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Valley Hospital v. Spunt


February 3, 2010


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-3246-07.

Per curiam.


Argued January 11, 2010

Before Judges Reisner and Yannotti.

This case concerns a dispute between plaintiff Valley Hospital (the hospital), defendant-third party plaintiff Christy Spunt, a former hospital patient, and her insurers third-party defendants Empire Blue Cross Blue Shield of New York (Empire) and Group Health Incorporated (GHI). The hospital appeals from a September 12, 2008 order granting Empire's summary judgment motion and dismissing the complaint on the grounds that the hospital's lawsuit constituted balance billing prohibited under its provider contract with Empire. The hospital also appeals from an October 24, 2008 order denying its motion for reconsideration. We reverse the order granting summary judgment and remand this matter to the trial court.


We discuss the facts and procedural history at some length because they illuminate the result we reach in this case. The hospital filed a complaint on May 3, 2007, against Christy and Barry Spunt, seeking recovery of $17,931.88 in payments for medical services provided to Christy.*fn2 Defendant filed an answer and counter-claim on October 2, 2007, alleging that the hospital was an "in-network provider, of which, according to the defendant's insurance policies, 100% of all bills are covered," and claiming that the hospital negligently billed her insurance carriers and improperly charged her for alleged out-of-network services which were in fact in-network services. She also filed a third-party complaint against her insurance carriers, GHI and Empire, alleging breach of their duty to make payment under her insurance policies. By leave of court, on July 18, 2008, the hospital filed an amended complaint seeking an additional $55,108.61 for medical services provided to Christy.*fn3

On August 11, 2008, Empire filed a motion for summary judgment. Empire asserted the following in its one-paragraph statement of undisputed material facts:

Plaintiff the Valley Hospital is a participating provider in Empire's network and is a party to a network provider agreement with Empire. Attached hereto . . . is a portion of this agreement which bars the Valley Hospital from filing lawsuits against member-patients for services rendered. Accordingly, the proposed amended claim must fail as a matter of law.

Empire also relied upon the certification of one of its attorneys, which referenced the network provider agreement (provider agreement) between the hospital and Empire, and attached a copy of the Agreement.

The provider agreement contained the following language:

Empire is the sole party responsible for making payment to Hospital as compensation for providing Covered Services to its Covered Persons. Under no circumstances, including insolvency of Empire or termination of this Agreement, shall Hospital seek payment from the Covered Person for payment of Covered Services rendered while this Agreement is in effect, except for visit fees, copayments or coinsurance . . . . Hospital's obligation to hold Covered Persons harmless for the cost of Covered Services rendered shall apply even if Hospital asserts that compensation paid or payable by Empire for a Covered Service rendered hereunder has not been made in accordance with this Section VI or is otherwise inadequate. Hospital may bill a Covered Person for any non-covered services; provided, however that for services which are not covered because Empire has determined that the services are medically unnecessary, Hospital may only bill for such services in accordance with Paragraphs C and D below. However, Hospital shall not bill a Covered Person until it has received an explanation of benefits (EOB) from Empire that states that the service at issue is not deemed to be medically necessary . . . .

It is clear that this provision precludes balance billing for covered services, but it is not clear that it applies to charges for services which simply are not covered under the policy, as opposed to charges denied as excessive or denied because they relate to medically unnecessary procedures. Further, Empire did not provide an explanation from a knowledgeable Empire employee as to how the agreement was administered. The hospital's response did not clarify these issues.

The hospital's response to Empire's statement of material facts admitted that the hospital is "generally" a participating provider in Empire's network and is "generally a party to a network provider agreement with Empire." However, the hospital disputed that it was a "participating provider" for purposes of the specific services rendered to Christy. The hospital asserted that it was a non-participating provider in the Spunts' "Comprehensive Benefits Plan (CBP)," which Barry Spunt received as a New York City employee,*fn4 and that the provisions of the CBP "control in this instance as to whether Plaintiff is a 'participating provider' in regards to Empire."

The hospital further asserted that "Empire rejected paying such bills upon the basis that the treatment was 'uncovered' by Empire," and that under the terms of the controlling GHI plan, defendant was required to pay the hospital directly. The hospital also attached to its statement a document signed by Christy acknowledging that she may be liable for services if her insurance denied payment because of improper authorization. However, other than a citation to that document, the hospital's statement of material facts did not cite to any evidence in the record, in violation of Rule 4:46-2(a) and (b).

Rather than filing a certification from a knowledgeable employee to support its motion opposition, the hospital filed the certification of one of its attorneys setting forth a series of legal arguments. The attorney also certified that:

Plaintiff sought payment of Ms. Spunt's bills first from Empire which rejected same as "uncovered." The applicable provisions of Empire and Plaintiff's Agreement provide that Plaintiff as a general participating provider cannot seek recovery from a "covered person" for "covered services." Since, the services were determined to be uncovered by Empire, Ms. Spunt was an "uncovered" person under the general participating agreement between Empire and Plaintiff, and as such, Plaintiff is entitled to recover directly from her pursuant to that general participating agreement with Empire. Thus this is another basis upon which Empire's motion must be denied.

The hospital did not submit a certification from a hospital employee or other legally competent evidence, concerning its attempts to collect payment from Empire or Empire's rejection of those claims.*fn5

On September 9, 2008, Empire filed a reply. In its submission, Empire purported to provide evidence that the hospital had submitted bills to Empire for the services rendered to Christy, and that Empire sent payment for such services. However, instead of authenticating these documents with a certification from an Empire employee with personal knowledge, Empire again improperly relied on a certification from its attorney.

At oral argument of Empire's motion, its attorney argued that the hospital sued Christy "after the relative insurance agreements had paid whatever was the amount pursuant to those benefit contracts," and that Empire paid the hospital $73,000. The hospital's attorney countered that the payments it received were not for the services at issue, and argued that the disputed issue was material:

Ms. Spunt was in for numerous treatments, Your Honor, emergency room, et cetera. Mr. Bursik submitted in his reply certification to my opposition a statement alleging that . . . [the] statement submitted reflects payment of the bills at issue. That's not the case, Your Honor. I checked with my client. . . . Ms. Spunt was treated for numerous times and procedures at Valley Hospital and some of those were emergency procedures and from what I understand those bills, that statement reflects some payments for emergency procedures.

He further argued that a factual dispute existed as to "whether these services were covered." Counsel asserted that under the provider agreement, the hospital was authorized to pursue defendant for payment after it received "notification that the bills were uncovered." However, because the hospital had not sought leave to respond to the new evidence Empire presented for the first time in its reply papers, its attorney relied exclusively on representations rather than legally competent evidence.

The judge granted Empire's summary judgment motion, stating his reasons on the record as follows:

It's undisputed that Valley Hospital recognized Empire Blue Cross Blue Shield as a service provider. It's also undisputed that that was Barry Spunt and Christy Spunt's insurance provider that Valley Hospital recognized. As such, the Valley Hospital is precluded as a matter of law both based on the contractual provisions and also based on statutory law from suing Barry Spunt and Christy Spunt. This is a practice known as balance book billing that apparently has not been recognized by some of the medical providers in this state although apparently soon will be, but it is the law that they are not allowed to bring a direct action against the insured except for co-pay amounts but not when the insurance provider declines to pay on services that were rendered to the insured patient.

On October 16, 2008, the hospital filed a motion for reconsideration, alleging that the court erred as to its findings that: (1) it had "balance billed" defendant; (2) the provider agreement precludes the hospital from pursuing payment from defendant directly in this instance; and (3) Empire paid the hospital for the bills at issue.

In support of its motion for reconsideration, the hospital included the certification of Yolanda Morera, its Patient Accounts Manager. Morera certified that the hospital "has received absolutely no payment at all regarding the bills at issue in this matter from either of Defendant's insurance companies, GHI or Empire." Morera further certified that the payments Empire allegedly made to the hospital, as evidenced in Empire's reply motion, "were not for the bills at issue, but were for inpatient hospital treatment Defendant received in our facility from July 2004 to October 2004. The bills at issue in this matter are from March 2005 to July 2007."

Morera's certification included attached copies of the hospital's billing records, which contain notes that Empire declined to pay for various services, as "not a covered service under [defendant's] hospital policy." However, she did not attach any legally competent evidence, such as EOB's from Empire, to substantiate the anonymous notes in the hospital's billing records.

In a written opinion denying the motion for reconsideration, the judge found that summary judgment had been properly granted because "[t]he Agreement entered between Valley and [Empire] is clear and it specifically prohibits the practice of balance billing." In rejecting the hospital's additional evidence, the judge concluded:

[N]o facts presented by Plaintiff in its Motion for Reconsideration warrant a vacation [of] the Summary Judgment Order.

As the Appellate Division noted in [Fusco v. Board of Education, 349 N.J. Super. 455, 462 (App. Div. 2002)], Plaintiff cannot now bring a document under the guise of reconsideration that he either made the tactical decision not to present the document or overlooked it in his initial argument. Plaintiff should have used the Certification in its opposition to the original Summary Judgment motion.

On February 13, 2009, the hospital and defendant entered into a Stipulation of Dismissal with prejudice as to her counterclaim, thus making this matter ripe for appeal.*fn6


Summary judgment must be granted where "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment as a matter of law." R. 4:46-2. We engage in de novo review of the trial court's summary judgment decision, reviewing the record to determine whether a genuine issue of material fact exists and whether the trial court correctly concluded that the moving party was entitled to judgment as a matter of law. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div. 1998), certif. denied, 154 N.J. 608 (1998). Having reviewed the record, we conclude that the parties' submissions were insufficient to permit the case to be decided on summary judgment.

In reversing, we note that through no fault of the motion judge, the summary judgment record was inadequate because none of the parties complied with Rule 4:46-2 by submitting legally competent evidence and statements of undisputed material facts citing to that evidentiary record. The certifications of the parties' attorneys were not legally competent evidence. See Venner v. Allstate, 306 N.J. Super. 106, 111 (App. Div. 1997); Cafferata v. Peyser, 251 N.J. Super. 256, 263-64 (App. Div. 1991); R. 1:6-6. Nor is it acceptable to simply attach evidentiary documents to a brief or a statement of material facts without an authenticating affidavit. See Celino v. Gen. Accident Ins., 211 N.J. Super. 538, 544 (App. Div. 1986).

Further, the parties failed to present the court with the most basic facts pertaining to the dispute. While Empire claimed that the hospital engaged in prohibited balance billing, none of the parties' summary judgment submissions properly established which bills were in issue, whether any of those bills had been paid in whole or in part, whether Empire or GHI had issued an explanation of benefits relating to the charges, and whether the bills were for services covered by the Empire provider contract.

Without a clear factual record, it is not possible to determine whether or how the provider agreement applies to the hospital's claim. Moreover, without motion papers supported by proper statements of undisputed material facts, and legally competent evidence, it is not possible to determine whether there are material factual disputes that would preclude summary judgment.

In short, the parties presented the trial court with a wholly inadequate record upon which to determine whether summary judgment could be granted. We therefore reverse the order granting summary judgment, and remand this matter to the trial court for further proceedings consistent with this opinion. In light of our disposition, the appeal from the October 24, 2008 order denying reconsideration is moot.

Reversed and remanded.

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