383 F. Supp. 3d 417
E.D. Pa.2019Background
- MRO is an ROI vendor that copies and delivers medical records to requesters; Humana reimbursed MRO for such deliveries though they had no formal contract.
- MRO used state-based rate schedules ("State Rate") and historically pre-billed and was paid those rates by Humana through 2012. A 2013 call ended pre-billing; Humana agreed to pay outstanding and future invoices.
- In May 2015 Humana issued a Provider Payment Integrity Policy stating copying fees would be paid at (a) provider contract rate, (b) CMS rate (12¢/page up to $25), or (c) state statute rate for commercial claims, and that Humana does not prepay.
- Beginning July 2015 Humana began paying many invoices at the CMS rate for requests it says related to Medicare Advantage plans; MRO insists State Rates applied and were previously paid.
- MRO sued for promissory estoppel and unjust enrichment; MRO moved to strike/limit Humana's affirmative defense that its paid rates were legally permissible; Humana moved for summary judgment on MRO's claims.
- The court denied both motions: it refused to strike Humana’s affirmative defense and denied Humana summary judgment on both promissory estoppel and unjust enrichment, finding factual disputes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Humana's affirmative defense that paid rates were legally permissible | Humana cannot rely on a legal-permissibility defense because it is not a CMS-authorized entity (e.g., RAC/QIO) entitled to the CMS rate | Humana contends its Policy and regulatory role with Medicare Advantage allow use of CMS rate | Court denied MRO's motion to strike; factual/legal questions remain whether Humana may apply CMS rate to Medicare Advantage requests |
| Promissory estoppel | MRO contends past payments and the May 2015 Policy amount to an express promise to pay State Rates on which it reasonably relied | Humana says there was no express promise to pay State Rates; Policy is ambiguous as to "commercial claims" and Medicare Advantage | Court denied Humana summary judgment; ambiguity and industry practice create factual issues for a jury |
| Unjust enrichment / quantum meruit | MRO says Humana received a benefit (records) and retaining payment at CMS rates is unjust; reasonable value exceeds CMS rate | Humana argues it paid MRO (so no unjust enrichment) and payments reflected reasonable value; competitors charged CMS rate | Court denied Humana summary judgment; disputed facts about reasonable value and whether retention is unjust require factfinder resolution |
| Applicability of CMS rate to Medicare Advantage requests | MRO argues State Rates should govern; CMS rates apply only to RACs/QIOs and not to Humana | Humana argues Medicare Advantage is regulated by CMS and the CMS rate can apply to post-payment audits it conducts | Court held not resolved as matter of law; record does not establish that Humana is barred from using CMS rate for Medicare Advantage claims |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard and genuine dispute test)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burdens and evidence requirements)
- Crouse v. Cyclops Indus., 745 A.2d 606 (Pa. 2000) (promissory estoppel as equitable remedy enforcing otherwise unenforceable agreements)
- Temple Univ. Hosp., Inc. v. Healthcare Mgmt. Alts., Inc., 832 A.2d 501 (Pa. Super. Ct.) (unjust enrichment / reasonable value principles)
- Pulli v. Warren Nat'l Bank, 412 A.2d 464 (Pa. 1979) (unjust enrichment / quantum meruit principles)