Shaffer v. IHC Health Services

This opinion is subject to revision before final
publication in the Pacific Reporter
2018 UT 13IN THE
SUPREME COURT OF THE STATE OF UTAH
S.S., by and through his mother and guardian, Staci Shaffer, and
STACI SHAFFER,
Appellants,
v.
IHC HEALTH SERVICES, INC., CARDON HEALTHCARE NETWORK, LLC,
and CARDON OUTREACH,
Appellees.
No. 20170256
Filed April 10, 2018
On Direct Appeal
Third District, Salt Lake
The Honorable Kara L. Pettit
No. 150909015
Attorneys:
Leonard E. McGee, Peter R. Mifflin, Sandy, for appellants
Alan C. Bradshaw, Steven C. Bednar, Salt Lake City, for appellee
IHC Health Services, Inc.
Derek J. Williams, Nathaneal J. Mitchell, Salt Lake City, for appellees
Cardon Healthcare Network, LLC and Cardon Outreach
JUSTICE HIMONAS authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE PEARCE, and JUDGE CHRISTIANSEN joined.
Having recused herself, JUSTICE PETERSEN does not participate herein;
COURT OF APPEALS JUDGE MICHELE M. CHRISTIANSEN sat.
JUSTICE HIMONAS, opinion of the Court:
¶1 A child was struck by a car and seriously hurt. The owner of
the hospital at which the child received medical care sought to
secure payment for that care by asserting liens against the child’s
interest in the tort claim against the driver of the car. The child, who
S.S. v. IHC HEALTH SERVICES
Opinion of the Court
was Medicaid eligible, and his mother brought a number of claims
against the hospital owner and its payments vendor, nearly all of
which centered on contentions that the liens violated Medicaid law. 1
After the liens had been released, the district court granted summary
judgment in favor of the defendants. We affirm the grant based upon
basic principles of mootness and plaintiffs’ inability to state a claim
as a matter of law.
BACKGROUND
¶2 There are very few material facts relevant to the causes of
action we address upon the merits in this appeal. S.S. was hit by a
car being driven by Gayla Stumpf. As a result of the accident, S.S.
was severely injured, necessitating extensive medical treatment,
which he received over the course of two years at Primary Children’s
Hospital, an IHC facility. 2
¶3 Staci Shaffer entered into a two-page, standard-form patient
agreement with IHC. Under the terms of that contract, Ms. Shaffer
agreed to pay IHC for the medically necessary and appropriate
health care services it provided to S.S.
¶4 IHC uses Cardon to help it collect from patients hurt in
accidents caused by third parties. In early 2014, Cardon asserted a
hospital lien on behalf of IHC against any potential recovery going
from Ms. Strumpf to S.S. Cardon released that lien three months
later. It then asserted a second hospital lien in March 2015.
¶5 After Cardon had asserted and released the first hospital
lien and asserted the second hospital lien, plaintiffs brought this
lawsuit. In their complaint, plaintiffs asserted eleven claims:
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1 For clarity, and unless necessary for context, we refer to the
child, S.S., and his mother, Staci Shaffer, as “plaintiffs” and to the
owner of the hospital, IHC Health Services (IHC), and its payments
vendor, the Cardon defendants (Cardon), as “defendants.”
2 When we assess a district court’s award of summary judgment,
“[w]e give no deference to the district court’s legal conclusions and
consider whether the court correctly decided that no genuine issue of
material fact existed.” Heslop v. Bear River Mut. Ins. Co., 2017 UT 5,
¶ 15, 390 P.3d 314 (citation omitted) (internal quotation marks
omitted). However, “[w]e review the facts in a light most favorable
to the party against whom summary judgment was granted.” Id.(citation omitted) (internal quotation marks omitted).
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Cite as: 2018 UT 13Opinion of the Court
(1) violation of the Utah False Claims Act, (2) civil conspiracy,
(3) conversion, (4) vicarious liability, (5) willful refusal to release a
lien, (6) negligence, (7) intentional infliction of emotional distress,
(8) tortious interference with economic relations, (9) breach of the
implied covenant of good faith and fair dealing, (10) wrongful lien,
and (11) declaratory judgment of a void lien. Five months after the
complaint was filed, defendants released the second hospital lien.
And five months after that, in October 2016, plaintiffs settled their
claims against Ms. Strumpf.
¶6 Defendants moved for summary judgment the following
month. Broadly speaking, defendants argued that the district court
should grant summary judgment because, first, the claims were all
mooted when they released the second hospital lien; second, the
claims all failed for independent legal reasons; and third, the claims
were all based upon an incorrect interpretation of Medicaid law. The
court granted the motion by order dated March 14, 2017. In that
order, the court reasoned “that all of [p]laintiffs’ claims are moot,
with the exception of” the intentional infliction of emotional distress
claim and the possible exception of the tortious interference and
good faith and fair dealing claims. As was its right, the district court
skipped over defendants’ second argument and dismissed the
remaining three counts based on the court’s interpretation of
Medicaid law.
¶7 Plaintiffs filed a timely notice of appeal. We have
jurisdiction under Utah Code section 78A-3-102(3)(j).
ANALYSIS
¶8 Although plaintiffs appealed the entirety of the district
court’s summary judgment decision, they have since conceded in
their briefing to this court that the district court was correct in
dismissing the majority of their claims as moot. So, the only claims
that remain before us on appeal are the intentional infliction of
emotional distress, the tortious interference, and the good faith and
fair dealing claims. And, based upon the defendants establishing
that the undisputed material facts showed that the defendants were
entitled to judgment as a matter of law, the second argument
defendants advanced in its motion for summary judgment, we
affirm the district court’s decision to dismiss these claims. 3
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3 Before we explain why each of these claims fails, we must
satisfy ourselves that they, unlike the majority of plaintiffs’ claims,
(continued . . .)
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S.S. v. IHC HEALTH SERVICES
Opinion of the Court
¶9 Plaintiffs’ counsel began his argument before us by echoing
Justice Breyer’s reference to Medicaid law as a “nest of statutes.”
Joseph D. Juenger, In Light of Ahlborn-Designing State Legislation to
Protect the Recovery of Medicaid Expenses from Personal Injury
Settlements, 35 N. KY. L. REV. 103, 103 (2008) (citation omitted). In our
opinion, it would be unwise of us to rush headlong into this “nest” if
we can “rest our decision of this cause upon simple and readily
apparent grounds.” Napier v. Firemen’s Ass’n of Chi., 293 N.E.2d 384,
386 (Ill. App. Ct. 1973). And, as set forth below, it is readily apparent
that the remaining three claims fail as a matter of law.
¶10 In order to state a claim for the intentional infliction of
emotional distress, a party must allege conduct so “outrageous and
intolerable” that it offends “generally accepted standards of decency
and morality.” Prince v. Bear River Mut. Ins. Co., 2002 UT 68, ¶ 37, 56
P.3d 524 (citation omitted). In their sole attempt to satisfy this
element, plaintiffs contend, without citation to any authority, that if
defendants acted unlawfully in asserting the liens and not billing
Medicaid, then “an inference arises that their collective conduct was
. . . outrageous and intolerable,” giving rise to emotional distress
damages. Asserting statutorily authorized liens instead of billing
Medicaid, without more, cannot constitute outrageous and
intolerable conduct. If it did, then every breach of contract or
statutory violation would automatically give rise to an intentional
infliction of emotional distress claim and tort damages, including
punitive damages.
¶11 With respect to their tortious interference claim, plaintiffs
allege in their complaint that defendants, by asserting the liens,
interfered with their potential economic relations with Ms. Strumpf
and Ms. Strumpf’s insurer. On appeal, however, plaintiffs abandon
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are not moot. In this respect, we altogether share the view of the
Ninth Circuit: “Clear precedent establishes that this court must first
determine whether this appeal is moot . . . .” Mount Graham Coal. v.
McGee, 52 F. App’x 354, 354 (9th Cir. 2002). A claim is moot “when
the requested judicial relief cannot affect the rights of the litigants.”
Jensen v. IHC Hosps., Inc., 2003 UT 51, ¶ 132, 82 P.3d 1076 (citation
omitted). Because here, despite the liens having been removed, each
of the three remaining claims could still possibly give rise to an
award of damages, they are not moot.
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this claim and any potential damages by offering naught in response
to defendants’ argument that “filing a lawsuit against another
person is not a ‘potential economic relationship.’”
¶12 The last is plaintiffs’ claim for breach of the implied
covenant of good faith and fair dealing, which inheres in every
contract. And as with all contract claims, damages are an “essential
element.” Eleopulos v. McFarland & Hullinger, LLC, 2006 UT App 352,
¶ 9, 145 P.3d 1157. Based on the briefing before us, we are hard-
pressed to understand plaintiffs’ theory of damages given the
removal of the liens. Indeed, the only tenable theory we can discern,
which plaintiffs advanced in the summary judgment proceedings
below, is that defendants’ assertions of the liens delayed their
settlement with Ms. Strumpf and her insurer. The problem with this
theory, however, is—as defendants pointed out—that plaintiffs have
produced no evidence that they could have or would have settled
sooner but for the liens. In light of the foregoing, we exercise our
prerogative to affirm the district court’s decision to dismiss this
claim, albeit on alternate grounds apparent from the record, i.e.,
plaintiffs’ failure to demonstrate a genuine issue of material fact as to
the damages element of their good faith and fair dealing claim. See
Dillon v. S. Mgmt. Corp. Ret. Tr., 2014 UT 14, ¶ 34 n.21, 326 P.3d 656(“It is well settled that an appellate court may affirm the judgment
appealed from if it is sustainable on any legal ground or theory
apparent on the record.” (citation omitted)).
¶13 For the foregoing reasons, we affirm the decision of the
district court.
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