Gazelka v. St. Peter S Hospital

May 12 2015
DA 14-0380
IN THE SUPREME COURT OF THE STATE OF MONTANA Case Number: DA 14-0380
2015 MT 127
JESSICA GAZELKA,
Plaintiff, Appellant, and Cross-Appellee,
v.
ST. PETER’S HOSPITAL,
Defendant, Appellee, and Cross-Appellant.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. DDV 2011-913
Honorable James P. Reynolds, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
John M. Morrison, Morrison, Sherwood, Wilson, & Deola PLLP,
Helena, Montana
Lawrence A. Anderson, Attorney at Law, P.C., Great Falls, Montana
For Appellee:
Randy J. Cox; Thomas J. Leonard; Randy J. Tanner, Boone Karlberg,
P.C., Missoula, Montana
Submitted on Briefs: April 1, 2015
Decided: May 12, 2015
Filed:
__________________________________________
Clerk
Justice Beth Baker delivered the Opinion of the Court.
¶1 Jessica Gazelka sued St. Peter’s Hospital in the First Judicial District Court, Lewis
and Clark County, alleging that the Hospital discriminated against her based on her lack
of health insurance. We address the following issues on appeal:
1. Whether the District Court erred in determining that Gazelka has standing.
2. Whether the District Court erred in awarding the Hospital summary judgment
on the merits.
¶2 We affirm the District Court’s determination that Gazelka has standing, and vacate
and remand the District Court’s order granting summary judgment.
PROCEDURAL AND FACTUAL BACKGROUND
¶3 In early 2010, Gazelka had no health insurance when she was involved in a motor
vehicle accident in Helena. She received treatment from the Hospital. The driver of the
vehicle that struck Gazelka had a Safeco vehicle insurance policy with a $100,000
general liability limit. In accordance with Ridley v. Guar. Nat’l Ins. Co., 286 Mont. 325,
951 P.2d 987 (1997), Safeco paid the Hospital for some of Gazelka’s medical bills.
When Safeco settled for the $100,000 liability limit, the Ridley payments were deducted
from the settlement funds that Gazelka received.
¶4 In early 2011, Gazelka again was uninsured and received treatment from the
Hospital. She did not pay for the treatment. The Hospital referred Gazelka’s account to a
debt collector, which sued Gazelka and received a judgment against her.
¶5 In September 2011, Gazelka filed suit against the Hospital, alleging that the
Hospital violated Montana anti-trust laws and Article II, Section 4 of the Montana
2
Constitution by discriminating against her on the basis of her uninsured status. Gazelka’s
complaint centers on preferred provider agreements (PPAs). PPAs are agreements
between insurers and healthcare providers regarding the amount and the manner of
payment that providers will accept as satisfaction for treatment rendered to insured
persons. The undisputed evidence shows that the Hospital has PPAs with several
insurers. Thus, Gazelka alleges that while the initial amount the Hospital charges to a
patient remains the same regardless of the patient’s insurance status, the actual amount
the Hospital will accept as full compensation for its services depends on whether the
patient has insurance and which company provides that insurance. The Montana
Preferred Provider Agreements Act (MPPAA) authorizes PPAs. Sections 33-22-1701
through 1707, MCA.
¶6 Gazelka argues that the MPPAA is unconstitutional. Without valid statutory
authorization, she argues that the Hospital’s billing practices violate state anti-trust laws.
Moreover, she argues that the Hospital’s billing practices are themselves unconstitutional.
She seeks to certify a class action on behalf of persons who have been discriminated
against on the basis of their insurance status.
¶7 In November 2011, the Hospital moved to dismiss Gazelka’s complaint. Among
other things, the Hospital argued that Article II, Section 4 is not self-executing and does
not provide a cause of action against a private party; that Gazelka failed to follow the
Montana Human Rights Act’s mandatory administrative process for resolving
3
discrimination disputes; and that Gazelka’s allegations did not state a claim for
unconstitutional conduct. The District Court denied the motion.1
¶8 After that ruling, the parties and the District Court apparently decided to litigate
standing and constitutional claims before turning to class certification. In January 2013,
Gazelka moved for partial summary judgment, arguing that she was entitled to judgment
that (1) the Hospital’s billing practices are unconstitutional, and (2) the MPPAA is
unconstitutional. The Hospital responded by arguing that Gazelka’s motion was
premature. It sought to continue discovery under M. R. Civ. P. 56(f), and, in the
alternative, moved for summary judgment on the ground that Gazelka lacks standing.
¶9 In May 2014, the District Court ruled on the summary judgment motions. The
court concluded that Gazelka has standing. But, after determining that uninsured persons
are not a protected class under the Montana Constitution, the court awarded summary
judgment to the Hospital on the merits and dismissed the suit. The parties filed
cross-appeals. Gazelka attacks the entry of summary judgment on the merits, while the
Hospital appeals the standing determination.
STANDARDS OF REVIEW
¶10 Standing is a threshold question that this Court determines as a matter of law and
reviews de novo. Chipman v. Nw. Healthcare Corp., 2012 MT 242, ¶¶ 16, 19, 366 Mont.
450, 288 P.3d 193. We also review summary judgment orders de novo. Albert v. City of
1
In this opinion, we will assume without deciding that Article II, Section 4 provides a right of
action against private actors in addition to the right provided by the Montana Human Rights Act,
and that that right may be exercised without following the Montana Human Rights Act’s
administrative process. Neither party has appealed these issues.
4
Billings, 2012 MT 159, ¶ 15, 365 Mont. 454, 282 P.3d 704. Summary judgment is
appropriate when the moving party demonstrates the absence of a genuine issue of
material fact and entitlement to judgment as a matter of law. M. R. Civ. P. 56(c)(3);
Albert, ¶ 15.
DISCUSSION
¶11 1. Whether the District Court erred in determining that Gazelka has standing.
¶12 Standing doctrine addresses whether a litigant is entitled to have a court resolve a
dispute in light of the adverseness of the parties, their stakes in the matter, the dispute’s
concreteness, and the judiciary’s function. See Chipman, ¶ 25. In Montana, a plaintiff
has standing if she suffers an actual or threatened injury that is redressable through her
action’s success. Chipman, ¶ 26.
¶13 The District Court concluded that Gazelka has standing on the basis of a financial
injury arising from treatment at the Hospital in early 2011. The Hospital charged
Gazelka a non-discounted amount for that treatment and, after Gazelka failed to pay,
referred Gazelka to collections for that amount. On appeal, the Hospital argues that
Gazelka’s failure to pay the non-discounted amount was “a clear attempt to manufacture
standing” and thus not a real financial injury. Further, the Hospital argues that non-
discounted amounts that Gazelka was charged in 2010 did not cause her a financial injury
because those amounts were paid by Safeco, the insurer of the driver whose vehicle
collided with Gazelka’s.
5
¶14 We do not address these financial injury arguments. Under the claims that
Gazelka alleges, she need not show a financial injury to have standing. In Ne. Fla.
Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 113
S. Ct. 2297 (1993) (Contractors), the United States Supreme Court discussed standing in
the context of the United States Constitution’s equal protection clause:
When the government erects a barrier that makes it more difficult for
members of one group to obtain a benefit than it is for members of another
group, a member of the former group seeking to challenge the barrier need
not allege that he would have obtained the benefit but for the barrier in
order to establish standing. The injury in fact in an equal protection case of
this variety is the denial of equal treatment resulting from the imposition of
the barrier, not the ultimate inability to obtain the benefit.
Contractors, 508 U.S. at 666, 113 S. Ct. at 2303 (internal quotation marks omitted).
¶15 Gazelka alleges discrimination claims under the Montana Constitution’s equal
protection and equal treatment provisions. These provisions state,
No person shall be denied the equal protection of the laws. Neither the state
nor any person, firm, corporation, or institution shall discriminate against
any person in the exercise of his civil or political rights on account of race,
color, sex, culture, social origin or condition, or political or religious ideas.
Mont. Const. art. II, § 4. We often look to the federal courts for guidance in applying
Montana’s standing requirements, see Heffernan v. Missoula City Council, 2011 MT 91,
¶¶ 32-33, 360 Mont. 207, 255 P.3d 80; Olson v. Dept. of Revenue, 223 Mont. 464,
469-71, 726 P.2d 1162, 1166-67; and equal protection guarantee, see Powder River Cnty.
v. State, 2002 MT 259, ¶ 79, 312 Mont. 198, 60 P.3d 357; Stratemeyer v. Lincoln Cnty.,
259 Mont. 147, 152, 855 P.2d 506, 509 (1993). In the context of claims brought to
redress an alleged violation of Montana’s equal protection provisions, the injury in fact
6
that Gazelka needs to show is the “denial of equal treatment resulting from the imposition
of [a] barrier.” Contractors, 508 U.S. at 666, 113 S. Ct. at 2303. See also Schoof v.
Nesbit, 2014 MT 6, ¶¶ 19-23, 373 Mont. 226, 316 P.3d 831 (concluding that the plain
language of Article II, Sections 8 and 9 of the Montana Constitution confers a personal
stake sufficient to establish standing for a plaintiff seeking to vindicate the rights
guaranteed by those sections).
¶16 Gazelka attacks the Hospital’s practices and the MPPAA—which arguably
authorizes those practices—as barriers to her equal treatment. Gazelka submitted
evidence that the Hospital accepts a lesser charge as satisfaction for services as a matter
of course from patients with PPA insurers, but not from patients without insurance or
without PPA insurers. This alleged unequal treatment and unequal opportunity to obtain
a benefit is an injury for standing purposes.
¶17 The Hospital argues that a court cannot redress Gazelka’s injury because Gazelka
has no right to benefit from PPAs to which she is not a party. See Kurtzenacker v. Davis
Surveying, Inc., 2012 MT 105, ¶ 20, 365 Mont. 71, 278 P.3d 1002 (“A stranger to a
contract lacks standing to sue for breach of that contract unless he is an intended
third-party beneficiary of the contract.”). But Gazelka does not allege breach of contract;
she alleges discrimination. She seeks a declaratory judgment that the MPPAA is
unconstitutional, a declaratory judgment that the Hospital’s practices are unlawful, and an
injunction prohibiting further unequal treatment. These orders, if awarded, would likely
“significantly affect,” Nat’l Parks Conservation Ass’n v. Manson, 414 F.3d 1, 7 (D.C.
7
Cir. 2005), the injury of unequal treatment and unequal opportunity that Gazelka alleges.
The controversy before the Court is a controversy in which “the judgment of [a] court
may effectively operate” and have the “effect of a final judgment in law or decree in
equity upon the right, status or legal relationships of one or more of the real parties in
interest.” Skinner v. Allstate Ins. Co., 2005 MT 323, ¶ 15, 329 Mont. 511, 127 P.3d 359
(citations omitted). Gazelka’s injury is redressable with or without awarding her PPA
benefits.
¶18 Although on different grounds, we affirm the District Court’s standing
determination.
¶19 2. Whether the District Court erred in awarding the Hospital summary judgment
on the merits.
¶20 Gazelka’s suit against the Hospital alleges different claims that require explanation
before examining the District Court’s determination on the merits. Gazelka argues that
the Hospital’s billing practices and the MPPAA both violate Article II, Section 4 of the
Montana Constitution. As recounted above, Article II, Section 4, states:
No person shall be denied the equal protection of the laws. Neither the state
nor any person, firm, corporation, or institution shall discriminate against
any person in the exercise of his civil or political rights on account of race,
color, sex, culture, social origin or condition, or political or religious ideas.
Gazelka alleges that the Hospital is a corporation that discriminated against her in the
exercise of a civil right on the basis of a social condition. She further alleges that the
MPPAA discriminates against her on the basis of a social condition, thus triggering strict
scrutiny, which she argues the MPPAA cannot withstand. In the alternative, she alleges
8
that the MPPAA deprives her of equal protection of the laws even if not on the basis of a
social condition, thus triggering rational-basis review, which she argues the MPPAA
cannot withstand. Finally, Gazelka alleges that the Hospital’s billing practices
unlawfully restrain trade in violation of § 30-14-205, MCA.
¶21 The District Court entered judgment in favor of the Hospital after determining that
Gazelka’s uninsured status is not a social condition under Article II, Section 4. The
court, however, did not address Gazelka’s remaining arguments, which the Hospital had
not yet briefed. The District Court’s social condition ruling disposes of Gazelka’s claim
that the Hospital and the MPPAA violated Article II, Section 4’s prohibition on
discriminating “on account of race, color, sex, culture, social origin or condition, or
political or religious ideas.” But that determination does not necessitate the conclusion
that the MPPAA does not deprive Gazelka of equal protection of the laws. When a
statute treats similarly situated individuals dissimilarly, but not on the basis of a suspect
classification or in the exercise of a fundamental right, a court must subject the
discriminating statute to rational-basis review. McDermott v. Mont. Dep’t of Corr., 2001
MT 134, ¶¶ 31-32, 305 Mont. 462, 29 P.3d 992. The District Court did not determine
whether Gazelka was treated differently from similarly situated individuals, and it did not
determine whether the MPPAA satisfies rational-basis review. Also, the District Court
did not determine whether the Hospital’s conduct violates § 30-14-205, MCA. The
determinations that the District Court did make in its summary judgment order did not
9
resolve all of Gazelka’s claims. Accordingly, the District Court erred by entering
judgment.
¶22 This Court retains authority to remand cases that require further proceedings. See
Bates v. Neva, 2013 MT 246, ¶ 20, 371 Mont. 466, 308 P.3d 114. We exercise that
authority now. We express no view on the merits of Gazelka’s claims, and decline at this
juncture to resolve the propriety of the District Court’s social condition ruling.
CONCLUSION
¶23 We affirm the District Court’s standing determination, but reverse its entry of
summary judgment on the merits. We remand for further proceedings on Gazelka’s
remaining claims.
/S/ BETH BAKER
We concur:
/S/ JAMES JEREMIAH SHEA
/S/ PATRICIA COTTER
/S/ JIM RICE
Justice Laurie McKinnon, dissenting.
¶24 I dissent from our conclusion that Gazelka has established standing. The standing
arguments now adopted by the Court are not those raised or briefed by Gazelka, and
consequently, she has not alleged facts that would allow her to prevail under the theory
advanced by the Court.
10
¶25 The Court correctly notes that it need not be demonstrated in every equal
protection case that the disadvantaged party would have actually received the benefit
sought. Opinion, ¶ 14. Rather, the disadvantaged party must demonstrate that he or she
was deprived of the equal opportunity to pursue or apply for the benefit. Ne. Fla.
Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656,
666, 113 S. Ct. 2297, 2303 (1993). The benefit afforded insurers and their customers
under the PPA statutes is the opportunity to enter into agreements with providers relating
to the amounts an insured may be charged for services. Section 33-22-1704, MCA. To
demonstrate that the PPA statutes violate equal protection, Gazelka must demonstrate that
she has been deprived of this benefit.
¶26 Gazelka’s standing arguments before the District Court and on appeal are
premised on the idea that she was injured by paying a higher rate for health care services,
not that she was injured by being excluded from the opportunity to negotiate with the
Hospital for lower rates. Indeed, the facts appear to demonstrate that Gazelka was
offered, and took advantage of, financial assistance which reduced her unpaid bills by
half. Thus, just as a patient covered by a PPA insurer receives a bill for one amount,
which is then, pursuant to the PPA, satisfied by payment of a lesser amount, Gazelka
received a bill for one amount, which was then, pursuant to the financial assistance
program, satisfied by payment of a lesser amount. She has not demonstrated that she was
deprived of the opportunity to pursue an agreement relating to the amount charged for
services rendered.
11
¶27 The underlying aim of this litigation is to demonstrate that PPAs, while favorable
to the insured, lead to the undesirable—one might even argue perverse—result that the
uninsured and often indigent are required to pay more for health care. While Gazelka’s
ultimate goal in this litigation may be an attempt to highlight the structural and systemic
problems of our health care system, both in Montana and nationally, the judiciary is not
the appropriate forum for such a statement. Rather, the problem, which is worth
addressing, is best left to the political branches of government. This Court would be wise
to apply well-established principles of standing and resist the urge to transgress into an
area best left to the Montana Legislature. For the foregoing reasons, I dissent.
/S/ LAURIE McKINNON
12