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DAC Surgical Partners P.A. v. United Healthcare Services, Inc.

United States District Court, S.D. Texas, Houston Division

July 19, 2019

DAC SURGICAL PARTNERS P.A., et al, Plaintiffs,
v.
UNITED HEALTHCARE SERVICES, INC., et al, Defendants.

          MEMORANDUM & ORDER

          Andrew S. Hanen United States District Judge

         Before 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 timely response.

         I. Background

         This 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.

         This 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 to United.

         At this 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).[1] 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.

         II. Summary Judgment Standard

         Summary 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.

         Therefore, 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.

         III. Analysis

         1. Fraud

         United 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.

         By way 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.[2] (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.

         United 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 ...


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