Zipperer v. Premera Blue Cross Blue Shield of Alaska

          ORDER AND OPINION [RE: MOTIONS AT DOCKETS 85, 109, 111, 114, AND 117]

          JOHN W. SEDWICK SENIOR JUDGE, UNITED STATES DISTRICT COURT

         I. MOTIONS PRESENTED

         Before the court are five motions. First, at docket 85, defendant Premera Blue Cross Blue Shield of Alaska (“Premera”) moves pursuant to Rule 12(c) for a partial judgment on the pleadings regarding Count II of the complaint of plaintiff John D. Zipperer, Jr., M.D. (“Zipperer”). Zipperer's opposition at docket 89 requested the court to convert the motion to a Rule 56 motion for summary judgment. Premera's reply is at docket 99. At docket 105 the court granted Zipperer's request and converted the motion to a motion for summary judgment. The court allowed Zipperer to file a supplemental response, which he did at docket 108, and allowed Premera to file a supplemental reply. Premera did not file a supplemental reply.

         Second, at docket 109 Premera moves for terminating sanctions pursuant to Rule 37(b). Premera supports the motion with a declaration of counsel at docket 110. Zipperer did not file an opposition by the August 11, 2017 deadline to do so. On August 18, Premera filed a reply at docket 115, noting Zipperer's failure to file a timely opposition. At docket 116 Zipperer filed a “declaration in opposition” to Premera's motion. Premera replied at docket 118.

         Third, at docket 111 Zipperer moves for sanctions under Rule 30(g). Premera opposes at docket 113. Zipperer did not file a reply.

         Fourth, at docket 114 Zipperer moves for leave to amend its complaint pursuant to Rule 15(a)(2). Premera opposes at docket 119, supported by a declaration of counsel at docket 120. Zipperer did not file a reply.

         Fifth, at docket 117 Premera moves for sanctions under Rule 37(c) and summary judgment under Rule 56. Zipperer opposes at docket 121. Premera replies at docket 122.

         Oral argument was not requested and would not assist the court.

         II. BACKGROUND

         The background of this case set out in detail in the court's order at docket 79 need not be repeated here. Suffice it to say, for present purposes, Zipperer is a physician who specializes in “interventional pain management.”^[1] His medical group, Zipperer Medical Group (“ZMG”), treats “patients with a face-to-face encounter at one of [its] Alaska clinics, ” “obtain[s] samples for testing, ” and sends the samples to its office in Tennessee for processing.^[2] Zipperer alleges that Premera has not paid an unspecified number of health insurance claims “with dates of service ranging from December 2014 to the present.”^[3] All of the claims at issue are for services performed in Tennessee.^[4]

         Zipperer's First Amended Complaint (“FAC”) alleges: (1) that Premera has violated Alaska's “[p]rompt payment of health care insurance claims” statute, AS 21.36.495 (“Prompt Payment Statute”);^[5] and (2) Zipperer is entitled to a declaratory judgment that it is filling out Box 32 of the form “CMS-1500” correctly according to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).^[6] At docket 79 the court denied a summary judgment motion filed by Zipperer and ZMG. At docket 104 the court granted Zipperer's motion to substitute himself in ZMG's place in this litigation and dismissed ZMG as a party.

         III. STANDARDS OF REVIEW

         A. Rule 56

         Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”^[7] The materiality requirement ensures that “only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.”^[8] Ultimately, “summary judgment will not lie if the . . . evidence is such that a reasonable jury could return a verdict for the nonmoving party.”^[9] However, summary judgment is appropriate “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.”^[10]

         The moving party has the burden of showing that there is no genuine dispute as to any material fact.^[11] Where the nonmoving party will bear the burden of proof at trial on a dispositive issue, the moving party need not present evidence to show that summary judgment is warranted; it need only point out the lack of any genuine dispute as to material fact.^[12] Once the moving party has met this burden, the nonmoving party must set forth evidence of specific facts showing the existence of a genuine issue for trial.^[13] All evidence presented by the non-movant must be believed for purposes of summary judgment and all justifiable inferences must be drawn in favor of the non-movant.^[14] However, the non-moving party may not rest upon mere allegations or denials, but must show that there is sufficient evidence supporting the claimed factual dispute to require a fact-finder to resolve the parties' differing versions of the truth at trial.^[15]

         B. Rule 15(a)

         Rule 15(a) states that after the time to amend pleadings as a matter of course has expired, “a party may amend its pleading only with the opposing party's written consent or the court's leave.”^[16] Although “the grant or denial of an opportunity to amend is within the discretion of the District Court, ”^[17] the “court should freely give leave when justice so requires.”^[18] “Rule 15's policy of favoring amendments to pleadings should be applied with ‘extreme liberality.'”^[19]

         IV. DISCUSSION

         A. Zipperer's HIPAA Cause of Action Lacks Merit

         One of the purposes of HIPAA is “‘to improve the . . . efficiency and effectiveness of the health information system through the establishment of standards and requirements for the electronic transmission of certain health information.'”^[20] In furtherance of this goal, the Department of Health and Human Services (“DHHS”) has promulgated a rule that, among other things, adopts standards and code sets that covered entities must use.^[21] The current standards that apply to the electronic transmission of professional health care claims, entitled “ASC X12N 837-P” (“837-P”), are issued by the American National Standards Institute, Accredited Standards Committee (“ASC”).^[22] DHSS has also adopted the 837-P's “implementation specifications, ”^[23] which are the ASC's “specific requirements or instructions for implementing” the 837-P standards.^[24] The 837-P standards and implementation specifications are relevant even where a provider submits a claim non-electronically using the CMS-1500 paper form because the CMS-1500's data elements are consistent with the 837-P standards.^[25] Thus, guidance on the 837-P's “Loop ID 2310C” is relevant to interpreting Box 32 on the CMS-1500 form because both queries seek the same data.^[26] Additionally, DHSS has issued authoritative guidance on the CMS-1500 form in the “Medicare Claims Processing Manual” written by the Centers for Medicare and Medicaid Services (“the CMS Manual”).^[27] The court will refer to these authorities collectively as the “HIPAA standards.”

         Premera's motion at docket 85 seeks judgment on the pleadings with regard to Zipperer's HIPAA cause of action based on the court's holding at docket 79 that the HIPAA standards require providers to complete Box 32 of the CMS-1500 with the location where the specific billed service was rendered.^[28] In his opposition, Zipperer stated that the court cannot decide Premera's motion without considering facts outside the pleadings.^[29] Thus, the court converted Premera's motion into one for summary judgment.^[30]

         Zipperer then supplemented the record with eight documents. They include (1) an unsigned settlement agreement that was allegedly drafted by Premera in 2016; (2) a September 27, 2011 Change Request to the Medicare Carriers Manual issued by DHHS, Centers for Medicare and Medicaid Services (“CMS”); (3) a copy of 42 C.F.R. § 410.32; (4) an excerpt from a final rule issued by DHHS on October 31, 1997; (5) an excerpt from Chapter 15 of CMS' Medicare Benefit Policy Manual; (6) a print-out of 42 U.S.C § 1395x(s); (7) excerpts from Chapters 13 and 16 of CMS' Medicare Claims Processing Manual; and (8) a print-out from the website of Nordian Healthcare Solutions.

         None of these materials raise a genuine dispute as to material fact. To the contrary, the only facts material to Zipperer's HIPAA claim are as follows: Zipperer billed the claims at issue for laboratory services that were performed in Tennessee.^[31]Zipperer does not dispute these facts.^[32] Thus, the parties' dispute is purely legal in nature. The specific legal question is whether the HIPAA standards require Zipperer, when he submits claims to Premera for laboratory services performed in Tennessee, to fill out Box 32 of the CMS-1500 form with (a) the location of the physician's face-to-face encounter with the patient when the specimen was drawn, as Zipperer argues, or (b) the location where the specific laboratory service that is being billed was actually performed, as Premera argues.^[33]

         The court resolved this legal dispute in Premera's favor at docket 79. None of the legal authorities that Zipperer has submitted in opposition to Premera's present motion convinces the court that this holding was in error. Premera's interpretation of Box 32 is supported by the 837-P implementation specifications^[34] and other published guidance on the HIPAA standards.^[35] Summary judgment will be granted in Premera's favor.

         B. Zipperer Will Not Be Granted Leave to Amend

         Zipperer seeks leave of court to amend his complaint to alter his HIPAA cause of action to add new fraud and breach-of-contract allegations, and to add a third cause of action for bad faith.^[36] Courts consider the four “Foman factors” when determining whether to grant a party leave to amend its complaint: “(1) bad faith on the part of the movant; (2) undue delay; (3) prejudice to the opposing party; and (4) futility of the proposed amendment.”^[37] Prejudice to the opposing party is the factor that “carries the greatest weight.”^[38] “Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend.”^[39] “The party opposing the amendment bears the burden of showing why the amendment should not be granted.”^[40]

         Zipperer filed his motion to amend one month after the close of discovery.^[41] The additional causes of action that Zipperer wishes to add to his complaint would transform this case from one in which Zipperer seeks no damages into one in which he seeks over $1 billion in damages. Allowing Zipperer's amendment would severely prejudice Premera, as Zipperer's new claims would require extensive discovery that Premera has no time left to conduct. Based on this prejudice to Premera, the court cannot grant Zipperer leave to amend his pleadings at this late stage of the litigation.^[42]

         C. Premera's Sanctions Motions Will Be Denied

         Under the Local Rules, counsel for a party moving for Rule 37 sanctions must either (a) “confer in person, or if they are not located in the same city then by telephone, with counsel for the party against whom relief is sought in an effort to resolve any discovery dispute” and attach a Good Faith Certificate to his or her motion or (b) “include in the first paragraph [of the motion] a statement as to the reason that a Good Faith Certificate can not be attached, including the efforts made to arrange a conference.”^[43] Premera's counsel did not comply with this rule.

         Premera states that its counsel could not complete a Good Faith Certificate “because of Dr. Zipperer's unwillingness or inability to address his discovery obligations in a forthright, comprehensive, and reasonable or rational manner.”^[44] But Premera fails to show that it made any efforts to arrange the necessary conference before filing two motions seeking terminating sanctions. Premera touts the emails that its counsel exchanged with Zipperer, but this is not enough.^[45] As this court has stated:

E-mail exchanges are generally of little help in resolving serious discovery disputes. The impersonal nature of and detached atmosphere surrounding the act of typing an e-mail and hitting the send button in the confines of one's own office is more likely to solidify intransigence than advance the possibility of reasonable accommodation. Second, when there is a meeting it is necessary to start slowly and civilly seeking whatever area of ...