FI L ED U.S. COURT OF APPEAL S EL EVENTH CI RCUI T MAY 12, 2010
J OHN L EY CL ERK [PUBLIS H]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __
No. 0 9- 11 01 2

__ __ __ __ __ __ __ __ __ __ __ __
D.C. Dock et No. 0 0- 01 33 4 M D-FAM

IN RE: MANAGED CARE LITIGATION

__ __ __ __ __ __ __ __ __ __ __ __ __ __ DOCTORS HEALTH, INC.,

In te res te d P art y -Ap pe ll an t,

ve rs us

AETNA, AETNA U .S. HEALT HCARE, INC.,

Defen da nt s- App el le es

.

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t fo r th e So ut he rn Dis tri ct of F lo rid a

__ __ __ __ __ __ __ __ __ __ __ __ (Ma y 12 , 20 10 )

Befo re TJ OFLAT and COX, Circ ui t J ud ge s, an d KORM AN, Dis tri ct Ju dg e. *

Honora ble Edwar d R. Korman, United States District J udg e for the Easter n District of New * York, sitting by

desig nation.PER CURI AM:

W e co ns id er in th is ap pe al whe th er th e di st ric t co ur t pr op erl y en joi ne d Doc to rs

Heal th
, In c. (“ Doc to rs Heal th ”) fro m pu rs ui ng a br each of co nt ract cl ai m ag ai ns t

NYLCare Heal th Pl an s of th e Mi d- Atl an ti c, In c. (“ NYLC are” ) th at res ul te d in a

jud gm en t fo r Doc to rs Heal th in ba nk ru pt cy co ur t. The di st ric t co ur t de te rm in ed th at

th e cl ai m ha d be en rel eas ed in a se tt le m en t ag reem en t in Sh an e v. Huma na , I nc ., e t

al

. , a fed eral cl as s act io n la wsu it br ou gh t by m ed ic al pr ov id ers ag ai ns t m an ag ed -car e

co m pa ni es . W e ho ld th at th e cl ai m at i ss ue was n ot rel eas ed an d v acat e th e d is tri ct

co ur t’s o rd er en

joi ni ng Doct or s Hea lt h fr om pu rs ui ng th at cla im

.

I. BACKG ROUND AND P ROCEDURAL HI STO RY

Beg in ni ng in la te 19 97
, Doc to rs Heal th m an ag ed NYLCare’s Med ic are HMO

pl an in Mar y la nd
, Virg in ia
, an d th e Dis tri ct of Co lu m bi a, pu rs ua nt to a th ree- y ear

co nt ract be twee n th os e pa rti es

. In Ju ly 19 98
, NYLCare be cam e a su bs id ia ry of Aetn a

U.S. Heal th care , In c. (“ Aetn a”). Sh or tl y th erea fte r, NYLCare de te rm in ed t h a t it

wou ld di sc on ti nu e th e Med ic are HMO pl an in Doc to rs Heal th ’s ge og ra p h i c reg io n

an d in fo rm ed th e go ve rn m en t th at it wou ld no t ren ew it s Med ic are co nt ract s fo r th at

reg io n as of Decem

be r 31
, 19 98

. NYLCare th en no ti fie d Do ct or s Hea lt h th at , as of

Ja nu ary 1, 19 99
, th ere wou ld be no Med ic are HMO pl a n f o r Doc to rs Heal th to

m an ag e.

2In Nov em be r 19 98
, Doc to rs Heal th fil ed
, in Mar y la nd
, a P e t i t i on fo r Rel ie f

un de r Ch ap te r 11 of th e Uni te d St at es Ban kr up tc y Co de

. NYLCare su bm it te d a pr oo f

of cl ai m in th e ba nk ru pt cy cas e. Doc to rs Heal th di d no t pay th e cl ai m

. In st ead
, th e

tru s t e e f il ed an ad ve rs ary act io n ag ai ns t NYLCare, al le gi ng th at NYLCare ha d

br each ed it s Med ic are HMO m an ag em en t co nt ract wit h Doc to rs Heal th an d ha d

cau se d Doc to rs Heal t h d am ag es in ex ces s of NYLCare’s cl ai m in th e ba nk ru pt cy

cas e. (R.1 -5 87 9, Ex. A.) The ad ve rs ary act io n was tri ed at th e en d of 20 01
, an d th e

ba nk ru pt cy

co ur t t oo k t he cas e u nd er ad vi se m en t.

In 20 00 (wh il e th e ba nk r u p t c y cas e was pe nd in g bu t be fo re th e ad ve rs ary

a c ti on was tri ed ), nu m ero us pu ta ti ve cl as s act io n la wsu it s were in it ia te d in fed e r a l

d i s tri ct co ur ts ag ai ns t he al th in su ran ce co m pa ni es in th e m an ag ed -car e in du st ry

.

Tho se la wsu it s were tra ns ferr ed by t he J u d i c i a l Pan el on Mu lt id is tri ct Lit ig at io n to

th e So ut he rn Dis tri ct of Fl or id a an d co ns ol id at ed fo r pr et ria l pr oc eed in gs

. The

co ns ol id at ed cas es m ov ed fo rward as In re Man ag ed Ca re Li ti ga ti on , MDL 13 34
, on

two tra ck s: th e Su bs cri be r Track (cas es br ou gh t on be ha lf of su bs cri be rs or m em be rs

of he al t h pl an s) an d th e Pro vi de r Track (cas es br ou gh t on be ha lf of ph y si ci an s an d

ot he r pr ov id ers of h eal th care ser vi ces ).

In S e p te m

be r 20 02
, th e cl ai m s as se rte d in th e Pro vi de r Track cas es were

b r ou gh t in a se co nd am en de d co ns ol id at ed cl as s act io n co m pl ai nt st y le d Sh an e v.

3Huma na , In c., e t a l

. D o c to rs Heal th was no t a na m ed pa rty. The Sh an e pl ai nt iff s

were ce rti fie d a s a n at io nwi de cla ss

.

In May 20 03
, Aetn a, In c. (an d al l it s su bs id ia rie s, in cl ud in g NYLCare) en te red

in to a se tt le m en t wit h th e Sh an e pl ai nt iff cl as s. The te rm s of th at se tt le m en t were

m em or ia li zed in a s e t t le m en t ag reem en t da te d May 21
, 20 03 (“ th e Agr eem en t” ).

(R.1 -2 00 0, Ex. B.) The Agr eem en t de fin ed th e cl as s as “ an y an d al l Ph y si c i a ns ,

Ph y si ci an s Gro up s and Ph y si ci an Org an iz at io ns who pro vi de d C ov ered Serv ic es to

a n y P la n Mem

be r or an y in di vi du al en ro ll ed in or co ve red by a pl an of fe r e d o r

ad m in is te red by an y Pers on na m ed as a de fen da nt in th e Co m pl ai nt or by an y of th ei r

r e s p ect iv e cu rren t or fo rm er su bs id ia rie s or affi li at es , in each cas e fro m Aug us t 4
,

19 90 th ro ug h [Ma y 30
, 20 03 ]. ” ( Id

. at 4, ¶ 1.1 5; R.1 -2 01 1.) Ph y si ci an Org an iz at io n

was de fin ed as “ an y as so ci at io n, pa rtn ers hi p, co rp or at io n or ot he r fo rm of

or ga ni zat io n (in cl ud in g wit ho ut li m it a t i o n in de pe nd en t pr act ic e as so ci at io ns an d

ph y si ci an ho sp it al or ga ni zat io ns ) th at arra ng es fo r care to be pr ov id ed by Ph y si ci an s

or ga ni zed un de r m

ul ti pl e ta xp ay er ID nu m

be rs , t o P la n M em

be rs .” (R.1 -2 00 0, Ex.

B at 10 , ¶ 1.7 0.)

Und er th e Agr eem en t, po te nt ia l m em be rs of th e cl as s were to be gi ve n no ti ce

of th e pr op os ed se tt le m en t an d an op po r t u n i t y to op t ou t of th e cl as s an d th e

Agr eem en t. (R.1 -2 01 1 at 7.) Not ic e was to be gi ve n th ro ug h th e m ai l to th e po te nt ia l

4c l a s s mem

be rs ’ la st kn own ad dr es se s an d th ro ug h pu bl ic at io n. ( Id

. at 5- 6.) Tho s e

cl as s m em

be rs who di d no t o p t o u t r e le as ed Aetn a an d al l it s su bs id ia rie s fro m al l

cl ai m s “ ari si ng on or be fo re t he Prel im in ary App ro va l Dat e, th at are, were or co ul d

ha ve be en ass ert ed ag ai ns t an y of th e Rel eas ed Part ie s ba se d on or ari si ng fro m th e

f a c t u a l al le ga ti on s of th e Co m pl ai nt

. . . .” (R. 1- 20 00
, Ex. B at 72
, ¶ 13 (a).) Th e

di st ric t co ur t gr an te d f

i n a l ap pr ov al of th e se tt le m en t, on th e te rm s st at ed in th e

Agr eem en t, on Octo be r 24
, 20 03

. ( R

. 1- 25 33 .) On Nov em be r 6, 20 03
, th e di st ric t

co ur t cl ari fie d it s Octo be r 24
, 20 03 or de r an d en joi ne d cl as s m em

be rs who di d no t op t

ou t fro m th e se tt le m en t fro m pu rs ui ng an y rel eas ed cl ai m s ag ai ns t Aetn a an d it s

su bs id ia rie s. (R.1 -2 57 0 at 2- 4.) The co u r t r e t a in ed juri sd ic ti on ov er al l m at te rs

re la ti ng to th e in te rp ret at io n, ad m in is tra ti on , an d co nsum m at ion of the A gr ee m en t an d

en fo rcem en t o f th e in

jun ct io ns . (

Id

. at 9 .)

In Apri l 2 00 5, t he ba nk ru pt cy co ur t i ss ue d i ts rul in g in th e ad ve rs ary act io n.

The co ur t di sa ll owe d NYLCare’s pr oo f of cl ai m in it s en ti ret y an d award ed Doc to rs

Heal th co nt ract da m ag es of $2 1.3 m il li on

. (R.1 -5 87 9, Ex. C at 10 .) Now a su bs id ia ry

of Aetn a, NYLCare to ok two co ur se s of act io n: (1 ) as NYLCare
, i t a p p e a le d to th e

D i s t r i c t of Mar y la nd ; an d (2 ) as Aetn a, it fil ed a Mo ti on to Sh ow Cau se in th e

So ut he rn Dis tri ct of Fl or id a se ek in g an or de r en fo rci ng th e rel eas e in th e Agr eem en t

as a ba r to th e ba nk ru pt cy co ur t’s jud gm en t. Doc to rs Heal th res po nd ed wit h an

5em erg en cy m ot io n in th e ba nk ru pt cy co ur t, se ek in g an in jun ct io n req ui rin g Aetn a to

wit hd raw it s m ot io n in th e So ut he rn Dis tri ct of Fl or id a. The ba nk ru pt cy co ur t gr an te d

th at m ot io n. (R.1 -5 87 9, Ex. B.) Bu t, th e Mar y la nd di st ric t co u rt va cat ed th e

ba nk ru pt cy co ur t’s in

jun ct io n an d st ay ed th e ap pe al of th e ba nk ru pt cy co ur t’s ru li ng s

on NYLCare’s pr oo f of cl ai m an d Doc to rs Heal th ’s b r e a ch of co nt ract jud gm en t

pe nd in g co ns id erat io n by th e So ut he rn Dis tri ct of Fl or i d a as to whe th er th e

Agr eem en t op erat ed to rel eas e th e cl ai m Doc to rs Heal th pu rs ue d ag ai n s t NYLCare

in th e ad ve rs ary act io n. (R .1-5 87 9, Ex . C.)

In th e So ut he rn Dis tri ct of Fl or id a, th e jud ge who ap pr ov ed th e se tt le m en t

be twee n th e Sh an e pl ai nt iff s an d Aetn a co ns id ered whe th er Doc to rs Heal th ’s cl ai m s

ag ai ns t NYLCare were rel eas ed by op erat io n of t h e Agr eem en t. (R.1 -5 96 0.) He

co nc lu de d th at Doc to rs Heal th was a m em be r of th e se tt le m en t cl as s, th at Doc to rs

Heal th rece iv ed ad eq ua te no ti ce of the se tt le m en t, and th at Doc to rs Heal th fai le d t o

ti m el y op t ou t of th e se tt le m en t. ( Id

. at 2.) He fu rth er c o n c l u d e d th at th e cl ai m

Doc to rs Hea l th ha d pu rs ue d ag ai ns t NYLCare in th e ad ve rs ary act io n was rel eas ed

by th e Agr eem en t. (

Id

. ) And
, he en

joi ne d Doc to rs Heal th fro m pu rs ui ng th at cl ai m

. ( Id

. )

6II . ISSUE S ON APPEAL & CONTENT IO NS OF THE PARTIES

Doc to rs Heal th ap pe al s t he So ut he rn Dis tri ct of Fl or id a in jun ct io n. Doct or s

1

Heal th co nt en ds th at th e cl ai m it pr os ecu te d in th e ad ve rs ary act io n was no t rel eas ed

be cau se : (1) Doc to rs Heal th was no t a m em be r of th e se tt le m en t clas s and th eref or e

no t a pa rty to th e Agr eem en t; (2 ) Doc to rs Heal th was no t gi ve n ad eq ua te no ti ce of th e

se tt le m en t or th e Agr eem en t; a n d ( 3 ) t h e sc op e of th e rel eas e of cl ai m s in th e

A gr ee m en t do es no t in cl ud e th e cl ai m Doc to rs Heal th pu rs ue d in th e ad ve rs ar y ac tio n.

In th e al te rn at iv e, Doc to rs Heal th co nt en ds th at , in th e in te res ts of ju st ic e, it sh ou ld

be gi ve n th e op po rtu ni ty to o p t ou t of th e se tt le m en t. Fi na ll y , Doc to rs Heal th

co nt en ds th at Aetn a sh ou ld be es to pp ed fro m as se rti ng th at Doc to rs Heal th ’s c la im

ag ai ns t NYLCare was rel eas ed by th e Agr eem en t be c a u s e Aetn a di d no t m ak e th at

arg um en t u nt il aft er t he jud gm en t i n t he ad ve rs ary act io n.

Aetn a co nt en ds th at th e di st ric t co ur t di d no t ab us e it s di sc ret io n by en joi ni ng

Doc to rs Heal th ’s pu rs ui t of th e cl ai m it pr os ecu te d ag ai ns t NYLCare in th e ad ve rs ary

act io n be cau s e D o c t o rs Heal th was a Ph y si ci an Org an iz at io n m em be r of th e cl as s,

rece iv ed ad eq ua te no ti ce of th e s et tl em en t, an d di d no t ti m el y op t ou t of th e

The parties asser

t that we have jurisdicti o n t o co nsider this appea l pursuant to 28 1
U.S.C. § 1292(a) (1). We a g ree

. The order appea led from g rants or modifies an injunction. By its

own terms, the order gra n t s a n ew injunction ag ainst Doctors Hea lth. And, even if the order is considere d one clar ify ing the injunction issued b y t h e district court on November 6, 2003, it is a modification of that exis ting injunction. Birmingham Fire Fighters Ass’n 117 v. Jefferson County
, 280 F.3d 1289, 1293 ( 11th Cir. 2002).

7A g r e e men t

. Aetn a al so co nt en ds th at th e rel eas e la ng ua ge of th e Agr eem en t is

su ffi ci en tl y br oa d to co ve r th e cl ai m Doc to rs Heal th pu rs ue d in th e ad ve rs ary act io n.

Aetn a op po se s Doc to rs Heal th ’s req ue st fo r an op po rtu ni ty to op t o u t aft er th e

de ad li ne

.

II I. STANDARDS OF REVI EW

W e rev ie w a di st ric t co ur t’s in jun ct io n of rel at ed li ti ga ti on pe nd in g in an ot he r

fed eral co ur t fo r ab us e of di sc ret io n. Se e Ada ms v. S. Far m Bur ea u Li fe In s. Co

. , 49 3

F.3 d 12 76
, 12 85 (1 1t h Ci r. 20 07 ) (“ ‘In rev ie win g th e di st ric t co ur t’s de ci si on to gr an t

an in jun ct io n, in cl ud in g an in

jun ct io n un de r th e All W rit s Act, we ap pl y an ab us e-o fdi sc ret io n st an da rd .’ ”) (q uo ti ng Kl ay v. Uni te d Hea l t hg ro up , In c. , 37 6 F.3 d 10 92
,

10 96 (1 1t h Ci r. 20 04 )); Ala ba ma v. U.S. Army Co rp s of Eng ’r s , 42 4 F.3 d 11 17
, 11 32

n.2 2 (1 1t h Ci r. 20 05 ) (ex pl ai ni ng th at “ in jun ct io n en

joi ni ng rel at ed f

ed eral

pr oc eed in gs ” in cl as s- act io n co nt ex t is pr op erl y is su ed un de r All W rit s Act an d ci ti ng

In re Ma na ge d C

ar e Li ti g. , 23 6 F . Sup p. 2 d 1 33 6 (S .D. Fla. 2 00 2) ).

Thi s co ur t al so rev ie ws de ni al s of req ue st s fo r ex te ns io ns of ti m e to op t ou t an d

de ni al s of as se rti on s of jud ic ia l es to pp el un de r th e ab us e-o f-d is cret io n st an da rd

. Se e

St ep he ns v. To lb er t , 47 1 F.3 d 11 73
, 11 75 (1 1t h Ci r. 20 06 ); Gri ll i v. Met ro po

. Li fe In s.

Co

. , 78 F.3d 15 33 , 15 38 (11 th Cir . 19 96 ).

8“ A di st ric t co ur t b y de fin it io n a bu se s i ts di sc ret io n wh en it m ak es an erro r of

la w.” Ko on v. Uni te d St at es , 51 8 U.S. 81
, 10 0, 11 6 S. Ct

. 20 35
, 20 47 (1 99 6) (ci ta ti on

om it te d)
, s u p ers ed ed by st at ut e on ot he r gr ou nd s as no te d in Uni te d St at es v.

M a n d h ai
, 37 5 F.3 d 12 43
, 12 49 (1 1t h Ci r. 20 04 ). W e co ns id er qu es ti on s of la w d e

no vo

. Ta ll

y-Ho , I nc . v . C oa s t C

m t y

. C o l le ge Dis t. , 8 89 F.2 d 10 18 , 1 02 2 (1 1t h Ci r.

19 89 ). Bu t, th e di st ric t c ou rt’s fact ua l fin di ng s wil l be rev ers ed on ly if cl earl y

erro ne ou s. Id

. (ci ti ng E. Remy Mar ti n & Co ., S.A. v. Sh aw -Ros s In t’l Impo rt s, In c. ,

75 6 F.2 d 15 25
, 15 29 (1 1t h Ci r. 19 85 )); se e al so Gol d Co as t Pub l’n s, In c. v. Co rr ig an ,

42 F.3d 13 36 , 13 43 (11 th Cir . 19 94 ).

IV. DIS CUSSI ON

W e fin d res ol ut io n of on e is su e in th is cas e di sp os it iv e of th e en ti re ap pe al

. W e

as su m e (b ut do no t de ci de ) th at Doc to rs Heal th fal ls wit hi n th e Agr eem en t’s

de fin it io n of a m e mb e r o f th e cl as s an d th at Aetn a ga ve Doc to rs Heal th ad eq ua te

no t i c e of th e se tt le m en t an d th e Agr eem en t. Nev ert he le ss , we ho ld th at th e di st ric t

co ur t’s in jun ct io n m

us t be va cat ed be cau se th e Agr eem en t do es no t rel eas e th e cl ai m

Doc to rs Heal th pu rs ue d a ga in st NYLCare i n t he ad ve rs ary act io n.

It is cl ear fro m th e Agr eem en t th at on ly cl ai m s “ ba se d o n o r ari si ng fro m th e

fact ua l al le ga ti on s of th e [ Sh an e ] Co m pl ai n t ” w e r e rel eas ed by vi rtu e of th e

se tt le m en t. (R.1 -2 00 0, Ex. B at 72
, ¶ 13 (a).) Rev ie w of th e Sh an e co m pl ai nt rev eal s

9th at al l of it s f a c t u a l al le ga ti on s co nc ern th e de fen da nt m an ag ed -car e co m pa ni es ’

fin an ci al rel at io ns hi ps wit h th e pr ov id ers of m ed ic al se rv ic es

. Th e gi st of th e

c om pl ai nt is th at de fen da nt s, in cl ud in g Aetn a, di d no t tre at pr ov id ers of m e d i c a l

se rv ic es fai rly–fai li ng to pa y th em wha t th ey were owe d whe n co ve red an d m ed ic al ly

ne ces sa ry se rv ic es were ren d e r e d ; m an ip ul at in g th e cap it at io n syste m to un de rp ay 2

m ed ic al pr ov id ers ; an d us in g th ei r m ark et do m in an ce to co erce m ed ic al pr ov ider s int o

acce pt in g co nt ract te rm s un fai r to m ed ic al pr ov id ers

. The co m pl ai nt in cl ud es

al le ga ti ons th at th e de fen da nt s de ni ed pa y m en ts to ph y si ci an s on th e ba si s of fin an ci al

cri te ria rat he r th an la ck of co ve rag e or m ed ic al ne ces si ty; us ed au to m at ed pr og ram s

to syste m at ic al ly m an ip ul at e rei m bu rs em en t co de s an d art ifi ci al ly red uc e th e am ou nt

pa id ph y si ci an s; de la y ed pa y m en ts to ph y si ci an s ; a n d co ve rtl y m an ip ul at ed th e

cap it at io n syste m to un de rm in e it s act ua ria l ba si s an d de pr iv e ph y si ci an s of pa y m en ts

to whi ch th ey

were en ti tl ed

. (R.1 -1 60 7 ¶ ¶ 5 -7 , 84 -1 11 .) 3

Under a capitation sy stem, medical providers are paid based on the number of patients they 2

ag ree to treat ra

ther than on a

fee -for -ser

vice ba sis. (R.1-1607 ¶ 102.)

The Shane comp l ai nt alleg es that, while capitation rolls are supposed to include all the 3 patients enrolled in a manag ed-c are plan and medical providers we re to be paid on a per- enrollee basis, the manag ed-c are companies manipulated the capitation rolls to include only those enrollee s who soug ht trea tment, “thus drama tically altering the actua rial underp i n n i n g s of the capitation
ag ree ment by withholding pay ments for ‘we ll’ members that are neede d to offse t the cost of trea ting the sick.” (R.1-1607 ¶ 105.) The complaint also alleg es that the manag ed-c are companies inflated char g es ag ainst the capitation pay ments due medical providers based upon false drug costs and used false y ear -end stat e me n ts to avoid pay ing contra ctually -re quired incentives to the medical providers. ( Id. ¶¶ 106- 09.)

10The Sh an e co m pl ai nt al so al le ge s th at t h e d e fen da nt s, th ro ug h th ei r

“ ov erwh el m in g e co no m ic po wer an d m ark et do m in an ce,” c oe rced pl ai nt iff s “ in to

pr ov id in g care un de r Defen da nt s’ po li ci es an d pr act ic es on a ‘tak e it or le av e it ’ ba si s,

an d pr ov id in g care on a cap it at ed as op po se d to fee fo r se rv ic e ba si s pu rs ua nt to ‘all

pr od uc ts ’ req ui rem en ts .” ( Id

. ¶ 1 13 .) The co m

pl ai nt fur th er al le ge s:

Defen da nt s fu rth er wiel d th ei r eco no m ic po wer an d m ark et do m in an ce i n a c oe rci ve m an ne r by res erv in g th e rig ht to un il at eral ly ame n d

co nt ract s w i th ph y si ci an s, refu si ng to pr ov id e in fo rm at io n co nc ern in g pr ic in g o r f

ee st ru ct ur es to Pl ai nt iff

s or cl as s m em

be rs , an d fai li ng to pr ov id e an y feas ib le m ech an is m fo r rev ie w of th e au to m at ed pa y m en t red uc ti on s – all in fur th eran ce o f th e sc he m e d es cri be d a bo ve

. ( Id

. ¶ 11 4.) Sp eci fic to Aetn a, th e Sh an e Co m pl ai nt al le ge s an in st an ce of ex to rti on

in whi ch Aetn a al le ge dl y th reat en ed an id en ti fie d ph y si ci an wit h te ll in g hi s pa ti en ts

th at he ha d res ig ne d fro m th e Aetn a ne two rk if he di d no t si gn a co nt ract wit h Aetn a

w i t h i n fo rty-eig ht ho ur s. W he n th e ph y si ci an as ke d fo r cl ari fic at io n of s o me

co nt ract ua l pr ov is io ns an d a fee sc he du le
, Aetn a te rm in at ed it s rel at io ns hi p wit h hi m ,

“ th reat en in g th e vi ab il it y of hi s pr act ic e an d en di ng nu m er ou s lo ng st an di ng

ph y si ci an /p at ie nt rel at io ns hi ps .” ( Id

. ¶¶ 1 56 –5 7.)

The cl ai m pu rs ue d by Doc to rs Heal th in th e ad ve rs ary act io n sh ares no fact ua l

ba si s wit h th e Sh an e co m pl ai nt

. W hi le Sh an e al le ge d th at t h e man ag ed -car e

co m pa ni es un de rp ai d pr o v i de rs of m ed ic al se rv ic es , th e br each of co nt ract cl ai m

11res ol ve d in th e ad ve rs ary act io n hi ng ed on Doc to rs Heal th ’s al le ga ti on th at NYLCare

br each ed it s Med ic are HMO m an ag em en t ag reem en t wit h Doc to rs Heal th by fai li ng

to ren ew it s Med ic are ag reem en ts w i t h th e go ve rn m en t an d th en pr em at ur el y

te rm in at in g th e Med ic are HMO m an ag em en t ag reem en t it ha d wit h Doc to rs Heal th

.

In de ed
, in award in g Doc to rs Heal th m or e th an $2 1 m il li on , th e ba nk r u p t c y co ur t

fo un d “ fro m th e ev id en ce th at th e tru e reas on fo r th e de ci si on no t to ren ew th e HCFA

co nt ract was a bu si ne ss de ci si on by Aetn a to di sc on ti nu e it s NYLCare6 5 Pl an , whi ch

am ou nt ed to a br each of c on tra ct .” (R.1 -5 87 9, Ex . H at 3 8.)

W hi le th e ad ve rs ary act io n co m pl ai nt do es co nt ai n so m e al le ga ti on s reg ard in g

pa y m en ts to pr ov id ers of m ed ic al se rv ic es , th os e al le ga ti on s are th at NYLCare

br each ed it s ag reem en t wi th Doct or s Hea lt h by fai li ng to pa y m ed ic al pr ov id ers th e

lo wes t ne go ti at ed rat e fo r th ei r se rv ic es

. (R.1 -5 87 9, Ex. A ¶¶ 35 -3 6.) In ot he r wor ds
,

un li ke th e pl ai nt iff

s’ al le ga ti on s in S

h a n e , Doc to rs Heal th al le ge d th at NYLCare

ov erp ai d m ed ic al pr ov id ers

. Fu rth er , th e Sh an e co m pl ai nt m ak es no al le ga ti on s

reg ard in g th e NYLCare Med ic are HMO m an ag e men t co nt ract

. In de ed
, th e Sh an e

co m pl ai nt m ak es no a l l e ga ti on s wha ts oe ve r reg ard in g an y co nt ract s be twee n

m an ag e d

- c are co m

pa ni es li ke NYLCare an d Aetn a an d co m pa ni es li ke Doc to rs

Heal th th at ad m in is te red or m an ag ed th e m an ag ed -car e co m pa ni es ’ in su ran ce pl an s.

12Aetn a al so arg ue s t ha t, ev en if t he fact ua l al le ga ti on s o f th e Sh an e co m pl ai nt

do no t su pp or t t he cla im

Doct or s Hea lt h b ro ug ht in th e ad ve rs ary act io n, th e Sh an e

co m pl ai nt co ul d ha ve be en am en de d to al le ge th e ne ces sa ry fact s. Bu t th e Agr eem en t

is un am bi gu ou s. It do es no t rel eas e cl ai m s th at co ul d ha ve be en as se rte d ba se d on or

ari si ng ou t of fact ua l al le ga ti on s th at co ul d ha ve be en a d d e d b y a m en dm en t to th e

Sh an e Co m

pl ai nt

. The rel eas e la ng ua ge is cle ar; it co nc ern s o nl y cla im s t ha t co ul d

ha ve be en as se rte d “ ba se d on or ari si ng fro m th e f a c t u a l a l le ga ti on s of th e [ Sh an e ]

C o mpla in t.” (R.1 -2 00 0, Ex. B at 72 , ¶ 13 (a).) The on ly rea so na bl e read in g o f t h i s

cl au se is th at th e sc op e o f cl ai m s rele as ed is li m it ed to th os e cl ai m s t ha t co ul d h av e

be en as se rte d ba se d on or ari si ng ou t of th e fact ua l al le ga ti on s of th e ex is ti ng Sh an e

co m pl ai nt (th e se co nd a m en de d co ns ol id at ed cl as s act io n co m pl ai nt ), no t so m e

hypo th et ic al co m

pl ai nt th at m ig ht res ul t fr om am en dm en t. 4

Whether the Shane complaint could have been amende d to state fac ts supporting the claim 4 pursued in the adver sary action is doubtful

. Un d er the Medica re HMO manag ement contra ct betwee n NYL Care and Doctors Hea lth, Doctors Hea lth was essentially NYL Care’ s subcontrac tor. (R.1-5879, Ex

. A ¶¶ 11-13.) I n light of that rela tionship, we question whether Doctors Hea lth share d the medical provider class members’ interests in Shane and whether amendment o f the Shane complaint to state fac ts suppor ting the claim Doctors Hea lth pur sued in the adver sary action could have been acc omplished in a manner that would satisfy Fe dera l Rule of Civil Procedur e 23. See Fe d. R. Civ. P. 23(a) (3) & (4) (re quiring that class repr esenta tives’ claims are ty pical of the claims of the class members and that class repr esenta tives fairly and adequately protec t the interests of the class). I ndeed, the Shane co m p l ai n t s tates that the functions perf ormed by entities like Doctors Hea lth are “dele g ated functions on behalf of and at the direc tion of the Def endants pursuant to mandated policies and proce dures. The [entit ies like Doctors Hea lth] are monitored and audited by the Def endants, and the d el ega ted functions may be revoke d at any time. I n perf orming these deleg ated functions[, these entities] are mere condu i t s throug h which the Def endants conduct business. [They ] are not co-c onspirators of the Def endants, and, lacking the requisite intent, do not aid and abet the unlawful conduct descr ibed here in.” (R.1-1607 ¶ 46.) The alleg ation that the

13Hav in g de ci de d t ha t th e cl ai m pu rs ue d by Doc to rs Heal th in th e ad ve rs ary

act io n is be y on d th e sc op e of th e rel eas e in th e Agr eem en t, we c o n c l u d e t ha t th e

di st ric t co ur t er red in en

joi ni ng Doct or s Hea lt h fr om pu rs ui ng th at cla im . We n eed

no t ad dr es s t he rem ai ni ng arg um en ts of t he pa rti es

.

V. CONCLUSIO N

The di st ric t cou rt’s ord er and in jun ct io n, dat ed Ja nu ary 21 , 20 09 , pro hi bi ti ng

Doc to rs Heal th fro m pu rs ui ng it s a d ve rs ary act io n cl ai m ag ai ns t NYLCare are

va cat ed

.

INJUNC TION VACATED

.

rela tionships betwee n the manag ed-c are defe ndants a n d e n ti ti e s li k e D o c to r s H e alth “may be revoke d
at any t i m e” is inconsistent with Doctors Hea lth’s claim in the adver sary action that NYL Care brea ched its contra ct with Doctors He alth by prema turely

terminating that contra ct.

14