DOROTHY J. HARRIS, Plaintiff and Appellant,
ST. VINCENT HEALTHCARE, Defendant and Appellee, DOROTHY J. HARRIS and TEDEEN HOLBERT, Plaintiffs and Appellants,
BILLINGS CLINIC, Defendant and Appellee.
Submitted on Briefs: May 28, 2013
District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV-12-0060 Honorable Gregory R. Todd, Presiding Judge Cause No. DV-12-0059 Honorable Russell C. Fagg, Presiding Judge
For Appellant: Alexander (Zander) Blewett, III, Andrew (Drew) Blewett, Hoyt & Blewett, Great Falls, Montana
Jim Edmiston, Shane Colton, Joe Cook, Edmiston & Colton, Billings, Montana
For Appellee St. Vincent Healthcare: Brendon J. Rohan, Poore, Roth & Robinson, P.C., Butte, Montana
For Appellee Billings Clinic: Ian McIntosh, Kenneth K. Lay, Crowley Fleck, PLLP, Bozeman, Montana
Patricia O. Cotter Justice.
¶1 Dorothy J. Harris (Harris) and Tedeen Holbert (Holbert) appeal from orders in two separate cases from Montana's Thirteenth Judicial District Court, Yellowstone County, dismissing Harris and Holbert's breach of contract and constructive fraud claims against Billings Clinic, and Harris' similar claims against St. Vincent Healthcare. We affirm both District Court decisions in this consolidated appeal.
¶2 Harris and Holbert raise four issues on appeal. Ultimately, all of these issues can be addressed in the following inquiry:
¶3 1. Did the District Courts err in dismissing Harris and Holbert's breach of contract and constructive fraud claims pursuant to M. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted?
FACTUAL AND PROCEDURAL BACKGROUND
¶4 On November 9, 2008, Holbert was involved in an automobile accident caused by another driver. The at-fault driver carried a Farmers automobile insurance policy. Holbert received medical treatment at Billings Clinic on 30 occasions from the date of the accident to December 17, 2009. Billings Clinic billed Holbert for medical expenses related to the accident, which totaled $6, 073.60. Farmers, as the at-fault driver's insurer, remitted payment for Holbert's medical expenses in full.
¶5 On February 25, 2010, Harris was injured in an unrelated automobile accident caused by a different third-party tortfeasor. The other driver carried a State Farm automobile insurance policy. Harris received medical treatment at St. Vincent Healthcare on the day of the accident and on March 22, 2010. St. Vincent Healthcare billed Harris for medical expenses totaling $777.52. The third-party tortfeasor's insurance carrier, State Farm, paid for Harris' medical expenses incurred at St. Vincent Healthcare. Harris also received medical treatment at Billings Clinic for injuries sustained in the accident on nine occasions between April 26, 2010, and July 19, 2011. State Farm paid Harris' $8, 993.34 Billings Clinic bill.
¶6 During the relevant period of time when Holbert and Harris were patients of Billings Clinic and St. Vincent Healthcare, both Holbert and Harris were members of health plans administered by Blue Cross Blue Shield of Montana (BCBS). BCBS entered into a preferred provider agreement (PPA) with Billings Clinic and St. Vincent Healthcare. The pertinent terms of the PPAs are the same for both providers. Pursuant to the PPA, Billings Clinic and St. Vincent Healthcare agreed to accept payment from BCBS at a discounted reimbursement rate for certain medical services provided to BCBS insureds.
¶7 On January 13, 2012, Harris filed her complaint in District Court against Billings `Clinic. Harris filed an amended complaint that added Holbert as a plaintiff on April 9, 2012. The amended complaint alleged individual and class claims of breach of contract and constructive fraud, and requested compensatory damages equal to the difference between the amount the third-party insurers paid to Billings Clinic and the reduced reimbursement rates under the PPA with BCBS. Judge Fagg presided in the case against Billings Clinic.
¶8 On May 17, 2012, Billings Clinic filed a M. R. Civ. P. 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. After the matter was fully briefed, the District Court granted Billings Clinic's motion to dismiss on July 3, 2012. The District Court determined that an insured plaintiff is entitled to recover only the amount of medical expenses paid and accepted as payment in full by the medical provider, not the amount billed for such medical services. Otherwise, a plaintiff would receive a windfall because he would recover amounts he never incurred and would never have had to pay. Next, the District Court determined that Harris and Holbert did not show that they suffered any detriment or legally cognizable damages based on their claims. The District Court concluded that Harris and Holbert did not owe Billings Clinic any additional amount and therefore had been made whole. The District Court reasoned that even if Billings Clinic had charged the third-party insurers at the reduced rate pursuant to the PPA, Harris and Holbert would essentially have been in the same exact position had the alleged breach never occurred. The District Court noted that Harris and Holbert's amended complaint did not contain any allegations that they had been deprived of settlement or insurance proceeds as a result of Billings Clinic's conduct.
¶9 On January 13, 2012, Harris also filed a complaint against St. Vincent Healthcare. This case was assigned to Judge Todd. Harris filed her second amended complaint on April 3, 2012, in which she asserted the same individual and class claims as she did against Billings Clinic. On August 2, 2012, Harris filed a motion for class certification. St. Vincent Healthcare filed a M. R. Civ. P. 12(b)(6) motion to dismiss on August 3, 2012. The District Court held oral argument on the motion for class certification and the motion to dismiss.
¶10 On October 16, 2012, the District Court granted St. Vincent Healthcare's motion to dismiss. The District Court determined that St. Vincent Healthcare was only contractually obligated to bill or collect discounted rates as set forth in the PPA when a patient received services that were paid for under a BCBS health plan. Under these circumstances, the District Court concluded that St. Vincent Healthcare did not breach any contractual obligation by billing State Farm according to its usual rates. Next, the District Court examined Harris' constructive fraud claim and determined that St. Vincent Healthcare had no legal duty under the PPA to charge ...