Clark Gunderson, M.D. v. F. A. Richard & Associates, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

09-1498

DR. CLARK GUNDERSON, ET AL.

VERSUS

F.A. RICHARD & ASSOCIATES, ET AL.

**********
APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2004-002417
HONORABLE ROBERT L. WYATT, DISTRICT JUDGE

**********

J. DAVID PAINTER
JUDGE

**********
Court composed of Sylvia R. Cooks, Billy Howard Ezell, and J. David Painter,
Judges.

AFFIRMED.

Perry R. Staub, Jr. Harry T. Lemmon
Donald J. Miester, Jr. 650 Poydras St.
1100 Poydras St., Ste. 2100 New Orleans, LA. 70130
New Orleans, LA 70163 Counsel for Defendant-Appellant:
Counsel for Defendant-Appellant: First Health Group Corp.
First Health Group Corp.

James R. Nieset Thomas A. Filo
1123 Pithon St. Michael K. Cox
Lake Charles, LA 70601 723 Broad St.
Counsel for Defendant-Appellant: Lake Charles, LA
First Health Group Corp. Counsel for Plaintiffs-Appellees:
Dr. Clark A. Gunderson,
John S. Bradford et al.
William B. Monk
One Lakeside Plaza, Fourth Fl. Stephen B. Murray
Lake Charles, LA 70601 Stephen B. Murray, Jr.
Counsel for Plaintiffs-Appellees: Arthur M. Murray
Dr. Clark A. Gunderson, 650 Poydras St., Ste. 1100
et al. Counsel for Plaintiffs-Appellees:
Dr. Clark A. Gunderson,
et al.

PAINTER, Judge.

Defendant, First Health Group Corporation (First Health), appeals the trial

court’s grant of Plaintiff Class’ motion for summary judgment and the denial of its

own motion for summary judgment.

FACTS AND PROCEDURAL HISTORY

Plaintiffs, Drs. Clark A. Gunderson and Frank A. Lopez, Beutler-England

Chiropractic Clinic (Beutler)and Southwest Louisiana Hospital Association d/b/a/

Lake Charles Memorial Hospital (LCMH) (Plaintiffs), brought this action for

statutory damages against Defendants, F.A. Richard & Associates, Inc.; First Health

Group Corporation (First Health); Focus Healthcare Management, Inc.; Cambridge

Integrated Services Group, Inc.; National Loss Control Management, Inc.; and AIG

Claim Services, Inc (Defendants). In their petition, Plaintiffs stated that Defendants

entered into contracts with them pursuant to the Preferred Provider Organization Act

(hereinafter “PPOA”), La.R.S. 40:2201, et seq., which allowed Defendants’

clients/payors to pay a discounted rate for health care services. They alleged that

Defendants routinely reimbursed them in workers’ compensation cases at the lower

PPOA contracted rates, rather than at the higher mandated workers’ compensation

rates. In doing so, the healthcare providers claim that Defendants violated the

provisions of La.R.S. 40:2203.1 by failing to provide them with prior notice of their

intent to reimburse at the PPO rates, either by providing the injured worker with a

PPO card or by providing thirty days’ written notice of their intent to utilize an

existing PPO agreement. La.R.S. 40:2203.1(B). Plaintiffs sought and received class

certification.

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Several Defendants entered into settlement agreements with Plaintiffs. In

November 2008, Plaintiffs filed a motion for partial summary judgment as to their

claims against First Health seeking payment of the minimum amount of damages

mandated by La.R.S. 40:2203.1(G) for each violation indicated by First Health’s

records. In January 2009, First Health also filed a motion for summary judgment

asserting that the choice of law clause included in the First Health provider

agreements required application of California or Illinois law rather than the Louisiana

Preferred Provider Statute, La.R.S. 40:2201, et seq.

Following proceedings outlined in Gunderson v. F.A.Richard & Assoc. Inc.,10-

61 (La.App. 3 Cir. __/__/10), ___ So.3d.___, the trial court heard arguments on the

motions. After the hearing, the trial court granted Plaintiffs’ motion for partial

summary judgment, awarded statutory damages, and denied First Health’s motion.

The court designated the judgment as final and immediately appealable pursuant to

La.Code Civ.P. art 1915(B). First Health appeals.

DISCUSSION

Failure to Comply with Uniform Rules-Courts of Appeal 2-12.4

We first note that First Health has, with regard to several of its assignments of

error, failed to provide references to the record volume and page number of the

evidence to which it refers. First Health often refers in only the most general way to

“evidence” it presented to the trial court without referring to the document or

documents by name or pinpointing in which of the over seventy volumes of records

and exhibits the document or documents can be found. Uniform Rules-Courts of

Appeal 2-12.4 states that:

The argument on a specification or assignment of error in a brief
shall include a suitable reference by volume and page to the place in the

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record which contains the basis for the alleged error. The court may
disregard the argument on that error in the event suitable reference to the
record is not made.

While it would be appropriate to disregard the arguments made in this respect,

we will address them out of an abundance of caution. We note, however, that First

Health’s failure to provide record citations suggests that many of these assignments

were interposed only for purposes of delay and confusion.

Trial Court’s Jurisdiction to Hear the Motions for Summary Judgment

First Health asserts that its appeal of the trial court’s denial of its motion to

decertify the Plaintiff Class divested the trial court of jurisdiction to hear the motions

for summary judgment. However, on review of the record, we cannot find any

evidence that the appeal was perfected before the motions were heard.

Louisiana Code of Civil Procedure Article 2088(A) provides in pertinent part

that:

The jurisdiction of the trial court over all matters in the case reviewable
under the appeal is divested, and that of the appellate court attaches, on
the granting of the order of appeal and the timely filing of the appeal
bond, in the case of a suspensive appeal or on the granting of the order
of appeal, in the case of a devolutive appeal.

While it appears from the transcript of the hearings that a motion for appeal

was tendered to the trial court prior to the hearing on the motions for summary

judgment, there is nothing of record to indicate that it was filed into the trial court

record or signed before the hearings. We further note that First Health proceeded

with the hearing on the motions for summary judgment without objection and without

calling any lack of jurisdiction to the attention of the trial court. Therefore, we cannot

conclude that the trial court heard the motions for summary judgment after it was

divested of jurisdiction by filing and/or signing of the motion for appeal.

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Choice of Law

First Health argues that the trial court erred in denying its motion for summary

judgment because most of First Health’s provider agreements require application of

California or Illinois law.

Louisiana Civil Code Article 3540 provides that: “All other issues of

conventional obligations are governed by the law expressly chosen or clearly relied

upon by the parties, except to the extent that law contravenes the public policy of the

state whose law would otherwise be applicable under Article 3537.”

La.R.S. 40:2203.1 provides in pertinent part that its notice provisions “shall

apply to all preferred provider organization agreements that are applicable to medical

services rendered in this state and to group purchasers as defined in this Part.” The

mandatory provisions of this statute evidence a strong public policy in favor of notice

to health care providers that a PPO discount may be taken. First Health itself raises,

in its appeal brief, the legislature’s interest in preventing doctors from becoming

victims of “silent” PPOs. While the law of another state may be applied to the

contract in general, it may not be used to circumvent the notice requirement.

Existence of Class Representatives

First Health asserts that the trial court erred in proceeding with the summary

judgment where the U.S. District Court for the Western District of Louisiana had

issued injunctions prohibiting the class representatives from pursuing their own

claims against First Health. This issue has been disposed of in the companion case

hereto, Gunderson v. F.A. Richard & Assoc., Inc., 10-61 (La.App. 3 Cir. __/__10),

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___ So.3d ___, wherein this court found that the injunctions did not present an

impediment to the representatives acting on behalf of the class.

Prescription

First Health argues that Plaintiffs’ cause of action has prescribed because the

appropriate prescriptive period is one year rather than the ten year prescriptive period

applied by the trial court.

First Health asserts that the prescriptive period applicable to unfair trade

practice claims is applicable to claims for violation of La.R.S. 40:2203.1(B). In

support of this position, it cites Louisiana Attorney General Opinion 92-824, which

addresses a claim under La.R.S. La.R.S. 40:2205(5)(c) which concerns a licensed

physician denied access to a PPO without ever having the opportunity to submit an

application. The attorney general found that the exclusion would be considered an

unfair trade practice. “Opinions of the Attorney General are advisory only and not

binding.” McCaig v. Town of Gueydan, 01-0140, p. 3 (La.App. 3 Cir. 6/27/01), 788

So.2d 1283, 1285. Even should we find the opinion persuasive, it in no way suggests

that every violation of the PPOA is an unfair trade practice and does not purport to

extend the prescriptive period applicable to unfair trade practices to the entire PPOA.

In Glod v. Baker, 04-1483, p.11 (La.App. 3 Cir. 3/23/05), 899 So.2d 642, 653, cited

by First Health in support of its position, this court explained that: “Conduct that

violates the Unfair Trade Practices Act must involve fraud, misrepresentation,

deception, or unethical conduct.” Id. at 649-650 (citing JCD Mktg. Co. v. Bass Hotels

& Resorts, Inc., 01-1096 (La.App. 4 Cir. 3/6/02), 812 So.2d 834).

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The conduct alleged by Plaintiffs does not meet those criteria. Plaintiffs’

petition alleges a cause of action for failure to comply with a statutory notice

requirement.

The Louisiana PPOA does not set out a prescriptive period for bringing an

action for violation of the notice requirement of La.R.S. 40:2203.1. This action is

personal in nature as defined by La.Code Civ.P. art. 422, which states that:

A personal action is one brought to enforce an obligation against
the obligor, personally and independently of the property which he may
own, claim, or possess.

A real action is one brought to enforce rights in, to, or upon
immovable property.

A mixed action is one brought to enforce both rights in, to, or
upon immovable property, and a related obligation against the owner,
claimant, or possessor thereof.

Louisiana Civil Code Article 3499 states that personal actions are subject to

a ten year prescriptive period “unless otherwise provided by legislation.” Unlike the

claim for past due wages considered by the court in Fishbein v. State ex rel.

Louisiana State Univ. Health Sciences Ctr., 04-2482 (La. 4/12/05), 898 So.2d 1260,

the claim urged by Plaintiffs is not “otherwise provided by legislation.” Accordingly,

we find no error in the trial court’s determination that a ten year prescriptive period

applies to the action.

Constitutionality of La.R.S. 40:2203.1

First Health asserts that the PPOA is unconstitutionally vague and that its

damage provision violates due process. However, First Health has not followed the

mandatory procedural steps required to dispute the constitutionality of a statute.

The party raising the issue bears the burden of proving a statute
unconstitutional. Id. To do so, the complaining party must first raise the
statute’s unconstitutionality in the trial court, through specific pleadings

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which particularize the grounds for the claim. Vallo v. Gayle Oil Co.,
Inc., 94-1238 (La.11/30/94), 646 So.2d 859. Furthermore, the pleading
attacking the statute’s constitutionality must be served on the attorney
general, affording him the opportunity to be heard on the issue. La. R.S.
49:257(C) and La.Code Civ.P. art. 1880.

Rapides Parish Police Jury v. Catahoula Duck Club & Lodge L.L.C., 09-64, pp. 4-5

(La.App. 3 Cir. 11/18/09), 24 So.3d 988, 991.

These requirements have not been met. Therefore, we will not address the

constitutionality of La.R.S. 40:2203.1.

Summary Judgment

First Health asserts that the trial court erred in granting Plaintiffs’ motion for

partial summary judgment on the issues of the applicability of La.R.S. 40:2203.1 to

First Health and on the issue of partial, undisputed damages.

Louisiana Code of Civil Procedure Article 966(B) states that
summary judgment shall be rendered “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to material fact,
and that mover is entitled to judgment as a matter of law.” In Boykin v.
PPG Industries, Inc., 08-117, p. 4 (La.App. 3 Cir. 6/18/08), 987 So.2d
838, 842, writs denied, 08-1634 and 08-1649 (La.10/31/08) 994 So.2d
537, this court explained the standard of review applicable to motions
for summary judgment, stating:

Appellate courts review a trial court’s grant or denial of a
motion for summary judgment using the de novo standard of
review, under the same criteria that govern the trial court’s
consideration of whether a summary judgment is appropriate in
any given case. Indep. Fire Ins. Co. v. Sunbeam Corp., 99-2181,
99-2257 (La.2/29/00), 755 So.2d 226.

Fruge v. ONOB, Inc., 09-1028, p. __ (La.App. 3 Cir. 3/10/10), ___ So.3d ___, ___.

1. Plaintiffs’ Case for Summary Judgment

Plaintiffs’ motion was supported by the affidavits of a number of Plaintiffs,

including at least two of the class representatives. The affidavits state that each was

a health care provider who rendered services to patients under the Louisiana Workers’

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Compensation Act, that each was a member of the First Health PPO Network.

Further, the affidavits further state that a PPO discount was applied to bills for

treatment of various workers’ compensation claimants, and that no notice was given

of the discount, either via benefit card or via thirty day written notice. Additionally,

a copy of the contract each had entered with the First Health PPO network was

attached to the affidavit as an exhibit. Also included in support of the motion was the

deposition of Greg Hale, designated representative of First Health. Hale stated that

First Health is not a payor and that its activities involved network issues and bill

review. He affirmed that no benefit cards were issued to workers’ compensation

clients. His testimony indicated that no notice was sent to workers’ compensation

health care providers since First Health did not consider La.R.S. 40:2203.1 applicable

to workers’s compensation. He noted that lists of benefit providers who could access

the PPO network were sent to the health care providers at the time the contracts were

entered but that thereafter, a provider manual listing the entities accessing the PPO

network is available on their website and that no updates are sent to the health care

providers. Also attached to the memorandum in support of the motion for partial

summary judgment was a deposition of Shelly McCarthy, who acted as First Health’s

designated corporate representative in another suit. She stated that no card was

issued to workers’ compensation clients and that no written notice was issued in lieu

of a card.

On appeal, First Health first asserts that the deposition of Shelly McCarthy was

inadmissible because it was taken in another matter. However, even if the McCarthy

deposition should not have been accepted into evidence, the Hale deposition

sufficiently supports Plaintiffs’ arguments.

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Plaintiffs additionally relied on the deposition of Lester Langley, Jr., a certified

public accountant. He affirmed that he used a spreadsheet prepared by First Health

to perform calculations to ascertain PPO discounts taken. In his affidavit, he

describes which records were removed from his calculations and notes that the total

number of discounted accesses to Plaintiffs’ services multiplied by $2,000.00 is

$262,048,000.00.

The initial burden of proof to show there is no genuine issue of material
fact remains with the movant. Hutchinson v. Knights of Columbus,
Council No. 5747, 03-1533 (La.2/20/04), 866 So.2d 228. If the movant
has made a prima facie case that the motion should be granted, the
burden shifts to the adverse party to produce enough evidence to show
that some issues of material fact remain. Id. If the non-moving party
fails to produce the evidence, the court must grant the motion as a matter
of law. Id.

Moreno Properties Two, L.L.C. v. Acadiana Inv. Group, L.L.C., 09-634, p. 5

(La.App. 3 Cir. 12/9/09), 25 So.3d 232, 236.

We find the evidence presented by Plaintiffs to be sufficient to make a prima

facie case with regard to both the applicability of La.R.S. 40:2203.1 to First Health

and the issue of partial damages. Accordingly, the burden shifts to First Health to

show that issues of material fact remain as to these issues.

2. First Health’s Rebuttal

a. Applicability of Notice Provisions to Workers’ Compensation Patients

First Health asserts that the notice provisions of La.R.S. 40:2203.1 do not apply

to workers’ compensation patients. They argue that the legislative history of the PPO

and the language of the act show that the notice provisions apply only to group health

plan participants.

La.R.S. 40:2203.1 provides in pertinent part that:

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A. Except as otherwise provided in this Subsection, the
requirements of this Section shall apply to all preferred provider
organization agreements that are applicable to medical services rendered
in this state and to group purchasers as defined in this Part. The
provisions of this Section shall not apply to a group purchaser when
providing health benefits through its own network or direct provider
agreements or to such agreements of a group purchaser.

B. A preferred provider organization’s alternative rates of
payment shall not be enforceable or binding upon any provider unless
such organization is clearly identified on the benefit card issued by the
group purchaser or other entity accessing a group purchaser’s
contractual agreement or agreements and presented to the participating
provider when medical care is provided.

....

(5) When no benefit card is issued or utilized by a group
purchaser or other entity, written notification shall be required of any
entity accessing an existing group purchaser’s contractual agreement or
agreements at least thirty days prior to accessing services through a
participating provider under such agreement or agreements.

Louisiana Civil Code Article 9 states that: “When a law is clear and

unambiguous and its application does not lead to absurd consequences, the law shall

be applied as written and no further interpretation may be made in search of the intent

of the legislature.” We find no ambiguity in the notice provisions of La.R.S.

40:2203.1. Therefore, we need not consider the intent of the legislature in applying

the statute.

Further, as La.Civ.Code art. 11 tells us: “The words of a law must be given

their generally prevailing meaning.” Therefore, we find that, contrary to the

arguments made by First Health, when La.R.S. 40:2203.1 states that it applies to “all

preferred provider organization agreements that are applicable to medical services

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rendered in this state and to group purchasers as defined in this Part,” it in fact, means

all such agreements.1

b. Exemption from Notice Requirements

First Health next argues that it is exempt from the notice requirements because

La.R.S. 40:2203.1(A) states that: “The provisions of this Section shall not apply to

a group purchaser when providing health benefits through its own network or direct

provider agreements or to such agreements of a group purchaser.”

First Health asserts, in its appellate brief, that this provision applies to it

because:

The evidence presented to the district court proved that that First Health
assembled its own network through direct provider agreements, which
authorize First Health to extend the negotiated payment rate to a
defined group of payors. First Health provides health benefits through
its assembled network: patients benefit by receiving quality, affordable
health care; providers benefit by receiving more patients and quicker
payments for their health care services; and payors benefit by paying
less for quality health care than they otherwise would have.

The evidence does not support the conclusion that First Health provides

benefits through its own PPO network or through a direct provider agreement.

Nothing of record suggests that First Health provides benefits at all. The affidavit of

Greg Mast, Director of Decision Support with Coventry Workers’ Compensation

Services and a former employee of First Health, states that “First Health does not

actually reimburse providers for medical services provided to injured workers.” He

states that payors, including insurance companies, third party administrators and self

1
In that Plaintiffs argue that La.R.S. 40:2203.1 applies to workers’ compensation PPOs, we
do not reach the issue of whether a PPO agreement entered into in connection with an employer’s
group health insurance can be extended to apply the workers’ compensation benefits payable to an
employee to discount payments to medical providers in excess of the amounts provided by the
Workers’ Compensation Statute. First Health’s arguments with regard to notice militate in favor of
a finding that PPO discounts, as currently used, are incompatible with the Workers’ Compensation
laws of this state.

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insureds, access the network and pay the bills. In other words, benefits are provided

by employers and their insurers with First Health acting as a middleman. The cited

provision of the Louisiana PPOA does not apply to entities such as First Health.

c. Compliance Through Written Notification

First Health next argues that it complied with the notice provisions of La.R.S.

40L2203.1(B) in that it gave written notice thirty days before it accessed service from

the healthcare provider.

Louisiana Revised Statutes 40:2203.1(B)(5) states:

When no benefit card is issued or utilized by a group purchaser or other entity,
written notification shall be required of any entity accessing an existing group
purchaser’s contractual agreement or agreements at least thirty days prior to accessing
services through a participating provider under such agreement or agreements.

We need not reach the question of who would be considered an entity

accessing an existing group purchaser’s contract, since we find that the notice cited

by First Health is inadequate to fulfill the requirements of La.R.S. 40:2203.1(B).

The purpose of La.R.S. 40:2203.1(B)(5) is to give notice where no benefit card

has been issued. However, the requirement is not a less stringent notification

requirement. For the thirty day written notice to be effective, it must include

everything which would be required by the statute of a benefit card. Anything less

would defeat the purpose of the notice requirement. We are unable to find any

evidence of record which fulfills the notice requirements of La.R.S. 40:2203.1 on

behalf of First Health.

d. Damages

With regard to damages, First Health points to the affidavit of Greg Mast. He

asserts in his deposition that Langley’s deposition reflects a fundamental

misunderstanding of what information is conveyed by the First Health spreadsheets

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showing discounts. He asserts that First Health neither sees the actual bill nor the

explanation of benefits which would show discounts actually taken. Mast stated that

the data in the spreadsheets analyzed by Langley does not reflect whether a discount

or payment adjustment was taken and that such information can only be obtained

through reference to the explanation of benefits issued by the payor. He states that:

“Given the current litigation in the State of Louisiana and/or for other reasons, many

clients have decided not to take contractually available discounts reported by First

Health.” He further states that the allowable amount field, used by Langley to obtain

the PPO discount, may also reflect billing adjustments other than the PPO contractual

discounts.

However, Mast’s personal knowledge of many of his assertions has not been

shown.

The requirement of personal knowledge in the context of
affidavits was recently addressed in Hibernia National Bank v. Rivera,
07-962, pp. 8-9 (La.App. 5 Cir. 9/30/08), 996 So.2d 534, 539-40
(citations omitted). The court explained:

Personal knowledge means something the witness actually
saw or heard, as distinguished from what he learned from some
other person or source. The purpose of the requirement of
“personal knowledge” is to limit the affidavit to facts which the
affiant saw, heard, or perceived with his own senses. Portions of
affidavits not based on personal knowledge of the affiant should
not be considered by the trial court in deciding a motion for
summary judgment.

Denbury Onshore, L.L.C. v. Pucheu, 08-1210, p. 18 (La.App. 3 Cir. 3/11/09), 6 So.3d

386, 398.

The affidavit does not establish the basis in personal knowledge of Mast’s

assertion that many clients do not take contractually available discounts. No further

evidence was introduced to establish this as fact. Further, while he asserts that the

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allowable amount field may reflect other discounts, he does not point to any instance

on the spreadsheets, which he prepared, as an example of a discount not attributable

to a PPO discount.

Further, First Health’s corporate representative Greg Hale affirmed in his

deposition that if the bill was going to be paid in full, there would be no need for First

Health’s discounting software program to be applied to the bill.

Accordingly, we find that the evidence presented by First Health in opposition

to the motion for summary judgment is insufficient to show the existence of a

material issue of fact. Therefore, we find that the motion for partial summary

judgment was correctly granted.

Defenses

First Health argues, insofar as can be ascertained from a rather confused and

confusing argument on this assignment of error, that the trial court erred in failing to

apply the affirmative defenses of waiver, estoppel, failure to mitigate damages, and

comparative fault to defeat the motion for summary judgment. Once Plaintiffs

showed a prima facie case that its motion for summary judgment should be granted,

the burden shifted to First Health to show that it could prove any affirmative defense

that would defeat summary judgment. See Louisiana Health Care Group, Inc. v.

Allegiance Health Mgmt., Inc., 09-1093 (La.App. 3 Cir. 3/10/10), ___ So.3d. ___.

We first note that First Health does not supply, and we cannot find any

authority for the idea that comparative fault principals can be applied to a penalty for

a statutory violation. Therefore, we decline to apply comparative fault principals to

the violation of La.R.S. 40:2203.1.

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Further, we find the doctrine of equitable estoppel to be inapplicable to the

situation before us. The second circuit in Commercial Nat’l Bank v. Rowe, 27,800,

pp. 12-13 (La.App. 2 Cir. 1/24/96),666 So.2d 1312, 1319, set out the requirements

of equitable estoppel as follows:

(1) a representation by conduct or word by the person sought to be
estopped, (2) justifiable reliance thereon; and (3) a change in position
because of that reliance to the detriment of the person asserting estoppel.
Chevron USA Inc. v. Traillour Oil Co., 987 F.2d 1138 (5th Cir.1993);
Knippers v. Lambard, 620 So.2d 1368 (La.App. 2d Cir.), writ denied ,
629 So.2d 1169 (1993).

Equitable estoppel is a doctrine of last resort; it is not favored by
Louisiana courts, and will be applied only when justice so demands.
Robbins Tire & Rubber Co. v. Winnfield Retread Inc., 577 So.2d 1189
(La.App. 2d Cir.1991), and citations therein. The party invoking
estoppel bears the burden of proving the facts on which it is founded.
KPW Associates v. S.S. Kresge Co., 535 So.2d 1173 (La.App. 2d
Cir.1988), writ denied, 537 So.2d 1167 (1989). Equitable
considerations and estoppel cannot prevail in conflict with the positive
law. La.C.C. art. 4; Palermo Land Co. v. Planning Comm’n, 561 So.2d
482 (La.1990).

La. Civ.Code art. 4 provides:

When no rule for a particular situation can be derived from the
legislation or custom, the court is bound to proceed according to equity.
To decide equitably, resort is made to justice, reason, and prevailing
usages.

There is a rule for this situation provided expressly by positive law which we

have already determined in this case is clear and unambiguous. The statute requires

adequate notice and imposes statutory damages for failure to comply with the notice

requirement. First Health’s failure to comply with the statutory requirement cannot

be excused by any of the Plaintiffs’ failure to object or by accepting payments. The

statute imposes a clear duty on First Health. Equitable estoppel is indeed a remedy

of last resort and is not favored by our courts. Moreover, the doctrine is inapplicable

when it is in conflict with positive law. See La.Civ.Code art. 4 and Palermo Land Co.

15

v. Planning Comm’n, 561 So.2d 482 (La. 1990). Given the requirements of positive

law regarding notice, we find the doctrine of equitable estoppel to be inapplicable

here.

First Health argues that Plaintiffs could have used the provider agreements to

mitigate their damages. As we have stated, the notice given Plaintiffs by the provider

agreement was inadequate to provide the degree of notice required by the statute.

First Health may not use an inadequate notice to avoid liability under the statute in

whole or in part. Louisiana Revised Statutes 40:2203.1 expressly provides: “In no

instance shall any provider be bound by the terms of a preferred provider organization

agreement that is in violation of this Part.” We further find that, even if a defense of

mitigation of damages were applicable herein, First Health has failed to show it will

meet its burden to prove that Plaintiffs’ conduct was unreasonable and that the

unreasonable conduct resulted in aggravation of the harm. See Fletcher v. Simmons,

37,758 La.App. 2 Cir. 10/29/03, 859 So.2d 292.

First Health further asserts that Plaintiffs waived their right to recover penalties

under the statute when they renewed their contracts with First Health.

Waiver is the relinquishment of a known right, power, or
privilege. Waiver occurs when there is an existing right, a knowledge
of its existence and an actual intention to relinquish it or conduct so
inconsistent with the intent to enforce the right as to induce a reasonable
belief that it has been relinquished. Gilbert v. B.D.O.W.S., Inc., 33,006
(La.App.2d Cir.6/23/00), 764 So.2d 313; Maddox v. Keen, 33,072
(La.App.2d Cir.4/7/00), 756 So.2d 1279.

L.T. v. Chandler, 40,417, p. 4 (La.App. 2 Cir. 12/14/05),917 So.2d 753, 757.

After reviewing the record, we find that nothing submitted from the filings or

pleading makes waiver a genuine issue of fact in dispute. First Health offers no

countervailing facts to support its defense of waiver.

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Designation of Judgment Regarding Damages as Final

First Health further argues that the trial court erred in designating the damages

portion of its judgment on Plaintiffs’ motion for summary judgment as final under

La.Code Civ.P. art 1915(B). This matter has been previously disposed of on a writ

application filed by First Health, and we find no reason to change our decision in that

regard. However, we will outline our reasoning with regard to this issue.

Louisiana Code of Civil Procedure Article 1915(B) provides, in pertinent part,

the following:

(1) When a court renders a partial judgment or partial summary
judgment or sustains an exception in part, as to one or more but less than
all of the claims, demands, issues, or theories, whether in an original
demand, reconventional demand, cross-claim, third party claim, or
intervention, the judgment shall not constitute a final judgment unless
it is designated as a final judgment by the court after an express
determination that there is no just reason for delay.

Under La.Code Civ.P. art. 966(E), “summary judgment may be rendered

dispositive of a particular issue, theory of recovery, cause of action, or defense, in

favor of one or more parties, even though the granting of the summary judgment does

not dispose of the entire case.”

This court has previously set forth the procedure to be followed in reviewing

an Article 1915(B) judgment designated without reasons. In Fakier v. State, Bd. of

Supervisors for Univ. of La. Sys., 08-111 (La.App. 3 Cir. 5/28/08), 983 So.2d 1024,

this court examined the issue of whether a partial judgment was a final judgment for

purposes of an immediate appeal when reasons were not given with the designation.

The Fakier court noted that in R.J. Messinger, Inc. v. Rosenblum, 04-1664 (La.

3/2/05), 894 So.2d 1113, the supreme court adopted from Allis-Chalmers Corp. v.

Philadelphia Elec. Co. , 521 F.2d 360 (3rd Cir.1975), several non-exclusive factors

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for use by trial courts when determining certification of a judgment and for use by

appellate courts when conducting de novo reviews when no reasons are given by the

trial court for designation. The factors for examining certification are:

1) The relationship between the adjudicated and unadjudicated claims;

2) The possibility that the need for review might or might not be mooted
by future developments in the trial court;

3) The possibility that the reviewing court might be obliged to consider
the same issue a second time; and

4) Miscellaneous factors such as delay, economic and solvency
considerations, shortening the time of trial, frivolity of competing
claims, expense, and the like.

Fakier, 983 So.2d at 1029 (quoting Messinger, 894 So.2d at 1122).

Our analysis of the case at bar under the Fakier factors favors designation of

the judgment as final. While the unadjudicated and adjudicated damages claims are

related, the damages at issue are also tied to the judgment of liability before us on

appeal given the fact that the damages are statutorily mandated.

Therefore, we find no error in the trial court’s decision to designate the

judgment as final.

CONCLUSION

For these reasons, we find that:

(1) First Health failed to show that the trial court was divested of jurisdiction prior

to the hearing on the motions for summary judgment by the grant of its motion for

appeal of its motion to decertify the class.

(2) The choice of law provision found in First Health’s contracts with Plaintiffs

cannot circumvent the State’s interest in the notice requirements of the PPOA and

does not apply in this case.

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(3) The trial court correctly found that the prescriptive period applicable to an

action for violation of the notice requirements of La.R.S. 40:2203.1 is ten years.

(4) First Health failed to carry its burden of proving that there is any genuine issue

of material fact in dispute or that it can present evidence sufficient to rebut Plaintiffs’

prima facie case.

(5) The trial court did not err in designating the damages portion of its judgment

as final.

Therefore, the judgment of the trial court denying First Health’s motion for

summary judgment and granting Plaintiffs’ motion for partial summary judgment is

affirmed. All costs of this appeal are assessed to First Health.

AFFIRMED.

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