DENTAL HEALTH ASSOCIATES, PA VS. HORIZON BLUE CROSS BLUE SHIELD(L-7842-11, ESSEX COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2923-15T3
DENTAL HEALTH ASSOCIATES, P.A.,
Plaintiff-Appellant,
v.
HORIZON BLUE CROSS BLUE SHIELD
OF NEW JERSEY; HORIZON NJ HEALTH;
HORIZON HEALTHCARE DENTAL, INC.;
HORIZON HEALTHCARE OF NEW JERSEY,
INC.; and GEORGE H. MCMURRAY, DDS,
PRESIDENT AND CEO OF HORIZON
HEALTHCARE OF NEW JERSEY, INC.,
Defendants-Respondents.
___________________________________
Argued July 11, 2017 – Decided October 19, 2017
Before Judges Nugent and Accurso.
On appeal from Superior Court of New Jersey,
Law Division, Essex County, Docket No. L-7842-
11.
Harry Jay Levin argued the cause for appellant
(Levin Cyphers, attorneys; Mr. Levin, Colleen
Flynn Cyphers, and Ronald J. Bakay, on the
briefs).
Edward S. Wardell argued the cause for
respondent (Connell Foley, LLP, attorneys;
Christine S. Orlando, on the brief).
PER CURIAM
Plaintiff, Dental Health Associates, P.A., appeals from an
October 23, 2015 summary judgment order dismissing its complaint
with prejudice and a February 5, 2016 order denying its motion for
reconsideration. In response to defendants' summary judgment
motion, plaintiff could establish no material facts to support the
causes of action it pleaded in its complaint; and on its motion
for reconsideration, plaintiff could produce no evidence that was
new or previously unavailable. Defendants were therefore entitled
to both summary judgment and the denial of plaintiff's motion for
reconsideration. We affirm both orders.
Defendants (collectively "Horizon") administer health
services programs.1 Commencing in approximately 1996, certain
Horizon entities and the Department of Human Services (DHS) were
1
Defendant Horizon Blue Cross Blue Shield of New Jersey is a
not-for-profit health service corporation organized under the New
Jersey Health Service Corporations Act, N.J.S.A. 17:48E-1 to -68.
Horizon Health Care Dental, Inc., provides managed dental
insurance plans for individuals and groups in the State. Horizon
Health Care of New Jersey, Inc., is a New Jersey health maintenance
organization, which contracts with the Department of Human
Services to provide health and dental services to eligible Medicaid
and New Jersey FamilyCare program participants. George H.
McMurray, DDS, was its CEO. Horizon NJ Health, a New Jersey
partnership, was an authorized agent of Horizon Health Care of New
Jersey, Inc. Horizon NJ Health was dissolved in 2015. The
administrative services for the Medicaid Managed Care Program once
provided by Horizon NJ Health are provided by Horizon Health Care
of New Jersey, Inc., d/b/a Horizon NJ Health. Plaintiff does not
distinguish the entities for purposes of its liability theories.
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parties to a "Contract To Provide Services" (the Contract). The
Contract designated DHS as:
[T]the state agency designated to administer
the Medicaid program under Title XIX of the
Social Security Act, 42 U.S.C. 1396 et seq.
pursuant to the New Jersey Medical Assistance
Act, N.J.S.A. 30:4D-1 et seq. and the
Children's Health Insurance Program (CHIP)
under Title XXI of the Social Security Act,
42 U.S.C. 1397aa et seq., pursuant to the
Children's Health Care Coverage Act, P.L.
1997, c. 272 (also known as "NJ KidCare"),
pursuant to Family Care Health Coverage Act,
P.L. 2005, c. 156 (also known as "NJ
FamilyCare") . . . .
Under the Contract, the designated Horizon entities are
obligated to "provide or arrange to have provided comprehensive,
preventive, and diagnostic and therapeutic, health care services"
to enrollees who are eligible through Title V, Title XIX or the
NJ FamilyCare program. This obligation is expressly made "subject
to any limitations and/or excluded services as specified in this
Article." In addition, the Contract requires the Horizon
signatories to "have in place a formal grievance/appeal process
which network providers and non-participating providers can use
to complain in writing." As of September 1, 2007, Horizon had in
place for "Horizon Blue Cross Blue Shield Dental Programs" a policy
and procedure which made available to all participating and non-
participating providers of dental services an appeal process for
certain Horizon determinations.
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Plaintiff provides dental services in offices throughout the
State. The majority of plaintiff's patients are persons enrolled
in Medicaid and the New Jersey FamilyCare Program. Since 2002,
Horizon and plaintiff, through its principal, have been parties
to an "Agreement with [a] Participating Dentist."2 The
Participating Dentist Agreement, which has twice been amended,
requires plaintiff to "provide Eligible Dental Services to Covered
Patients."
The term "covered patient" is defined as "a person entitled
to Eligible Dental Services under any contract which [Horizon Blue
Cross Blue Shield of New Jersey, Inc. (HBCBSNJ)] underwrite[s] or
administer[s], wholly or in participation with others." The term
"Eligible Dental Services" is defined as "a dental service which
a Covered Patient is entitled to receive pursuant to a HBCBSNJ
health or dental insurance contract, subscription certificate, or
benefit design program being administered by HBCBSNJ or Horizon
Healthcare Dental Services, Inc." In 2007 and 2010, the parties
entered into amendments to the Participating Dentist Agreement.
In 2010, as part of a budget initiative, the State became
2
This Agreement's signature line appears below printed form
language, "Accepted and agreed: Horizon Healthcare Dental
Services, Inc." The copy in the appellate record is unsigned by
any officer on behalf of this entity, but contains the signature
of Clifford Lisman.
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more restrictive with respect to its programs' eligible
orthodontic services for children. The State limited such services
to those medically necessary, and restricted medical necessity to
"cases involving birth defects, facial deformities causing
functional difficulties in speech and mastication, and trauma."
According to a June 15, 2010 email from DHS to HBCBSNJ's Dental
Director, N.J.A.C. 10:56 would be modified in 2011 when it was due
for re-adoption. "In the interim, a Newsletter [would] be issued
documenting the changes once they are final."
On January 18, 2011, DHS informed Horizon of "the State Fiscal
Year (SFY) 2011 Appropriations Act (Act) includ[ing] an initiative
to narrow the scope in which orthodontia is a covered service for
children." The letter quoted the Act:
Notwithstanding the provisions of any law
or regulation to the contrary, of the amounts
hereinabove appropriated in Managed Care
Initiative, Payments for Medical Assistance
Recipients – Dental Services, and NJ
FamilyCare – Affordable and Accessible Health
Coverage Benefits, no payment shall be
expended on orthodontic services for children
except in cases where medical necessity can
be proven, such as cases involving birth
defects, facial deformities causing
functional difficulties in speech and
mastication, and trauma.
The letter emphasized that orthodontia should be provided
only in exceptional situations. Following the 2010 budget
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initiative, there was a decrease in all Medicaid claims for
orthodontia, including those submitted by plaintiff.
In 2012, the State broadened the criteria for eligible
orthodontics under the Medicaid Managed Care Program. The State
acknowledges "there was a two year period from July 2010 through
July 2012 when 'it really wasn't clear what was required for
orthodontic evaluation.'"
The State issued a newsletter in July 2012 explaining that
it would broaden reimbursements for orthodontics. At the same
time, the State implemented a change in its contract. At that
time, the State required each provider of services under the
Medicaid Managed Care Program, including Horizon, to submit a
Corrective Action Plan outlining actions they would take to comply
with the State's July 2012 directive for orthodontic coverage.
Horizon submitted a Corrective Action Plan and reimbursed
plaintiff for work-ups that were previously denied from July 2010.
Meanwhile, in September 2011, plaintiff filed its complaint.
The "Statement of Facts" section of the complaint is divided into
three major subsections. The first is entitled "Denial of
Orthodontic Services and Diagnostic Materials." After identifying
the parties, the complaint recites the State's reduction of
payments "so as to no longer require coverage of orthodontic
procedures" in July 2010. The complaint cites the State's August
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1, 2010 newsletter clarifying that certain orthodontic procedures
were required to be covered by HMOs. The complaint further
asserts, "under Medicaid's Early and Periodic Screening,
Diagnostic & Treatment (EPSDT) service, orthodontic procedures and
treatment that are medically necessary must be covered pursuant
to Federal mandate."
The second subsection of the complaint's factual allegations
is entitled "Mishandling of Frequency Limitations to New Jersey
State Medicaid and FamilyCare Recipients." According to a
certification submitted by HBCBSNJ's dental director, "a
'frequency limitation' . . . is a limit on the number of times a
member can receive certain services (such as routine cleanings)
and have them covered during a certain time period." The complaint
alleges Horizon refused to comply with administrative regulations
and "routinely denied [plaintiff] reimbursement for services
provided to Medicaid or FamilyCare patients that were within the
State listed frequency limitation and should [have been] covered."
The complaint further alleges Horizon had created arbitrary
frequency limitations on certain procedures.
The third subsection of the complaint's factual statements
is entitled "Bad Faith Conduct of Horizon." This subsection
alleges Horizon failed to pay the contracted fee for certain
procedures and instead routinely downgraded payment; failed to pay
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the proper contract fee for one of plaintiff's offices during its
initial months of operation; improperly denied root canal
treatment procedures and wrongly advised patients such procedures
were denied due to poor prognosis; inappropriately denied approval
and/or payment for impacted third molars that were medically
necessary; implemented onerous claims appeals process designed to
deny payment to providers and medically necessary treatment to
members; periodically failed to maintain accurate eligibility
files and other systems necessary to adequately and properly
adjudicate claims; failed to send patients accurate information
on Explanation of Benefit forms; failed to pay adequate fees and
routinely paid higher fees to practices that Horizon considered
as providing a lower quality in care; used abusive practices to
deny access to care for the underserved; and mishandled Federal
and State dollars for its own financial gains.
Based on these facts, plaintiff asserted causes of action for
breach of contract, breach of the implied covenant of good faith
and fair dealing, and interference with prospective economic
advantage. To support its damage claim, plaintiff submitted an
expert report from a firm with "extensive expertise in the area
of business valuation, with over forty years of combined experience
in the field." The report's author concluded plaintiff sustained
losses of $2,765,579.
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Following discovery, Horizon moved for summary judgment.
During oral argument on Horizon's summary judgment motion,
plaintiff conceded it had no outstanding claims with Horizon for
services rendered.
[The Court]: Okay. So there's no issue that
— there were no claims that were filed that
were denied that were part of this lawsuit?
[Plaintiff's Attorney]: I do not have a
specific claim or claims where I can say they
were submitted and they were denied.
Plaintiff also conceded its expert had no opinion on the
"issue of frequency," nor did the expert have any evidence
concerning the allegations that Horizon's reimbursement rates were
disparate depending upon socio-economic classifications. Although
not entirely clear, it appears plaintiff argued on the summary
judgment motion that Horizon should be held accountable for the
State's budgeting decisions in 2011 and 2012 to restrict
reimbursements for certain dental services.
Judge Stephanie A. Mitterhoff granted Horizon's summary
judgment motion and explained her reasons in a written opinion
accompanying the October 23, 2015 order entering summary judgment.
After reviewing plaintiff's three-count complaint, Judge
Mitterhoff noted that as of "the filing of Horizon's summary
judgment motion . . . [p]laintiff failed to identify a single
claim that was denied." Judge Mitterhoff also noted Horizon's
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argument that plaintiff had failed to exhaust its administrative
remedies, but deemed the argument moot once plaintiff conceded at
oral argument that Horizon had denied none of plaintiff's claims.
The judge next noted that plaintiff "initially claimed
damages based on improper denials based on frequency limitations,
and disparate and discriminatory reimbursement rates paid to
providers such as [p]laintiff providing services to patients in
urban areas as compared to the rates for the same services paid
to providers who practice in more affluent areas." Judge
Mitterhoff pointed out, however, that plaintiff had not provided
its expert with any "data that would enable him to opine on the
value of either of those claims." Judge Mitterhoff also noted
plaintiff's concession at oral argument "that the frequency
limitation and discrimination claims are no longer being pursued
in this case." Thus, as the judge explained, plaintiff's remaining
argument was "that had the eligibility criteria for orthodontic
services been the same during the time period of 2010 to 2012 as
they had been prior to 2010 and after 2012, [plaintiff] would have
been able to generate more business and thus would have earned
more money."
Judge Mitterhoff determined Horizon could not be held liable
for losses plaintiff sustained as the result of the State's
limiting coverage for Medicaid patients pursuant to a budget
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initiative. The parties did not dispute that their contract was
subject to the contract between Horizon and DHS. As Horizon was
bound by its contract with DHS concerning what procedures were
"covered services," plaintiff could not prevail on its claim that
Horizon breached its contractual obligations.
For similar reasons, Judge Mitterhoff determined plaintiff
had not demonstrated a material factual dispute as to whether
Horizon had breached the implied covenant of good faith and fair
dealing by acting "arbitrar[ily], unreasonably, or capriciously,
with the objective of preventing the other party from receiving
its reasonably expected fruits under the contract." The judge
further determined plaintiff could not prevail on its tortious
interference claim because plaintiff's alleged loss during the
relevant time frame resulted from the State's budget initiative
rather than intentional or malicious interference on the part of
Horizon.
Plaintiff moved for reconsideration. Contrary to its
representation during oral argument on Horizon's summary judgment
motion, plaintiff claimed it "did in fact submit claims, that
otherwise should have been honored, but were rejected." In support
of that proposition, plaintiff submitted one claim, which
plaintiff asserted Horizon had rejected. Plaintiff also claimed
New Jersey's budget initiative violated federal law, though it
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cited no authority for that proposition. In its remaining
arguments, plaintiff mostly rehashed the arguments it had made
when opposing Horizon's summary judgment motion.
Judge Mitterhoff denied the motion for reconsideration. She
noted plaintiff had produced no evidence that was unavailable when
defendants filed their summary judgment motion. Moreover, she
noted plaintiff had failed to exhaust its administrative remedies.
Lastly, the judge reiterated her reasons for granting summary
judgment, which applied to the arguments plaintiff reiterated on
its motion for reconsideration.
On appeal, plaintiff contends the trial court erroneously
denied its motion for reconsideration. It cites the single denied
claim it submitted in support of its motion and makes a general
statement that Horizon was "rejecting any and all claims for
orthodontia, in a wholesale fashion, whether or not there was
medical necessity." Plaintiff also relies on the certification
of its principal, "explaining that [plaintiff] did submit claims
for pre-authorization, but ceased doing so as all claims were
being denied and continuing to submit claims was futile."
Additionally, plaintiff argues the trial court erred in
granting summary judgment to Horizon. Plaintiff contends there
were material issues of fact in dispute that should have precluded
the grant of summary judgment. Plaintiff argues the trial court's
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decision "ignores or discredits the fact that the State's decision
to cut funding to [Horizon] for orthodontic procedures does not,
in turn give [Horizon] the right to deny medically necessary
orthodontia claims submitted for pre-authorization by [plaintiff]
which is in violation of the contract between [plaintiff] and
[Horizon]."
Lastly, plaintiff argues the trial court erred in finding
that it did not exhaust its administrative remedies, because the
situation falls under an exception to the exhaustion doctrine.
Appellate courts "review[] an order granting summary judgment
in accordance with the same standard as the motion judge." Bhagat
v. Bhagat, 217 N.J. 22, 38 (2014) (citations omitted). We "review
the competent evidential materials submitted by the parties to
identify whether there are genuine issues of material fact and,
if not, whether the moving party is entitled to summary judgment
as a matter of law." Ibid. (citing Brill v. Guardian Life Ins.
Co. of Am., 142 N.J. 520, 540 (1995)); accord R. 4:46-2(c). A
trial court's determination that a party is entitled to summary
judgment as a matter of law is not entitled to any "special
deference," and is subject to de novo review. Cypress Point Condo.
Ass'n v. Adria Towers, L.L.C., 226 N.J. 403, 415 (2016) (citation
omitted).
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We review a trial court's denial of a motion for
reconsideration under an abuse of discretion standard. Davis v.
Devereux Found., 414 N.J. Super. 1, 17 (App. Div. 2010) (citing
Marinelli v. Mitts & Merrill, 303 N.J. Super. 61, 77 (App. Div.
1997)), aff'd in part and rev'd in part on other grounds, 209 N.J.
269 (2012).
Having considered plaintiff's arguments in light of the
record and the applicable standards of review, we affirm,
substantially for the reasons expressed by Judge Mitterhoff in her
written opinions granting summary judgment to defendants and
denying plaintiff's motion for reconsideration. Plaintiff's
arguments are without sufficient merit to warrant further
consideration in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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