THE STATE OF SOUTH CAROLINA In The Court of Appeals

Jeanne Beverly, individually and on behalf of others similarly situated, Appellant,

v.

Grand Strand Regional Medical Center, LLC, Respondent.

Appellate Case No. 2016-001499

Appeal From Horry County Benjamin H. Culbertson, Circuit Court Judge

Opinion No. 5708 Heard November 8, 2018 – Filed January 15, 2020

AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED

Sidney L. Major, Jr. and R oy F. Harmon, III, of Harmon & Major, PA, of Greenville; J ohn Gressette Felder, Jr., of McGowan, Hood & Felder, LLC, of Columbia; Chad

Alan McGowan and Jordan Christopher Calloway, both of McGowan, Hood & Felder , LLC, of Rock Hill; and Jeffrey Christopher Chandler, of Chandler Law Firm, of Myrtle Beach, for Appellant.

James Lynn Werner, William R. Thomas, and Katon Edwards Dawson, Jr., all of Parker, Poe, Adams & Bernstein, LLP, of Columbia, for Respondent.MCDONALD, J.: Jeanne Beverly appeals the ci rcuit court's order granting Grand Strand Medical Center, LLC's (Grand Strand' s) motion to dismiss Beverly's claims for breach of contract, bad faith, and unjus t enrichment. Beverly argues the circuit court erred in: (1) finding Beverly is not an intended third-party beneficiary of the preferred provider contract between Blue Cross Blue Shield (BCBS) of South Carolina and Grand Strand and (2) dism issing Beverly's claim for unjust enrichment, despite her complaint's alle gation that Grand Strand impermissibly collected payments from Beverly and others "at a higher value than contracted for

with BCBS." We affirm in part, reverse in part, and re mand to the circuit court for further proceedings.

Facts and Procedural History

On April 29, 2005, Grand Strand contract ed with BCBS of South Carolina to become a preferred provider within th e BCBS preferred provider organization (PPO) 1 . In exchange for this status a nd access to BCBS members (Members), Grand Strand promised to bill BCBS directly for certain medical services delivered

to Members 2 and to accept a discounted reim bursement rate from BCBS for such services. Specifically, the Institutional Agreement (the Agreement) prohibits Grand Strand from "solicit[ing] any payment from Members" 3 and requires Grand Strand to "accept the reimbur sement terms and rates" BCBS established for the PPO. After executing the Agreement, Gr and Strand began ma rketing itself to Members as a BCBS preferred provider.

1 The PPO is a network of hospitals and me dical practices market ed to Members as "preferred providers."

2 The contract defines "Member" as "anyone who is covere d for health care

services under the terms of a Benefits Co ntract or who is eligible for Covered Services as a result of an agreement be tween Plan and an Associate Plan." A "Benefits Contract" is defined, in pertinent part, as "any PPO contract between Plan and Member entitling the Member to receive Covered Services or other services as designated in the Benefits Contract."

3 Exceptions to this provision include: co -payments, deductibles, coinsurance, noncovered services rendered, covered services deemed to be not medically necessary, or covered services provided to Members who are unable to provide sufficient information regarding eligib ility and coverage either prior to receiving service or following services rendered.On September 6, 2012, Beverly was injured in an automobile accident. That same day, she went to Grand Strand's emerge ncy room, where she was evaluated and treated by an emergency room physician. Thereafter, Grand Strand sent Beverly a bill for $8,000.00. 4 Because Beverly had previously purchased a health insurance policy from BCBS—and thus became a Member with access to the PPO network—Beverly did not expect to receive such a bill.

Beverly filed suit against Grand Strand, asse rting claims for breach of contract, bad faith, and unjust enrichment. Beverly claimed Grand Strand breached its contract

with BCBS and violated its contractua l and fiduciary duties to her (and other

Members who contracted for access to th e PPO network) by billing her directly and charging her an amount exceeding th e contractual reimbursement rate.

Grand Strand moved to dismiss and, fo llowing a hearing, the circuit court dismissed Beverly's complaint. The circu it court denied Beverly's subsequent Rule 59(e), SCRCP, motion to alter or amend.

Standard of Review

"On appeal from the dismissal of a case pu rsuant to Rule 12(b) (6), an appellate court applies the same standard of review as the trial court." Rydde v. Morris , 381 S.C. 643, 646, 675 S.E.2d 431, 433 (2009). "In considering such a motion, the trial court must base its ruling solely on allegations set forth in the complaint." Spence v. Spence , 368 S.C. 106, 116, 628 S.E.2d 869, 874 (2006). "If the facts and inferences drawn from the facts alleged in the complaint, viewed in the light most favorable to the plaintiff, would entitle the plaintiff to relief on any theory, then the grant of a motion to dismiss for failure to state a claim is improper." Id. "At the Rule 12 stage, therefore, the first decisi on for the trial court is to decide only whether the pleading states a claim." Skydive Myrtle Beach, Inc. vs. Horry Cty.

, 426 S.C. 175, 180, 826 S.E.2d 585, 588 (2019).

Law and Analysis

I. Third-Party Beneficiary

Beverly argues the circuit court erred in fi nding a Member is not an intended third-

4 Grand Strand billed Beverly $7,031.25 fo r the initial medi cal treatment and $968.75 for removal of staples.party beneficiary of the Institutional Agreement between BCBS and Grand Strand because the Agreement adds Grand Strand to a PPO network structured to provide

direct benefits to Members. She fu rther asserts the Agreement's purported "beneficiary disclaimer" does not bar he r claims because the disclaimer's own language renders it inapplicable to "a Member 's right to receive Covered Services." We agree.

Under South Carolina law, it is well settled that a nonparty may enforce contractual terms that intentionally provide her direct benefits. See, e.g.

, Kingman

v. Nationwide Mut. Ins. Co. , 243 S.C. 405, 412, 134 S. E.2d 217, 221 (1964) ("We

have held in numerous cases that a contra ct between two persons, for the benefit of a third, even though such third party be not named therein, can be enforced by such third party."); Jennings v. First of Ga. Underwriters Co. , 283 S.C. 455, 457, 322 S.E.2d 694, 695 (Ct. App. 1984) (explaining contracts between two persons for the benefit of a third can be enforced by the third person even though she is not named therein). "The presumption that [a] cont ract is not enforceable by [a nonparty] may be overcome by showing he was intended to be the direct beneficiary of the

contract." Touchberry v. City of Florence , 295 S.C. 47, 48–49, 367 S.E.2d 149, 150 (1988).

"The cardinal rule of contract interpretation is to ascertai n and give legal effect to the parties' intentions as determ ined by the contract language." Whitlock v. Stewart

Title Guar. Co. , 399 S.C. 610, 614, 732 S.E. 2d 626, 628 (2012) (quoting McGill v.

Moore , 381 S.C. 179, 185, 672 S.E.2d 571, 574 (20 09)). "Courts must enforce, not write, contracts of insurance, and their la nguage must be given its plain, ordinary and popular meaning." Id. (quoting USAA Prop. & Cas. Ins. Co. v. Clegg , 377

S.C. 643, 655, 661 S.E.2d 791, 797 (2008)). "A contract is read as a whole document so that one may not create an ambiguity by pointing out a single

sentence or clause." Williams v. Gov't Emps . Ins. Co. (GEICO) , 409 S.C. 586, 595, 762 S.E.2d 705, 710 (2014) (quoting McGill , 381 S.C. at 185, 672 S.E.2d at 574). "Whether a contract is ambiguous is to be determined from examining the entire contract, not by reviewing isolated portions of the contract." Id.

The circuit court excluded Beverly as a third-party beneficiary based upon its

examination of Section 16.16 of th e Agreement, titled "No Third Party Beneficiaries," which states:

This Agreement is not intended to, and shall not be construed to, make any pers on or entity a third party beneficiary. Notwithstanding the preceding, nothing inthis section shall affect Plan s rights under Article XV, or a Member's right to receive Covered Services [5] pursuant to the terms of this Agreement.

Construing Section 16.16's first sentence in isolation, the circuit court concluded BCBS and Grand Strand disclaimed the po ssibility of any third-party beneficiary claim by Members. However, the provision's second sentence clarifies that despite this provision "nothing in this section shall affect . . . a Member's right to receive Covered Services pursuant to the terms of this Agreement." A similar phrase is found in the Agreement's recitals: "Wher eas, [Grand Strand] desires to become a PPO provider to allow it to provide Cove red Services under the terms of this Agreement." Grand Strand's refusal to su bmit Beverly's bill directly to BCBS is arguably actionable because the language of the Agreement requires Grand Strand to do just that. Likewise, Beverly's al legation that Grand St rand's billing her and demanding an undiscounted sum for covere d services states a claim because, pursuant to the terms of the Agreement, Grand Strand agreed to bill BCBS and to accept a discounted reimbursement for Member Beverly's benefit.

Moreover, the remaining twenty pages of the Agreement impose requirements on Grand Strand specifically intended to bene fit Beverly and other Members. South Carolina courts have recognized that the pa rties' intent must be derived from the Agreement's language taken as a whole. This isolated sentence—when considered within the context of the entire Institutional Agreement—does not retract the benefits the Agreement repeatedly bestows upon BCBS PPO Members. Significantly, Section 16.16's second sentence recognizes a "Member's right to receive Covered Services pursuant to th e Agreement," thus carving out related claims from any purported third-party beneficiary exclusion.

Further, interpreting Sec tion 16.16's language as a bar to Beverly's claims disregards expressions of the parties' inte nt set forth elsewhere in the contract.

5 The Agreement defines "Covered Servi ces" as "those inpatient and outpatient hospital services, supplies, equipment, and/ or items to be delivered by or through

Institution to Members that are reim bursable under the applicable Member Benefits Contract. Certain services, s upplies, equipment and/or items are not included under this Agreemen t as Covered Services, including but not limited to services provided by skilled nursing fac ilities, durable me dical equipment suppliers, outpatient retail pha rmacies, and physicia n services other than radiology, pathology, anesthesiology, and emergenc y room that are combined billed on [a certain form]." Article XV addresses Associate Plans and is inapplicable here.BCBS established its PPO "for the be nefit of Members." The very first responsibility Grand Strand undertook in the "Institution Services and Responsibilities" section of the Agreement wa s to "provide Covered Services to any Member." Members are al so direct beneficiaries of Grand Strand's promise to accept the negotiated reimburse ment rate from BCBS as well as its promise to bill BCBS, not the Member, for covered services.

Other jurisdictions have found a third-part y beneficiary discla imer may not apply when substantive provisions in the contr act contradict the purported disclaimer. In a case similar to Beverly's, the Wisc onsin Court of Appeals found an insured covered by a health maintenance organiza tion (HMO) was a thir d-party beneficiary of her insurer's HMO provider contract with the hospital where she was treated following an automobile accident. Dorr v. Sacred Heart Hospital , 597 N.W.2d 462, 475 (Wis. App. 1999). The contract's language expr essing a general intent to disclaim third-party benefici aries was ineffective as to the insured because it was inconsistent with other portions of the same contract protecting subscribers' rights.

Id. (finding "hold harmless" provision's terms were "designed specifically for the purpose of protecting HMO subscribers"). Likewise, a federal district court in Pennsylvania applied similar principles to reject a third-party beneficiary exclusion offered to prevent a medical provider from enforcing a PPO contract between an

insurer and a health insurance network. See Aetna Life Ins. Co. v. Huntingdon Valley Surgery Ctr. , Civil Action No. 13-03101, 2015 WL 1954287 (E.D. Pa. Apr. 30, 2015). Because the contract in que stion purported to exclude third-party beneficiaries while also granting specific benefits to nonparties, the contract was patently ambiguous and the third-party bene ficiary claim could not be dismissed on a pre-answer motion. Id. at *10. Like the defendant in Huntingdon Valley , Grand Strand cannot selectively enjoy certain benefits of the Agreement while disregarding terms beneficial to Members. Id.

The Tennessee Supreme Court addressed whether a patient was a third-party beneficiary entitled to en force a similar institutional agreement between a Tennessee hospital and BCBS of Tennessee in Benton v. Vanderbilt University

, 137 S.W.3d 614 (Tenn. 2004). Benton involved an arbitration dispute, but the dispute arose in part because the court had recognized a BCBS insured was a thirdparty beneficiary of the hospital's ag reement with BCBS of Tennessee. Id. at 620. The court explained:

Applying these principles, we conclude that the Court of Appeals correctly held that Benton was bound by the arbitration provision containe d in the contract betweenVanderbilt and [BCBS]. Be nton was a third-party beneficiary to the contract who filed an action seeking to enforce rights under the contract. Benton's claim was dependent on his status as a third-party beneficiary to the

contract and Vanderbilt's a lleged obligations under section 6.1 of the agreement. Accordingly, based on the general principle that a third-party beneficiary cannot enforce favorable terms of a contract while avoiding unfavorable terms, we conclude that Benton's claim seeking to enforce the cont ract is subject to the arbitration provision.

Id.; see also West v. She lby Cty. Healthcare Corp. , 459 S.W.3d 33, 45 (Tenn. 2014) (citing Benton and noting the court had "already held that persons insured by an insurance company are in tended third-party beneficiaries of the contract between their insurance compan y and a hospital. Thus, with regard to an insurance company's customers, 'reasonable charge s' are the charges agreed to by the insurance company and the hospital.").

In another billing dispute be tween a Blue Cross insured and a hospital contracting with the insurer, an Arizona court found a provision requiring the hospital to accept a discounted reimburseme nt rate was "clearly a be nefit to the subscriber;

that benefit is both intentional and direct." Nahom v. Blue Cross & Blue Shield of
Arizona, Inc. , 885 P.2d 1113, 1117 (Ariz. App. 1994). As further evidence that the insured was an intended third-party beneficiary, Nahom noted the numerous times

the class of Blue Cross subscrib ers was named in the contract. Id. at 1118. The South Dakota Supreme Court reached the same conclusion when construing a hospital's contract with a se lf-insured health plan. Jennings v. Rapid City Reg'l Hosp. Inc. , 802 N.W.2d 918 (S.D. 2011). The health plan's members were thirdparty beneficiaries to the contract becaus e "the contract language clearly expresses

intent to benefit" the members. Id. at 922. The Jennings court made special note

of the contract's recitals wh ich, as in this case, identified the benefits to members the insurance plan expressly intended to provide. Id. Jennings rejected the notion that the members could not be third-pa rty beneficiaries because the contract provided direct benefits to its parties, i.e. the hospital and insurer. Notwithstanding its benefits to the contracting parties, th e contract also benefited the members, and as such, the members were permitted to protect those benefits by enforcing the

contract's terms. Id. at 923 ("We look only at who was directly and primarily benefited. In this case, it is [the health plan's insured employees].").Here, the Agreement's language, structure, and purpose directly benefit Members like Beverly. From its opening provision, the Agreement acknowledges its core objective is to support a PPO created "f or the benefit of its Members." The Agreement defines a PPO as "a network of providers unde r contract with the Plan whereby Benefit Contracts contain fina ncial incentives for Members to seek Covered Services from such providers." These financial incentives are made explicit later in the contract where Gra nd Strand agreed to accept reimbursement for its services for BCBS Members at a discounted rate. Beyond co-pays and deductibles, Grand Strand wa s prohibited from directly charging Members for covered services, even at the reduced rate . In clear terms, Grand Strand agreed it would not solicit any payment from Member s. Indeed, the Agreement conferred an additional practical benefit on Member s by placing on preferred providers such as Grand Strand the obligation to submit the Members' bills to BCBS.

Beverly's third-party beneficiary status is also evident from th e PPO's structure, which is established by the Agreement. As a South Carolina district court has explained:

A PPO is a means of hea lth insurance whereby the insurance company contracts with a network of health care providers, including hospitals. The insurer attempts to negotiate favorable rates of reimbursement for the cost of health care that reflects the volume of patients the insurer expects to deliver to the preferred health care provider. The insurer then passes through some of thiscost saving to subscribers in the form of lower copayments and reduced deduc tibles, which creates the incentive for the patient to use the preferred providers and, in turn, creates the volume to support the "discount."

Drs. Steuer & Latham, P.A. v. Nat'l Med. Enters., Inc. , 672 F. Supp. 1489, 1513 (D.S.C. 1987).

Beverly argues and we agree the PPO here is intended to benefit its participants. Grand Strand gained access to BCBS's expansive membership along with guaranteed reimbursements from BCBS in ex change for accepting both reduced payments as well as the re sponsibility of submitting Memb ers' claims to BCBS. BCBS gained greater cost control in exchange for promising prompt payment for Grand Strand's services and touting Grand Strand's PPO provider status to Members. Beverly's allegations that Gran d Strand's failure to submit Beverly's billto BCBS and refusal to bill her at the reduced reimbursement rate state a claim that Grand Strand breached its contract in deny ing Beverly benefits arising from the Agreement. Therefore, the circuit court erred in dismissing Beverly's breach of

contract claim.

II. Fiduciary Relationship

The circuit court dismissed Beverly's breach of fiduciary duty claims against Grand Strand as based on duties arising from a contract Beverly lacked standing to enforce. However, as discussed above , a nonparty may enforce a contract that intentionally provides her direct benefits.

Although Beverly's complaint alleges certain required el ements of a breach of fiduciary duty claim, the ci rcuit court concluded Beverly and Grand Strand did not have a relationship from wh ich a fiduciary duty arose. Beverly claims Grand Strand and Beverly created a relationship of trust when Grand Strand became a PPO preferred provider and accepted the Agreement's terms, and Beverly sought

out Grand Strand for medical services beca use it was a part of the BCBS PPO. By providing Grand Strand with her BCBS PP O insurance identification card, Beverly contends she met the requirements for Gr and Strand to fulfill the duties arising from its relationship with BCBS. Thus, Beverly claims Grand Strand breached its duty of trust.

While South Carolina courts have recognized fiduciary relationships between agents and principals, attorneys and client s, the administrator and beneficiaries of an estate, business partners, officers and sh areholders of a corporation, and doctors and their patients, there is no authority to support the proposition that a fiduciary relationship exists between a hospital a nd patient with respect to a hospital's contractual duty to submit an insurance claim. See Wogan v. Kunze, 366 S.C. 583, 605, 623 S.E.2d 107, 119 (Ct. App. 2005), affd as modified, 379 S.C. 581, 666 S.E.2d 901 (2008) ("[T]his state has not found that medical negligence or malpractice will support a cause of action for breach of fiduciary duty. Nor have

our courts found the failure of a doctor to offer assistance in filing a Medicare

claim or other claim is a br each of fiduciary duty."); see also Burton v. William Beaumont Hosp., 373 F. Supp. 2d 707, 723-24 (E.D. Mich. 2005) (finding Michigan law does not authorize the impos ition of a fiduciary duty related to a hospital's billing practices); DiCarlo v. St. Mary Hosp., 530 F.3d 255, 269 (3d Cir. 2008) ("It is clear, however, that in ge neral New Jersey does not find fiduciary duty in the debtor-creditor context, and, given that the cases cited by both sides relate only to the provision of care and not the payment therefor, it is unlikely thatthe New Jersey courts would expand a hos pital's fiduciary duty to its billing practices. In the absence of a fiduciary duty, no cause of action exists for its alleged breach, and [the breach of fi duciary duty claim] will therefore be dismissed.").

Here, Beverly does not challenge the quality of the medical care she received. Rather, she complains only of Grand Strand's billing practices and its breach of the BCBS Agreement. Beverly attempts to expand the fiduciary relationship that may

in certain circumstances exist betwee n a doctor and patient to encompass a hospital's billing practices for medical services rendered. In essence, Beverly is asking the court to impose a fiduciary duty on a creditor-debtor relationship; South Carolina law does not impose such a duty in the absence of some special trust reposed in the creditor. See Regions Bank v. Schmauch, 354 S.C. 648, 671, 582 S.E.2d 432, 444 (Ct. App. 2003) ("South Carolina holds the normal relationship

between a bank and its custom er is one of creditor-debtor and not fiduciary in nature." (citing Burwell v. South Carolina Nat'l Bank, 288 S.C. 34, 40, 340 S.E.2d 786, 790 (1986)). The circuit court pr operly found South Carolina does not recognize a fiduciary duty related to a hosp ital's billing practices. Accordingly, we affirm the circuit court's dismissal of Beverly 's claim for breach of fiduciary duty.

III. Unjust Enrichment/Quantum Meruit

Beverly argues the circuit court essentiall y found it equitable for Grand Strand to charge a Member in violation of its agreement with BCBS. While we disagree the circuit court's order so finds, we agree with Beverly's contention that the court erred in dismissing her quantum meruit claim. See Columbia Wholesale Co. v. Scudder May N.V. , 312 S.C. 259, 261, 440 S.E. 2d 129, 130 (1994) ("Absent an express contract, recovery under quantum meruit is based on quasi-contract, the elements of which are: (1) a benefit c onferred upon the defendant by the plaintiff; (2) realization of that benefit by the de fendant; and (3) reten tion by the defendant

of the benefit under conditions that make it unjust for him to retain it without paying its value."); Barnes v. Johnson , 402 S.C. 458, 466, 742 S.E.2d 6, 10 (Ct. App. 2013) (explaining quant um meruit is a remedy for unjust enrichment); Williams Carpet Contract ors, Inc. v. Skelly , 400 S.C. 320, 327–28, 734 S.E.2d 177, 181 (Ct. App. 2012) (allowing a party to a llege an unjust enrichment cause of

action as an alternative claim for breach of contract).

Grand Strand argues Pitts v. Jackson National Life Insurance Co. , 352 S.C. 319, 574 S.E.2d 502 (Ct. App. 2002), supports the circuit c ourt's dismissal. We disagree. The asserted wrong in Pitts was a breach of an alleged "duty of insurer toinform an applicant of th e availability of an allege dly superior product." Id. at 338, 574 S.E.2d at 512. However, the court found it was not inequitable for an insurer to retain the price of an insurance polic y where the insurer co uld have offered a policy with similar coverage at a lesser price. There si mply was no duty to provide

such a notification. Id. at 339, 574 S.E.2d at 512. Pitts also relied on the fact that the alleged wrongdoing was performed when the plaintiff was a mere insurance applicant. Id. at 331, 574 S.E.2d at 508. At that point, there was no existing relationship on which to build a fiduciary duty or to impose liability for unjust

enrichment. Id.

But Beverly is not a mere insurance app licant; she is a defined Member in a PPO Agreement under which Grand Strand contr acted to provide Covered Services. Additionally, Beverly's complaint does not allege a failure to inform; it alleges affirmative inequitable conduct seeking to de prive her of the benefit of her funds.

While the Pitts defendant was permitted to refuse to offer a gratuitous discount, Grand Strand is not permitted to bill a Memb er for its services at a higher payment rate than it contractually agreed to accep t. The complaint doe s not allege a mere matter of erroneous billing. When Gr and Strand billed Be verly for covered services, it declined to bill her at the contracted for, discounted rate, and it sent her

the bill in violation of its contract with BCBS. Accordingly, it was error for the circuit court to dismiss the quantum meruit claim at the 12(b)(6) stage.

Conclusion

We reverse the circuit cour t's dismissal of Beverly' s breach of contract and quantum meruit claims. We af firm as to the dismissal of the claim for breach of fiduciary duty and remand this matter for further proceedings.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

KONDUROS and HILL, JJ., concur.