Spine Care Delaware, LLC v.State Farm Mutual Auto. Ins. Co. ( 2020 )

SUPERIOR COURT
OF THE
STATE OF DELAWARE
NOEL EASON PRIMOS Kent County Courthouse
JUDGE 38 The Green
Dover, DE 19901
302-735-2131
Date Submitted: October 26, 2020
Date Decided: December 14, 2020
John S. Spadaro, Esquire Colin M. Shalk, Esquire
John Sheehan Spadaro, LLC Casarino Christman Shalk Ransom & Doss, P.A.
54 Liborio Lane 1007 North Orange Street
Smyrna, Delaware 19977 Nemours Building, Suite 1100
P.O. Box 1276
Wilmington, Delaware 19899
RE: Spine Care Delaware, LLC v. State Farm Mut. Auto. Ins. Co. et al.
Civil Action No. K18C-07-008 NEP
Dear Counsel:
Following remand of this matter from the Delaware Supreme Court, certain
procedural issues arose that this Court needed to address. The Court directed the parties
to submit simultaneous written briefings on these issues. This Letter Order constitutes
the Court’s decision on the issues.
I. INTRODUCTION
On October 29, 2019, this Court granted summary judgment in favor of Plaintiff
Spine Care Delaware, LLC (“Spine Care”), finding that the application of Multiple
Procedure Reductions (“MPR’s”) to bilateral and multilevel spinal injection procedures
by Defendants State Farm Mutual Automobile Insurance Company and State Farm Fire
and Casualty Company (collectively, “State Farm”) contravened 21 Del C. § 2118(a)(2),
which requires, pursuant to Delaware-mandated Personal Injury Protection (“PIP”)
coverage, compensation for reasonable and necessary medical expenses.
On September 9, 2020, the Supreme Court reversed and remanded, finding that this
Court had erred by improperly imposing the burden of proof on State Farm rather than on
Spine Care, by failing to recognize that the reasonableness of Spine Care’s fees was
central to the case, and by employing an improper standard for determining the
reasonableness of Spine Care’s fees. Specifically, the Supreme Court remanded the case
with instructions that Spine Care be required to prove the reasonableness of its fees
pursuant to the appropriate standard. That is, Spine Care must show that its fees are
reasonable using a flexible approach focusing on the most important factor in this context
(i.e., the ordinary and reasonable charges of similar situated professionals) rather than a
rigid application of all the factors set forth in Anticaglia v. Lynch1 and Watson v. Metro
Property & Casualty Insurance Co. 2 On remand, the parties dispute the following: (1)
whether additional discovery should be allowed on the issue the Supreme Court directed
this Court to address (i.e., the reasonableness of Spine Care’s fees), and (2) whether there
should be additional briefing.
Spine Care argues that additional discovery should not be permitted because (1)
the parties submitted a stipulation of facts to avoid discovery, (2) the period for discovery
has expired, (3) State Farm was aware of Spine Care’s competitors prior to the discovery
period’s expiration, (4) State Farm made no application for discovery pursuant to Superior
Court Civil Rule 56(f), (5) State Farm conceded at oral argument on the cross-motions
for summary judgment that no factual disputes existed, and (6) by filing a summary
judgment motion questioning the reasonableness of Spine Care’s fees, State Farm has
waived the right to further discovery on the issue. Spine Care argues in the alternative
1
1992 WL 138983 (Del. Super. March 16, 1992).
2
2003 WL 22290906 (Del. Super. Oct. 2, 2003).
2
that, if this Court permits additional discovery, it should be strictly limited. Spine Care
further contends that no further briefing is necessary.
State Farm argues that the Court should permit additional discovery to determine
the reasonableness of Spine Care’s fees because the issue before this Court on remand is
different from the issue for which Spine Care sought relief in its original complaint. State
Farm further argues that additional discovery, while limited, should be more expansive
than that advocated by Spine Care. Lastly, State Farm contends that additional briefing
is necessary to address the issue this Court must now decide on remand.
II. DISCUSSION
A. The Court Will Allow Additional Limited Discovery
When this Court first heard the dispute between the parties in this litigation, both
the Court and State Farm fundamentally misunderstood whether the reasonableness of
Spine Care’s fees was at issue in the case. The Court believed that the reasonableness of
Spine Care’s fees was not at issue because Spine Care had not requested that declaratory
relief (i.e., that its fees are reasonable as a matter of law) in its complaint. Likewise, State
Farm took the position that the issue in the case was not the reasonableness of Spine
Care’s fees, but the reasonableness of State Farm’s application of MPR’s. Furthermore,
while the parties entered into a stipulation of facts prior to the summary judgment briefing,
the comparison of Spine Care’s fees with those of its competitors was not addressed
therein.
Spine Care relies on Monsanto Company v. Aetna Casualty and Surety Company3
to argue that additional discovery should not be permitted. In Monsanto, the Supreme
Court found that the trial court had acted appropriately in denying a request for additional
discovery made as part of a motion for reargument of a motion for partial summary
judgment, since the requesting party had already elected not to conduct discovery when
3
577 A.2d 754 (TABLE), 1990 WL 72535 (Del. 1990).
3
it filed its original motion. Moreover, the additional discovery was requested on an issue
already decided by the trial court. 4 Here, the Supreme Court has now clarified that the
issue of the reasonableness of Spine Care’s fees is “central to the case” 5—i.e., if Spine
Care’s fees are reasonable, State Farm may not apply MPR’s to reduce them. 6 That issue
was specifically not decided by this Court, as the Supreme Court recognized. 7
Because the issue on remand is not the same as the issue afforded attention during
the previous proceedings, the Court finds that the parties should be entitled to additional
discovery relating to the issue now before the Court. While State Farm’s counsel
represented at oral argument on the parties’ cross motions for summary judgment that,
from State Farm’s perspective, there were no disputed issues of fact, State Farm did not
waive its right to further discovery on the issue now before the Court because State Farm
did not believe that that issue was the one being decided. State Farm repeatedly stated in
its summary judgment briefing that the reasonableness of Spine Care’s fees was not at
issue in the case.8 In addition, at oral argument before this Court, State Farm’s counsel
explicitly represented that, while State Farm viewed the record as closed for purposes of
its summary judgment motion, “if the Court were to find that the real issue was the
reasonableness of [Spine Care’s] fees . . . there could be a fact question” and the Court
“would want to actually hear from the witnesses.”9
For the same reasons, Superior Court Civil Rule 56(f) is inapplicable, Spine Care’s
arguments to the contrary notwithstanding. That rule permits the trial court to allow a
party opposing summary judgment to conduct additional discovery when that party
“cannot for reasons stated present by affidavit facts essential to justify the party’s
opposition . . . .” Because State Farm was not aware (as indeed the Court itself was not)
4
Id. at *2.
5
State Farm Mut. Auto. Ins. Co. v. Spine Care Delaware, LLC, 238 A.3d 850, 861 (Del. 2020).
6
Id. at 862.
7
Id. at 861.
8
See Defs.’ Resp. to Plf.’s Mot. for Summary Judgment at 1, 3-5.
9
Tr. of oral argument at 5:14-17.
4
that the issue properly before the Court at summary judgment was the reasonableness of
Spine Care’s fees, State Farm could not have been expected to request additional
discovery on that point before the cross-motions were decided. Therefore, State Farm is
not barred by that provision from requesting additional discovery on the reasonableness
issue at this time.
Spine Care argues that the Supreme Court did not indicate in its opinion that
discovery should be reopened—but neither does that opinion prohibit additional
discovery. Indeed, the Supreme Court noted at one point that “[Spine Care] supported its
position by submitting evidence that nearly all other PIP insurers (other than State Farm
and USAA) fully pay [Spine Care’s] fees for bilateral and multilateral injections,” but on
remand, the trial Court should determine the weight to be given that evidence “and any
other evidence the trial court deems relevant.” 10 Because the issue on remand—the
reasonableness of Spine Care’s fees—is different from the issue previously before this
Court, the parties should be permitted to submit additional evidence that will be relevant
to deciding the issue. Therefore, in fairness to State Farm, further limited discovery
should be allowed. Furthermore, the Court finds that further discovery would be helpful
to it in deciding the issue now before it.
B. The Scope of Discovery Permitted
The Court will allow limited discovery on the issue of the reasonableness of Spine
Care’s fees. This Court has historically allowed limited discovery on remand. 11
However, the limitations requested by Spine Care are inappropriate. Spine Care argues
that, before State Farm may seek discovery from the nonparty competitors previously
identified by Spine Care, State Farm should be required to search its own records for
10
Spine Care, 238 A.3d at 863.
11
See Citadel Holding Corp. v. Roven, 603 A.2d 818, 825 (Del. 1992) (directing this Court to “permit
additional discovery consistent with this ruling and conduct a further hearing, if necessary, on the
reasonableness issue”); Stayton v. Clariant Corp., 2014 WL 28726, at *1 (Del. Jan. 2, 2014) (noting that
additional discovery had occurred on remand).
5
medical bills from those competitors. Spine Care also argues that if discovery of Spine
Care’s competitors is permitted, that discovery should be limited to two 30-minute
depositions.
The relevant inquiry to decide the issue now before this Court, as recognized by
the Supreme Court, is the “ordinary and reasonable charges of similarly situated
professionals.”12 Spine Care has identified two competitors, but this does not necessarily
mean that they are the only two “similarly situated professionals” relevant to the inquiry.
Therefore, the Court will not limit discovery to the two competitors identified by Spine
Care.
The Court will also allow an inquiry into whether similarly situated professionals
accept, as payment in full, fees reduced by MPR’s. However, the Court cautions the
parties that such information appears to be of doubtful relevance. The relevant inquiry is
the “charges” of similarly situated professionals, not the amounts they may ultimately be
paid: the Supreme Court made it clear that if Spine Care shows that its fees charged are
reasonable, such fees may not be reduced by MPR’s. 13
C. The Request for the Identification of Additional Experts
The Court will not allow the identification of additional experts at this stage of the
litigation, as requested by State Farm. The sole issue before the Court is the
reasonableness of Spine Care’s fees. The Supreme Court has determined that “[t]he factor
most germane to this case is the ordinary and reasonable charges usually made by
members of the same profession of similar standing.” 14 The Court fails to see how the
potential testimony of an expert would satisfy the requirements of Delaware Rule of
12
Spine Care, 238 A.3d at 861.
13
Id. at 857 (“The burden . . . is on [Spine Care] to show that State Farm is not entitled to take the . . .
MPR’s. And to answer that question, [Spine Care] first has to demonstrate that its charges for the second
and subsequent injections are reasonable. If it is determined that they are reasonable, then, under the
statute, State Farm must pay them without reduction.”) (emphasis supplied).
14
Id. at 862.
6
Evidence 702(a). 15 Should either party believe, following fact discovery, that there is a
need for expert testimony, the Court will consider the party’s application at that time.
D. Additional Briefing and Scheduling Conference
The Court finds that additional briefing would be helpful to the Court in assessing
the issues remanded by the Supreme Court. Spine Care cites no authority for its assertion
that this Court should not permit further briefing. Delaware courts have called for
additional briefing in similar instances.16
To address the duration of the limited discovery consistent with this letter, and to
determine the length and sequence of the additional briefing along with other scheduling
matters, the Court will schedule a conference with counsel in the near future.
IT IS SO ORDERED.
Sincerely,
/s/Noel Eason Primos
Judge
NEP/wjs
Via Email
oc: Prothonotary
15
See D.R.E. 702(a) (requiring that an expert’s testimony “help the trier of fact to understand the
evidence or to determine a fact in issue.”).
16
See, e.g., California State Teachers' Ret. Sys. v. Alvarez, 179 A.3d 824, 839, 855 (Del.), cert. denied,
139 S. Ct. 177 (2018) (observing that Court of Chancery had permitted supplemental briefing on remand
and that additional briefing has benefits); Quadrant Structured Prod. Co., Ltd. v. Vertin, 115 A.3d 535,
542 (Del. Ch. 2015) (noting that there was additional briefing on remand).
7