The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MARK WIGHTMAN, D.D.S., et CIVIL ACTION
al.
VERSUS No.: 19-11628
AMERITAS LIFE SECTION: “J” (3)
INSURANCE CORP. AND
DENTEMAX, L.L.C.
ORDER & REASONS
Before the Court are two Motions to Dismiss for Failure to State a Claim (Rec.
Docs. 8 and 11) filed by Ameritas Life Insurance Corporation (“Ameritas”) and
Dentemax, L.L.C. (“Dentemax”), defendants in this matter.1 Mark Wightman,
Courtney Wightman, and Wightman Family Dental L.L.C. (“Plaintiffs”) have filed an
omnibus opposition thereto (Rec. Doc. 23). Both defendants have supplemented their
motions with replies. Having considered the motions and legal memoranda, the
record, and the applicable law, the Court finds both motions should be GRANTED
in part and DENIED in part.
FACTS AND PROCEDURAL BACKGROUND
Plaintiffs are dentists who operate their family dentistry, Wightman Family
Dental, L.L.C., in St. Bernard Parish.2 At some point prior to 2012, Plaintiffs entered
into a preferred provider organization (“PPO”) agreement with Dentemax. A PPO is
defined as a “contractual agreement or agreements between a provider or providers
1 Ameritas filed its Motion to Dismiss in (Rec. Doc. 8) and Dentemax filed its Motion to Dismiss in (Rec. Doc. 11).
2 All facts are taken from Plaintiffs complaint. (Rec. Doc. 1).
and a group purchaser or purchasers to provide for alternative rates of payment
specified in advance for a defined period of time in which the provider agrees to accept
these alternative rates of payment offered by the group purchasers to their members
whenever a member chooses to use its services.” La. R.S. 40:2202(5)(a). Plaintiffs
stated goal in entering the PPO was to expand their client base via access to
Dentemax’s network.
On May 1, 2012, Ameritas “leased” the Dentemax PPO network, which granted
Ameritas access to the reduced PPO reimbursement rate Plaintiffs had provided
Dentemax. Plaintiffs were not notified of this arrangement, nor were Ameritas’s
benefit cards updated to reflect this change. Thus, when Ameritas’s insureds
presented their benefit cards to Plaintiffs, Plaintiffs believed they would be
reimbursed at their standard rates.3
Upon discovering Ameritas intended to reimburse them at a reduced rate,
Plaintiffs reached out to Ameritas and learned about the leasing arrangement
between Ameritas and Dentemax. After Ameritas and Dentemax denied Plaintiffs’
request to reimburse Plaintiffs at Plaintiffs’ standard rate, Plaintiffs initiated the
present suit. The gravamen of Plaintiffs complaint is Defendants’ purported violation
of La. R.S. 40:2203.1, which requires PPOs to notify health care providers when using
reduced rates. The 40:2203.1 amendment, passed by the legislature in 1999, is itself
an amendment to the PPO Act, which authorized health care providers and insurance
companies to enter into PPOs. See La. R.S. 40:2201.
3 The standard rate is the rate Ameritas’s benefit cards advertised, which was the rate Plaintiffs were used to before
Ameritas entered into the leasing arrangement with Dentemax.
Although both Defendants seek dismissal of Plaintiffs’ claims pursuant to Rule
12(b)(6), they do so on relatively different grounds. Therefore, the Court will address
each Defendant’s request for dismissal separately.
LEGAL STANDARD
Under the Federal Rules of Civil Procedure, a complaint must contain “a short
and plain statement of the claim showing that the pleader is entitled to relief.” Fed.
R. Civ. P. 8(a)(2). The complaint must “give the defendant fair notice of what the
claim is and the grounds upon which it rests.” Dura Pharm., Inc. v. Broudo, 544 U.S.
336, 346 (2005) (internal citations omitted). The allegations “must be simple, concise,
and direct.” Fed. R. Civ. P. 8(d)(1).
“Under Rule 12(b)(6), a claim may be dismissed when a plaintiff fails to allege
any set of facts in support of his claim which would entitle him to relief.” Taylor v.
Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002) (citing McConathy v. Dr.
Pepper/Seven Up Corp., 131 F.3d 558, 561 (5th Cir. 1998)). To survive a Rule 12(b)(6)
motion to dismiss, the plaintiff must plead enough facts to “state a claim to relief that
is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the
plaintiff pleads facts that allow the court to “draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. A court must accept all well-
pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff.
Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009); Baker v. Putnal,
75 F.3d 190, 196 (5th Cir. 1996). The court is not, however, bound to accept as true
legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678. “[C]onclusory
allegations or legal conclusions masquerading as factual conclusions will not suffice
to prevent a motion to dismiss.” Taylor, 296 F.3d at 378.
When determining an issue of Louisiana law, the Court should first look to the
decisions of the Louisiana Supreme Court. Howe ex rel. Howe v. Scottsdale Ins. Co,
204 F.3d 624, 627 (5th. Cir. 2000). As the Louisiana Supreme Court has not directly
addressed any of the Louisiana legal issues raised by the parties, it is necessary for
the Court to discuss the level of deference this Court owes to Louisiana Courts of
Appeal. See Labiche v. Legal Sec. Life Ins. Co., 31 F. 3d 350, 351 (5th. Cir. 1994)
(holding that when interpreting an issue of Louisiana law, federal courts should first
look to the decisions of the Louisiana Supreme Court). “In the absence of a ruling
from the state’s highest court, this Court may look to the decisions of intermediate
appellate state courts for guidance.” Howe ex rel. Howe., 204 F.3d at 627. In
Louisiana, interpretations of law by intermediate appellate courts are not to be
disregarded by a federal court unless there exists other persuasive data that the
Louisiana Supreme court would decide otherwise. Labiche, 31 F. 3d at 351 (citing
Commissioner v. Estate of Bosch, 387 U.S. 456, 465(1967)).
DISCUSSION
I. WHETHER LA. R.S. 40:2203.1 APPLIES TO DENTAL PROVIDERS
Before addressing the individual defenses of Ameritas and Dentemax
(“Defendants”), the Court must answer the antecedent question of whether La. R.S.
40:2203.1 applies to dentists. La. R.S. 40:2203.1(A), the application provision in the
amendment, states that “the requirements of this Section shall apply to all preferred
provider organization agreements that are applicable to medical services.”
Defendants argue that dentists and dental services are excluded from this definition,
and thus all of La. R.S. 40:2203.1, including the notice requirements, is inapplicable
to this case. The Court disagrees.
Defendants put forward several arguments in support of their position. First,
Defendants argue that 40:2203.1 is punitive in nature and inhibits the freedom to
contract, and thus must be construed narrowly. See Rodriguez v. Louisiana Med. Mut.
Ins. Co. 618 So.2d 390, 394 (La. 05/24/93). (“[A] statute in derogation of common or
natural rights is to be strictly construed”); see also Katie Realty v. La. Citizens Prop.
Ins. Corp., 2012-0588 (La. 10/16/12) 100 So. 3d 324, 328 (“[S]tatutes that are penal in
nature must be strictly construed”).
However, the entirety of La. R.S. 40:2203.1 is not punitive. Rather, it is only
Subsection G which is penal in nature. See Indian Harbor Ins. Co. v. Bestcomp, Inc.,
No. 09-7327 2010 WL 5471005 (E.D. La. Nov. 2010) (“the Court also finds it
significant that numerous courts have referred to the damages under section
40.2203.1(G) as punitive.”). Additionally, 40:2203.1 does not prohibit Defendants
from entering into any type of contract they so desire. The only requirement of
40:2203.1 is that the health care provider receive notice of the alternative rate of
payment created by the contract in order for the contract to be enforceable against
that health care provider. Defendants’ argument is akin to reasoning that Louisiana’s
Public Records doctrine is a restriction on the right to contract because third parties
have to be put on notice in order for the contracts to be enforceable. Thus, the Court
does not find it needs to construe 40:2203.1 particularly narrowly.
Second, Defendants urge the Court not to be the first “to judicially expand the
scope of this statute decades after enactment.” (Rec. Doc. 8 at 12). The question before
the Court is the precise scope of the statute, namely if the notice requirements of
40:2203.1 apply to dentists and dental services. The use of the term “expand” is
misleading, as no court has previously addressed this issue. In fact, Defendants have
not presented, nor has the Court’s independent research revealed, any case analyzing
in depth the scope of 40:2203.1. Thus, there is no core precedent surrounding this
issue from which the Court can “expand.”
Third, Defendants attempt to argue the entire PPO Act is inapplicable to
dentists by highlighting the definition of health care provider found in La. R.S.
40:2202.1(6)(A),4 which states, “Provider shall mean one or more entities which offer
health care services and shall include but not be limited to hospitals, individuals, or
group of physicians, individuals or groups of psychologists, nurse midwives,
ambulance service companies, and other health care entities.” (emphasis added).
Defendants attempt to make the rather incredulous argument that the Court should
apply the interpretive method of expressio unius est exclusio alterius5 to the statute,
and thereby find that it does not apply to dentistry because dentistry is not explicitly
enumerated in the statute. The Court declines to do so, considering the language of
4 This statute defines the term health care provider for purposes of the entire PPO Act. In essence, Defendants are
attempting here to argue that the entire PPO Act is inapplicable to dentists. Only in the alternative do they posit that
40:2203.1, the amendment to the PPO Act, in particular is inapposite to dentists.
5 The inclusion of one means the exclusion of the other.
the statute, “shall include but not be limited to,” is quite clearly illustrative as
opposed to exclusive. See Pumphrey v. City of New Orleans, 2005-0979 (La. 4/4/06)
(“A court must give effect to the literal application of a statute, including its
grammatical construction.”) 925 So. 2d 1202, 1211. Moreover, the Court notes the
inconsistency of Defendants arguing that their own business arrangement, entering
into PPO agreements with a dental service provider, has in fact been unauthorized
under the PPO Act this entire time.
Because the list in 2202.1(6)(A) is illustrative and not exhaustive, the proper
method of statutory interpretation is ejusdem generis. Utilizing the rule of ejusdem
generis, the general phrase “other health care entities” should be applied to “classes
of things of the same general kind as those specifically enumerated.” Id. at 1212. Put
more simply, dentists should be considered health care providers if they are of the
same general kind as physicians, nurse midwives, psychologists, and ambulance
service companies. See La. R.S. 40:2202.1(6)(A).
Dentistry is the “evaluation, diagnosis, prevention, or treatment, including
nonsurgical, surgical, or related procedures, of disease, disorders, or conditions of the
oral cavity, maxillofacial areas or the adjacent and associated structures and their
effect on the human body.” 37:751(A)(1). Dentists “may administer general and local
anesthetics and prescribe drugs or medicines necessary or proper in the[ir] practice.”
La. R.S. 37:751(A)(1). A dentist must obtain an advanced degree and maintain a
license to practice. La. R.S. 37:751. Thus, a dentist shares key characteristics with
the enumerated group. The Court finds no appreciable difference between
psychologists and nurse midwives specializing in mental and female reproductive
health respectively, and dentists specializing in maxillofacial health. Therefore, a
straightforward analysis of the statutory language of 40:2201.1(6)(A) necessitates a
conclusion that dentists are health care providers.
The Court’s conclusion is further buttressed by an advisory opinion authored
by the Office of the Attorney General, which explicitly states that dentists are to be
considered “providers” under 40:2201.1(6)(A), despite not being expressly included in
the enumerated list. See La. Atty. Gen. Op. No. 94-313 (La. A.G. 1994), 1994 WL
553063. Additionally, Louisiana courts have already recognized that providers of
chiropractic care, a form of health care not expressly articulated in 2201.1(6)(A), can
avail themselves of the PPO statute. Gunderson v. F.A. Richard & Assocs., 2009-1498
(La. App. 3 Cir. 6/30/10) 44 So. 3d. 779. One of the plaintiffs in Gunderson was
Beutler-England Chiropractic Clinic. Id. at 782. Defendants correctly point out that
the Gunderson court’s listing of Beutler-England Chiropractic Clinic as a plaintiff is
the extent of the Gunderson court’s discussion of the issue. Nevertheless, the mere
recognition of a chiropractic clinic as a valid health care provider under the PPO Act
is sufficient to convince this Court that it is correct in its of reading 40:2201.1(6)(A).
Namely, that the indisputably broad language was intended to include all manner of
specialists and providers in the health care profession, including dentists and
chiropractors.
Finally, the Court addresses Defendants’ argument that the legislature’s use
of the term “medical services” in 40:2203.1(A) compared to “health care services” in
the definition of health care provider was intended to exclude dentists from the ambit
of 40:2203.1. See 40:2202.1(6)(A). Fundamentally, Defendants’ urge the Court to
avoid reading “medical services” as a synonym for “healthcare services,” as doing so
would render the change in terminology superfluous. In support of their contention,
Defendants rely heavily on the proposition that 2203.1’s enactment in 1999, five years
after the rest of the PPO Act, renders the Attorney General’s 1994 Opinion on the
inclusion of dentists in the PPO Act inapplicable to a determination on the inclusion
of dentists as providers of medical services under the 2203.1 amendment. Defendants
further cite several Louisiana statutes that regulate “medical treatment” distinctly
from the practice of dentistry. See, e.g. La. R.S. 37:21.1, 37:751, and 37:1263.
To counter, Plaintiffs highlight a definition of “medical services” found in the
Louisiana Discount Medical Plan (“LDMA”), which states “[m]edical Services shall
mean any care, service, or treatment of illness or dysfunction of, or injury to, the
human body, including but not limited to physician care, inpatient care…….
ambulance services, chiropractic services, dental services….and medical equipment
and supplies.” La. R.S. 22:1620.2. Plaintiffs further stress the Gunderson court’s
acceptance of a chiropractic clinic as a viable plaintiff under 40:2203.1, thereby
implicitly deeming chiropractic services equivalent to medical services for purposes
of 40:2203.1. Many of the statutes cited by Defendants that draw distinctions between
dentists and physicians make similar distinctions between physicians and
chiropractors. See La. R.S. 37:2801 (regulating chiropractors separately from
physicians, surgeons, and midwives). Thus, the Third Circuit’s implicit recognition of
chiropractic services as medical services is strong support for Plaintiffs’ contention
that dental services constitute medical services. See Gunderson, 44 So. 3d at 779.
Because defining the term “medical services” requires this Court to interpret
Louisiana legislation, the primary search is for legislative intent. Pierce Foundations,
Inc. v. Jaroy Const., Inc., 2015-0785 (La. 5/3/16) 190 So. 3d. 298, 303. When
interpreting legislation, “all laws pertaining to the same subject matter must be
interpreted in pari materia, or in reference to each other.” Id. If a statute is
ambiguous, a statute “must be interpreted as having the meaning that best conforms
to the purpose of the law. Moreover, when the words of a law are ambiguous, their
meaning must be sought by examining the context in which they occur and the text
of the law as a whole.” Red Stick Studio Dev., L.L.C. v. State ex rel. Dep't of Econ.
Dev., 10–0193, p. 10 (La.1/19/11), 56 So. 3d 181, 187–88. Utilizing these secondary
rules of statutory interpretation, the Court finds that dental services fall within the
ambit of medical services in 40:2203.1.
First, the Court is persuaded by the similarities between the MDPA and the
PPO Act. Both statutory regimes regulate the complex interplay between health care
providers, insurance companies, and patients. It is logical to conclude the legislature
had similar balancing of interests and policy goals in mind when authoring both
regimes. This is supported by the definition of health care provider in the MDPA,
which mirrors the definition of health care provider in the PPO Act.6 The same broad
6 For comparison, the full text of the PPO Act’s definition of health care provider reads, “Provider shall mean one or
more entities which offer health care services and shall include but not be limited to hospitals, individuals, or groups
of physicians, individuals or groups of psychologists, nurse midwives, ambulance service companies, and other health
care entities.” The full text of the MDPA’s definition of health care provider reads, “Health care provider shall mean
language of “including but not limited to” is used in both statutes, but whereas in the
PPO Act the illustrative examples are “psychologists, nurse midwives, and
ambulatory services,” the illustrative list in the MDPA is “chiropractors, pharmacies,
and dentists.” See La. R.S. 22:1260.2(9) and La. R.S. 40:2202.1(6)(A).
Defendants would have the Court conclude the legislature is arbitrarily cherry-
picking certain medical specialties to be subject to different aspects of insurance
regulation, despite providing no appreciable reason the legislature would do so. Not
only is there no discernable reason the legislature would intend such a result, but the
resulting confusion resulting from such application of insurance statutes would lead
to absurd consequences.
Furthermore, the legislature defined “medical services” as broadly as possible
in the MDPA, to include any “care, service, or treatment of illness or dysfunction of,
or injury to, the human body.” La. R.S. 22:1260.2(13). Not only are dental services
included in the definition, but so are substance abuse services, laboratory services,
medical equipment and supplies, audiology services, and vision services. See Id.
Under the doctrine of in pari materia the term medical services in the PPO Act should
be interpreted using the definition in the MDPA as a reference point. Not only do the
two statutory regimes concern the same subject matter, but the definition of medical
services in the MDPA is the only formal definition of the term medical services
contained in the revised statutes.
any person licensed, certified, or registered in this state to provide health care services, including but not limited to
physicians, hospitals, home health agencies, chiropractors, pharmacies and dentists.”
Defendants’ supporting statutes do not include a definition of medical services
or dental services. See La. R.S. 37:2801 and 37:751. Rather, Defendants rely almost
exclusively on various Title 37 statutes that regulate the licensing and behavior of
dentists and physicians separately and obliquely refer to them as separate
professions. In comparison to insurance regulation, it is easy to understand why the
legislature drew distinctions between dentistry and physicians as regards licensing
and professional regulation.7 The calculus involved and policy goals sought are
substantially different than in the insurance realm. Put another way, there are clear
reasons for the legislature to distinguish between dentists and physicians in
regulation and licensing statutory regimes, but the Court finds no clear reasons, and
none are proffered by Defendants, as to why the legislature would intend to treat
dentists and physicians differently when regulating the two professions’ relationships
with insurance companies. Thus, the Court finds the MDPA to be more applicable to
the interpretation of the statutes at issue than the Title 37 provisions.8
Next, the Court turns to the legislative history surrounding the passage of
40:2203.1, the prohibitory amendment to the PPO. See Pierce Foundations, 190 So.
3d at 303-04. The legislative history gives no indication the drafters of 40:2203.1
intended the term medical services to be restrictive. (Rec. Doc. 34-2, 34-3, 34-4).
7 The education required is the most obvious example.
8 Defendants argue, a contrario, that the inclusion of dental services in the MDPA definition is proof that the legislature
knows how include dental services in its definition of medical services, and thus not doing so in the PPO
Act should be deemed intentional. Once again, however, Defendants miss the mark. The PPO Act does not define
medical services and merely not mention dental services. Rather, it does not define medical services at all. By
Defendants’ logic, all services listed in 22:2160.2 (13) but not in the PPO Amendment were intended to be excluded
from the PPO Amendment’s ambit, including “inpatient care, outpatient care, hospital surgical services, emergency
services, ambulance services, chiropractic services, dental services, audiology services, vision care services, mental
health services, substance abuse services, and podiatric care services.” La. R.S. 22:2160.2 (13). Defendants confuse
different definition with no definition.
Indeed, there is no indication the drafters placed any particular significance on the
use of the term medical as opposed to health care services. See Id. On the contrary,
the evidence shows the drafters considered the scope of the PPO Act’s application but
chose only to broaden its scope with the addition of “nurse midwives” to the
illustrative list of health care providers in 40:2202.1(6)(A). Id. Additionally, it must
be presumed the drafters had knowledge of the Attorney General’s Opinion expressly
stating the PPO Act was intended to apply dentists, and yet they chose not to mention
dentists at all under the 40:2203.1 amendment or restrict the broad language
defining health providers under the PPO Act. Id. Furthermore, La. R.S. 2203, the
PPO authorization statute, uses the term “medical services” as well. This undercuts
Defendants’ contention that the legislature intended the use of “medical services” to
have a legally-significant restrictive meaning in the 40:2203.1 amendment. The
Court finds the legislative history of 40:2203.1 evinces that the legislature implicitly
adopted the 1994 Attorney General’s Opinion by not refuting it during passage.
Finally, the Court finds that interpreting 40:2203.1 to include dentists and
dental services comports with the purpose of the amendment, which is to support “a
strong public policy in favor of notice to health care providers that a PPO discount
may be taken.” Gunderson, 44 So. 3d, at 783. Clearly, requiring PPOs to notify
dentists that a PPO discount may be taken furthers that policy. In a broader sense
though, the 40:2203.1 amendment must be “examined in the context in which it
occurs.” Pierce Foundations, Inc., 190 So. 3d at 303. The 40:2203.1 amendment
prohibiting certain practices by PPOs was enacted in response to issues created by
the PPO Act. See La. R.S. 42:2201. Thus, the broader purpose of 40:2203.1 was to
amend the way PPOs operated pursuant to the general PPO Act. There is no reason
apparent to the Court, evident from the legislative history, or proffered by Defendants
that PPOs should be immune from the requirements of the 40:2203.1 amendment
when interacting with dentists but not with any other branch of medicine.
Accordingly, the Court finds that the provisions 40:2203.1 apply to dental
service providers.9
II. PLAINTIFFS’ CLAIMS AGAINST AMERITAS
Having answered the antecedent question in the affirmative, the Court
identifies three separate claims Plaintiffs bring against Ameritas in the present
action. First, Plaintiffs claim they are entitled to the statutory damages found in La.
R.S. 40:2203.1(G). Second, Plaintiffs argue that even if the specific penalty provision
of Subsection (G) is not applicable to Ameritas, they are still entitled to compensation
for the difference between the standard billing rate and the reduced rate of the
Dentemax PPO. Finally, Plaintiff argues for injunctive and declaratory relief
prohibiting Ameritas from continuing to engage in the billing and reimbursement
practices at issue.
A. Plaintiff’s Claims Under L.A. R.S. 40:2203.1(G)
9 At the risk of redundancy, the Court once again notes that Louisiana’s Third Circuit Court of Appeal reached
essentially the same conclusion in Gunderson. A chiropractor attempting to avail themselves of 40:2203.1 is in a
virtually indistinguishable position from a dentist for the purposes of Defendants’ arguments. Indeed, as Plaintiffs
correctly point out, a dentist is more akin to a prototypical physician by almost any metric. “[C]hiropractors, unlike
dentists, cannot prescribe medicine, administer drugs, or install prosthetic devices.” (Rec. Doc. 23 at p. 6).
Additionally, chiropractors did not have an Attorney General Opinion specifically stating that 2203 was undoubtedly
intended to apply them. Thus, a fortiori, dentists must be viable plaintiffs under 40:2203.1.
Ameritas’s first argument in support of dismissal is that Plaintiffs have failed
to allege facts supporting a claim that Ameritas is a group purchaser within the
meaning of La. R.S. 40:2203.1(G). The Court agrees.
As background, La. R.S. 40:2203.1(G) states, in relevant part, that “[f]ailure to
comply with the provisions of Subsection A, B, C, D, or F of this Section shall subject
a group purchaser to damages payable to the provider of double the fair market value
of services provide. . .together with attorney fees to be determined by the court.” Id.
(emphasis added). Plaintiffs allege that Ameritas violated Subsection B, which
requires group purchasers to fulfill certain notice requirements when entering into
PPOs. Ameritas does not contest, in the present motion at least, its alleged violation
of Subsection B’s notice requirements.
The definition of group purchaser is found in La. R.S. 40:2202(3). “Group
purchaser shall mean an organization or entity which contracts with providers for the
purposes of establishing a preferred provider organization.” La. R.S. 40:2202(3)
(emphasis added). Thus, for the Court to consider Ameritas a “group purchaser” there
must be facts alleged showing that Ameritas contracted with Plaintiffs. Plaintiffs
have alleged no such facts. Rather, Plaintiffs’ complaint reflects an arrangement
where Plaintiffs contracted solely with Dentemax, who then in turn entered into a
contract with Ameritas.
Nonetheless, Plaintiffs oppose Ameritas’s motion to dismiss on the grounds
that the correct interpretation of La. R.S. 40:2202(3) does not require an entity to
contract directly with the health care provider at issue in the litigation. Instead,
Plaintiff proposes the statute be read to mean that as long as Ameritas has contracted
with any health care provider, even one not remotely related to the present dispute,
then Ameritas is a “group purchaser” for purposes of Plaintiffs’ claims under
Subsection G. (Rec. Doc. 23).
Fortunately, this is issue is not one of first impression. In Touro Infirmary v.
American Maritime Officer, the Louisiana Fourth Circuit Court of Appeal addressed
this precise question. 24 So. 3d 948, 2009-0697 (La. App. 4 Cir. 11/9/09). In Touro, the
court dismissed claims by a provider against entities in the identical position as
Ameritas, holding that only “the party who contracts with the provider is the group
purchaser.” Id. at 955. Crucially, the Touro court analyzed the term “provider” as
contemplated in both La. R.S. 40:2202(3) and La. R.S. 40:2203.1(G) and determined
that it refers to the “provider involved in this litigation.” Id. In other words, there
must be privity of contract between the provider seeking Subsection G damages and
the entity against whom they are seeking Subsection G damages. Id. The reasoning
in Touro persuades the Court, and thus the Court finds that Plaintiffs have failed to
state a claim for recovery against Ameritas under Subsection G.
Plaintiff makes an additional argument that as a result of the leasing
arrangement between Ameritas and Dentemax, Ameritas now “stands in the shoes of
Dentemax.” (Rec. Doc. 23 at 15). The Touro court rejected a similar argument by the
plaintiff that the contract between the Ameritas-positioned entities and the PPO to
use the reduced rate established a mandate “such that it conferred a direct
contractual relationship” between the provider and the Ameritas-positioned entities.
Id. Thus, the Court finds that Plaintiffs have failed to state a claim against Ameritas
under La. R.S. 40:2203.1(G).
B. Plaintiffs’ Claims for Compensation
In the event the Court finds, as it did, that Plaintiffs have not properly stated
a claim under Subsection G, Plaintiffs argue in the alternative that Ameritas is still
liable for the difference between the standard rate, that is the rate advertised on
Ameritas’s benefit cards, and the reduced rate Ameritas believes it is entitled to via
its arrangement with Dentemax.
La. R.S. 40:2203.1(B) states that a “preferred provider organization’s
alternative rates of payment shall not be enforceable or binding upon any provider
unless such organization is clearly identified on the benefit card issued by the group
purchaser.” Crucially, Subsection B shifts the focus from penalizing the insurance
provider to protecting the health care provider. Thus, even though Ameritas is not
liable under the punitive provisions of Subsection G, its arrangement with Dentemax
is not enforceable on Plaintiffs if the notice requirements are not followed. Ameritas
argues that although this may be an accurate interpretation of the statute, there is
no legal theory for Plaintiffs to recover the compensation they seek. The only two
avenues of recovery, according to Ameritas, are an affirmative grant of damages
under the statute or breach of contract damages. As the statute does not affirmatively
provide for this type of compensation, and because Plaintiffs have not plead facts
indicating a contractual relationship between themselves and Ameritas, Ameritas
contends they cannot be forced to reimburse Plaintiffs at the standard rate.
There are two fatal flaws to Ameritas’s position. First, Ameritas ignores the
well-established principle of unjust enrichment, codified in Louisiana in Article 2298
of the Louisiana Civil Code.10 Article 2298 codified long-standing Louisiana
jurisprudence “that had imported the theory of action de in rem verso.” Nikolaos A.
Davrados, Demystifying Enrichment Without Cause, 78 La. L. Rev. (2018). While the
Court takes no position on the ultimate success of an unjust enrichment claim,
particularly in light of the parties’ lack of in-depth briefing on the issue, the Court
notes that a claim for unjust enrichment, if successful, would entitle Plaintiff to the
compensation they seek despite the absence of contractual privity.
Second, Ameritas relies heavily on the Touro decision to support its position
that it is not liable under Subsection G. However, the Touro court further held that
the plaintiff had stated “a cause of action against [defendants] for the difference
between the discounted ‘alternative rates of payment’ and the full standard rate of
payment as billed by [plaintiff].” 24, So. 3d. 955. Essentially, the arguments entitling
Ameritas to dismissal on the Subsection G claims do not constitute “a convincing case
justifying why [it] should be permitted to enforce discounted rates against [Plaintiffs]
in the face of [Plaintiffs] factual allegations concerning the benefit cards.” Id. at 956.
10 Article 2298 reads, “A person who has been enriched without cause at the expense of another person is bound to
compensate that person. The term "without cause" is used in this context to exclude cases in which the enrichment
results from a valid juridical act or the law. The remedy declared here is subsidiary and shall not be available if the
law provides another remedy for the impoverishment or declares a contrary rule.
The amount of compensation due is measured by the extent to which one has been enriched or the other has been
impoverished, whichever is less.
The extent of the enrichment or impoverishment is measured as of the time the suit is brought or, according to the
circumstances, as of the time the judgment is rendered.” La. C.C. art. 2298.
Not only does the rationale in Touro mesh with the existence of quasi-
contractual remedies in Louisiana, but it would also be inconsistent for the Court to
follow the guidance of the Touro court on one statutory interpretation issue, and then
go completely against the Touro decision on another. It is particularly inconsistent
when the two issues, the applicability of the Subsection B and Subsection G of La.
R.S. 40:2203.1, are so intertwined. Furthermore, Ameritas suggests a reading of the
statute that ultimately renders the notification requirement completely inapplicable
to Ameritas and comparable entities. The Court is not convinced the legislature
intended the notification requirements to be so ineffective, particularly in light of the
“strong public policy in favor of notice to health care providers” that the statute
evidences. Gunderson v. F.A. Richard & Assocs., 2009-1498 (La. App. 3 Cir. 6/30/10).
Accordingly, the Court finds that Plaintiffs’ allegations asserting their right to
reimbursement from Ameritas at the full standard rate are sufficient to state a
plausible claim.
C. Plaintiffs’ Claim for Declaratory and Injunctive Relief
In light of the Court’s other findings, the only disputed issue left is whether
Plaintiffs’ claim for declaratory relief is “redundant of the substantive legal claims.”
Perry v. H.J. Heinz Co. Brands, LLc, No. 19-280, 2019 WL 2423231 at 3* (E.D. La.
June 10, 2019). Ameritas maintains Plaintiffs’ declaratory relief claim is redundant
because Plaintiff fails plead any facts indicating prospective relief is necessary. In
support of its position, Ameritas points to the portion of Plaintiffs’ complaint reading
“[these] actions violate the Petitioners’ provider agreements with Dentemax for the
period of 2012 through 2016.” (Rec. Doc. 1 at 6).
Nevertheless, Plaintiffs also contend that “Defendants continue to engage in
unlawful billing and reimbursement attempts as more fully outlined hereinabove.”
(Rec. Doc. 1 at 8) (emphasis added). Although in a vacuum Plaintiffs allegation of
current unlawful billing and reimbursement would constitute a mere “legal
conclusion,” the pleading clearly incorporates by reference the specific actions and
procedures that make said billing and reimbursement illegal. Therefore, taken as
true and drawing all reasonable inferences in favor of Plaintiffs, they have plead facts
indicating prospective relief may be appropriate in this case. See Lormand, 565 F.3d
228.
III. PLAINTIFFS’ CLAIMS AGAINST DENTEMAX
The Court identifies three separate claims Plaintiffs bring against Dentemax
in the present action. First, Plaintiffs claim they are entitled to the statutory damages
found in the penalty provision of La. R.S. 40:2203.1(G). Second, Plaintiffs claim they
are entitled to breach of contract damages from Dentemax. Third, Plaintiffs seek the
same declaratory and injunctive relief against Dentemax that they seek against
Ameritas. (Rec. Doc. 1).
A. Plaintiffs’ Claims Under 40:2203.1(G)
Although Plaintiffs’ claims against Dentemax under 40:2203.1(G) mirror their
claims against Ameritas under the same provision, Dentemax’s argument on its
motion to dismiss is completely separate from Ameritas’s. Whereas Ameritas argues
it is not a group purchaser under 40:2203.1(G), Dentemax maintains it falls within
the exception clause in 40:2203.1(A), which states, “[t]he provisions of this Section
shall not apply to a group purchaser when providing health benefits through its own
network or direct provider agreements or to such agreements of a group purchaser.”
Thus, if the exception in Subsection A applies to Dentemax, then Dentemax cannot
be held liable to Plaintiffs under any legal theory for failure to follow the notice
requirements of 40:2203.1(B), because the notice requirements would not apply to
Dentemax.11 If, on the other hand, Dentemax is not within the exception laid out in
40:2203.1(A), then it is undisputed Plaintiffs have alleged facts supporting a plausible
claim against Dentemax under Subsection G.
Dentemax provides three arguments in support of its position. First, Dentemax
asserts that the plain language of 40:2203.1(A) bolsters its contention that the notice
requirements do not apply to them, stressing the legislative purpose of curbing rising
healthcare costs that was behind the PPO authorization statute. See La. R.S. 40:2201.
Second, Dentemax cites legislative history it believes indicates the legislature was
only concerned with “silent PPOs,” as opposed to a PPO possessing a direct
contractual relationship with the provider.12 Finally, Dentemax cites several holdings
from the Western District of Louisiana supporting nearly all of its proffered
rationales for applying the exemption to them. See Liberty. Mut. Ins. Co. v.
Gunderson, No. 04-2405, 2006 WL 367700 (W.D. La. Feb 15, 2006); American Home
11 Subsection B of 40:2203.1 contains the actual notice requirements that PPOs must follow. A PPO’s failure to follow
the notice requirements may subject them to liability under the punitive provisions of Subsection G, if the PPO is a
group purchaser, or it may simply nullify any reduced rates the PPO is attempting to reimburse the healthcare provider
at.
12 A “silent PPO” is a PPO without direct contractual privity with the health care provider.
Assur. Co. v. Bernauer, No. 06-579, 2007 WL 1812573 (W.D. La. June 19, 2007); CCN
Managed Care, Inc. v. Shamieh, No. 06-519, 2007 WL 2088302 (W.D. La. July 20,
2007). Nevertheless, the Court disagrees and finds the exemption in 40:2203.1(A)
inapplicable to Dentemax.
First, the Court does not find the language in 40:2203.1(A) to be unambiguous.
The provision could plausibly be read as applying only to PPO networks who directly
provide health benefits to patients. It is not clear from the language of the exemption
that the legislature intended to exempt PPO’s operating purely as middlemen and
providing no reimbursement or health benefits of their own. See Gunderson, 44 So.
3d. at 787 (holding that the focus is solely on whether the PPO provided benefits
directly).
Furthermore, even if the language in 40:2203.1(A) was as unambiguous as
Dentemax claims, statutes should be interpreted in a manner that does not lead to
absurd or ridiculous consequences. Red Stick Studio Dev., L.L.C. v. State ex rel. Dep’t
of Econ. Dev., 56 So. 3d 181, 10-0193 (La. 1/19/11). Instead, “the function of the courts
is to interpret the law so as to give them the meaning which the lawmakers obviously
intended them to have.” Savoie v. Rubin, 2001-3275 (La.6/21/02), 820 So.2d 486, 488.
The purpose of 40:2203.1 was to “prohibit certain practices by PPOs relative to
alternate rates of payment.” (Rec. Doc. 34-2). Dentemax’s proffered interpretation of
the 40:2203.1(A) amendment would completely frustrate that purpose and render the
notice requirement virtually meaningless.
On one hand, Dentemax strenuously urges the Court to hold that 40:2203.1, in
its entirety, does not apply to PPO’s in privity with the relevant health care provider.
On the other hand, Ameritas urges the Court to hold that 40:2203.1(G) only applies
to PPO’s in privity with the healthcare provider. Taking those interpretations
together, the Court is hard-pressed to think of any situation where 40:2203.1(G)
would apply. Considering the Court found Ameritas’s position to be correct, the only
way to avoid what is practically a complete nullification of Subsection G is to apply
the 40:2203.1 amendment in its entirety to Dentemax.
Dentemax, and by reference its supporting cases, misconstrue the purpose of
the 40:2203.1 amendment by conflating it with the purpose of the PPO Act writ large.
See Liberty. Mut. Ins. Co., 2006 WL 367700 *4 (“The purpose of the PPO statutes is
to control the rising costs of providing quality health care benefits.”). Yet the
amendment to the PPO Act, 40:2203.1, is, by its very nature, designed to amend the
original statutes. It is true the purpose of the original PPO Act was to control the
rising costs of health care, yet the purpose of the 40:2203.1 amendment was to
reinforce the need for notification of reduced rates to health care providers.
Gunderson, 44 So. 3d at 783. The Court finds that in order to best effectuate the intent
of the legislature, 40:2203.1 should be interpreted with the policy goals of the
40:2203.1 amendment in mind, not the policy goals behind the initial PPO Act.
This brings the Court to Dentemax’s argument that the legislative history of
40:2203.1 shows the legislature intended to exempt all PPO’s in direct contract with
a health care provider. (Rec. Doc. 11); see also Liberty. Mut. Ins. Co., 2006 WL 367700
*4.
To be sure, the minutes from the House Committee on Insurance do state that
the purpose of the amendment was to “seek to void the use of PPO contracts by parties
that are not part of that contract.” (Rec. Doc. 34-4 at 3). That statement, however,
speaks on the aims of the 40:2203.1 amendment as a whole, and not specifically on
the exemption elucidated in Subsection A. Indeed, holding middlemen companies like
Dentemax responsible for leasing alternative rates to third-party payors without
notice assists in the stated goal.
Rather, the Court finds the statements made by Mr. Greg Frost, a
representative of Columbia Health Care Association, to be more instructive as to the
legislature’s ultimate intent. Mr. Frost “stated that the amendments remove State
Group Benefits because they have their own direct contracts and, typically, a labor
union health benefit plan will have its own direct contracts. He further stated that
the point of the amended version of the bill is to eliminate those who have assembled
their own networks.” (Rec. Doc. 34-4 at 3).
This commentary confirms that the House Committee on Insurance, which
included the exception at issue in 40:2203.1, was primarily concerned with entities
that clearly provide health care benefits themselves, such as labor unions and state
employee benefit groups. There is no clear-cut evidence showing that the legislature
intended for companies operating like Dentemax, i.e. providing no direct health care
benefits themselves and essentially acting as middle men between health care
providers and benefits providers, to be privy to the exception.
Finally, the Court’s interpretation of 40:2203.1(A) is buttressed by the decision
of Louisiana’s Third Circuit Court of Appeal in Gunderson. 44 So. 3d at 787. The court
in Gunderson was faced with precisely the scenario present before this Court. First
Health, an entity whose business model involved acting as a middleman by
establishing a PPO network for third-party payors, was found to be subject to the
provisions of 40:2203.1. Id. (“In other words, benefits are provided by employers and
their insureds with First Health acting as a middleman. The cited provision of the
Louisiana PPOA does not apply to entities such as First Health.”).
The Court acknowledges that Dentemax has provided case law from another
district court that directly conflicts with the position taken by the Gunderson court.
See Liberty. Mut. Ins., 2006 WL 367700. Nevertheless, because the present question
is one of Louisiana law, the Court “will not disregard the decisions of Louisiana’s
intermediate courts unless [it is] convinced that the Louisiana Supreme Court would
decide otherwise.” In re Katrina Canal Breaches Litigation, 459 F.3d 191, 206 (5th.
Cir. 2007). As the discussion of Dentemax’s other arguments shows, the Court has
not been convinced that the Louisiana Supreme Court would decide the case any
differently than the Gunderson court.
Accordingly, the Court finds that Plaintiffs have plead sufficient facts to
plausibly support a claim for relief against Dentemax under La. R.S. 40:2203.1.
B. Plaintiffs’ Claim for Breach of Contract
Plaintiffs assert they are entitled to breach of contract damages because of
Dentemax’s breach of the Preferred Provider Agreement. (Rec. Doc. 11-2). In their
omnibus opposition, Plaintiffs allege two different breaches of the contract. First,
Plaintiffs’ assert that Dentemax breached its responsibility to “market its program to
groups and individuals with the intent of obtaining Participants who may become
patients of the Provider.” Id. Second, Plaintiffs contend Dentemax violated its
contractual obligation that “[a]ll notices, including but not limited to change of
address and change of license status shall be submitted in writing and delivered
either personally or by U.S. Mail postage.” Id.
The Court finds Plaintiffs first breach of contract claim is not supported by the
facts alleged in their complaint. Plaintiffs merely allege that Dentemax marketed the
program to Ameritas. Nowhere do Plaintiffs state facts alleging Dentemax failed to
market the program to other groups and individuals. Id.
The Court further finds Plaintiffs’ second claim is not supported by the terms
of the contract. The relevant provision states, “[a]ll notices, including but not limited
to change of address and change of license status shall be submitted in writing and
delivered either personally or by U.S. Mail postage prepaid to the address below or
any new address supplied by the other party.” (Rec. Doc. 11-2). The provision merely
details how notices are to be delivered. It does not set forth an affirmative obligation
to deliver notices. The obligation to give notice arises from the language of 40:2203.1,
and it is there that the remedies for failing in that obligation are found, not in breach
of contract.
Accordingly, Plaintiffs have failed to state a claim for breach of contract upon
which relief can be granted.
C.Plaintiffs’ Claim for Declaratory and Injunctive Relief
Plaintiffs’ have stated a claim for declaratory and injunctive relief for the same
reasons elucidated in Part II.C. supra.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant Ameritas’s Motion to Dismiss
(Rec. Doc. 8) is GRANTED as regards Plaintiffs’ claims for damages under La. R.S.
40:2203.1(G) and DENIED as regards Plaintiffs’ claims for compensation and
declaratory relief.
IT IS FURTHER ORDERED that Defendant Dentemax’s Motion to Dismiss
(Rec. Doc. 11) is hereby GRANTED as regards Plaintiffs’ claims for breach of
contract and DENIED as regards Plaintiffs’ claims for damages under La. R.S.
40:2203.1(G) and declaratory relief.
New Orleans, Louisiana this 26th day of November, 2019.
LK hu
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CARL J. BARBrHR \/
UNITED ST DISTRICT JUDGE
27