United States District Court, S.D. Texas, Houston Division
MEMORANDUM & ORDER
S. Hanen United States District Judge
the Court is United Healthcare Services, Inc.'s Motion
for Summary Judgment as to its Claims Against Par Surgical,
PLLC and Euston Associates, PLLC (Doc. No. 705). Par
Surgical, PLLC and Euston Associates, PLLC have not filed a
Court's predecessor has written numerous opinions in this
case, each of which included a thorough factual background
section. This Court will reproduce only an abbreviated
version of the pertinent facts in this case.
case was originally filed in 2011 by several doctors who
performed surgeries at the Palladium for Surgery
("Palladium"), an ambulatory surgical center
("ASC") located in Houston, Texas. These
doctor-plaintiffs asserted that United Healthcare Services,
Inc. ("United") represented that it would pay $20
million in facility fees for surgical operations performed at
the Palladium. In response, United filed crossclaims,
asserting that the plaintiffs had committed fraud by
misrepresenting the facility fees on claims forms submitted
stage in the case, there are two remaining
counter-defendants: Par Surgical, PLLC ("Par") and
Euston Associates, PLLC ("Euston"). United and Dr.
Scott Cohen (former owner of Par and Euston) reached a
settlement agreement just after the United moved for summary
judgment. (Doc. No. 707). United maintains its counterclaims
against these counter-defendants and has moved for summary
judgment against Par and Euston. In its Motion for Summary
Judgment, United asks the Court to grant judgment in its
favor as to its fraud claims, its money had and received
claims, and its request for declaratory judgment.
Summary Judgment Standard
judgment is warranted "if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." Fed.R.Civ.P.
56(a). "The movant bears the burden of identifying those
portions of the record it believes demonstrate the absence of
a genuine issue of material fact." Triple Tee Golf,
Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007)
(citing Celotex Corp. v. Catrett, 477 U.S. 317,
322-25 (1986)). Once a movant submits a properly supported
motion, the burden shifts to the nonmovant to show that the
Court should not grant the motion. Celotex Corp.,
477 U.S. at 321-25. The non-movant then must provide specific
facts showing that there is a genuine dispute. Id.
at 324; Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). A dispute about a
material fact is genuine if "the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party." Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). The Court must draw all reasonable
inferences in the light most favorable to the nonmoving party
in deciding a summary judgment motion. Id. at 255.
Local Rules 7.3 and 7.4 of the Southern District of Texas
state that a response to a motion will be submitted to the
judge within twenty-one days after filing and that the
failure to respond will be taken "as a representation of
no opposition." Rule 7.4(a) plainly states that such
responses must be filed by the submission date, which in this
case, has passed without any response from the non-movants.
the local rules would allow the Court to grant
Defendants' motion as it should be considered unopposed.
However, the Fifth Circuit has explained that "although
we have endorsed the adoption of local rules that require
parties to file responses to opposed motions, we have not
approved the automatic grant, upon failure to comply with
such rules, of motions that are dispositive of the
litigation." See Johnson v. Pettiford, 442 F.3d
917, 918 (5th Cir. 2006) (first citing Johnson v.
Louisiana, 757 F.2d 698, 707-09 (5th Cir. 1985); then
citing Ramsey v. Signal Delivery Serv., 631 F.2d
1210, 1213-14 (5th Cir. 1980)). In other words, where a party
does not respond to a summary judgment motion, such failure
does not permit the court to enter a "default"
summary judgment. Eversley v. Mbank Dallas, 843 F.2d
172, 174 (5th Cir. 1988). A court, however, is permitted to
accept the movant's facts as undisputed when no response
or opposition is filed. Id. Normally, "[a]
summary judgment nonmovant who does not respond to the motion
is relegated to [his] unsworn pleadings, which do not
constitute summary judgment evidence." Bookman v.
Schubzda, 945 F.Supp. 999, 1002 (N.D. Tex. 1996) (citing
Solo Serve Corp. v. Westowne Assocs., 929 F.2d 160,
165 (5th Cir. 1991)). Consequently, this Court will analyze
the claim's validity despite the lack of response.
moves the Court to grant summary judgment in its favor on its
fraud claim against Par and Euston. United argues that its
evidence demonstrates as a matter of law that Par and Euston
committed fraud by making certain misrepresentations in the
claims that they submitted to United. Specifically, United
argues that its evidence demonstrates that Par and Euston
represented that they were licensed ASC facilities when they
were actually single-member entities or "shell
companies" formed by Dr. Cohen for the sole purpose of
submitting fraudulent facility fee claims.
of background, many surgical medical claims involve two types
of charges-a facility fee, paid to the hospital or ASC and a
physician fee, paid to the doctor. (Doc. No. 541 at 9). Here,
Par and Euston had a "unique" way of allocating the
facility fees. Par and Euston were owned by doctors who
performed surgeries at Palladium. Par and Euston were not
licensed ASCs. See Tex. Health & Safety Code
§243.003 (requiring that all ASC facilities be
licensed). Palladium, on the other hand, held an ASC license.
As a result, Par and Euston contracted with Palladium for
surgical facility services during the surgeries their
doctor-owners performed. The contracts Par and Euston each
signed with Palladium included a facility use agreements and
a billing services agreements. (Cohen Depo. Doc. No. 705, Ex. 3
at 113). Under the terms of these agreements, Par and Euston
and Palladium agreed that Par and Euston would pay Palladium:
(1) 45% of Par and Euston's net monthly revenue to
"use" Palladium's space, equipment, and
employees; and (2) 5% of Par and Euston's net monthly
collected revenue for Palladium to provide "billing
services" as each of the companies' "sole and
exclusive agent," for among other things, submitting
facility fee claims to insurers such as United. (Doc. No. 541
at 10). After the facility fees were collected by Par and
Euston from insurers, such as United, they paid Palladium 50%
of the collected amount (45% for use of the facility plus 5%
for billing services) and retained the remaining 50%, which
then passed through Par and Euston to their doctor owners.
(Kovnat Depo. Doc. No. 486, Ex. 30 at 4:25-6:24; Moore Depo.
Doc. No. 487, Ex. 12 at 21:14-20). United alleges that Par
and Euston concealed their fee-splitting arrangement with
Palladium by submitting fraudulent claims.
provides evidence that Par and Euston misrepresented facility
fees on the claims forms they submitted to United by
representing that Par and Euston were licensed facilities
when they were really single-member entities or "shell
companies" (formed by the counter-defendant doctors for
the sole purpose of submitting fraudulent facility fee
claims) and by misrepresenting the amount of facility fees
Palladium was due. United also provides evidence that it
would have denied the facility fee claims pursuant to