Case 5:19-cv-04007-HLT-TJJ Document 194 Filed 12/21/20 Page 1 of 37
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`ORCHESTRATE HR, INC. and
`VIVATURE, INC.,
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`v.
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`Plaintiffs,
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`BLUE CROSS AND BLUE SHIELD
`OF KANSAS, INC.,
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`Defendant.
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`___________________________________________________________________________________________________________________
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF KANSAS
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`§
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` CASE NUMBER
` 5:19-cv-04007-SAC-TJJ
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` JURY TRIAL DEMANDED
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`DESIGNATION OF PLACE OF TRIAL
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`The designated place of trial is Topeka, Kansas.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`Plaintiffs Orchestrate HR, Inc. and Vivature, Inc. (collectively, “Vivature”) complain of
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`Defendant Blue Cross and Blue Shield of Kansas (“BCBSKS”) showing the Court:
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`I.
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`PARTIES
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`1.
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`Plaintiff Orchestrate HR, Inc. is a Texas corporation organized and existing under
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`the laws of Texas with its principal place of business at 5050 Spring Valley Rd., Dallas, Texas
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`75244.
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`2.
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`Plaintiff Vivature, Inc. is a Texas corporation organized and existing under the laws
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`of Texas with its principal place of business at 5050 Spring Valley Rd., Dallas, Texas 75244.
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`3.
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` Defendant Blue Cross and Blue Shield of Kansas (“BCBSKS” or “Defendant”) is
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`a corporation organized and existing under the laws of Kansas with its principal place of business
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`at 1133 Topeka Ave., Topeka, KS, 66609 and has appeared and answered.
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`Case 5:19-cv-04007-HLT-TJJ Document 194 Filed 12/21/20 Page 2 of 37
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`II.
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`JURISDICTION AND VENUE
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`4.
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`This Court has jurisdiction over the subject matter of this action pursuant to 28
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`U.S.C. 28 § 1332(a) because this is an action for, inter alia, damages in excess of $10,000,000.00,
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`exclusive of costs, fees, interest, or other possible sources of award or relief, and there is complete
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`diversity of citizenship. This Court has already found that it has jurisdiction over this dispute. See
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`Doc. 69.
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`5.
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`Venue is proper in this Court pursuant to U.S.C. 28 § 1391(b).
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`III.
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`FACTS
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`6.
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`Although BCBSKS repeatedly objected, this Court ordered BCBSKS to produce
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`its own internal documents which BCBSKS had tried to avoid producing.1 After reviewing these
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`documents, it is painfully obvious why BCBSKS did not voluntarily produce them—BCBSKS’s
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`own documents confirm that BCBSKS has been engaged in a campaign of fraud, defamation,
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`and tortious interference against Vivature. BCBSKS’s documents show that BCBSKS planned
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`to cause problems between Vivature and their clients so as to attempt to get Vivature’s clients to
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`end their business relationship with Vivature.
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`7.
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`The documents produced on August 3, 2020 by BCBSKS, as a direct result of this
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`Court’s order which overruled BCBSKS’s objections,2 show that BCBSKS has made defamatory
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`statements about Vivature to at least the following entities:
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`• The United States Department of Justice;
`• The Federal Bureau of Investigation;
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`1 See Doc. No. 125, Order, July 13, 2020; Doc. No. 174, Memorandum and Order, September 25, 2020.
`2 See Doc. No. 125.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`PAGE 2
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`Case 5:19-cv-04007-HLT-TJJ Document 194 Filed 12/21/20 Page 3 of 37
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`• All other Blue Cross and Blue Shield entities via at least the Blue Cross and
`Blue Shield Association (specifically including but not limited to Anthem,
`Health Care Services Corporation, Blue Cross and Blue Shield of Kansas City,
`Blue Cross and Blue Shield of South Carolina, Blue Cross and Blue Shield of
`Texas and Blue Cross and Blue Shield of Nebraska);
`• The Office of Inspector General, U.S. Department of Health and Human
`Services;
`• The Kansas Department of Insurance;
`• The United States Postal Service;
`• The United States Office of Personnel Management;
`• The National Health Care Anti-Fraud Association;
`• The National Association of Insurance Commissioners;
`• The Centers for Medicare & Medical Services;
`• The Kansas Board of Healing Arts;
`• United Healthcare; and
`• Aetna.
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`8.
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`Examples of these communications are contained in documents with starting Bates-
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`label numbers BCBSKS_00001354, 1355, 1358, 1358.001, 1483, 1508, 1528, 1528.001, 1530,
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`1596 1662, 1663, 1673, 1673.001, 1738, 1741, 1786, 1809, 1809.001, 1844, 1860, 1936.001, 1947,
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`2019, 2049, 2183, 2183.001, 2247, 2338, 2338.01, 2377, 2424, 2424.001, 2451, 2454, 2462, 2494,
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`2538, 2538.001, 2546, 2549, 2580, 2636, 3227_001, 3233, 3271, 3277, 3285, 3292, 3296, 3305,
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`3311, 3227, 3228, 3277, 3318, 3326, 3302, 3333, 3338, 3343, 3347, 3353, 3357, 3362, 3377, 3886,
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`3888, 3890, 3892, 3894, 3897, 3904, 3907, 3909, 3911, 3912, 3917, 3919, 4021, 4022, 4033, 4052,
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`4285, 4508, 4519, 4524, 4527, 4530, 4533, 4535, 4536. BCBSKS has designated these documents
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`as confidential, therefore Vivature is prevented from attaching all of them to this public pleading
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`at this time.3
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`3 In Doc. No. 171 this Court ruled that certain of these documents (BCBSKS_00001354, BCBSKS_00001483,
`BCBSKS_00001530, BCBSKS_00001936.001, BCBSKS_00002183, BCBSKS_00003233, BCBSKS_00003318,
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`PAGE 3
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`Case 5:19-cv-04007-HLT-TJJ Document 194 Filed 12/21/20 Page 4 of 37
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`9.
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`These communications are defamatory as they explicitly accuse Vivature of:
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`• Committing fraud;
`• Providing false information;
`• Filing false claims;
`• Fraudulently billing;
`• Overutilizing services;
`• Billing for unlicensed trainers;
`• Billing for unlicensed individuals;
`• Billing for band-aids;
`• Perpetrating a scheme;
`• Hand writing or altering medical records; and
`• Keeping different medical records than the universities.
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`10.
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`Vivature also believes that these communications are implicitly defamatory as they
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`imply that:
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`11.
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`• Vivature committed fraud;
`• Vivature made misrepresentations to BCBSKS;
`• Vivature forged medical records or related information;
`• Vivature provided false medical records;
`• Vivature fraudulently billed;
`• Vivature billed for illegitimate medical offices;
`• Vivature provided false medical records;
`• Vivature filed false claims;
`• Vivature broke the law; and
`• Vivature committed a crime.
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`Further, BCBSKS’s witnesses have now admitted that BCBSKS knew it was
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`accusing Vivature of committing fraud and crimes in communications sent to dozens of third
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`BCBSKS_00004519) were not entitled to be filed under seal and therefore those documents are already part of the
`public record in this case. Accordingly, Vivature attaches those documents to this 2nd Amended Complaint as Exhibits
`A-H.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`PAGE 4
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`Case 5:19-cv-04007-HLT-TJJ Document 194 Filed 12/21/20 Page 5 of 37
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`parties and that there could and would be serious adverse consequences to Vivature as a result of
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`these allegations made by BCBSKS.4
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`12.
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`Vivature only discovered the existence of these defamatory statements, at the
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`earliest, on August 3, 2020 as a direct result of the Court ordered discovery in this case and is of
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`the opinion that BCBSKS fraudulently concealed the existence of these documents and statements.
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`BCBSKS made many of these statements at a time when they were in direct communication with
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`Vivature and while BCBSKS was claiming to be working with Vivature to get claims into the
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`BCBSKS system so they could be processed and paid. Upon information and belief, Vivature
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`believes that discovery will provide evidence of additional defamatory statements by BCBSKS.5
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`13.
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`On April 1, 2020, also a result of another Court order forcing BCBSKS to produce
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`documents, Vivature first became aware of the internal communication by BCBSKS which
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`confirmed that BCBSKS was engaged in a scheme, to intentionally interfere with the relationship
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`between Vivature and its clients,6 designed to cause those clients to terminate their relationship
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`with Vivature.7
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`4 See Zimmerman Dep. 296:1 – 298:25, 164:22 - 165:3, 330:20 – 331:1, 342:23 – 343:11, 343:24 – 344:4, November
`9, 2020; Holmes Dep. 114:25 – 115:12, 119:20 – 120:12, 132:7 – 16, November 10, 2020; Mzhickteno Dep. 64:5 –
`7, 140:21 – 141:4, 227:13 – 22, November 19, 2020, collectively, attached as Exhibit I.
`5 To the extent necessary, Vivature requests that it be allowed to conduct both written and deposition discovery in
`order to obtain further evidence to support its claims and overcome BCBSKS’s defenses to these claims and also be
`able to properly and completely respond to any motion to dismiss or motion for summary judgment filed by BCBSKS.
`6 Vivature has, or at least had, contracts with the following Kansas schools: Fort Hays State University, Emporia
`State University, Allen County Community College, Benedictine College, Pittsburg State University, Midamerica
`Nazarene University, Tabor College, Kansas Wesleyan University, Southwestern College, McPherson College, Baker
`University and Newman University. This is only a list of schools in the Kansas area which Vivature has/had contracts
`with.
`7 Exhibit J, email from Marguerite Mzhickteno of BCBSKS to certain other BCBSKS employees, admitting to
`BCBSKS’s automatic denial of claims and its intention to interfere with BCBSKS’s contractual relationship with
`Washburn University, dated October 18, 2017, Bates label BCBSKS_00000846.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`It is my hope that eventually, with little to no reimbursement being made on
`these claims and with the reimbursement going to the member, there will be no
`value to continuing the partnership with the 3rd party biller and they will cease
`being an issue altogether. However, we do cover athletic trainer services so I
`may not get my wish!
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`Notably, BCBSKS has previously filed pleadings with this Court specifically denying such
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`campaign.8 Upon information and belief, there are additional internal documents in BCBSKS’s
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`possession, which have yet to be produced, which will show additional details of this campaign
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`and show that BCBSKS had multiple communications with Vivature’s clients which constitute
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`tortious interference with Vivature’s contracts with its clients.
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`14.
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`Vivature is a Texas corporation based in Dallas, Texas. Vivature, and its affiliates
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`and predecessors, have been in business for over 30 years and have grown into a multi-million-
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`dollar business with multiple offices across the United States with hundreds of employees.
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`Vivature has spent significant money and time developing its reputation in the human resource
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`management and medical insurance industry. Vivature has developed highly unique and
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`proprietary products, services, and marketing concepts which have directly led to Vivature’s
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`singular success and the goodwill it enjoys.
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`8 See Doc. No. 73 at ¶11 “BCBSKS further specifically denies engaging in any sort of "campaign to damage Vivature."
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`Case 5:19-cv-04007-HLT-TJJ Document 194 Filed 12/21/20 Page 7 of 37
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`15.
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`Since 2011, Vivature has expanded the services it offers to include assisting
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`colleges and universities across the United States with developing income streams to assist them
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`in providing the high-quality education that is offered by those schools. Currently, Vivature counts
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`its collegiate clients in the hundreds. One of the services provided by Vivature is that it works
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`with these schools to monetize the necessary medical services performed by its licensed athletic
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`trainers. These trainers perform services, pursuant to a medical doctor’s standing orders. As part
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`of the services it provides, Vivature reviews a doctor’s standing orders in order create fields in
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`Vivature’s software for certified licensed athletic trainers to use. Those fields relate to services
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`prescribed pursuant to a doctor’s standing orders, which have been deemed medically necessary.
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`16.
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`Vivature contracts with a school to help the school get paid for these eligible
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`necessary medical services which then provides more money to the school to spend on its athletes
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`and students. For some schools, this source of income is not only important, but it is needed to
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`ensure the continuity of care being provided to the athletes and students.
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`17. Washburn University (“Washburn”) became one of Vivature’s clients in 2016. In
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`addition to other insurance-related matters, Vivature entered into a contract with Washburn to
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`provide credentialing, billing, and medical claims assistance for Washburn. Vivature negotiated
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`and executed the Washburn University Contract in Texas (“Washburn Contract”). Vivature was
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`Washburn University’s billing agent for the necessary medical services provided by Washburn’s
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`licensed athletic trainers and Vivature held a contractual power-of-attorney for that purpose.9As a
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`9 Vivature’s other clients in Kansas, whose claims are the subject of this suit include Fort Hays State University
`(under contract since April 2016 but contract terminated as a result of BCBSKS’s actions on or about January 2019),
`Emporia State University (under contract since April 2016), Allen County Community College (under contract since
`March 2017), Benedictine College (under contract since July 2017), Pittsburg State University (under contract since
`May 2016), Midamerica Nazarene University (under contract since June 2016), Tabor College (under contract since
`February 2017), Kansas Wesleyan University (under contract since May 2016), Southwestern College (under contract
`since June 2016), McPherson College (under contract since October 2016), Baker University (under contract since
`July 2016 but contract terminated, as a result of BCBSKS’s actions on or about March 2018), and Newman University
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`result of its contracts with Washburn and Vivature’s other Kansas Clients, Vivature would receive
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`a percentage, varying from 20% to 35%, of the billings collected from the necessary medical
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`services being provided.10 The total dollar amount of improperly unpaid claims by BCBSKS is
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`close to $6,000,000.
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`18.
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`BCBSKS purports to offer comprehensive insurance plans to its customers. In
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`reality, BCBSKS is in the business of taking people’s money for insurance coverage and then
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`finding any way it can to delay paying those people or simply just deny them payment altogether.
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`BCBSKS is an independent licensee of the Blue Cross Blue Shield Association. While BCBSKS
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`alleges that it provides comprehensive medical plans to its insureds, and that those plans pay for
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`services performed by trainers, on information and belief Vivature asserts BCBSKS by design
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`systematically denies coverage to its insureds in relation to services provided by athletic trainers.
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`19.
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`BCBSKS fraudulently represented to Vivature that if Vivature modified its claims
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`process to accommodate BCBSKS’s demands, BCBSKS would process and pay the claims
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`submitted by Vivature on Washburn University’s and Vivature’s other Kansas Clients’ behalf, all
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`collectively, (“Claims”). However, despite Vivature’s compliance with BCBSKS’s ever-changing
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`demands, still, BCBSKS refuses to process and pay the Claims submitted by Vivature and Vivature
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`(under contract since August 2011 but contract terminated as a result of BCBSKS’s actions on or about July 2020)
`(collectively “Kansas Clients”). This is only a list of schools in the Kansas area who Vivature has/had contracts with.
`10 It should be noted that in many cases, Vivature even arranges for an Assignment of Benefits from these insureds
`to the school whereby the insureds assign certain rights they have, as to the payment of claims. As a result of the
`contract with the schools, Vivature is essentially a beneficiary of those Assignments of Benefits. Exhibits 1-2 to
`Exhibit K hereto, Supplemental Declaration of Mouzon Bass III, April 18, 2019.
`Plaintiffs further affix Exhibit L, Declaration of Mouzon Bass III, April 10, 2019, Exhibit M, Second Supplemental
`Declaration of Mouzon Bass, III, June 3, 2019, and Exhibit N, Declaration of Cam Clark, April 30, 2019 and
`incorporate them in their entirety by reference. It is Plaintiffs’ intention that all contents of these affidavits constitute
`additional facts plead by Plaintiffs in this pleading. Plaintiffs are not arguing the admissibility of these exhibits but
`instead Plaintiffs are attaching them in order to avoid making the pleading more cumbersome as a result of copying
`the contents of the affidavits directly into the body of the pleading.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`has discovered that BCBSKS has been engaged in a campaign to damage Vivature, and thereby
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`avoid paying for these medically necessary services, since at least March of 2017.
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`20.
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`From late 2016 through late 2017 BCBSKS and Vivature have engaged in
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`substantial written and oral communications11 regarding, among other things (1) instructions on
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`how Vivature should certify and credential trainers and other providers for enrollment BCBSKS’s
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`network; (2) working with Vivature to build BCBSKS’s provider network; and (3) understanding
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`how to file claims with. Based on the substantial written and oral communications with BCBSKS,
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`in particular with Cathy Holmes and BCBSKS’s counsel Shelly King, BCBSKS represented it
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`would pay and process the Claims submitted by Vivature if Vivature made substantial changes to
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`its submission process.
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`21.
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`BCBSKS fraudulently concealed and omitted that as early as January 2017,
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`BCBSKS had targeted and singled out Vivature and taken the extraordinary measure of placing a
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`“Stop Pay F” code on all claims submitted to BCBSKS by Vivature on behalf of its clients ensuring
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`that those claims would be treated differently and gone through with a fine tooth comb in an effort
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`11 Many examples of these communications are contained in documents with Bates numbers VIVATURE0000421
`- VIVATURE0000423, VIVATURE0000441 - VIVATURE0000505, VIVATURE0000509, VIVATURE0000524,
`VIVATURE0000584, VIVATURE0000662, VIVATURE0000729 - VIVATURE0000809, VIVATURE0000820 -
`VIVATURE0000822, VIVATURE0000830 - VIVATURE0000844, VIVATURE0001065 - VIVATURE0001066,
`VIVATURE0001075 - VIVATURE0001194, VIVATURE0001199 - VIVATURE0001207, VIVATURE0001211 -
`VIVATURE0001239, VIVATURE0001248 - VIVATURE0001340, VIVATURE0001365 - VIVATURE0001376,
`VIVATURE0001380 - VIVATURE0001390, VIVATURE0001493 - VIVATURE0001494, VIVATURE0001500 -
`VIVATURE0001523, VIVATURE0001530 - VIVATURE0001593, VIVATURE0001598 - VIVATURE0001611,
`VIVATURE0001615 - VIVATURE0001682, VIVATURE0001687, VIVATURE0001691 - VIVATURE0001693,
`VIVATURE0001695 - VIVATURE0001720, VIVATURE0001722 - VIVATURE0001841, VIVATURE0001845 -
`VIVATURE0001887, VIVATURE0001889 - VIVATURE0001912, VIVATURE0001915, VIVATURE0001920 -
`VIVATURE0001992, VIVATURE0002005 - VIVATURE0002019, VIVATURE0002035, VIVATURE0002042 -
`VIVATURE0002071, VIVATURE0002074 - VIVATURE0002112, VIVATURE0002119 - VIVATURE0002127,
`VIVATURE0002135, VIVATURE0002139, VIVATURE0002156 - VIVATURE0002176, VIVATURE0002187 -
`VIVATURE0002196, VIVATURE0002204 - VIVATURE0002226, VIVATURE0002229 - VIVATURE0002246,
`VIVATURE0002249 - VIVATURE0002256, VIVATURE0002262 - VIVATURE0002461, VIVATURE0002467 -
`VIVATURE0002495 and BCBSKS_0000229, BCBSKS_00001729, BCBSKS_00002412, BCBSKS_00000732,
`BCBSKS_00001906, BCBSKS_00002119, BCBSKS_00001411, BCBSKS_00000288, BCBSKS_00001398.001,
`BCBSKS_00001661.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`to deny all of them.12 Further, BCBSKS fraudulently omitted the fact that BCBSKS had already
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`been accusing Vivature of committing the crime of health care fraud and other bad acts as
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`described above.
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`22.
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`Additionally, BCBSKS concealed the fact that it was applying the “U602” message
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`code to the claims submitted by Vivature. BCBSKS fought mightily from having to produce any
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`information regarding the U602 code and its application to these claims.13 Prior to the Court
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`ordering certain discovery, BCBSKS had attempted to claim that its communication with Blue
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`Cross and Blue Shield of North Dakota (“BCBSND”) was a one-off event and that BCBSKS had
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`never accused Vivature of fraud. As a result of the Court ordered discovery, it was discovered that
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`the U602 code is used to designate a claim as being the result of fraud and abuse.14 Further, every
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`claim submitted by Vivature for Washburn University was flagged with the U602 code.15 To make
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`matters worse, BCBSKS communicated this U602 fraud code to multiple other Blue Cross and
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`Blue Shield (“BCBS”) entities.16 A review of the documents produced by BCBSKS to date shows
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`12 See Holmes Dep. 234:25 – 236:1; Mzhickteno Dep. 329:15 – 19, 354:14 – 355:8, 68:5 – 10; Zimmerman Dep.
`72:23 – 73:2, 84:23 – 85:10, 211:9 – 12, 286:24 – 287:4, 288:16 – 21, 344:6 – 11, 68:18 – 21, 69:23 – 70:4, 74:3 – 7,
`76:5 – 10, 85:16 – 22, 285:22 – 286:1, 286:19 – 23; Robertson 14:25 – 15:5, 12:10 – 20, November 10, 2020,
`collectively, attached as Exhibit O; see also Ex. D. It is noted that Exhibit 45 to the Mzhickteno Dep. is an earlier
`email within the email chain contained in Ex. D.
`13 See Doc No. 94, Plaintiffs’ Motion To Compel And Extend The Scheduling Order, May 1, 2020; Doc No. 95,
`Memorandum Of Law In Support Of Plaintiffs’ Motion To Compel And Extend The Scheduling Order, May 1, 2020;
`Doc. No 104, Defendant's Response To Plaintiffs' Motion To Compel And Extend The Scheduling Order, May 15,
`2020; Doc No. 106, Plaintiffs’ Reply To Defendant’s Response To Plaintiffs’ Motion To Compel And Extend The
`Scheduling Order, May 26, 2020; Doc. No. 135, Defendant's Motion For Reconsideration Of July 13, 2020 Order
`Granting In Part Plaintiffs' Motion To Compel, July 27, 2020; Doc. No. 139, Plaintiffs’ Response To Defendant’s
`Motion For Reconsideration, August 3, 2020.
`14 See Zimmerman Dep. 61:20 – 62:1, 102:25 – 103:3, 107:4 – 108:4, 155:15 – 21, 190:23 – 191:2, 201:16 – 18,
`collectively, attached as Exhibit P.
`15 See Zimmerman Dep. 207:5 – 7, 209:7 – 11, collectively, attached as Exhibit Q.
`16 See Zimmerman Dep. 205:25 – 206:7, 19:12 – 17, 101:4 – 5, 201:6 – 8; Mzhickteno Dep. 265:7 – 10, collectively,
`attached as Exhibit R. As a result of being part of the BCBS Association, BCBS entities are allowed to adjudicate
`claims for other BCBS entities. The “Host” plan is the local BCBS entity that receives the claim from the local
`provider. In some cases, and especially in this case where we are dealing with claims for student-athletes who may
`have been recruited from other states, the “Host” plan is not actually the BSBS entity through which the insured
`maintains their insurance. In that case, the “Home” plan is the actual BCBS entity who the insured has their contract
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`that BCBSKS communicated fraud, via the usage of the U602 code, to at least the following BCBS
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`entities:
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`• Anthem (which is the parent of over a dozen other BCBS entities);
`• BCBS KC;
`• BCBS Nebraska;
`• BCBS Arkansas;
`• BCBS Wisconsin;
`• BCBS South Carolina;
`• BCBS Minnesota;
`• BCBS Illinois;
`• Highmark;
`• BCBS Texas;
`• BCBS Massachusetts; and
`• BCBS Michigan.17
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`23.
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`Vivature believes that this allegation of fraud, combined with the other documents
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`produced by BCBSKS which confirm that BCBSKS told the other BCBS entities that Vivature
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`was committing fraud and/or a crime,18 has led to a national effort by the BCBS entities to
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`improperly interfere with Vivature’s contracts with its clients and that a concerted effort is being
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`made by the BCBS entities to deny all claims submitted by Vivature to those entities. To be clear,
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`it is Vivature’s contention that as a direct result of BCBSKS’s acts and omissions, as described in
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`with. As an example, a student from Texas may attend a Kansas university. Assuming the student had insurance with
`BCBSTX, BCBSKS would be the Host plan that receives the claim from the Kansas provider. BCBSTX would be the
`Home plan.
`17 Upon information and belief, BCBSKS has accused Vivature of committing fraud, directly or indirectly, to every
`BCBS entity. One basis for support for this belief is the SIU Alert submitted by BCBSKS. Vivature cannot attach this
`Alert, BCBSKS_00003888, to this complaint as BCBSKS claims it is confidential, even though BCBSKS admits the
`Alert was sent out to every other BCBS entity. There are also additional documents and testimony which confirm that
`all BCBS plans were contacted by BCBSKS regarding Vivature alleged fraudulent acts.
`18 See Zimmerman Dep. 298:15 – 25, 301:21 – 302:4, 302:21 – 25, 308:24 – 310:18, 19:10 – 14, 206:15 – 20,
`collectively, attached as Exhibit S.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`Case 5:19-cv-04007-HLT-TJJ Document 194 Filed 12/21/20 Page 12 of 37
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`this complaint, Vivature has suffered tens of millions of dollars in damages resulting from other
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`BCBS entities improperly targeting Vivature in a similar manner as BCBSKS has done. It is
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`Vivature’s contention that but for BCBSKS’s improper actions, these damages would not have
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`occurred. Vivature notes that prior to BCBSKS doing what it has done, Vivature was successfully
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`processing claims with all of the BCBS entities and claims were being adjudicated and paid by
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`them. Only after BCBSKS undertook its campaign against Vivature did Vivature begin to have
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`problems with the other BCBS entities. This has resulted in Vivature not receiving tens of millions
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`of dollars in revenue from claims submitted to these entities and has also caused Vivature
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`difficulties with some of its clients, including the loss of business. Vivature believes that the
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`nation-wide damages resulting from BCBSKS’s improper actions are well over $10,000,000.
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`24.
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`BCBSKS and Vivature have also had numerous telephone meetings in which
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`BCBSKS demanded Vivature expend time and resources modifying numerous of its procedures
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`relating to how it filed and submitted the Claims.
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`25.
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`Regarding the Washburn Contract, and the contracts with the other Kansas Clients,
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`BCBSKS and Vivature have engaged in: (1) multiple conference calls, some of which were
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`requested by BCBSKS; (2) multiple one-on-one telephone calls, some of which were originated
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`by BCBSKS; (3) dozens of e-mail communications, some originated by BCBSKS, including
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`correspondence from BCBSKS’s counsel; (4) thousands of claims handled, totaling several
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`millions of dollars in claims for which Vivature seeks recovery.
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`26.
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` Vivature submitted Claims following the procedures and guidelines which were
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`told to Vivature by BCBSKS. In more than one of these conference calls, where representatives
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`from both sides were present, BCBSKS fraudulently represented to Vivature that if Vivature made
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`the substantial changes to its claims filing process, BCBSKS would process and pay the Claims as
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`Case 5:19-cv-04007-HLT-TJJ Document 194 Filed 12/21/20 Page 13 of 37
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`submitted by Vivature.19 One of such conference calls occurred on October 17, 2017, where the
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`participants for Vivature included Mouzon Bass, Brandon Stanwix, and Vivature’s counsel, on
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`behalf of Vivature, and the participants for BCBSKS included Cathy Holmes, Marguerite
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`Mzhickteno, and counsel Shelly King.20 During this particular conference call, Cathy Holmes
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`made the fraudulent misrepresentation to Mouzon Bass, Brandon Stanwix, and Vivature’s counsel.
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`27.
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`Having dealt with insurance providers across the United States for years on similar
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`issues, Vivature justifiably relied upon BCBSKS’s representations and in good faith complied with
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`BCBSKS’s demands to completely alter its submission process.21 Despite Vivature’s compliance
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`with BCBSKS’s demands, BCBCKS has claimed that less than 1% of the claims have to be paid.
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`Based on information learned by Vivature, regarding this secret campaign of harm towards
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`Vivature that BCBSKS has pursued, there is little doubt that BCBSKS never had any intention to
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`pay the Claims as submitted by Vivature, and BCBSKS’s promise to do so was knowingly false
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`when it was made. This seems self-evident from the fact that while BCBSKS claimed to be
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`assisting Vivature with proper claims submission, it had already reported to dozens of third parties
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`that Vivature was committing fraud.22
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`28.
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`BCBSKS has, through its ever-changing demands that Vivature change its
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`submission process, made it more difficult, if not impossible, for providers, insureds, and Vivature,
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`to get paid. This seems to be precisely what BCBSKS intended as confirmed by BCBSKS’s
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`internal email from Marguerite Mzhickteno where she confirmed that BCBSKS intentionally was
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`19 BCBSKS was hiding the fact that it had, as early as January of 2017, already concluded that Vivature’s claims
`submissions were fraudulent and potentially criminal.
`20 Exhibit K, Supplemental Declaration of Mouzon Bass III.
`21 See Exhibit 3 to Exhibit K, which is just one example of Vivature’s justifiable reliance on BCBSKS’s demands
`that Vivature substantially modify its claims process.
`22 See Zimmerman Dep. 330:7 – 18, attached as Exhibit T.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`denying all claims and making it difficult for any claims to be paid with the hope that Vivature’s
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`clients would see little benefit in continuing to do business with Vivature.23 Even after Vivature
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`jumped through all of BCBSKS’s hoops regarding its submission process, BCBSKS denied claims
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`for medically necessary covered services for injured students whose families pay significant
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`premiums to BCBSKS.
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`29.
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`BCBSKS’s repeated requests that Vivature modify its submission process to satisfy
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`BCBSKS’s demands and failure to pay any of the Claims shows that BCBSKS’s promise to do so
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`was knowingly false when it was made. Furthermore, when BCBSKS failed to pay the Claims,
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`Vivature and BCBSKS engaged in substantial follow-up to determine whether there was any
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`legitimate reason for BCBSKS’s denial of virtually 100% of these claims.24 Vivature was also
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`dealing with BCBSKS regarding the appeals process for these claims.
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`30.
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`In furtherance of its effort to avoid paying the Claims, BCBSKS contacted
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`Washburn25 and maliciously made numerous false accusations regarding Vivature and the
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`paperwork submitted by Vivature on Washburn’s behalf. In doing so, BCBSKS either purposely
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`avoided the truth or deliberately failed to verify or investigate the truth of its accusations.26
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`23 See Exhibit J.
`24 BCBSKS has admitted that they denied 100% of the claims submitted by Vivature that were all reviewed by
`BCBSKS’s Special Investigations Unit. See Mzhickteno Dep. 356:4 – 24, attached as Exhibit U; Exhibit D. It is noted
`that Exhibit 45 to the Mzhickteno Dep., is an earlier email within in the email chain contained in Exhibit D.
`25 And upon information and belief, the other Kansas Clients.
`26 See Exhibit K. Zimmerman Dep. 164:7 – 9, 306:1 – 4, 317:11 – 318:10, 319:14 – 19, 357:3 – 21, 358:9 – 360:6,
`39:20 – 40:5, 79:6 – 9, 83:12 – 14; Holmes Dep. 88:15 – 89:21; Mzhickteno Dep. 274:10 – 13, 328:5 – 12, 352:3 – 7,
`collectively, attached as Exhibit V.
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`PLAINTIFFS’ SECOND AMENDED COMPLAINT
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`A.
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`BCBSKS Maliciously Engages In A Campaign To Defame Vivature.
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`31.
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`On one occasion, on February 14, 2017, Douglas Scott, BCBSKS’s Director of
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`Professional Relations, informed Washburn University Sports Medicine27 that its Contracting
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`Provider Agreement “involved significant misrepresentations” and was being terminated.28
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`Vivature was Washburn’s point of contact, Vivature provided information to BCBSKS concerning
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`the agreement referred to, and Douglas Scott knew Washburn was one of Vivature’s clients when
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`he made the false statements. Therefore, Douglas Scott’s statement to Washburn