Opelousas General Hospital Authority v. Fairpay Solutions, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

13-17

OPELOUSAS GENERAL HOSPITAL AUTHORITY, ET AL.

VERSUS

FAIRPAY SOLUTIONS, INC.

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APPEAL FROM THE
TWENTY-SEVENTH JUDICIAL DISTRICT COURT
PARISH OF ST. LANDRY, NO. 12-C-1599-C
HONORABLE ALONZO HARRIS, DISTRICT JUDGE

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SHANNON J. GREMILLION
JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Shannon J. Gremillion,
and Phyllis M. Keaty, Judges.

AFFIRMED; MOTION TO SEAL GRANTED.

John S. Bradford
William B. Monk
Stockwell, Sievert, Viccellio, Clements & Shaddock, L.L.P.
One Lakeside Plaza, Fourth Floor
Lake Charles, LA 70601
(337) 436-9491
COUNSEL FOR PLAINTIFFS/APPELLEES:
Opelousas General HospitalAuthority, A Public Trust, D/B/A
Opelousas General Health System and Arklamiss Surgery Center,
L.L.C.

Steven G. Durio
Durio, McGoffin, Stagg & Ackermann
220 Heymann Blvd.
Lafayette, LA 70503
(337) 233-0300
COUNSEL FOR DEFENDANT/APPELLEE:
Fairpay Solutions, Inc.

Jerald R. Harper
Amber H. Watt
Harper Law Firm
213 Texas St.
Shreveport, LA 71101
(318) 213-8800
COUNSEL FOR DEFENDANT/APPELLEE:
Fairpay Solutions, Inc.

Patrick A. Juneau, Jr.
Juneau David, APLC
Post Office Drawer 51268
Lafayette, LA 70505-1268
(337) 269-0052
COUNSEL FOR PLAINTIFF/APPELLEE:
Patrick A. Juneau Jr., Special Master

John M. Landis
Douglas J. Cochran
Brooke C. Tigchelaar
Abigayle C. Farris
Stone, Pigman, Walther, Wittmann L.L.C.
546 Carondelet St.
New Orleans, LA 70130-3588
(504) 581-3200
COUNSEL FOR INTERVENOR/APPELLANT:
Qmedtrix Systems, Inc.

Patrick Craig Morrow, Sr.
Morrow, Morrow, Ryan & Bassett
P. O. Box 1787
Opelousas, LA 70570
(337) 948-4483
COUNSEL FOR PLAINTIFFS/APPELLEES:
Opelousas General HospitalAuthority, A Public Trust, D/B/A
Opelousas General Health System and Arklamiss Surgery Center,
L.L.C.

Stephen B. Murray
Arthur M. Murray
Murray Law Firm
909 Poydras Street, Suite 2150
New Orleans, LA 70112-4000
(504) 525-8100
COUNSEL FOR PLAINTIFFS/APPELLEES:
Opelousas General HospitalAuthority, A Public Trust, D/B/A
Opelousas General Health System and Arklamiss Surgery Center,
L.L.C.

Thomas A. Filo
Cox, Cox, Filo, Camel & Wilson
723 Broad Street
Lake Charles, LA 70601
(337) 436-6611
COUNSEL FOR PLAINTIFFS/APPELLEES:
Opelousas General HospitalAuthority, A Public Trust, D/B/A
Opelousas General Health System and Arklamiss Surgery Center,
L.L.C.

R. Bray Williams
Williams Family Law Firm, L.L.C
P. O. Box 15
Natchitoches, LA 71458-0015
(318) 352-6695
COUNSEL FOR PLAINTIFFS/APPELLEES:
Opelousas General HospitalAuthority, A Public Trust, D/B/A
Opelousas General Health System and Arklamiss Surgery Center,
L.L.C.

David Coale
Attorney at Law
2100 Ross Ave., Suite 2700
Dallas, TX 75201
COUNSEL FOR DEFENDANT/APPELLEE:
Fairpay Solutions, Inc.

GREMILLION, Judge.

Qmedtrix Systems, Inc. (Qmedtrix), an intervenor, appeals the trial court‟s

approval of a class action settlement between the defendant-appellee, Fairpay

Solutions, Inc. (Fairpay) and the plaintiffs, Opelousas General Hospital Authority,

A Public Trust, D/B/A Opelousas General Health System and Arklamiss Surgery

Center, L.L.C.. For the following reasons, we affirm the trial court‟s ruling and,

further, grant Fairpay‟s motion to place documents under seal.

FACTUAL AND PROCEDURAL BACKGROUND

Qmedtrix and Fairpay provide workers compensation bill reviewing services

to employers and their workers‟ compensation insurers. Hundreds of Louisiana

hospitals and ambulatory surgery centers have filed class action lawsuits against

Fairpay‟s clients (and Qmedtrix also) claiming that Fairpay repriced their bills at

levels below that required in La.R.S. 23:1020.1. There is pending litigation in both

state and federal courts regarding these claims. This class action pertains to

Fairpay‟s attempts to settle the matter.

In March 2012, Fairpay and the class representatives (represented by

plaintiffs) jointly filed a petition seeking certification and approval of a class action

settlement agreement. The parties to the settlement further filed a joint motion to

place the pricing methodology exhibit referred to in the class action settlement

under seal. The district court sealed the documents that disclosed the Fairpay

pricing methodology.

In April 2012, the parties to the settlement filed a joint motion for

preliminary approval of the thirty-page settlement agreement, which was approved

by the trial court. The settlement agreement proposed a payment by Fairpay of

$6.9 million to compensate the class members for every alleged underpayment of

workers‟ compensation health care bills from October 21, 2003, through the

effective date of the settlement. It further provided an agreement to reprice future

workers‟ compensation health care bills handled by Fairpay in accordance with the

repricing methodology that the settlement agreement states is a trade secret under

Louisiana law to be kept confidential and under seal.1 The settlement agreement

states that the repricing methodology resulted in a payment of 72% of all bills

processed for payment by Fairpay.

A deadline of June 29, 2012 was provided in order to file written objections

to the settlement agreement. On August 2, 2012, Qmedtrix filed a motion for leave

to intervene in the case in order to oppose the proposed class action settlement.

Qmedtrix argued that the settlement would “adversely affect all competitors in the

bill review industry,” and that it had a right to intervene to protect its own

economic interests. Qmedtrix complained that the Future Fairpay Pricing

Methodology component was a price-fixing agreement that is illegal under state

and federal antitrust statutes. The trial court granted Qmedtrix leave of court to file

an intervention and scheduled its objection to the settlement agreement for hearing

on August 17, 2012, the day of the fairness hearing. On August 16, 2012,

Qmedtrix filed a motion to unseal the record.

At the conclusion of the fairness hearing, the plaintiffs filed an Incidental

Class Action Demand class against Qmedtrix alleging fraud in connection with its

bill review practices. The cross-claim is currently pending.

On August 17, 2012, the trial court entered a final judgment approving the

class settlement between approximately 185 ambulatory surgery centers and

1
The second component of the agreement is referred to as the “Future Fairpay Pricing
Methodology.”

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Fairpay. The trial court found that any objections to the fairness, reasonableness,

and adequacy of the settlement agreement lacked merit. The trial court further

found that the settlement agreement was the result of “extensive and intensive

arms-length negotiations undertaken in good faith by highly experienced counsel,

with full knowledge of the risks inherent in this litigation.”

In September 2012, Qmedtrix filed a notice of removal attempting to remove

the matter to federal court. In November 2012, the United States Court of Appeals

for the Fifth Circuit (Fifth Circuit) dismissed Qmedtrix‟s appeal and remanded the

matter to the 27th Judicial District Court.

In November 2012, the plaintiffs filed a motion to certify a class against

Qmedtrix. On this same day, Qmedtrix filed a permission to appeal the district

court‟s remand order with the United States Court of Appeals for the Fifth Circuit.

In December 2012, Qmedtrix appealed the trial court‟s August 17, 2012 judgment.

In March 2013, Fairpay filed a motion to place documents under seal with this

court.

ISSUES

Qmedtrix assigns as error:

1. The district court abused its discretion by approving the Settlement
Agreement, which is an absolute nullity because it violated
Louisiana‟s statutory law and public policy.

2. The district court lacked jurisdiction to enter the order and
judgment approving the Settlement Agreement.

DISCUSSION

The Settlement Agreement/Intervention

A class action settlement agreement is reviewed pursuant to an abuse of

discretion standard. Orrill v. AIG, Inc., 09-0888 (La.App. 4 Cir. 4/21/10), 38

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So.3d 457, writs denied, 10-0945, 10-1117 (La. 9/17/10), 45 So.3d 1035, 1036. If

the trial court did not abuse its discretion in finding that the class action settlement

is “fair, reasonable, and adequate for the class,” we will not overturn its findings.

La.Code Civ.P. art. 594(B). At the conclusion of the fairness hearing, the trial

court denied Qmedtrix‟s objection to the proposed settlement and found that “they

have no standing in this fairness hearing and filed to intervene after the cutoff

period. They‟re not members of the class.” The trial court found that the

settlement between the class members was fair, reasonable, and adequate for the

class. We reviewed the testimony presented at the fairness hearing and find no

abuse of the trial court‟s discretion in finding that the settlement agreement was

fair, reasonable, and adequate for the class. None of the class members contest that

finding. Instead, Qmedtrix, who was not a party to the class action settlement

contract, attacks its validity,

Qmedtrix does not contest the $6.9 million payment by Fairpay to the

plaintiffs; rather, its main opposition to the agreement is the undisclosed pricing

methodology agreed to by the class in the settlement agreement which it couches in

terms of “price fixing agreements,” “illegal monopolization,” “violation of antitrust

laws,” and “against public policy.” We agree with the trial court that Qmedtrix

lacked standing to oppose the settlement agreement at the fairness hearing because

Qmedtrix was not a party to the class action settlement agreement and it has other

remedies available to it under the law that may be properly asserted. Beside the

fact that the intervention was untimely, the merits of refusing to allow Qmedtrix to

intervene are well supported.

It is well settled by jurisprudence that the requirements for
intervention are twofold: the intervenor must have a justiciable
interest in, and connexity to, the principal action, and the interest

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much be so related or connected to the facts or object of the principal
action that a judgment on the principal action will have a direct impact
on the intervenor‟s rights. In re Succession of Walker, 836 So.2d at
277, (quoting from In re Interdiction of Campbell, 01-863 (La.App. 5
Cir. 1/15/02), 807 So.2d 908, 910, writ denied, 02-0499 (La.2/27/02),
810 So.2d 1148.) A “justiciable interest” is defined as “the right of a
party to seek redress or a remedy against either [the] plaintiff or
defendant in the original action or both, and where those parties have
a real interest in opposing it.” The right, if it exists, must be so related
or connected to the facts or object of the principal action that a
judgment on the principal action will have a direct impact on the
intervenor‟s rights. Id.

Mike M. Marcello, Inc. v. Louisiana Gaming Control Bd., 04-488, 04-1224, pp. 4-5

(La.App. 1 Cir. 5/6/05), 903 So.2d 545, 548.

Qmedtrix failed to put on any evidence at the fairness hearing proving that it

had a justiciable interest in the settlement. The settlement agreement has no res

judicata effect on Qmedtrix‟s claims, which can be asserted elsewhere, nor does it

interfere with Qmedtrix‟s ability to conduct business in the state. A competitor

simply does not have the right to intervene in a contract between private companies

because the company may gain a competitive advantage through a negotiated

contract. This is a fundamental tenant of our free market society. Qmedtrix is free

to come up with its own formula for repricing workers‟ compensation bills and to

negotiate contract terms with its clients. Any claims it has against Fairpay may be

raised in a separate action. This assignment of error is without merit.

Jurisdiction

Qmedtrix argues that the Office of Workers Compensation (OWC) has

exclusive jurisdiction to determine whether use of the pricing methodology

satisfies the requirements of the Louisiana Workers‟ Compensation Act (the Act).

Fairpay says the claims against it do not arise under the Act, that the OWC could

never possess jurisdiction over a class action, and that La.Code Civ.P. art. 594

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requires trial court approval of approve action settlements. We agree with Fairpay.

Pursuant to La.R.S. 23:1310.3(F), workers‟ compensation judges are vested

with original, exclusive jurisdiction over all claims or disputes arising
out of this Chapter, including but not limited to workers‟
compensation insurance coverage disputes, group self-insurance
indemnity contract disputes, employer demands for recovery for
overpayment of benefits, the determination and recognition of
employer credits as provided for in this Chapter, and cross-claims
between employers or workers‟ compensation insurers or self-
insurance group funds for indemnification or contribution, concursus
proceedings pursuant to Louisiana Code of Civil Procedure Articles
4651 et seq. concerning entitlement to workers‟ compensation
benefits, payment for medical treatment, or attorney fees arising out of
an injury subject to this Chapter.

The present matter simply does not arise under the Act as the Act does not regulate

contracts between bill reviewers and medical care providers. “Mere involvement

of workers‟ compensation issues is insufficient; such disputes may „relate to‟ to

workers‟ compensation matters, but they do not „arise out of” the Act.” Broussard

Physical Therapy v. Family Dollar Stores, Inc., 08-1013, p. 9 (La. 12/2/08), 5

So.3d 812, 817. The contract claims resolved in this class action settlement

involve a civil dispute between companies that provide bill review services to

medical care providers. The district court properly had jurisdiction over this matter.

This assignment of error is without merit.

Motion to Seal the Record

Although there is no specific statutory provision allowing a trial court to seal

court records, pursuant to its supervisory powers it has discretion in sealing records

based on the facts and circumstances of the case. See La.Code Civ.P. art. 191;

Copeland v. Copeland, 07-0177 (La. 10/16/07), 966So.2d 1040. It is within the

trial court‟s purview to decide if information is sensitive such that it should not be

disclosed to others. Id. Further, La.R.S. 44:3.2 recognizes the right of a party to

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shield its trade secrets from public view when conducting business with the state.

We find no abuse of the trial court‟s discretion in sealing Fairpay‟s pricing

methodology formula.

CONCLUSION

The trial court‟s approval of the class action settlement is affirmed. All

costs of this appeal are assessed against the intervenor, Qmedtrix Systems, Inc.

AFFIRMED; MOTION TO SEAL THE RECORD GRANTED.

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