Case 4:22-cv-01449 Document 1 Filed on 05/05/22 in TXSD Page 1 of 20
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`UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
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`C.A. No. ____________________
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`MEMORIAL HERMANN HEALTH SYSTEM,
`
`
`Plaintiff,
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`v.
`
`HEALTH CARE SERVICE CORPORATION,
`A MUTUAL LEGAL RESERVE COMPANY,
`d/b/a BLUE CROSS BLUE SHIELD OF
`TEXAS,
`
`
`Defendant.
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`PLAINTIFF’S ORIGINAL COMPLAINT
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`Plaintiff Memorial Hermann Health System (“Memorial Hermann”) files this Original
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`Complaint against Defendant Health Care Service Corporation, a Mutual Legal Reserve
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`Company d/b/a Blue Cross Blue Shield of Texas (“BCBS”).
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`1.
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`NATURE OF THE ACTION
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`1.
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`This case involves an insurance company prioritizing profits over patient well-
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`being and its obligation to pay for emergency and subsequent care. After losing more than $400
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`million on Affordable Care Act (“ACA”) Exchange plans in Texas in 2014, and over $300
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`million on individual market plans in Texas in 2015, BCBS improperly sought to shift some of
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`these losses to Memorial Hermann by wrongly denying hundreds of valid Blue Advantage and
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`MyBlue Health claims (the “BAV Claims”) for emergency services and post-stabilization care.
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`Although BCBS resolved the bulk of its misconduct through a lawsuit Memorial Hermann filed
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`in 20171, BCBS now again has refused to properly reimburse Memorial Hermann for BAV
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`1 This case is related to Memorial Hermann Health System v Health Care Service Corp., Case
`No. 4:17-CV-2661, that was pending before Judge Sim Lake in the United States District Court
`for the Southern District of Texas.
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`1196262.4
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`Claims. As a result of BCBS’s continuing improper conduct, Memorial Hermann has suffered
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`more than $3 million in damages.
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`2.
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`In late 2013, BCBS agreed to pay Memorial Hermann at an agreed rate for
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`healthcare provided to BCBS’s members who came to Memorial Hermann with emergent
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`medical conditions (the “BAV HMO Agreement”). In accordance with the BAV HMO
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`Agreement, between January 2014 and June 2015, BCBS generally paid Memorial Hermann for
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`the care it rendered to thousands of BAV members, whether in the emergency room or upon
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`admission to the hospital for emergent or continuing treatment. However, after BCBS suffered
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`more than $400 million in losses on the ACA Exchange in Texas in 2014, BCBS decided in mid-
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`2015 to begin breaching the BAV HMO Agreement in earnest and as a result increased its
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`denials for anything beyond what BCBS deemed “emergency care”, on the basis that Memorial
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`Hermann is “out-of-network” for BAV members.
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`3.
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`BCBS’s belated position was that Memorial Hermann must force BCBS BAV
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`members who came to Memorial Hermann in an emergent condition out of a Memorial Hermann
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`facility, requiring them to leave Memorial Hermann and transfer to an “in-network” hospital so
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`that BCBS can save money, even if it disrupts the patient’s continuity of care, endangers patient
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`safety, and subjects Memorial Hermann to potential liability for improper transfers or medical
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`malpractice.
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`4.
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`As a result of BCBS’s change in position in mid-2015, BCBS substantially
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`increased its denials of payment for anything beyond what BCBS unilaterally deemed to be
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`“emergency” care, going from approximately one such denial per month, on average, to
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`approximately 40 such denials per month, on average. If, as BCBS insisted, the BAV members
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`had been transferred to an in-network facility for continuing care, BCBS still would have had to
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`pay the in-network provider for those services. However, under BCBS’s view of the world,
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`BCBS did not have to pay anything at all and could shift the cost of continuing related medical
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`care to its own BAV members (by denying benefits) or to Memorial Hermann (by denying
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`claims).
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`5.
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`BCBS’s improper claim denial policy not only financially injured Memorial
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`Hermann and unjustly enriched BCBS, but it also endangered patient care and safety, as shown
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`in one example of BCBS’s denials from the prior lawsuit: patient A suffered an open fracture of
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`her lower left leg, a closed right lower leg fracture, broken ribs, and internal bleeding. Patient A
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`was first taken to another hospital, but the physician at that hospital decided to transfer patient A
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`to a Memorial Hermann emergency room for trauma care, declaring the transfer a medical
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`emergency. As a medical emergency, Memorial Hermann was not permitted to check insurance
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`benefits or redirect patient A to another facility based on insurance coverage. Upon arrival at
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`Memorial Hermann, patient A went directly to the operating room for surgery. Following
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`surgery, patient A required continuing care and was admitted to the Memorial Hermann hospital
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`for that continued care. BCBS was notified that patient A was being admitted, and did not deny
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`coverage. When it was medically appropriate, patient A was discharged from the hospital after
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`14 days.
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`6.
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`Memorial Hermann provided $261,156.30 in medical treatment to patient A.
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`BCBS, however, paid just $4,672.35, claiming that patient A should have been transferred to a
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`BCBS “in-network” hospital right after coming out of surgery. BCBS apparently believed that,
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`even though BCBS did not object to Memorial Hermann treating patient A at the time, Memorial
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`Hermann should have forced patient A from the hospital right after surgery -- regardless of the
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`physician’s or patient’s belief about what was in the patient’s best interests, and even though
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`such a transfer would have been nearly impossible because physicians generally are unwilling to
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`accept transfer of trauma patients because they require continuity of care at the treating facility.
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`It clearly was not in patient A’s best interests to be transferred right after such significant
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`surgery, but BCBS apparently believes that Memorial Hermann should forcibly discharge BAV
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`patients like patient A -- even against physician’s recommendations or the patient’s will -- once
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`the patient has been “stabilized” in the emergency room. BCBS’s after-the-fact denial policy is
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`premised on the notion that reduced financial cost to BCBS is more important than patient well-
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`being.
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`7.
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`Memorial Hermann sued BCBS in 2017, ultimately seeking more than
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`$30,000,000.00 in damages for BCBS’s improper claim denials and breaches of the BAV HMO
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`Agreement. The parties resolved that lawsuit in 2019.
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`8.
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`BCBS’s continued breaches of the parties’ agreement and failures to comply with
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`Texas law have cost Memorial Hermann more than $3 million in additional health care
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`reimbursements for approximately 100 additional BAV members who came to Memorial
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`Hermann with emergency conditions, which were not part of the prior lawsuit.
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`2.
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`PARTIES
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`8.
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`Memorial Hermann is a Texas corporation with its principal place of business in
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`Houston, Harris County, Texas. Memorial Hermann can be notified through its attorneys,
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`Smyser Kaplan & Veselka, L.L.P., 717 Texas Ave., Suite 2800, Houston, Texas, 77002.
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`9.
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`Defendant Health Care Service Corporation, a Mutual Legal Reserve Company
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`d/b/a Blue Cross Blue Shield of Texas is a corporation with its principal place of business in
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`Illinois. BCBS can be served through its registered agent, Corporation Service Company, 211 E.
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`7th St., Suite 620, Austin, TX 78701-3218.
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`1196262.4
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`3.
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`JURISDICTION AND VENUE
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`10.
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`This Court has jurisdiction over this action under 28 U.S.C. § 1332(a)(1) because
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`there is complete diversity between the parties and the amount in controversy exceeds $75,000,
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`exclusive of interests and costs.
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`11.
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`Venue is proper in this district under 28 U.S.C. § 1391(b)(2) because a substantial
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`part of the events or omissions giving rise to Memorial Hermann’s claims occurred in this
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`district.
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`4.
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`FACTUAL BACKGROUND
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`12. Memorial Hermann is entitled to reimbursement for the unpaid BAV Claims.
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`BCBS properly paid the BAV claims for 18 months before losing hundreds of millions of dollars
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`in its Exchange plans. Memorial Hermann filed a lawsuit and resolved BCBS’s misconduct.
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`BCBS, though, has again refused to properly pay BAV Claims for approximately 100 additional
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`patients.
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`A.
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`Relationship between Memorial Hermann and BCBS.
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`13. Memorial Hermann is the largest non-profit, charitable healthcare system in
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`Southeast Texas. BCBS offers, issues, and administers health insurance plans.
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`14.
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`Persons covered under insurance policies issued or administered by BCBS and its
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`affiliates (“insureds”) receive health care services at Memorial Hermann. The insurance benefits
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`are governed by a number of different types of agreements between the individual patients and
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`BCBS or an employer health plan administered by BCBS.
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`15.
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`Separate from these insurance policies between BCBS and its insureds, BCBS and
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`Memorial Hermann entered into agreements that govern compensation and billing for BCBS’s
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`Health Maintenance Organization (“HMO”) and Preferred Provider Organization (“PPO”)
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`Program Participants. These agreements provide BCBS with a contractual discount from
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`Memorial Hermann’s usual and customary charges when BCBS’s HMO or PPO Program
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`Participants receive medical or health services at Memorial Hermann’s facilities.
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`16.
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`Upon signing these agreements, Memorial Hermann became an “in-network”
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`facility for BCBS’s HMO and PPO insureds, entitling them to discounted fees. The general
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`rationale for these contractual discounts is volume; BCBS will incentivize its insureds to visit in-
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`network facilities and increase the number of patients being treated at Memorial Hermann by
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`providing superior insurance benefits to its insureds who are treated in-network versus “out-of-
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`network.”
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`17.
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`BCBS also has insureds who are not HMO or PPO Program Participants. Some
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`of these insureds are covered by fully-insured indemnity plans (“Indemnity Plans”), which are
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`substantively different from HMO or PPO insurance plans. Indemnity Plans do not participate in
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`a provider network and have only one level of co-insurance. Whether treated at an in-network or
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`out-of-network facility, the beneficiary’s co-insurance obligation is the same.
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`18.
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`In May 2005, Memorial Hermann and BCBS entered into the “Hospital Contract
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`for Traditional Indemnity Business” (“Indemnity Contract”). It provides a discounted rate for
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`insureds covered by BCBS Indemnity Plans, known as the PAR rate. This rate has consistently
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`been applied to the entire claim for all services provided by Memorial Hermann to a BCBS
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`insured covered by an Indemnity Plan, not just to emergency services.
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`19. When the Indemnity Contract was negotiated and signed, it was contemplated and
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`agreed that it would cover reimbursement only for medical services provided to members of
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`BCBS Indemnity Plans.
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`B.
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`BCBS begins offering the Blue Advantage HMO Plan.
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`20.
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`In late 2013, BCBS began offering health insurance plans over the Exchanges
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`created under the ACA, with an effective start date of January 1, 2014. ACA Exchange plans are
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`not covered by the Employee Retirement Income Security Act (“ERISA”). One of those ACA
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`plans offered by BCBS was the Blue Advantage HMO plan (“BAV Plan”).
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`21. When the BAV plan was introduced, BCBS excluded the BAV plan from its
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`HMO contract with Memorial Hermann. BCBS wanted to reimburse Memorial Hermann for
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`care provided to BAV members at lower rates, and Memorial Hermann did not agree to those
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`rates. Thus, BCBS initially designated Memorial Hermann as “out-of-network” for BAV Plan
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`members.
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`22.
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`However, despite Memorial Hermann being “out-of-network” for the BAV plan, a
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`BAV insured that presents to a Memorial Hermann emergency room or with an emergency
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`medical condition must be treated. Under the federal Emergency Medical Treatment and Active
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`Labor Act (“EMTALA”), Memorial Hermann has a statutory duty to provide emergency services
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`and care to all individuals, including members and insureds of BCBS, who present to its
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`emergency departments with potentially life-threatening conditions, without regard to the
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`patients’ ability to pay or their possession of insurance benefits.
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`23.
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`Under the Texas Insurance Code, BCBS must “pay for emergency care performed
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`by non-network physicians or providers at the usual and customary rate or at an agreed rate.”
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`Tex. Ins. Code § 1271.155(a). In addition, BCBS must “approve or deny coverage of post-
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`stabilization care as requested by a treating physician or provider within … one hour of the time
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`of the request.” Tex. Ins. Code. § 1271.155(c).
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`24. When a BAV insured comes to a Memorial Hermann emergency room, Memorial
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`Hermann verifies the patient’s insurance coverage and eligibility electronically with BCBS. If
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`there is a subsequent change in the patient’s status, such as being admitted to the hospital for
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`continuing care, Memorial Hermann reasonably notifies BCBS of the change in status, provides
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`the patient’s chief complaint or diagnosis, and requests authorization or approval for treatment.
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`Typically, BCBS responds with any questions it had or additional information it wants and
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`informs Memorial Hermann that authorization or approval for the treatment is pending, but does
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`not refuse or object to the treatment of the patient at Memorial Hermann. In other words, BCBS
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`does not deny the request for approval within one hour as required by the Texas statute. As a
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`result, BCBS must pay for all care, whether emergency or post-stabilization, that Memorial
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`Hermann provides to such BAV Plan insureds. If BCBS were to deny authorization, however,
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`then it would be incumbent upon BCBS to coordinate a transfer of the patient to another facility
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`in BCBS’s network and provide transfer instructions to Memorial Hermann.
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`C.
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`For 18 months, BCBS paid for BAV Plan members’ treatment at the agreed rate.
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`25.
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`Because Memorial Hermann was initially considered “out-of-network” for the
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`BAV Plan, there was no contractual discount for BCBS when the BAV Plan was introduced
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`effective January 1, 2014. Under the typical “out-of-network” scenario, the payor (e.g., BCBS)
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`must reimburse the healthcare provider at its usual and customary rate, i.e. 100% of its billed
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`charges.
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`26.
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`However, in late 2013, before the BAV Plan took effect, BCBS took the position
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`that it could pay the discounted PAR rate from the separate Indemnity Contract for treatment that
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`Memorial Hermann provided to BAV Plan insureds who presented at Memorial Hermann’s
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`emergency room or with emergency conditions that Memorial Hermann was required to treat.
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`Initially, Memorial Hermann disagreed and maintained that BCBS was not entitled to access the
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`PAR rate to pay for treatment provided to BAV insureds who came to Memorial Hermann
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`through the emergency room or with emergency conditions. However, through negotiation in
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`late 2013, the parties agreed that BCBS could pay the PAR rate to reimburse Memorial Hermann
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`for BAV Plan insureds who were treated at Memorial Hermann because they presented to the
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`emergency rooms or with an emergency condition (the “BAV HMO Agreement”).
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`27.
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`As a result, for BAV insureds treated at Memorial Hermann from January 2014
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`through mid-2015, BCBS generally reimbursed Memorial Hermann at the PAR rate for
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`healthcare services its BAV Plan insureds received, both in the emergency room and in the
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`hospital upon admission for continuing care and treatment. Per its typical practice, when a
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`patient required observation or inpatient admission, BCBS responded to Memorial Hermann’s
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`request for approval that its approval was “pending,” and did not deny coverage. Consistent with
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`the BAV HMO Agreement, after the patient was treated BCBS generally reimbursed Memorial
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`Hermann for all of the services provided at the agreed-upon rate and did not draw any distinction
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`between emergency care and post-stabilization care in Memorial Hermann’s emergency rooms
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`and in hospitals upon admission for continuing care and treatment.
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`28.
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`For approximately 18 months, BCBS generally did not deny Memorial
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`Hermann’s claims for all treatment that Memorial Hermann provided to these BAV insureds, at
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`the agreed-upon PAR reimbursement rate. There were thousands of claims during this time
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`period for which BCBS paid millions of dollars at the PAR rate, pursuant to the BAV HMO
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`Agreement. BCBS did not question a BAV Plan insured’s admission to Memorial Hermann for
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`ongoing treatment relating to or resulting from the insured’s emergency condition. BCBS did
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`not require its BAV insureds to be transferred to an in-network facility, locate and coordinate the
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`transfer to an in-network facility, or provide transfer instructions to Memorial Hermann in order
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`to transfer these BAV Plan insureds to an in-network facility. BCBS instead generally paid the
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`claims for all of the services that Memorial Hermann provided to BAV insureds, both in the
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`emergency department and in the hospital. This changed starting in mid-2015, however.
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`D.
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`BCBS breached the BAV HMO Agreement by refusing to pay BAV Claims.
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`29.
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`In July 2015, BCBS notified its customers and agents that it had lost more than
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`$400 million on its ACA Exchange products in Texas for the year 2014. In other words, when
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`setting its premium rates for the forthcoming new Exchange products in Texas, BCBS
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`underestimated potential claims for healthcare for the upcoming 2014 year and ended up paying
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`out $400 million more than it collected in premiums in Texas that year. As a result of this huge
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`loss in 2014, BCBS stopped offering its PPO plan on the ACA Exchange and raised the 2016
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`premiums for the remaining HMO plans by approximately 20%. After suffering large losses
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`again in 2015, BCBS raised its premiums for the HMO plans by nearly 60% for 2017.
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`30.
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`Beginning in 2015, BCBS began looking for ways to recoup these losses.
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`Therefore, it was no coincidence that in mid-2015, BCBS began denying hundreds of claim
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`payments for treatment that Memorial Hermann provided to BAV plan members who came to
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`Memorial Hermann with emergency conditions. Contrary to the BAV HMO Agreement and to
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`the parties’ conduct and course of performance for the previous 18 months, for hundreds of
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`claims BCBS began paying only for what BCBS deemed, after the fact, to be “emergency care”
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`and denying claims for what BCBS deemed to be “post-stabilization treatment.”
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`31.
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`BCBS’s justification for denying hundreds of Memorial Hermann’s claims (after
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`18 months of generally paying them) was that BAV Plan insureds were required to obtain
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`healthcare services from in-network providers Contrary to the BAV HMO Agreement and to
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`BCBS’s practice for 2014 and the first half of 2015, in mid-2015 BCBS began claiming that
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`Memorial Hermann was required to transfer BAV plan members to a different, in-network
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`facility once the patient’s condition had (in BCBS’s post-hoc opinion) stabilized—even if the
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`patient did not want to be transferred. When Memorial Hermann asked BCBS whether it was
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`supposed to transfer BAV plan members to different facilities against their will, BCBS
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`responded “that’s what you have security for.”
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`32.
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`BCBS’s position is incorrect and contradicted by Texas law, the BAV HMO
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`Agreement, and the parties’ conduct and course of dealing.
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`33.
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`By denying Memorial Hermann’s claims and refusing to pay the PAR rate, BCBS
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`violated the BAV HMO Agreement and the parties’ conduct and course of dealing over the prior
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`18 months. BCBS also violated Texas law which required BCBS to pay an out-of-network
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`provider for “emergency care” at the “usual and customary rate” or at an “agreed rate.” Tex. Ins.
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`Code § 1271.155(a).
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`34.
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`Texas law requires BCBS to pay an out-of-network provider for “emergency
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`care” at the “usual and customary rate” or at an “agreed rate.” Tex. Ins. Code § 1271.155(a).
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`Here, the agreed rate is the PAR reimbursement rate. Thus, BCBS must pay for all “emergency
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`care” provided to BCBS’s BAV members at that rate.
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`35. With respect to care provided after a patient is “stable,” the standard of what
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`constitutes “stable” is difficult to ascertain or to formulate a general rule about because there are
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`several different clinical definitions of stable, and the ultimate question of stability is one for a
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`physician to determine (for which there can be differences of opinion among physicians).
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`Moreover, if Memorial Hermann transfers a BAV insured to an “in-network” facility just
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`because BCBS unilaterally deems, without physician review, that the patient is “stable,” the
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`patient’s continuity of care will be disrupted and Memorial Hermann could face liability under
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`EMTALA or Texas law for an improper transfer and/or medical malpractice. BCBS cannot
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`dictate medical outcomes simply because its BAV insureds presented to Memorial Hermann with
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`an emergent condition and needed additional, related and continuing care in the hospital for
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`which BCBS does not want to pay (even at the agreed discounted PAR reimbursement rate).
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`36.
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`Regardless of the definition or determination of stability, however, Texas law
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`requires BCBS to approve or deny coverage for “post-stabilization” treatment provided by
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`Memorial Hermann within one hour of Memorial Hermann’s request. Tex. Ins. Code §
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`1271.155(c). BCBS cannot designate the Memorial Hermann request for authorization or
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`approval of treatment as “pending” and then later deny payment based upon a BCBS post-
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`hospitalization decision that, from BCBS’s perspective, the patient was “stable” and could have
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`been forced out of Memorial Hermann to another facility.
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`37.
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`BCBS did not comply with the Texas law that requires approval or denial within
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`one hour of the request. See Tex. Ins. Code § 1271.155(a). And BCBS agreed to pay Memorial
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`Hermann for the care provided to BAV members at the agreed-upon PAR rate. As a result,
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`BCBS must pay for all services provided by Memorial Hermann to BAV insureds who present to
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`a Memorial Hermann facility with an emergent medical condition, whether or not BCBS
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`subsequently (as part of a post-hoc claims review process) unilaterally characterizes some of the
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`services provided by Memorial Hermann as “post-stabilization” treatment. BCBS cannot require
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`Memorial Hermann to provide free medical care to its BAV insureds simply because BCBS
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`takes a “wait and see” approach to approving payment of medical care for BAV insureds that
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`come to Memorial Hermann for emergency care.
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`38.
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`Altogether, before the prior lawsuit, BCBS refused to reimburse Memorial
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`Hermann for millions of dollars for medical treatment and services provided to over 1,200 BAV
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`Plan members who were treated in Memorial Hermann’s emergency departments. Memorial
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`Hermann made several demands for payment, all of which BCBS refused. Consequently, on
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`September 3, 2017, Memorial Hermann filed suit against BCBS seeking to recover payment for
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`medical services provided to these BAV Plan members (“2017 Lawsuit”). See Case No. 4:17-
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`cv-02661, Dkt. 1, in the United States District Court for the Southern District of Texas.
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`E. Memorial Hermann and BCBS resolve the 2017 lawsuit, and then begin to address
`the Remaining BAV Claims.
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`39.
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`Following two-plus years of litigation, Memorial Hermann and BCBS resolved
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`the 2017 Lawsuit and the BAV Claims that were at issue in that lawsuit. That case was
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`dismissed on October 18, 2019. See id., Dkt. 80.
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`40.
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`There were, however, remaining BAV Claims (“Remaining BAV Claims”) that
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`were not resolved by the 2017 Lawsuit. Memorial Hermann and BCBS then reached agreement
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`on how to resolve the Remaining BAV Claims and exchanged information to resolve the
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`Remaining BAV Claims.
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`41.
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`Rather than review every single unpaid BAV Claim and determine the specific
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`amount owed, the parties agreed that BCBS would pay Memorial Hermann a defined percentage
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`of the expected variance on all the Remaining BAV Claims. The parties acknowledged that the
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`intent of this agreement was to avoid the time associated with a claim-by-claim review of the
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`Remaining BAV Claims. The parties further agreed that complete settlement of the unpaid BAV
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`Claims would take place in phases, with Memorial Hermann sending BCBS spreadsheets
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`identifying the Remaining BAV Claims and their total expected variance, from which the
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`defined percentage amount would be calculated and then paid by BCBS.
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`42.
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`Pursuant to this agreement, Memorial Hermann submitted on June 5, 2020 a
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`spreadsheet for the first set of Remaining BAV Claims identifying the total expected variance.
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`BCBS then reviewed, calculated and paid the agreed amount on January 27, 2021.
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`43. Memorial Hermann then submitted the second and final spreadsheet of Remaining
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`BAV Claims on July 16, 2021. In response, BCBSTX provided feedback on various accounts
`
`and as a result, MHHS reviewed and removed accounts for which it agreed required exclusion.
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`On January 10, 2022, MHHS submitted an updated spreadsheet of BAV Claims, with a total
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`variance of $3,143,271.64.
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`44.
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`Rather than pay the agreed amount—as the parties had agreed and how BCBS
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`previously had done—BCBS further contested a number of the Remaining BAV Claims and
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`offered to pay significantly less than the previously agreed and used percentage of the claims’
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`expected variance. BCBS has paid nothing for this final set of Remaining BAV Claims.
`
`45.
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`Despite several additional attempts to resolve this dispute by Memorial Hermann,
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`BCBS refuses to pay the Remaining BAV Claims. Memorial Hermann now files suit to recover
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`payment for that final set of Remaining BAV Claims.
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`A.
`
`Count One – Breach of Express Contract
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`5.
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`Causes of Action
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`46. Memorial Hermann incorporates paragraphs 1–45 as if stated verbatim herein.
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`47.
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`BCBS and Memorial Hermann entered into the BAV HMO Agreement, based on
`
`their oral and written communications. The material terms of the BAV HMO Agreement are that
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`BCBS would reimburse Memorial Hermann for all services provided to BAV insureds at
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`Memorial Hermann using the PAR reimbursement rate.
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`48.
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`BCBS breached the BAV HMO Agreement by failing to pay claims for healthcare
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`services provided to BAV plan members.
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`49. Memorial Hermann seeks to recover all appropriate damages for BCBS’s breach,
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`including but not limited to the full amount of the denied claims at the PAR rate, currently more
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`than $3 million, plus interest.
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`1196262.4
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`Case 4:22-cv-01449 Document 1 Filed on 05/05/22 in TXSD Page 15 of 20
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`50.
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`Alternatively, BCBS and Memorial Hermann, through their oral and written
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`communications, also entered into a valid and binding agreement for reimbursement of the BAV
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`Claims remaining unresolved after the 2017 Lawsuit. Memorial Hermann agreed to submit
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`spreadsheets of the Remaining BAV Claims to BCBS, and BCBS agreed to calculate and pay a
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`percentage of the Remaining BAV Claims’ total variance amount.
`
`51.
`
`BCBS tendered payment for the first set of the Remaining BAV Claims at the
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`agreed amount, but refuses to tender payment for the second and final set. By refusing to pay the
`
`agreed percentage of the total variance for the final set of Remaining BAV Claims, BCBS has
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`breached the parties’ agreement.
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`52.
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`As a result of BCBS’s breaches, Memorial Hermann has suffered actual damages.
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`B.
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`Count Two – Breach of Implied Contract
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`53. Memorial Hermann incorporates paragraphs 1-45 as if stated verbatim herein.
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`54.
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`In the alternative to Count One, BCBS and Memorial Hermann entered into an
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`implied contract that BCBS would reimburse Memorial Hermann for all services provided to
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`BAV insureds at Memorial Hermann using the PAR reimbursement rate. The parties’ mutual
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`agreement and meeting of the minds is evidenced by, among other things, BCBS’s payment at
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`the PAR rate for the medical treatment that Memorial Hermann provided to BAV insureds for
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`approximately 18 months.
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`55.
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`BCBS breached its agreement with Memorial Hermann by failing to pay claims
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`for healthcare services provided to BAV plan members.
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`56. Memorial Hermann seeks to recover all appropriate damages for BCBS’s breach,
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`including but not limited to the full amount of the denied claims, currently about $3,000,000,
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`plus interest.
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`1196262.4
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`15
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`57.
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`Also in the alternative to breach of the implied BAV HMO Agreement, BCBS
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`and Memorial Hermann entered into an implied contract for the Remaining BAV Claims as set
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`forth above. The parties’ mutual agreement and meeting of the minds is evidenced by, among
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`other things, BCBS’s payment of the first BAV Remaining Claims that Memorial Hermann
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`submitted at the agreed percentage of variance.
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`58.
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`BCBS breached its agreement with Memorial Hermann by failing to tender
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`payment for the final set of Remaining BAV Claims.
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`59.
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`As a result of BCBS’s breach, Memorial Hermann has suffered actual damages.
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`C.
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`Count Three Quantum Meruit/Quantum Valebant
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`60. Memorial Hermann incorporates paragraphs 1-45 as if stated verbatim herein.
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`61.
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`In the alternative to breaches of contract, in the event they are determined
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`unenforceable, Memorial Hermann seeks to recover via quantum meruit for the value of services
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`and materials provided, and via quantum valebant for the value of goods provided.
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`62.
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`To the extent BCBS denies the parties agreements, Memorial Hermann
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`nevertheless has rendered valuable health services and materials to BCBS’s BAV Plan insureds.
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`This provision of medical services and materials was intended to and in fact benefited BCBS in
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`that its insureds received care and treatment for which BCBS was obligated to pay.
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`63.
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`BCBS accepted the health services that Memorial Hermann provided to its
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`insureds and promised, expressly or impliedly, to pay Memorial Hermann for providing services
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`to its BAV Plan insureds. Texas law also requires BCBS to pay out-of-network healthcare
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`providers at the usual and customary rate or at an agreed rate for emergency services and, when
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`BCBS does not approve or deny within one hour of the request, for post-stabilization services
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`that are rendered by the provider. See Tex. Ins. Code. § 1271.155. BCBS therefore had
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`reasonable notice that Memorial Hermann expected compensation for services it provided.
`16
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`1196262.4
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`64.
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`As a result of BCBS’s failure to pay all of Memorial Hermann’s charges at the
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`agreed-upon rate, Memorial Hermann has been underpaid and seeks to recover all appropriate
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`damages, which currently are valued at more than $3 million for the Remaining BAV Claims.
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`D.
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`Count Four -- Promissory Estoppel
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`65. Memorial Hermann incorporates paragraphs 1-45 as if stated verbatim herein.
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`66.
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`BCBS promised to pay Memorial Hermann for the Remaining BAV Claims. It
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`was foreseeable to BCBS that Memorial Hermann would rely on this promise because of the
`
`statutory requirements and the parties’ past con