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Alabama Psychiatric Services, P.C. v. A Center for Eating Disorders, L.L.C

Supreme Court of Alabama

January 24, 2014

Alabama Psychiatric Services, P.C., and Managed Health Care Administration, Inc.
A Center for Eating Disorders, L.L.C

Page 709

Appeal from Jefferson Circuit Court. (CV-09-903205).

For Alabama Psychiatric Services, P.C., Managed Health Care Administration, Inc., Appellants: Thomas A. Kendrick, W.M. Bains Fleming III, Norman, Wood, Kendrick & Turner, Birmingham; Jack Criswell, Hare Clement & Duck, P.C., Birmingham.

For Appellee: Stephen D. Heninger, Heninger Garrison & Davis, LLC, Birmingham.

MAIN, Justice. Stuart, Bolin, Parker, Murdock, Shaw, and Bryan, JJ., concur. Moore, C.J., dissents. Wise, J., recuses herself.


Page 710

MAIN, Justice.

Alabama Psychiatric Services, P.C. (" APS" ), and Managed Health Care Administration, Inc. (" MHCA" ), the defendants in this action, appeal from the trial court's order denying their motions for a judgment as a matter of law (" JML" ) made at the close of all the evidence. Although the jury entered a verdict for APS and MHCA, they nonetheless argue that the two claims that were ultimately tried should not have been submitted to a jury. APS and MHCA also appeal from the order entered by the trial court granting a motion for a new trial filed by A Center for Eating Disorders, L.L.C. (" ACED" ), the plaintiff in this action. The trial court's order overturned the judgment entered on a jury verdict for APS and MHCA. We reverse and remand.

I. Factual Background and Procedural History

In its order granting in part the motions for a summary judgment filed by APS and MHCA, the trial court stated the facts as follows:

" Plaintiff A Center for Eating Disorders, L.L.C. ('ACED'), opened on February 23, 2009, providing partial hospitalization treatment ('PHP') for individuals suffering from eating disorders. In a PHP program, patients come to the facility for various treatment sessions for five or six hours per day for five or six days per week. ACED is fully accredited by the Joint Commission.[1]
" Blue Cross Blue Shield of Alabama ('BCBS') is in the health insurance business. BCBS does not have a preferred provider network for individual mental health providers. BCBS utilizes Managed Health [Care Administration], Inc. ('MHCA') to manage behavioral health networks for their members. MHCA is owned mainly by physicians who work for [Alabama] Psychiatric Services, P.C. ('APS'). Additionally, MHCA is managed by two non-physicians who are also employed by APS. Rusty Adams has been the Chief Operating Officer of APS for 20 years and the Chief Operating Officer of MHCA for 15 years. Similarly, Doyle Stewart has been the Chief Financial Officer of both APS and MHCA for the past 10 years. BCBS has testified that it was not aware of the overlapping ownership between MHCA and APS.

Page 711

" APS entered into a contract with BCBS in 1986 to manage what is known as Expanded Psychiatric Services ('EPS'). In 1991, that contract was transferred from APS to MHCA. MHCA now manages a number of behavioral health networks for BCBS. BCBS contracts with members for health insurance and out of the premiums it receives, BCBS pays MHCA $3.10/month per member. MHCA is expected to arrange mental health services for these members for that monthly payment, and any leftover amount is profit to MHCA. Many BCBS group health insurance plans and self-funded group plans administered by MHCA provide mental health benefits for their members through three benefit designs that access certain preferred provider networks: (1) Expanded Psychiatric Services benefits; (2) Expanded Psychiatric Services Exclusive ('EPX') benefits; and (3) Blue Choice Behavioral benefits ('Blue Choice').
" The services of mental health professionals covered under BCBS are accessed through EPS and administered by MHCA. APS operates the [Eating Disorders Center of Alabama ('the EDCA')], which provides treatment for patients through a partial hospitalization program. In a prior trademark suit filed by APS against ACED, APS alleged that the services provided by ACED were essentially identical to the services provided by the EDCA. BCBS members with EPS benefits in their health plan may obtain PHP services for eating disorders by accessing their EPS benefits.
" BCBS has stated that ACED is not an MHCA provider and that any claims submitted by ACED are paid as Out of Network benefits, regardless of whether or not the plan provides access to EPS benefits. As a result, BCBS members seeking behavioral health treatment receive no benefit whatsoever if they choose treatment at ACED. This places ACED at a clear competitive disadvantage, as BCBS members with EPS plans constitute 90-95% of the market. If members wanted any EPS benefits at all for behavioral health treatment, they were required to choose treatment at the EDCA, which is operated by APS and managed by the same individuals who manage MHCA.
" Before ACED opened, it contacted BCBS about seeking Individual Case Management ('ICM') agreements. Under an Individual Case Management agreement, BCBS and the provider work together to design an individual contract for services that are otherwise not covered under the member's health plan. Individual Case Management Agreements are discretionary and subject to the voluntary participation of BCBS, the member and the ...

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