Title: Alabama Psychiatric Services, P.C. v. A Center for Eating Disorders, L.L.C.
Citation: N/A
Docket Number: 1110703
State: Alabama
Issuer: Alabama Supreme Court
Date: January 24, 2014

Rel: 01/24/2014
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2013-2014
_________________________
1110703
_________________________
Alabama Psychiatric Services, P.C., and Managed
Health Care Administration, Inc.
v.
A Center for Eating Disorders, L.L.C.
Appeal from Jefferson Circuit Court
(CV-09-903205)
MAIN, Justice.
Alabama Psychiatric Services, P.C. ("APS"), and Managed
Health Care Administration, Inc. ("MHCA"), the defendants in
this action, appeal from the trial court's order denying their
motions for a judgment as a matter of law ("JML") made at the
1110703
The "Joint Commission" provides nationally recognized
1
accreditation credentials for health-care organizations and
programs in the United States.
2
close of all the evidence.  Although the jury entered a
verdict for APS and MHCA, they nonetheless argue that the two
claims that were ultimately tried should not have been
submitted to a jury.  APS and MHCA also appeal from the order
entered by the trial court granting a motion for a new trial
filed by A Center for Eating Disorders, L.L.C. ("ACED"), the
plaintiff in this action.  The trial court's order overturned
the judgment entered on a jury verdict for APS and MHCA.  We
reverse and remand.  
I. Factual Background and Procedural History
In its order granting in part the motions for a summary
judgment filed by APS and MHCA, the trial court stated the
facts as follows:
"Plaintiff A Center 
for 
Eating 
Disorders, 
L.L.C.
('ACED'), opened on February 23, 2009, providing
partial 
hospitalization 
treatment 
('PHP') 
for
individuals suffering from eating disorders.  In a
PHP program, patients come to the facility for
various treatment sessions for five or six hours per
day for five or six days per week.  ACED is fully
accredited by the Joint Commission.[ ]
1
"Blue Cross Blue Shield of Alabama ('BCBS') is
in the health insurance business.  BCBS does not
have a preferred provider network for individual
1110703
3
mental health providers.  BCBS utilizes Managed
Health [Care Administration], Inc. ('MHCA') to
manage behavioral health networks for their members.
MHCA is owned mainly by physicians who work for
[Alabama] 
Psychiatric 
Services, 
P.C. 
('APS').
Additionally, MHCA is managed by two non-physicians
who are also employed by APS.  Rusty Adams has been
the Chief Operating Officer of APS for 20 years and
the Chief Operating Officer of MHCA for 15 years.
Similarly, 
Doyle 
Stewart 
has 
been 
the 
Chief
Financial Officer of both APS and MHCA for the past
10 years.  BCBS has testified that it was not aware
of the overlapping ownership between MHCA and APS.
"APS entered into a contract with BCBS in 1986
to manage what is known as Expanded Psychiatric
Services ('EPS').  In 1991, that contract was
transferred from APS to MHCA.  MHCA now manages a
number of behavioral health networks for BCBS.  BCBS
contracts with members for health insurance and out
of the premiums it receives, BCBS pays MHCA
$3.10/month per member.  MHCA is expected to arrange
mental health services for these members for that
monthly payment, and any leftover amount is profit
to MHCA.  Many BCBS group health insurance plans and
self-funded group plans administered by MHCA provide
mental health benefits for their members through
three benefit designs that access certain preferred
provider networks: (1) Expanded Psychiatric Services
benefits; 
(2) 
Expanded 
Psychiatric 
Services
Exclusive ('EPX') benefits; and (3) Blue Choice
Behavioral benefits ('Blue Choice').
"The services of mental health professionals
covered under BCBS are accessed through EPS and
administered by MHCA.  APS operates the [Eating
Disorders Center of Alabama ('the EDCA')], which
provides treatment for patients through a partial
hospitalization program.  In a prior trademark suit
filed by APS against ACED, APS alleged that the
services provided by ACED were essentially identical
to the services provided by the EDCA.  BCBS members
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4
with EPS benefits in their health plan may obtain
PHP services for eating disorders by accessing their
EPS benefits.
"BCBS has stated that ACED is not an MHCA
provider and that any claims submitted by ACED are
paid as Out of Network benefits, regardless of
whether or not the plan provides access to EPS
benefits.  As a result, BCBS members seeking
behavioral health treatment receive no benefit
whatsoever if they choose treatment at ACED.  This
places ACED at a clear competitive disadvantage, as
BCBS members with EPS plans constitute 90-95% of the
market.  If members wanted any EPS benefits at all
for behavioral health treatment, they were required
to choose treatment at the EDCA, which is operated
by APS and managed by the same individuals who
manage MHCA.
"Before ACED opened, it contacted BCBS about
seeking 
Individual 
Case 
Management 
('ICM')
agreements.  Under an Individual Case Management
agreement, BCBS and the provider work together to
design an individual contract for services that are
otherwise not covered under the member's health
plan.  Individual Case Management Agreements are
discretionary 
and 
subject 
to 
the 
voluntary
participation of BCBS, the member and the provider.
On most occasions, BCBS declined to agree to an
Individual Case Management Agreement with ACED.
"The contract between Blue Cross and MHCA
requires that if MHCA subcontracts or otherwise
delegates any of its health network functions it
must be done by another contract authorized by BCBS.
The contract also requires that MHCA must have
contractual agreements with any providers it deems
to be 'in-network,' and thus able to receive
benefits from BCBS under the EPS network.  APS is
the 
only 
provider 
deemed 
by 
MHCA 
to 
be
'in-network.'" 
 
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5
ACED opened its doors under the name Alabama Center for
Eating Disorders and using the acronym ACED.  Shortly
thereafter, as the trial court noted, APS filed a trademark-
infringement lawsuit against ACED, arguing that ACED's name
infringed on the name of APS's eating-disorder center.  ACED
voluntarily changed its name to A Center for Eating Disorders
so that it could continue to use the acronym ACED, and the
trademark-infringement lawsuit was dismissed.  After MHCA
refused to allow ACED to apply as a services provider for the
network of mental-health professionals treating patients
insured by Blue Cross Blue Shield of Alabama ("Blue Cross")
with EPS benefits, ACED filed its own seven-count lawsuit
against APS, MHCA, and Blue Cross.  ACED alleged intentional
interference with contractual or business relations (count I);
defamation (count II); fraud, misrepresentation, and deceit
(count III); breach of contract (count IV); interference with
the 
health-care-provider/patient 
relationship 
(count 
V); 
civil
conspiracy (count VI); and a count seeking declaratory relief
(count VII), in which ACED sought to have the trial court
"enjoin [APS and MHCA], separately and severally, from
employing artificial and improper restrictions on [ACED's]
1110703
6
business 
and 
patients 
seeking 
pre-certification 
or
coverage/benefits; from engaging in conduct that disparages
[ACED] and/or its staff; [and] from engaging in conduct that
interferes 
with 
[ACED's] 
Health 
Care 
Provider/Patient
relationship."  
APS, MHCA, and Blue Cross initially filed motions to
dismiss ACED's complaint.  The trial court denied those
motions as to all counts except count III, which alleged
fraud, misrepresentation, and deceit.  As to count III, the
trial court ordered ACED to file a more definite statement.
When ACED filed nothing further, the trial court entered an
order on January 6, 2010, dismissing count III as to all
defendants with prejudice.  
APS, MHCA, and Blue Cross then filed motions for a
summary judgment; ACED opposed those motions.  All parties
filed evidence supporting their respective positions.  The
trial court heard what it described as "extensive oral
arguments" on the summary-judgment motions on April 13, 2011.
On April 19, 2011, the trial court entered a summary judgment
for APS and MHCA as to count II (defamation).  On June 29,
2011, the trial court entered detailed orders on the summary-
1110703
7
judgment motions.  As to Blue Cross, the trial court entered
a summary judgment in its favor on all counts except count VII
(seeking declaratory relief).  As to APS and MHCA, the trial
court entered a summary judgment in their favor as to counts
IV (breach of contract) and V (interference with the health-
care-provider/patient relationship).  The trial court denied
the summary-judgment motions as to count I (intentional
interference with  contractual/business relations) and count
VI (conspiracy).  The trial court made no ruling on count VII,
the count seeking declaratory relief, in its June 29 order. 
On October 13, 2011, the trial court entered an order
finding that the evidence before it indicated that there was
no justiciable controversy requiring declaratory relief in
this case because, the court said, "a judgment of this Court
would not affect [ACED's] legal position and would not provide
[ACED] with any relief.  Additionally, [ACED] lacks standing
to obtain the requested relief."  The trial court then entered
a summary judgment in favor of APS and MHCA as to count VII.
It also entered a summary judgment in favor of Blue Cross as
to count VII and, because no other claims remained pending
1110703
8
against Blue Cross, dismissed Blue Cross as a defendant with
prejudice.  
The case then proceeded to trial against APS and MHCA on
counts I and VI of ACED's complaint.  Before trial, APS and
MHCA filed an extensive motion in limine as to numerous items;
ACED also filed a motion in limine.  On November 9, 2011, the
trial court entered an order responding to the items that were
the subject of the motions in limine.  The trial began on
November 14 and concluded with a verdict in favor of APS and
MHCA on November 18.  The trial court had denied  APS's and
MHCA's motions for a JML made at the close of all the
evidence.  The trial court entered a judgment on the jury
verdict on November 18.  
ACED then filed a motion for a new trial.  ACED argued
that the trial court erred in excluding certain evidence
pursuant to its pretrial order on the parties' motions in
limine.  ACED concluded by arguing that the trial court's
exclusion of the evidence discussed in its motion prevented
ACED "from showing the true manipulation of this sham network
by no written agreement and the actual false statements made
in later contracts."  After APS and MHCA responded to the
1110703
9
motion for a new trial, the trial court heard argument on the
motion.  On January 26, 2012, the trial court entered an order
granting ACED's motion for a new trial and reinstating count
IV (breach of contract) as to which the court had entered a
summary judgment in favor of APS and MHCA.   APS and MHCA
appealed.
II. Standards of Review
A. Motion for a JML
"When reviewing a ruling on a motion for a JML,
this Court uses the same standard the trial court
used initially in deciding whether to grant or deny
the motion for a JML.  Palm Harbor Homes, Inc. v.
Crawford, 689 So. 2d 3 (Ala. 1997).  Regarding
questions of fact, the ultimate question is whether
the nonmovant has presented sufficient evidence to
allow the case to be submitted to the jury for a
factual resolution.  Carter v. Henderson, 598 So. 2d
1350 (Ala. 1992).  The nonmovant must have presented
substantial evidence in order to withstand a motion
for a JML.  See § 12-21-12, Ala. Code 1975; West v.
Founders Life Assurance Co. of Florida, 547 So. 2d
870, 871 (Ala. 1989).  A reviewing court must
determine whether the party who bears the burden of
proof has produced substantial evidence creating a
factual dispute requiring resolution by the jury.
Carter, 598 So. 2d at 1353.  In reviewing a ruling
on a motion for a JML, this Court views the evidence
in the light most favorable to the nonmovant and
entertains such reasonable inferences as the jury
would have been free to draw.  Id.  Regarding a
question of law, however, this Court indulges no
presumption of correctness as to the trial court's
ruling.  Ricwil, Inc. v. S.L. Pappas & Co., 599 So.
2d 1126 (Ala. 1992)."  
1110703
10
Waddell & Reed, Inc. v. United Investors Life Ins. Co., 875
So. 2d 1143, 1152 (Ala. 2003).
B. Motion for a New Trial
"When the court grants a motion for a new trial on
grounds other than a finding that the verdict is
against the great weight or preponderance of the
evidence, this Court's review is limited.
"'"It is well established that a
ruling on a motion for a new
trial rests within the sound
discretion of the trial judge.
The exercise of that discretion
carries with it a presumption of
correctness, which will not be
disturbed by this Court unless
some legal right is abused and
the record plainly and palpably
shows the trial judge to be in
error."'
"Curtis v. Faulkner Univ., 575 So. 2d 1064, 1065-66
(Ala. 1991) (quoting Kane v. Edward J. Woerner &
Sons, Inc., 543 So. 2d 693, 694 (Ala. 1989), quoting
in turn Hill v. Sherwood, 488 So. 2d 1357, 1359
(1986))."
Baptist Med. Ctr. Montclair v. Whitfield, 950 So. 2d 1121,
1125-26 (Ala. 2006).  
III. Analysis
The elements of a claim of intentional interference with
business relations are (1) the existence of a protectable
business relationship; (2) of which APS and MHCA were aware;
1110703
11
(3) to which APS and MHCA were strangers; and (4) with which
APS and MHCA intentionally interfered; and (5) damage to ACED.
White Sands Grp., LLC v. PRS II, LLC, 32 So. 3d 5, 14 (Ala.
2009).  APS and MHCA first argue that the trial court erred
when it denied their motions for a JML at the close of all the
evidence.  Because ACED failed to support each of the elements
of intentional interference with a business relationship with
substantial evidence, they argue, they were entitled to a JML
as to that claim.  They further argue that because they are
entitled to a JML as to ACED's claim of intentional
interference with a business relationship, ACED's conspiracy
claim also fails.  
The dispositive question presented by this appeal is
whether ACED presented substantial evidence at trial of any
act of intentional interference by APS or MHCA with ACED's
business relationships.  APS and MHCA argue that they did not
attempt to manipulate the market so that APS is MHCA's only
in-network 
provider 
for 
eating-disorder 
partial-
hospitalization ("PHP") services or to ensure that APS "gets
all the business."  APS and MHCA's brief, at 27.  Instead,
they say, "MHCA has simply made the business decision that, in
1110703
12
order to provide the appropriate and required treatment to
Blue Cross insureds with [expanded psychiatric services]
benefits, it only needs one eating disorder PHP facility in
its network of providers."  APS and MHCA's brief, at 27-28. 
APS and MHCA correctly state that this Court has
consistently held that a mere refusal to deal is not an
intentional interference with a business relationship, citing
Axelroth v. Health Partners of Alabama, Inc., 720 So. 2d 880,
886 (Ala. 1998).  APS and MHCA also rely on Denton v. Alabama
Cotton Coop. Ass'n, 30 Ala. App. 429, 432-33, 7 So. 2d 504,
507 (1942), in which the Court of Appeals held that "[e]very
person has the right to deal or refuse to deal with whom he
chooses."  Moreover, they say, Alabama courts cannot force a
company to do business with another company because, they
argue, Alabama law recognizes that a citizen of this state "is
free to contract in any way he sees fit," citing Kinmon v.
J.P. King Auction Co., 290 Ala. 323, 325, 276 So. 2d 569, 570
(1973).  Because the business arrangement between APS and MHCA
is within their rights, they argue, ACED's claims fail as a
matter of law.  We agree.  
1110703
13
APS and MHCA maintain that ACED failed to offer any
evidence indicating that MHCA was obligated to include ACED in
its 
approved-provider 
network 
for 
expanded-psychiatric-
services policy coverage.  They argue that ACED's claim
amounts to an argument that it is "not fair" that MHCA did not
approve ACED as an in-network provider, and such a claim, they
argue, does not create a valid cause of action.  APS and MHCA
contend that Renee Miller, ACED's clinical director and one of
the two members of the limited liability corporation, admitted
that MHCA had no obligation to do business with ACED and that
she knew what ACED's status with Blue Cross would be before
she formed ACED.  Furthermore, they argue, Alabama is not an
"any willing provider" state in which health insurers are
obligated to include all providers in their networks, but,
instead, Alabama law permits health insurers to maintain
exclusive-provider networks, citing Blue Cross & Blue Shield
of Alabama v. Nielsen, 917 F. Supp. 1532 (N.D. Ala. 1996).
Moreover, APS and MHCA say, there is no evidence indicating
that APS or MHCA directed patients away from ACED.  They
contend that Miller testified only that she thought Blue
Cross, APS, and MHCA were acting in collusion and that ACED
1110703
"Q. Ms. Miller, what obligates MHCA to do business with
2
your company?
"A.
There is no obligation."
14
failed to present any evidence from patients that could
establish that APS or MHCA had interfered with their access to
ACED.  
After reviewing the record in this case, we are unable to
find any evidence to suggest that APS or MHCA intentionally
interfered with ACED's business relationships.  During
Miller's cross-examination by one of the attorneys for APS and
MHCA, she testified that she had no evidence to confirm that
APS and MHCA had interfered with ACED's business and had
instructed patients to leave ACED's program and to attend
APS's program.  Miller further testified that MHCA had no
obligation to do business with ACED.   Based on the record
2
before us, we conclude that ACED simply argues that it is
unfair that APS and MHCA have chosen not to contract with ACED
for preferred in-network provider services.  This does not
constitute evidence of intentional interference with an
existing business relationship.  Furthermore, APS and MHCA
have no legal obligation to do business with ACED.  Axelroth,
720 So. 2d at 886.  Consequently, we conclude that, as a
1110703
15
matter of law, ACED's intentional-interference-with-business-
relations claim should not have been submitted to the jury.
APS and MHCA were entitled to a JML as to that claim.  
Likewise, because APS and MHCA were entitled to a JML as
to ACED's intentional-interference-with-business-relations
claim, ACED's conspiracy claim should not have been submitted
to the jury.  Alabama law is clear that a conspiracy "is not
an independent cause of action; therefore, when alleging
conspiracy, a plaintiff must have a viable underlying cause of
action."  Direct Parts & Serv. Co. v. Joy Mfg. Co., 619 So. 2d
1280, 1290 (Ala. 1993) (citing Allied Supply Co. v. Brown, 585
So. 2d 33, 36 (Ala. 1991)).  Because ACED did not prove its
underlying cause of action (intentional interference with
business relations), APS and MHCA also were entitled to a JML
as to ACED's conspiracy claim.  
We conclude that ACED failed to present substantial
evidence showing that APS or MHCA intentionally interfered
with ACED's business relations.  Because, as a matter of law,
the evidence does not support a finding of intentional
interference, the trial court erred in denying the motion for
a JML filed by APS and MHCA at the close of all the evidence
1110703
16
as 
to 
ACED's 
intentional-interference-with-business-relations
claim and its conspiracy claim.  Therefore, those claims
should not have been submitted to the jury, and the trial
court's order denying APS's and MHCA's motions for a JML is
due to be reversed. 
We next address whether the trial court should have
granted ACED's motion for a new trial.  Because we hold that
the trial court erred when it submitted ACED's two remaining
claims to the jury, we further hold that the trial court erred
when it granted ACED's motion for a new trial and reinstated
ACED's breach-of-contract claim. 
IV. Conclusion
We reverse the trial court's order denying APS's and
MHCA's 
motions 
for 
a 
JML 
as 
to 
ACED's 
intentional-
interference-with-business-relations and conspiracy claims,
and we reverse the trial court's order granting ACED's motion
for a new trial.  We remand the cause and direct the trial
court to enter a JML in favor of APS and MHCA on ACED's
remaining two counts.  Because we conclude that the trial
court should have entered a JML as to ACED's remaining two
claims, we pretermit consideration of the other arguments made
by the parties.
1110703
17
REVERSED AND REMANDED. 
Stuart, Bolin, Parker, Murdock, Shaw, and Bryan, JJ.,
concur.  
Moore, C.J., dissents.  
Wise, J., recuses herself.