Most Fort Worth insurance lawyers will be aware of this case. It is a Houston Court of Appeals [14th Dist.] case styled, Allstate v. Rehab Alliance of Texas. This Court upheld the trial Court summary judgment in favor of Rehab Alliance. The opinion is long but here is a little of what it says.
Rehab Alliance is a chiropractic clinic which provided services including chiropractic care, orthopedic and pain management, epidural steroid injections, and radiologists’ services to persons injured in car accidents. As part of its services, Rehab Alliance also provided reports to attorneys outlining injuries and treatment plans for its patients in order to facilitate settlements of their claims for damages.
Allstate claims that Rehab Alliance solicited referrals from attorneys representing such claimants. In those situations, Rehab Alliance would treat the injured parties under a “letter of protection” with the patients’ attorneys. According to Allstate, these letters provided that Rehab Alliance would seek to recover payment of its bills from its patients only if there were a recovery reached by way of settlement or judgment; that is, the patients were released from financial responsibility for health care services if there was no settlement or judgment with an insurer. Allstate alleged these “letters of protection” were concealed from it because they were not included as a part of the settlement packages that attorneys for the various claimants presented to Allstate.
Allstate sued Rehab Alliance and Shanti for fraud, conspiracy, and unjust enrichment, alleging that since 2004, Rehab Alliance made material misrepresentations, including:
* Providing services as if a medical doctor had performed the service, when a nurse practitioner had performed the service * Sending bills for services and other consultations incurred by the patient, when the contract for such procedures was based on a fee splitting agreement with lay persons and, thus, represented the unauthorized and corporate practice of medicine * “Upcoding” or improperly coding treatment, representing that a patient incurred health care costs and remained financially liable, when an agreement releasing him or her from liability was concealed from Allstate * Stating various charges were made as if the service were attended by a medical professional, but was in fact, unattended * Noting that MRIs, surgical injection procedures, and other referrals for further treatment were medically necessary, when they were not, and that MRI reports often included false identification of bulges or herniations to vertebral discs * Medical doctors and Rehab Alliance and/or other diagnostic clinics had “fee splitting” arrangements or other payment arrangements which were not authorized.
*Failing to disclose that medication prescriptions and refills were made by unauthorized persons, yet the costs for such medications were billed as if made by a medical doctor * Concealing patient notes showing that medications were often prescribed or refilled by lay persons, using the name of a medical doctor under contract, or otherwise compensated, through Rehab Alliance.
Allstate asserted that had it “been made aware of these methods and practices, it would not have considered such billings in settling the claims” of the injured persons treated by Rehab Alliance. Specifically, Allstate claimed certain of the sums charged were included in the medical and billing records which were a part of over 100 demand packages which various attorneys presented to Allstate in order to settle their clients’ claims. These claims were for personal injury damages, settled between the years 2004 and 2008. Allstate filed suit in December 2009, seeking to recover the sums it paid for services for which the patients were released from liability and which it claims were improperly billed or coded, improperly supervised, or not medically reasonable or necessary, and which were included as part of the total package which Allstate considered in settling the claims.
In 2012, Rehab Alliance filed a no-evidence motion for summary judgment. It urged there was no evidence to support the injury element of Allstate’s fraud clam. Rehab Alliance urged that because it required proof of the underlying tort of fraud, conspiracy failed.
To prove fraud, Allstate must establish proof of each of the following elements: (1) a material representation was made; (2) the representation was false; (3) at the time it was made, Shanti and/or Rehab Alliance knew the representation was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) Shanti and/or Rehab Alliance made the representation with the intent that Allstate would act on it; (5) Allstate acted in reliance on the representation; and, (6) Allstate suffered injury.
The elements of civil conspiracy are: (1) two or more person; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages.
The Court’s ruling stated that A claim of injury or damages cannot be sustained when based on an “entirely hypothetical, speculative bargain that was never struck and would not have been consummated.” If damages are too remote, uncertain or based purely on conjecture, they cannot support recovery and summary judgment is proper.
As to settlements, the Court noted that there are a whole host of reasons–other than reliance on reports from the adverse party’s doctors, that might lead a part to settle, viz: Several factors other than reliance on the truth of an opponent’s allegations may influence a party’s ultimate decision to settle disputed claims in a lawsuit, including the nature of the liability facts, the nature of the damages, . . . discovery, trial preparation, and trial itself.
Allstate admits that it never paid the entire claim as presented to it.
Updated: