Zipperer v. Premera Blue Cross Blue Shield of Alaska

          ORDER AND OPINION [RE: MOTIONS AT DOCKETS 126, 128]

          JOHN W. SEDWICK, UNITED STATES DISTRICT JUDGE.

         I. MOTIONS PRESENTED

         At docket 128, defendant Premera Blue Cross Blue Shield of Alaska (“Premera”) moves for summary judgment on the only remaining claim in this case, Count I of the First Amended Complaint brought by plaintiff John D. Zipperer, Jr., M.D. (“Zipperer”). Zipperer's opposition is at docket 132. Premera's reply is at docket 135. Oral argument was not requested and would not be of assistance to the court.

         At docket 126, Premera moves to dismiss the action based on Zipperer's failure to comply with his discovery obligations. Zipperer responds at docket 133. Premera replies at docket 134. Oral argument would not be of assistance to the court.

         II. BACKGROUND

         Zipperer's medical practice, Zipperer Medical Group (“ZMG”), is an “interventional pain management and addiction recovery” physician practice that 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.^[1]Zipperer's complaint alleges that Premera has not paid ZMG for an unspecified number of health insurance claims “with dates of service ranging from December 2014 to the present.”^[2] All of the claims at issue are for services performed in Tennessee.^[3]

         For reasons unrelated to this case Premera placed ZMG's claims on prepayment review status in 2014.^[4] According to Premera, prepayment review “means that before Premera issues a payment, it will manually review the underlying medical records for the service billed rather than processing the claim automatically.”^[5] Sometime after January 28, 2015-the date on which Premera took ZMG off of prepayment review status-ZMG resubmitted an unspecified number of claims to Premera.^[6] To do so ZMG used a form known as the “HCFA 1500.” Box 32 of the form asks for the “service facility location information.”^[7] For the claims at issue here ZMG filled in Box 32 with the address of the Alaska clinic where the sample was obtained, not the Tennessee laboratory where the billed service was performed.

         In a letter dated March 19, 2015, Premera put ZMG back on prepayment review “due to ZMG's improper completion of box 32 on the HCFA 1500 claim form.”^[8] The letter notes that “Box 32 on HCFA 1500 claim form must accurately reflect the location where the laboratory service was performed.”^[9] ZMG responded to Premera by insisting that it is filling out Box 32 correctly.^[10]

         According to Zipperer, Premera sent ZMG “voluminous information requests related to the claims at issue” in May.^[11] He does not provide the court with the quantity of these requests; he only provides the court with one example of an information request from Premera.^[12] In the example, Premera asks ZMG to submit “documentation in support of the laboratory codes billed; laboratory/pathology results/reports” for one claim.^[13]

         Zipperer's First Amended Complaint (“FAC”) alleges in Count I that Premera has violated Alaska's “[p]rompt payment of health care insurance claims” statute, AS 21.36.495 (“Prompt Payment Statute”).^[14] It asks that the court declare the laboratory claims “clean” and declare Premera to be in violation of the Prompt Payment Statute; it asks that the court declare Zipperer entitled to interest on unprocessed claim s and order Premera to process them all. The FAC alleges in Count II that Zipperer is entitled to a declaratory judgment as to the fact that ZMG filled out Box 32 of the “CMS-1500” form correctly according to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).^[15]

         At docket 43, the court partially granted Premera's motion to dismiss Count I, dismissing the Prompt Payment Statute action as to any insurance claims for laboratory services performed for patients enrolled in Premera's health insurance plan for federal employees and patients enrolled in health benefit plans governed by ERISA. At docket 79, the court denied Zipperer's summary judgment motion. 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. At docket 123, the court granted Premera's motion for summary judgment as to Count II, concluding that Zipperer had filled out Box 32 incorrectly because the location code to be placed in that box should have been the location where the specific laboratory service that was being billed was actually rendered. The court dismissed Count II in its entirety. The last issue in this lawsuit is Count I and only with respect to the remaining insured, state-regulated insurance claims. Premera now moves for summary judgment or, alternatively, for dismissal based on Zipperer's failure to meet his discovery obligations.

         III. STANDARDS OF REVIEW

         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.”^[16] 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.”^[17] Ultimately, “summary judgment will not lie if the . . . evidence is such that a reasonable jury could return a verdict for the nonmoving party.”^[18] 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.”^[19]

         The moving party has the burden of showing that there is no genuine dispute as to any material fact.^[20] 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.^[21] 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.^[22] 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.^[23] 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.^[24]

         IV. DISCUSSION

         Alaska's Prompt Payment Statute requires an insurer to act quickly on any insurance claim. Section 495(a) states that a health care insurer must either pay or deny a “clean claim” within 30 days of receiving it.^[25] A “clean claim” is a claim that “does not have a defect or impropriety.”^[26] A defect or impropriety includes “a particular circumstance requiring special treatment that prevents timely payment of the claim.”^[27]Section 495(b) has a notice requirement that applies if the insurer does not pay or denies a claim. If the insurer denies a claim, it must issue a notice that states the basis for the denial within 30 days of receipt of the claim; if the insurer otherwise does not pay a claim, it must provide a notice within 30 days of receipt of the claim that states the specific information that the insurer needs to adjudicate the claim.^[28] The consequence of an insurer's failure to provide the notice required by § 495(b) is that “the claim is presumed a clean claim, and interest shall accrue at a rate of 15 percent annually beginning on the day following the day that the notice was due and continues to accrue until the date that the claim is paid.”^[29]

         Zipperer alleges in his complaint that Premera has violated § 495(a) in that it has failed to pay or deny his “clean” laboratory claims within the requisite 30 days. Zipperer argues in his opposition to the motion for summary judgment that the removal of his claims from the first prepayment review status in January 2015 is enough proof to show that Premera considered his claims clean and therefore enough to demonstrate his entitlement to payment. As noted by Premera, such an argument mischaracterizes the evidence. Premera did initiate and terminate a separate prepayment review period against Zipperer, but the reasons for that prepayment review period are unrelated to the current litigation. It came to Premera's attention that his laboratory claims had an error in reporting the service location, and therefore he was placed back on prepayment review status for this separate issue.^[30] Moreover, Premera did not violate § 495(a) because, as the court concluded at docket 123, the laboratory claims at issue were not properly coded. When Zipperer completed HCFA 1500 he incorrectly indicated in Box 32 that the laboratory services had been performed at his Alaska clinic where the test sample was taken rather than his Tennessee laboratory where the testing service was performed. This error (whether intentional or not) renders these Tennessee laboratory claims defective and therefore not “clean” as that term is defined in the statute.

         Zipperer alleges that, regardless of whether the laboratory claims were clean, Premera failed to provide the requisite notices under § 495(b). To establish a violation of § 495(b) a health care provider must show that (1) it submitted a claim to an insurer; (2) the insurer either did not pay or denied the claim; and (3) the insurer did not provide the notice required by § 495(b) within 30 days of receipt of the claim. The notice must state the reasons for the denial if the insurer has decided to deny the claim or state what is needed to pay the claim in the event the insurer has decided it cannot yet issue payment. In his motion for summary judgment at docket 54, Zipperer specified that Premera committed two categories of § 495(b) violations. The first category involves claims for which Premera allegedly failed to provide any sort of timely notice. This category includes the unspecified quantity of claims that ZMG submitted to Premera sometime between the end January 2015 and thirty days before Premera's May 2015 information requests. In his motion, Zipperer asserted that there is a lack of a genuine dispute regarding the fact that ZMG submitted these claims to Premera; that Premera either failed to pay or denied all of them; and that Premera did not provide ZMG with timely notices required by § 495(b) with regard to any of them. As a result, Zipperer argued, claims in this “no notice” category are presumed to be clean and are payable.

         The second category of § 495(b) violations involves the unspecified quantity of claims that ZMG submitted to Premera less than 30 days before Premera's May 2015 information requests. Zipperer argued in his motion for summary judgment that these claims should be presumed clean because Premera's notices were defective under § 495(b).

         At docket 79, after noting that Zipperer bears the burden of proof at trial on its § 495 claim, the court denied Zipperer's request for summary judgment. It concluded that Zipperer “cite[d] no evidence which establishes that [ZMG] submitted any claims to Premera that Premera either did not pay or denied, how many such claims [ZMG] submitted, or the dates on which Premera received them” and that he “cite[d] no evidence showing that Premera failed to provide ZMG with notices required by § 495(b) within 30 days of when it received these specific claims.”^[31] That is, Zipperer only alleged that he resubmitted an unspecified amount of claims at some unspecified date after January 28, 2015 but did not produce evidence at the summary judgment phase which, if uncontroverted, would entitle Zipperer to a directed verdict at trial. Moreover, the court noted that the evidence regarding Premera's information requests in May of 2015 only consisted of one notice dated May 6, 2015 regarding a specific claim, and it concluded that the “notice is unavailing because it is impossible for the court to discern when Premera received the claim subject to the notice.”^[32]

         Now Premera moves for summary judgment. A party moving for summary judgment without the ultimate burden of persuasion at trial, such as Premera, must either produce evidence negating an essential element of the nonmoving party's claim or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.^[33] Here, Premera provided a declaration explaining that it is standard practice for Premera to send out explanation of payment forms (“EOPs”) for all claims within 30 days to ensure that it is fully compliant with Alaska's Prompt Pay Statute.^[34] It states that Premera followed this practice with regard to Zipperer's laboratory claims.^[35] The declaration explains how the EOPs are coded to show how each test or service billed was processed for payment or denied.^[36]It explains, with attached examples, that EOPs for Zipperer's laboratory claims ...