Court Opinion

ID: 4212798
Source: CourtListenerOpinion
Date Created: 2017-10-19 13:11:10.217744+00
Date Added: 2024-06-11T14:40:51.918052
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-2923-15T3

DENTAL HEALTH ASSOCIATES, P.A.,

        Plaintiff-Appellant,

v.

HORIZON BLUE CROSS BLUE SHIELD
OF NEW JERSEY; HORIZON NJ HEALTH;
HORIZON HEALTHCARE DENTAL, INC.;
HORIZON HEALTHCARE OF NEW JERSEY,
INC.; and GEORGE H. MCMURRAY, DDS,
PRESIDENT AND CEO OF HORIZON
HEALTHCARE OF NEW JERSEY, INC.,

        Defendants-Respondents.

___________________________________

              Argued July 11, 2017 – Decided October 19, 2017

              Before Judges Nugent and Accurso.

              On appeal from Superior Court of New Jersey,
              Law Division, Essex County, Docket No. L-7842-
              11.

              Harry Jay Levin argued the cause for appellant
              (Levin Cyphers, attorneys; Mr. Levin, Colleen
              Flynn Cyphers, and Ronald J. Bakay, on the
              briefs).

              Edward S. Wardell argued the cause for
              respondent (Connell Foley, LLP, attorneys;
              Christine S. Orlando, on the brief).
PER CURIAM

     Plaintiff, Dental Health Associates, P.A., appeals from an

October 23, 2015 summary judgment order dismissing its complaint

with prejudice and a February 5, 2016 order denying its motion for

reconsideration.      In response to defendants' summary judgment

motion, plaintiff could establish no material facts to support the

causes of action it pleaded in its complaint; and on its motion

for reconsideration, plaintiff could produce no evidence that was

new or previously unavailable.     Defendants were therefore entitled

to both summary judgment and the denial of plaintiff's motion for

reconsideration.   We affirm both orders.

     Defendants    (collectively       "Horizon")   administer    health

services programs.1     Commencing in approximately 1996, certain

Horizon entities and the Department of Human Services (DHS) were

1
    Defendant Horizon Blue Cross Blue Shield of New Jersey is a
not-for-profit health service corporation organized under the New
Jersey Health Service Corporations Act, N.J.S.A. 17:48E-1 to -68.
Horizon Health Care Dental, Inc., provides managed dental
insurance plans for individuals and groups in the State. Horizon
Health Care of New Jersey, Inc., is a New Jersey health maintenance
organization, which contracts with the Department of Human
Services to provide health and dental services to eligible Medicaid
and New Jersey FamilyCare program participants.          George H.
McMurray, DDS, was its CEO.      Horizon NJ Health, a New Jersey
partnership, was an authorized agent of Horizon Health Care of New
Jersey, Inc.    Horizon NJ Health was dissolved in 2015.        The
administrative services for the Medicaid Managed Care Program once
provided by Horizon NJ Health are provided by Horizon Health Care
of New Jersey, Inc., d/b/a Horizon NJ Health. Plaintiff does not
distinguish the entities for purposes of its liability theories.

                                   2                             A-2923-15T3
parties to a "Contract To Provide Services" (the Contract).              The

Contract designated DHS as:

            [T]the state agency designated to administer
            the Medicaid program under Title XIX of the
            Social Security Act, 42 U.S.C. 1396 et seq.
            pursuant to the New Jersey Medical Assistance
            Act, N.J.S.A. 30:4D-1 et seq. and the
            Children's Health Insurance Program (CHIP)
            under Title XXI of the Social Security Act,
            42 U.S.C. 1397aa et seq., pursuant to the
            Children's Health Care Coverage Act, P.L.
            1997, c. 272 (also known as "NJ KidCare"),
            pursuant to Family Care Health Coverage Act,
            P.L. 2005, c. 156 (also known as "NJ
            FamilyCare") . . . .

     Under   the   Contract,    the   designated   Horizon    entities   are

obligated to "provide or arrange to have provided comprehensive,

preventive, and diagnostic and therapeutic, health care services"

to enrollees who are eligible through Title V, Title XIX or the

NJ FamilyCare program.    This obligation is expressly made "subject

to any limitations and/or excluded services as specified in this

Article."     In   addition,    the    Contract    requires   the   Horizon

signatories to "have in place a formal grievance/appeal process

which network providers and non-participating providers can use

to complain in writing."       As of September 1, 2007, Horizon had in

place for "Horizon Blue Cross Blue Shield Dental Programs" a policy

and procedure which made available to all participating and non-

participating providers of dental services an appeal process for

certain Horizon determinations.

                                      3                             A-2923-15T3
     Plaintiff provides dental services in offices throughout the

State.    The majority of plaintiff's patients are persons enrolled

in Medicaid and the New Jersey FamilyCare Program.        Since 2002,

Horizon and plaintiff, through its principal, have been parties

to   an   "Agreement   with   [a]   Participating   Dentist."2        The

Participating Dentist Agreement, which has twice been amended,

requires plaintiff to "provide Eligible Dental Services to Covered

Patients."

     The term "covered patient" is defined as "a person entitled

to Eligible Dental Services under any contract which [Horizon Blue

Cross Blue Shield of New Jersey, Inc. (HBCBSNJ)] underwrite[s] or

administer[s], wholly or in participation with others."      The term

"Eligible Dental Services" is defined as "a dental service which

a Covered Patient is entitled to receive pursuant to a HBCBSNJ

health or dental insurance contract, subscription certificate, or

benefit design program being administered by HBCBSNJ or Horizon

Healthcare Dental Services, Inc."       In 2007 and 2010, the parties

entered into amendments to the Participating Dentist Agreement.

     In 2010, as part of a budget initiative, the State became

2
  This Agreement's signature line appears below printed form
language, "Accepted and agreed:      Horizon Healthcare Dental
Services, Inc." The copy in the appellate record is unsigned by
any officer on behalf of this entity, but contains the signature
of Clifford Lisman.

                                    4                            A-2923-15T3
more     restrictive     with    respect    to   its   programs'     eligible

orthodontic services for children. The State limited such services

to those medically necessary, and restricted medical necessity to

"cases      involving    birth   defects,   facial     deformities     causing

functional difficulties in speech and mastication, and trauma."

According to a June 15, 2010 email from DHS to HBCBSNJ's Dental

Director, N.J.A.C. 10:56 would be modified in 2011 when it was due

for re-adoption.        "In the interim, a Newsletter [would] be issued

documenting the changes once they are final."

       On January 18, 2011, DHS informed Horizon of "the State Fiscal

Year (SFY) 2011 Appropriations Act (Act) includ[ing] an initiative

to narrow the scope in which orthodontia is a covered service for

children."     The letter quoted the Act:

                  Notwithstanding the provisions of any law
             or regulation to the contrary, of the amounts
             hereinabove appropriated in Managed Care
             Initiative, Payments for Medical Assistance
             Recipients   –   Dental    Services,   and   NJ
             FamilyCare – Affordable and Accessible Health
             Coverage Benefits, no payment shall be
             expended on orthodontic services for children
             except in cases where medical necessity can
             be proven, such as cases involving birth
             defects,    facial      deformities     causing
             functional   difficulties     in   speech   and
             mastication, and trauma.

       The letter emphasized that orthodontia should be provided

only   in    exceptional    situations.      Following    the   2010    budget

                                      5                                A-2923-15T3
initiative, there was a decrease in all Medicaid claims for

orthodontia, including those submitted by plaintiff.

      In   2012,   the   State   broadened     the   criteria     for    eligible

orthodontics under the Medicaid Managed Care Program.                   The State

acknowledges "there was a two year period from July 2010 through

July 2012 when 'it really wasn't clear what was required for

orthodontic evaluation.'"

      The State issued a newsletter in July 2012 explaining that

it would broaden reimbursements for orthodontics.                    At the same

time, the State implemented a change in its contract. At that

time, the State required each provider of services under the

Medicaid Managed Care Program, including Horizon, to submit a

Corrective Action Plan outlining actions they would take to comply

with the State's July 2012 directive for orthodontic coverage.

Horizon    submitted      a   Corrective    Action      Plan   and    reimbursed

plaintiff for work-ups that were previously denied from July 2010.

      Meanwhile, in September 2011, plaintiff filed its complaint.

The "Statement of Facts" section of the complaint is divided into

three   major    subsections.        The   first   is   entitled     "Denial     of

Orthodontic Services and Diagnostic Materials." After identifying

the   parties,     the   complaint   recites   the      State's   reduction      of

payments "so as to no longer require coverage of orthodontic

procedures" in July 2010.        The complaint cites the State's August

                                       6                                  A-2923-15T3
1, 2010 newsletter clarifying that certain orthodontic procedures

were required to be covered by HMOs.                    The complaint further

asserts,   "under     Medicaid's      Early       and     Periodic      Screening,

Diagnostic & Treatment (EPSDT) service, orthodontic procedures and

treatment that are medically necessary must be covered pursuant

to Federal mandate."

      The second subsection of the complaint's factual allegations

is entitled "Mishandling of Frequency Limitations to New Jersey

State   Medicaid    and   FamilyCare         Recipients."        According   to    a

certification      submitted     by   HBCBSNJ's         dental     director,      "a

'frequency limitation' . . . is a limit on the number of times a

member can receive certain services (such as routine cleanings)

and have them covered during a certain time period." The complaint

alleges Horizon refused to comply with administrative regulations

and   "routinely    denied   [plaintiff]        reimbursement      for    services

provided to Medicaid or FamilyCare patients that were within the

State listed frequency limitation and should [have been] covered."

The   complaint    further     alleges       Horizon    had   created    arbitrary

frequency limitations on certain procedures.

      The third subsection of the complaint's factual statements

is entitled "Bad Faith Conduct of Horizon."                      This subsection

alleges Horizon failed to pay the contracted fee for certain

procedures and instead routinely downgraded payment; failed to pay

                                         7                                 A-2923-15T3
the proper contract fee for one of plaintiff's offices during its

initial      months    of    operation;       improperly    denied   root     canal

treatment procedures and wrongly advised patients such procedures

were denied due to poor prognosis; inappropriately denied approval

and/or payment for impacted third molars that were medically

necessary; implemented onerous claims appeals process designed to

deny payment to providers and medically necessary treatment to

members; periodically failed to maintain accurate eligibility

files and other systems necessary to adequately and properly

adjudicate claims; failed to send patients accurate information

on Explanation of Benefit forms; failed to pay adequate fees and

routinely paid higher fees to practices that Horizon considered

as providing a lower quality in care; used abusive practices to

deny access to care for the underserved; and mishandled Federal

and State dollars for its own financial gains.

      Based on these facts, plaintiff asserted causes of action for

breach of contract, breach of the implied covenant of good faith

and   fair    dealing,      and   interference    with     prospective   economic

advantage.      To support its damage claim, plaintiff submitted an

expert report from a firm with "extensive expertise in the area

of business valuation, with over forty years of combined experience

in the field."        The report's author concluded plaintiff sustained

losses of $2,765,579.

                                          8                                 A-2923-15T3
     Following discovery, Horizon moved for summary judgment.

During    oral    argument     on    Horizon's     summary    judgment     motion,

plaintiff conceded it had no outstanding claims with Horizon for

services rendered.

               [The Court]:   Okay. So there's no issue that
               — there were no claims that were filed that
               were denied that were part of this lawsuit?

               [Plaintiff's Attorney]:    I do not have a
               specific claim or claims where I can say they
               were submitted and they were denied.

     Plaintiff also conceded its expert had no opinion on the

"issue    of    frequency,"    nor    did    the   expert    have   any   evidence

concerning the allegations that Horizon's reimbursement rates were

disparate depending upon socio-economic classifications. Although

not entirely clear, it appears plaintiff argued on the summary

judgment motion that Horizon should be held accountable for the

State's    budgeting     decisions      in     2011   and    2012   to    restrict

reimbursements for certain dental services.

     Judge      Stephanie     A.    Mitterhoff     granted   Horizon's     summary

judgment motion and explained her reasons in a written opinion

accompanying the October 23, 2015 order entering summary judgment.

After     reviewing     plaintiff's          three-count     complaint,      Judge

Mitterhoff noted that as of "the filing of Horizon's summary

judgment motion . . . [p]laintiff failed to identify a single

claim that was denied."             Judge Mitterhoff also noted Horizon's

                                         9                                 A-2923-15T3
argument that plaintiff had failed to exhaust its administrative

remedies, but deemed the argument moot once plaintiff conceded at

oral argument that Horizon had denied none of plaintiff's claims.

       The   judge    next   noted    that    plaintiff   "initially      claimed

damages based on improper denials based on frequency limitations,

and   disparate      and   discriminatory      reimbursement    rates    paid    to

providers such as [p]laintiff providing services to patients in

urban areas as compared to the rates for the same services paid

to    providers   who      practice   in     more   affluent   areas."      Judge

Mitterhoff pointed out, however, that plaintiff had not provided

its expert with any "data that would enable him to opine on the

value of either of those claims."               Judge Mitterhoff also noted

plaintiff's     concession      at    oral   argument   "that   the     frequency

limitation and discrimination claims are no longer being pursued

in this case." Thus, as the judge explained, plaintiff's remaining

argument was "that had the eligibility criteria for orthodontic

services been the same during the time period of 2010 to 2012 as

they had been prior to 2010 and after 2012, [plaintiff] would have

been able to generate more business and thus would have earned

more money."

       Judge Mitterhoff determined Horizon could not be held liable

for losses plaintiff sustained as the result of the State's

limiting coverage for Medicaid patients pursuant to a budget

                                        10                                A-2923-15T3
initiative.   The parties did not dispute that their contract was

subject to the contract between Horizon and DHS.           As Horizon was

bound by its contract with DHS concerning what procedures were

"covered services," plaintiff could not prevail on its claim that

Horizon breached its contractual obligations.

     For similar reasons, Judge Mitterhoff determined plaintiff

had not demonstrated a material factual dispute as to whether

Horizon had breached the implied covenant of good faith and fair

dealing by acting "arbitrar[ily], unreasonably, or capriciously,

with the objective of preventing the other party from receiving

its reasonably expected fruits under the contract."            The judge

further determined plaintiff could not prevail on its tortious

interference claim because plaintiff's alleged loss during the

relevant time frame resulted from the State's budget initiative

rather than intentional or malicious interference on the part of

Horizon.

     Plaintiff   moved     for   reconsideration.     Contrary       to   its

representation during oral argument on Horizon's summary judgment

motion, plaintiff claimed it "did in fact submit claims, that

otherwise should have been honored, but were rejected." In support

of   that   proposition,    plaintiff    submitted   one    claim,     which

plaintiff asserted Horizon had rejected.        Plaintiff also claimed

New Jersey's budget initiative violated federal law, though it

                                    11                               A-2923-15T3
cited   no   authority    for   that    proposition.      In    its    remaining

arguments, plaintiff mostly rehashed the arguments it had made

when opposing Horizon's summary judgment motion.

     Judge Mitterhoff denied the motion for reconsideration.                   She

noted plaintiff had produced no evidence that was unavailable when

defendants filed their summary judgment motion.                  Moreover, she

noted plaintiff had failed to exhaust its administrative remedies.

Lastly, the judge reiterated her reasons for granting summary

judgment, which applied to the arguments plaintiff reiterated on

its motion for reconsideration.

     On appeal, plaintiff contends the trial court erroneously

denied its motion for reconsideration.           It cites the single denied

claim it submitted in support of its motion and makes a general

statement that Horizon was "rejecting any and all claims for

orthodontia, in a wholesale fashion, whether or not there was

medical necessity."        Plaintiff also relies on the certification

of its principal, "explaining that [plaintiff] did submit claims

for pre-authorization, but ceased doing so as all claims were

being denied and continuing to submit claims was futile."

     Additionally,       plaintiff     argues   the   trial    court   erred    in

granting summary judgment to Horizon.             Plaintiff contends there

were material issues of fact in dispute that should have precluded

the grant of summary judgment.         Plaintiff argues the trial court's

                                       12                                A-2923-15T3
decision "ignores or discredits the fact that the State's decision

to cut funding to [Horizon] for orthodontic procedures does not,

in turn give [Horizon] the right to deny medically necessary

orthodontia claims submitted for pre-authorization by [plaintiff]

which is in violation of the contract between [plaintiff] and

[Horizon]."

     Lastly, plaintiff argues the trial court erred in finding

that it did not exhaust its administrative remedies, because the

situation falls under an exception to the exhaustion doctrine.

     Appellate courts "review[] an order granting summary judgment

in accordance with the same standard as the motion judge."    Bhagat

v. Bhagat, 217 N.J. 22, 38 (2014) (citations omitted).   We "review

the competent evidential materials submitted by the parties to

identify whether there are genuine issues of material fact and,

if not, whether the moving party is entitled to summary judgment

as a matter of law."   Ibid.   (citing Brill v. Guardian Life Ins.

Co. of Am., 142 N.J. 520, 540 (1995)); accord R. 4:46-2(c).          A

trial court's determination that a party is entitled to summary

judgment as a matter of law is not entitled to any "special

deference," and is subject to de novo review.   Cypress Point Condo.

Ass'n v. Adria Towers, L.L.C., 226 N.J. 403, 415 (2016) (citation

omitted).

                                13                           A-2923-15T3
     We     review      a   trial    court's   denial      of     a     motion      for

reconsideration under an abuse of discretion standard.                        Davis v.

Devereux Found., 414 N.J. Super. 1, 17 (App. Div. 2010) (citing

Marinelli v. Mitts & Merrill, 303 N.J. Super. 61, 77 (App. Div.

1997)), aff'd in part and rev'd in part on other grounds, 209 N.J.

269 (2012).

     Having      considered      plaintiff's   arguments     in       light    of   the

record    and    the    applicable    standards    of     review,       we     affirm,

substantially for the reasons expressed by Judge Mitterhoff in her

written   opinions       granting    summary   judgment    to     defendants        and

denying   plaintiff's       motion    for   reconsideration.            Plaintiff's

arguments       are    without   sufficient    merit    to      warrant        further

consideration in a written opinion.            R. 2:11-3(e)(1)(E).

     Affirmed.

                                       14                                      A-2923-15T3