my name is douglas gregory i represent elective system medical services also we commonly refer to it as m s i may place the court i'd like to reserve five minutes of my time  this case tends to get complex over what really is a fairly simple subject the overarching issue is whether the district court erred in dismissing with prejudice all of e m s size claims even the size of medical provider that provides a specific product in this case and mainly tens units and the supplies to use those uni with and used the defendant blue cross blue shield of texas for many many years including during that time her prior to a contract being a nerd into when they were out of network provider also during january two thousand and seven a contract provider contract was put in place that requires payment four covered services of which throughout the country the blues plans cover tens units and the supplies and it requires blue cross blue shield of texas to pay according to a three schedule which is in this case basically a percentage of the charge for all those subscribers for which  goes not just to those individuals that live in texas or for a product that was given and provided in texas but rather it poses an obligation upon blue cross blue shield of texas to  both or it is you because there are roughly thirteen thousand claims in the during the contract period and there is approximately twenty thousand claims that arise in the offended this case when in fact they should have been submitted to a different the dispute that i do because because that i think what you're getting at judge is during the time that the contract was in place the claims were properly submitted to texas blue cross texas then when that contract was terminated august of two thousand and ten the m s i continued to provide products and services  many of the same individuals of living in texas and elsewhere that it was providing during the contract term the those claims which are roughly twenty thousand post terminations clients were in great respect submitted to other blue cross plans and returned the reason they were submitted to other blue cross plans was because at that time in the summer of two thousand and ten blue cross blue shield national issued a policy directive that said from henceforth we want all providers to submit their claims not to where they've been submitting them not to who they have a contract with necessarily but the claim should go that the blues plan in the state where the product was delivered and the patient resides so you know aside tempted to comply with that directive and that's why it said those claims to those states well apparently those states then wanted to submit texas and that the court district court ordered at a hearing in february of two thousand and thirteen that we submit those claims to texas that was then rescinded the subsequent  a a existing lawsuit in which we claim that these claims should be paid and discovery can then go forward to address whether the  narrow it and didn't it appears as though i think they're right that we don't have a quantum arrow claim but that we do have claims potentially for breach of implied contract breach how do you have a third party beneficiary claim under texas law because it's like your point to merely it's a better argument but you don't have that so why how do you have a third party beneficiary claiming the third party been officially claim arises from the fact that there is a contract that exists between the patient and blue cross texas or some other blues plan we are we as a provider our third party beneficiary of that contract that allows us to submit that then puts us in a position whereby we can submit claims for services and products provided to that patient and expect payment return ok but texas law is clear if you're not third health care providers or not third party beneficiaries unless you have specific facts that show in the controlling factor in determining whether third party may force a contract is the contracting parties the tent and i submit that we can all lead to the extent we have failed to allege the intent of the parties and allowing for non participating providers those without a contract with blue cross to recover claims that we can allege and tent implied contract in a suit on an open account actually set forth the the allegations that need to be alleged to state a claim under for those causes of action i've got a written down here i don't know that you want me to go through all of them but we e m i sign could go back on them and pleading and make that allegation and make those allegations  all exist and we could follow the court's directive on that what what is somewhat confusing is the court says in its order that they're going to dismissed all the claims of prejudice even the breach of contract claim for them find them as dismiss all with prejudice because repeated attempts to amend had not  been appropriate and any further amendment attempts would be futile with the truth of the matter is there was never repeated attempts to amend we found our original complaint which was just a bare bones complaint in state court that then sat for about proximately one year because the parties were working together to try to resolve the various issues but it became clear that that was not going to come to fruition we then filed our first amended complaint which we added additional causes of action that was then rather than april twenty third hearing he stays that the motion to dismiss that he filed was very narrow one on the state and federal government i me and that is indeed the case when there was seventy seven claims that were arose out of state and government employee or  hearing on august the second two thousand and twelve says i'm not ordering that you put into the complaint a full list of claims i think that's pleading evidence but i am ordering that you at least be much clearer about the source and nature of the claims that was the only discussion and the only reason for the dismissal the first amended complaint there was never any discussion of the other causes of action that that gives the universe a claim to give certain information so we indeed did that we located and then itemized on a spreadsheet with all the various information thirteen thousand claims blue cross came up with eight hundred kinds but in any event there's a substantial number of claims then claims and then the federal and state government employee climes at the hearing on april twenty third which was the status hearing so up until this time no discussion with the court about any of the other claims no discussion about having two a man two that we haven't seen the state of the cause of action for breach of contract with courtney ever well we're just trying to get their head you still have five minutes for  d morning may please the court counsel my name is brian kavanagh and i represent health care service corporation generally referred to by the acronym h c s e in the pleading in the proceedings below with my time today i'd like to make three points first i would like to explain why this course of firm the district courts exercise of its sound discretion in denying electricity and leave to fall of fourth iteration of its complaint second if this court affirms the district court's denial of leave to amend based on claims that were conceded either in the district court or in briefing on appeal or waived by failing to argue any error on appeal this court would only need to address whether or not the district court erred as a matter of law in dismissing the breach njust enrichment the third party benefit why would it be left with only the breach of contract interests or the unjust enrichment breach of implied contract in quantum claims in in the electronics briefing they can see that they're only challenging the district court's denial of leave to amend they're not alleging that the district court are asserting that the district court erred as a matter of law and dismissing those claims in the second a minute complained so our position is one the third one i want to make the court not err in not allowing them to amend on those because that does hadn't been the subject of problems you know th the previous amendments were based upon the contract climbs for the most part you know the what was deficient in that intel's hadn't been a focus so how did they know that there was something wrong and to say how were they given a chance your honor i believe that the chronology in this case is is critical this is not a typical situation or a situation in which the district court entertain motions i dismissed shortly after the filing of a complaint and then dismissed those claims without an opportunity the parties litigated in federal court for two years prior to final dismissal of those claims with prejudice prior to that the claim the case had been pending although these cause of action had not been asserted approximately a year as counsel for elector stem noted during the two years that the parties were before the district court there were extensive conversations with the court and between the parties in an effort to just understand what claims are at issue and what the election's theory of recovery thought i will i will concede that that the brief thing maybe didn't address in the motion to dismiss the first minute complaint some of these causes of action but these issues were addressed with the court over and over and over again that in the record that would tell me that they were told ahead of time that there was a deficiency given a chance to cure and they failed to cure why i think the court observed numerous times that the complaint that was filed was a bare bones complaint in fact if we go back to the first amended petition the court not any where were they told that there were specific detention sees in the state law claims and given an opportunity to correct that that is what they were told that in in h c ses motions to dismiss at a minimum they had an opportunity to seek leave to amend they didn't do it they how did they know that the court believed there was some deficiency that's the question i will say that the court the court or you're not a third party beneficiary because texas law doesn't allow it for these three reasons there's not there's not that interchange on the state law claims because the whole focus seems to be the contra times i'd read them i don't think the district court gave plaintiffs a roadmap as to how to properly plead their claims or told them that they were deficient and gave them a chance to cure such that prejudice missile with prejudice would be appropriate i think the district court gave them ample notice that the complaint as a whole was deficient she did not your correct under the district court did not get into detail on the specific cause of action i believe the district court worked extensively with the parties to try to understand what claims were issued and this is the something in the record with me to go back and look at enrichment suit on account third party beneficiary no no your honor i can't i can't point to something before from the court prior to that point time that said c s e raise those issues in a motion to dismiss in opposing claims and i'm not sure i'm there frankly that they're futile i think in order to all of them so i think in order to understand it with divide the two universes of claim so as to the twenty thousand your i don't believe that the district court entered an order that would as a matter of race judicata bar them from submitting their claims or suing another party on those claims the only dissent in this kid sister court did not discourage them from told i don't believe the district court ordered them not to submit the claims the district court observed that submitting them to us would be futile because they acknowledge they were not claims that had any connection to each c s e after the contract was terminated electricity is providing goods and services to patients the only right they would have to submit a claim to my client is whether there is as an ass any of those patients they conceded that they submitted those claims to the entities they thought they were supposed to submit them to there's no there's nothing in the record there's nothing in the second amended complaint that indicates that any of those claims relate to patients or beneficiaries of a policy of insurance issued by my client or a health care plan under rest of its administered by  c s e which is why we raised the article three standing issue there's simply no connection between those claims and my client to be sure elected him says they weren't paid and if we assume that to be true they have an injury but they don't have a causal connection to my client don't we know that the well i guess the court ordered the district court ordered the exchange of spreadsheets in connection with these claims how much discovery of money was done aside from that in this case there were propounded the discovery they got and both sides propounded discovery but to be clear your honor i don't believe the spreadsheets per se were directly responsive to a particular discover request that was something that the parties had exchanged in their own mediation discussions and which the district court encourage further exchange of to help understand the universe of claims that issues did they ask for the e o p and the contracts and did they receive them before they were their position is that without the e o b's in the contract they can't plead anymore particularly in that information is in your control or not at least not in their control i think i think that raises the question of whether or not they did what they were required do before filing a lawsuit they have an opportunity to go it did did they plead for the i'm the can you answer my question yes i don't ask in discovery for these items and did they receive these items in discovery before they were poured out these before they were dismissed i'm sorry i'm using a cloak we'll texas phrase that i'm sure you're familiar with i have to go find i suspect i got it i have to imagine they would have asked for absolutely they would have asked for it and they did not receive it well we also need to be clear that my client doesn't necessarily have that information but that's another problem here is that they're challenging coverage if they want the summary plan descriptions of the plan documents they need to get those from the plan administrator that's not something each c s e is going to have the vast vast majority of claims in this case it's a bizarre situation admittedly but i think you heard counsel say that there are a florida provider sending these tens units all over the country they obtained a contract with texas based on a storefront that they had in in texas most of the claims in this case had nothing to do with taxes that they're administered by other people other blue cross blue shield entities they may be there may be active you know employer groups that are ministering their own plans  using a blue cross and of these solely for claims of ministration we don't necessarily have that information you have the e o p they have the obese too we have they said they don't have the e o p in their initial disclosures they identified d o b as is one of the documents that they had and they would use to prove their title have some e o b's but they were missing large quantities of the e o p which make it hard for them to plead with any more particularities they are probably missing well i don't know whether they're missing them or not but b is for the blue card claims are not something my client would have if the claim is administered by a blue cross blue shield plan other than one under the umbrella of h c s e then we wouldn't have the e o p we don't hold the benefits my client doesn't it mr that plan it is simply facilitating the processing of on coverage no we don't make that determination if it's electricity here's a hypothetical if electricity and ships a tens unit to a patient who has their insurance with blue cross blue shield of michigan or has a is a member of an employer sponsored plan that's administered by blue cross blue shield of michigan let's say that michigan patient actually happened to be with physically within the boundaries of texas and received that unit there they submit the claim to texas we process it and this  for that period where they were contracted provider we process it which means we forwarded on to michigan michigan then decides based on its knowledge of the plan is this a covered claim or is it not and then  e with respect to plans that are not administered by us does not make that determination your client was not responsible for pay paying any of these claims during the contract period the check would have been issued if it was a covered claim and payment was allowed the check would have come from blue cross blue shield texas to its network provider electricity so your client would have made the payments even though you say that michigan would have decided whether or not to pay pursuant to the blue car program between the blues plans the two the check would be issued by texas but texas would not have financial responsibility for that one and they should sue michigan even though the check comes from you your client if we're talking about pre term a nation if we're talking about a coverage determination and we're talking about a risk i think arista requires them to name that plan administrator because that's the only person who's going to have the administrative record of why that decision was made with them we're talking made of that information don't you have to tell them oh it's really michigan is your plan administrator so then they can amend to bring them in and you'll have that information in your your document retention area well first and foremost the e o p would come from michigan it wouldn't come from us and so that would indicate a second they have the patient's insurance information the ev their insurance card they know it's michigan not it's third even if they didn't and even if they did and by the way we learned well into the case the right one of the challenges with not having the information is they were using a third party clearinghouse to do this so they didn't have the claims information themselves but even if they didn't have it had time and they should of and they had the ability to get it in the claims spreadsheet that we provide them as early as january two thousand and twelve all that information is right there on a claim by claim basis and it's also in the claims spreadsheets that were filed under seal with the court in february of two thousand and thirteen for every single claim we identify what is the plan if it's not us is it michigan is it anthem is  on thirteen thousand versus eighty eight hundred i can't say why they think they have thirteen thousand claims we they have it on their list and you have eight hundred your list so why the list not match they don't have claims numbers on their list they have patients name dates and things like that but in terms of claims that were submitted to us in january of two thousand and twelve if c s e queried it system and gave them a list of every claim that they had submitted to texas in the time period issue they then handed back this spreadsheet with thirteen thousand or many many more thousands of lines on it and and did not have claimed on birth and did you go back and check those against your database of people that you provided services or sent yes each c s e cross reference their list against the list that we had provided them in january of two thousand and twelve and that's what resulted in the eighty eight hundred matches and that was those were the spreadsheets of the district court required us to  claims so for coverage reasons i believe number one they don't allege anything in the second amended complaint to indicate why they're challenging those determinations so if it's in a recent government claim why are they challenging coverage what element of the patients plan and titles them to have that said i have to know why you denied it before they can know why they're challenging your denial and they have that information how do they have that information they receive that in two ways one they receive a provider claim summary from h c s c that indicates whether the claim was wind is part of this litigation no no no it was patient normal course of business so they wouldn't have received it the patient would have received it right know the patient would receive an explanation of benefits from their plan administrator so if that was one of our plans in each c s e plan it would have come from a c s e if it was michigan or california or whomever would have come from michigan or california then in addition to that while they were contracted provider blue cross blue shield texas would provide them with is called the provider claim summary indicating payment was being made or not being made and doesn't say why not being made and does it also say in the amount we are rejecting because they also have partial break claiming they have payment rate claims in then the the patient gets the information says your claim is denied because and they're given a reason the explanation of benefits that goes to the patient for the patient process but their their company does not get that information i don't know whether their company gets  or not from all these are the plans but what they do get from texas through the contract is a provider claim summary that has that information in a more summer exaction it's not in a risk adverse benefit determination with all of the content that typically has to have but it has other information and how can they know if they have a recent claims if they don't know why it's nine hundred and risk is very technical and they don't know why it's nine and how can they plead in a more technically than they have well they do they do know why it's denied because the provider claims summary as well indicates whether or not a claim is denied based on coverage i also like to direct the why what's wrong with the coverage is it that the person doesn't have a plan they get their you know they didn't pay their premium and they got fired at their job or is it because that the plan doesn't cover for the this procedure and less you've had a referral from the right expert doctor there's so many reasons and so they need to know why they can penetrate whether or not they have a to things i would say in response that for the pre terminations period particularly given the court's focus on a recent number one there are vehicles that are a surprise to get that information if there's any ambiguity in their minds if they truly are assamese and by the way there's nothing in the record that demonstrates plan documents to get additional information in addition is a contracted provider with h c s e the contract provides a claim reconsideration an appeal process so if they have any question number one they can log in on line and get additional information and number two they can they can engage in dialogue through that process council selector stem conceded during one of the status conferences and i can get the reference for the court that electricity i'm never engaged in any appeal of any of its claims so there are avenues through the contract and through rissa to get information before you come to the court and say we want to put it into every single claim and then let's sort it out in discovery and figure out which ones we have are valid in which are not and that's precisely what electricity was said during the april twenty third i believe conference it told the court heard me told the court well if it turns out there's no coverage then we can see that claim that that that i think that the judge o'connor in the northern district of dallas in the innova case correctly cited equality very similar circumstance saying you know and the second circuit has spoken to this rather eloquently about when the information is in the control of the other party and your position now is that it's not in the control of the other party is that i see my time's up let me answer honest question i see that it's its peak if the claim was if coverage was determined by a party other than my client then it may not be in our possession in addition they have avenues to get that information is not information that is exclusively in the control of the claims process or here at c s e they have it as if they are an ass any of the patient with the proper authorization they can get that information from the plan well i think that we have to if they have to have done that before through the arista information before they filed suit thank you thank you claims thirty thousand what's a reza what's not blue cross texas isn't going to be able to give you that information cross cross purposes here i'm asking when the claim was denied in the particular case and you got your you provided your unit to provide services for people of the help someone and then it's denied at that point or is a does have a mechanism where you appeal through the the denial this was not done in any of these so what's happened is instead of doing these as they come in or not pay your client has waited bundled them all up and pursue them only in litigation tell me why that's not accurate  showed that a coverage determination was made and that it related to a wrist a plan so we did not know where when we received any information whether it was a recipe plan or not and in and one of the parties to focus on this spreadsheet information and an actually a baby discovery until further order it wasn't until the april twenty third two thousand and thirteen hearing then that she indicated world where she sets a new discovery process time frame says you guys need to get going on discovery because you need to get a lot of information she said and then she says all right it seems to that what we ought to do is this i will rule the motion to dismiss but if the risk is an issue in this then it seems to me that the most i could do would be to say and i would limit the ruling frankly to those three thousand claims she's referring to those blue card claims and those federal and state employee claims we don't even know anything about the other claims yet until you tell me differently and if you if there is different i'm eager to hear but  challenges based on rate of payment would not those would have to be subject to breach of contract analysis we'd have to read please but either way we drive the case so that's the final hearing that we have prior to the court entering in order the smoking with prejudice not only all of the breach of contract claims but also all the arista claims so because we have covered all of our say without support in your complaint that there are aggressive plans to which should have been paid without identifying theorist's a plan specifically in the alternative as we're entitled to do in a plating because we don't know what the arista plans are and we know that that that the defendant removed the case to federal court based already for the proposition that you cannot know whether your claim relates to a risk or whether it relates to a breach of contract and that you can just you can just plead it in there without any as as that provider is sitting there filing it soon it cannot know for instance what claims were subject to risk what weren't but often times and when you have a medical practice filing claims it's a very few clients when you have someone like my client that does the type of business it is contrary to to to to what m thought we were not sitting around collecting claims and just collecting them so that we could then bring one suit in one big pile those claims were were were heading every single day and so were even when the contract terminated where there weren't so many claims that existed at the time of terminations they then became claims because slowly but surely