges; 3) and the trial court erroneously granted summary judgment to plaintiffs and third-party defendants on its common law claims.

Having thoroughly reviewed the record and the legal arguments presented by the parties and amici, we conclude that Health Net's appeal is without merit. We accordingly affirm the order granting summary judgment to plaintiffs and third-party defendants substantially for the reasons stated by Judge Robert P. Contillo in his thorough and comprehensive opinion. We add the following comments.

In this matter, Health Net alleged that plaintiffs and third-party defendants violated the IFPA because they knowingly submitted claims that were false and misleading. Health Net maintained that submission of the claims violated the IFPA because the referrals by plaintiffs and third-party defendants of their patients to WSC violated the provisions of the so- called "Codey Law" that were in effect at the time the referrals were made. Health Net also alleged that plaintiffs and third-party defendants ...


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