Columbus Specialty Surgery Center v. Southeastern Indiana Health Organization, Inc., and Columbus Regional Health , 22 N.E.3d 665 ( 2014 )

Dec 01 2014, 9:12 am
FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE
SOUTHEASTERN INDIANA HEALTH
WILLIAM N. RILEY ORGANIZATION, INC.:
JOSEPH N. WILLIAMS
Price Waicukauski & Riley, LLC MARK D. GERTH
Indianapolis, Indiana NICHOLAS W. LEVI
Kightlinger & Gray, LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
COLUMBUS SPECIALTY SURGERY )
CENTER, )
)
Appellant-Plaintiff, )
)
vs. ) No. 03A01-1406-PL-264
)
SOUTHEASTERN INDIANA HEALTH )
ORGANIZATION, INC., )
)
Appellee-Defendant, )
)
and )
)
COLUMBUS REGIONAL HEALTH d/b/a )
COLUMBUS REGIONAL HOSPITAL, )
)
Appellee-Defendant.1 )
APPEAL FROM THE BARTHOLOMEW SUPERIOR COURT
The Honorable James D. Worton, Judge
Cause No. 03D01-1309-PL-4793
1
We note that although Columbus Specialty Surgery Center does not raise any claim on appeal
against Columbus Regional Health, a party below is a party on appeal.
December 1, 2014
OPINION - FOR PUBLICATION
BRADFORD, Judge
CASE SUMMARY
On September 3, 2013, Appellant-Plaintiff the Columbus Specialty Surgery Center,
LLC (“CSSC”) filed a complaint alleging that insurance provider the Southeastern Indiana
Health Organization, Inc. (“SIHO”) committed defamation per se by allegedly informing the
Seymour Community School Corporation (“SCSC”) that CSSC had “declined” to participate
in SIHO’s network. The trial court subsequently dismissed CSSC’s defamation claim against
SIHO without prejudice after determining that CSSC had failed to state a claim upon which
relief can be granted. We affirm.
FACTS AND PROCEDURAL HISTORY
The facts, as presented in CSSC’s complaint for damages, are as follows: SIHO was
founded in 1987 to provide comprehensive insurance services and health plan benefits to
businesses. SIHO is privately-owned by Columbus Regional Hospital, Schneck Medical
Center, Multi County Physicians, and Bloomington Hospital and Healthcare System. SIHO
provides claims administration, pre-certification, case management, concurrent review,
utilization review, member services, benefit consulting, national pharmacy networking, and a
network of hospitals and physicians in one organization.
CSSC is an ambulatory surgery center providing a full array of surgical services to
patients residing in the Columbus area. CSSC is physician-owned. Part of the physician
ownership of CSSC is composed of local Columbus physicians.
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SCSC uses SIHO as a third-party benefit administrator. On April 2, 2013, the
employees received a notification from SCSC’s insurance committee that provided as
follows:
[CSSC] is an outpatient surgical facility located in Columbus. It is owned by
several Columbus area physicians and has been open since August of last year.
Up to this point [CSSC] has declined to participate in the SIHO Network.
When SCSC first moved to SIHO we knew that their network was not quite as
large as the Anthem network and we augmented the SIHO network with
“wrap” networks. We have been treating providers in these wrap networks as
“in network providers” for benefit purposes. This had very little financial
impact on the plan and had the effect of reducing the number of claims that
were paid at the out of network benefit level, thereby saving [] you money,
while providing a large number of network providers.
Unfortunately, utilizing this practice with [CSSC] has cost the SCSC plan in
excess of $100,000 more than it would have otherwise spent just since last
August.
Therefore effective April 15th 2013, [CSSC] will be considered an out of
network provider for the Seymour Community Schools plan.
IMPORTANT – WHAT THIS MEANS TO YOU
· For procedures on or after April 15th at [CSSC], the facility charges will
be paid at the out of network level of benefits. This means the facility
charges will be subject to the deductible and the balance paid at 60%.
· The Plan will use the SIHO in-network amount as the allowable charge.
This means that there could be a significant difference between the amount
billed by the facility and the amount the plan considers eligible. You could
be responsible to pay this entire amount.
· The facility could write off all or a portion of this balance amount, but
is under no obligation to do so.
· If you choose to use this facility, be certain that you understand the
amount you will be responsible to pay before you agree to use this facility.
· This change only impacts the facility charges, not the physician fees
(the doctors involved are members of the SIHO network).
· As these are local doctors, you still have the use of Schneck and
Columbus Regional Hospital as in-network facilities.
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If you have any questions, please contact Brandie Hall at the Administration
Building.
Appellant’s App. p. 24 (emphases in original).
On September 3, 2013, CSSC filed a lawsuit against SIHO alleging that SIHO had
defamed CSSC. Specifically, CSSC alleged that the statement that it had decided not to
participate in the SIHO network was not true. In raising this allegation, CSSC claimed that it
had engaged in numerous efforts to be brought into the SIHO network, but that SIHO had
refused that entry. CSSC also alleged that SIHO communicated the information regarding its
alleged unwillingness to participate in the SIHO network to SCSC. CSSC further alleged
that the communication was calculated to harm CSSC’s reputation in its trade, profession,
and business and, as a result, CSSC’s business reputation has been and continues to be
damaged.
On October 24, 2013, SIHO filed a Trial Rule 12(C) motion for judgment on the
pleadings. On this same date, SIHO also filed a brief in support of its motion for judgment
on the pleadings. CSSC filed its response in opposition to SIHO’s motion for judgment on
the pleadings on November 25, 2013. The trial court conducted a hearing on SIHO’s motion
on February 21, 2014. Four days later, on February 25, 2014, the trial court granted SIHO’s
motion and dismissed CSSC’s defamation claim without prejudice.
On March 19, 2014, CSSC filed a motion to correct error. SIHO subsequently filed a
response in opposition to CSSC’s motion to correct error. The trial court scheduled a hearing
on CSSC’s motion for May 12, 2014. On May 15, 2014, the trial court denied CSSC’s
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motion to correct error. This appeal follows.
DISCUSSION AND DECISION
I. Standard of Review
CSSC contends that the trial court erred in dismissing its defamation claim against
SIHO.
A judgment on the pleadings pursuant to Ind. Trial Rule 12(C) is proper
only when there are no genuine issues of material fact and when the facts
shown by the pleadings clearly entitle the moving party to judgment. Wildman
v. National Fire and Marine Ins. Co., 703 N.E.2d 683, 685 (Ind. Ct. App.
1998). A motion for judgment on the pleadings should be granted only when it
is clear from the pleadings that the non-moving party cannot in any way
succeed under the facts and allegations therein. Id. In reviewing the grant of a
Rule 12(C) motion, we accept as true the well-pleaded material facts alleged in
the pleadings, and our review is confined to information included in the
pleadings. Id.
Where … a motion for judgment on the pleadings raises a defense of
failure to state a claim upon which relief can be granted, the motion for
purposes of that defense should be treated in the same manner as an Ind. Trial
Rule 12(B)(6) motion to dismiss for failure to state a claim. Anderson v.
Anderson, 399 N.E.2d 391, 405 (Ind. Ct. App. 1979). Where no evidence
outside the pleadings has been presented, Rule 12(B)(6) motions to dismiss a
complaint for failure to state a claim are granted only where it is clear from the
face of the complaint that under no circumstances could relief be granted.
Culver-Union Tp. Ambulance Service v. Steindler, 629 N.E.2d 1231, 1235
(Ind. 1994). Similarly, where a Rule 12(C) motion for judgment on the
pleadings raises the defense of failure to state a claim, without resort to matters
outside the pleadings, judgment on the pleadings is appropriate only under the
same conditions. That is, the motion for judgment on the pleadings should be
granted only where it is clear from the face of the complaint that under no
circumstances could relief be granted. Id. In applying this test, we take as true
all well-pled material facts alleged in the complaint. Id. If, on either a Rule
12(B)(6) motion to dismiss or a Rule 12(C) motion for judgment on the
pleadings, matters outside the pleadings are presented to and not excluded by
the court, the motion shall be treated as one for summary judgment under Ind.
Trial Rule 56. Ind. Trial Rule 12(b)(6); Ind. Trial Rule 12(C).
Bledsoe v. Fleming, 712 N.E.2d 1067, 1069-70 (Ind. Ct. App. 1999). On the record before
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us, it does not appear that the trial court considered any evidence outside the pleadings in
reaching its decision. Rather, in dismissing CSSC’s defamation claim without prejudice, the
trial court treated SIHO’s motion as a Trial Rule 12(B)(6) motion for failure to state a claim
upon which relief can be granted. As such, we will review the judgment of the trial court as
an order granting a Trial Rule 12(B)(6) motion to dismiss.
II. Whether the Trial Court Erred In Dismissing
CSSC’s Defamation Claim Against SIHO
The law of defamation was created to protect individuals from
reputational attacks. Journal-Gazette Co., Inc. v. Bandido’s, Inc., 712 N.E.2d
446, 451 (Ind. 1999). A defamatory communication is defined as one that
“‘tends so to harm the reputation of another as to lower him in estimation of
the community or to deter a third person from associating or dealing with
him.’” Doe v. Methodist Hosp., 690 N.E.2d 681, 686 (Ind. 1997) (quoting
Restatement (Second) of Torts § 559 (1977)). To prevail on a cause of action
for defamation, a plaintiff must prove four elements: (1) a communication with
defamatory imputation, (2) malice, (3) publication, and (4) damages. Hamilton
v. Prewett, 860 N.E.2d 1234, 1243 (Ind. Ct. App. 2007), trans. denied.
While interpreting Indiana’s notice pleading provision in the context of
a defamation claim, our Supreme Court has held that
even under notice pleading, a plaintiff must still set out the
operative facts of the claim. Indeed, hornbook law stresses the
necessity of including the alleged defamatory statement in the
complaint. See, e.g., 53 C.J.S. §§ 128-163; 9 Indiana Practice
§§ 28.3-28.14. There is sound reason for this policy, as the
absence of a statement in the complaint works a detriment on
both the court and the defendant. The court is handicapped
without the statement since, without it, the court cannot actually
determine if the statement is legally defamatory. [Bandido’s,
712 N.E.2d at 457]. The defendant is placed on an unfair
footing since the absence of the statement denies her the
opportunity to prepare appropriate defenses.... Permitting
defamation actions to proceed without the inclusion of the
alleged statement would sanction claims brought by individuals
who allege nothing more than that someone must have said
something defamatory about them....
Trail v. Boys and Girls Clubs of Nw. Ind., 845 N.E.2d 130, 136-38 (Ind. 2006).
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Newman v. Jewish Cmty. Ctr. Assn. of Indpls., 875 N.E.2d 729, 734-35 (Ind. Ct. App. 2007)
(footnote omitted). In Newman, we further concluded that “[c]ontained within the Supreme
Court’s holding [in Trail] that a plaintiff must identify the alleged defamatory statements in
his complaint is the implication that the plaintiff must also identify the speaker of those
statements.” Id. at 735-36.
CSSC alleges that SIHO communicated the information regarding CSSC’s alleged
unwillingness to participate in the SIHO Network to SCSC. Unlike the defendant in
Newman, we observe in the instant matter that CSSC levied its claim against SIHO itself and
not against unnamed representatives or employees of SIHO. As such, we conclude that
because CSSC specifically alleged that SIHO made the alleged defamatory remarks, CSSC
adequately pled the identity of the speaker of those statements. However, we do not believe
that CSSC adequately pled a defamatory per se statement that was sufficient to set forth a
claim under which CSSC would be entitled to the requested relief.
CSSC alleged that SIHO’s alleged act of providing the above-mentioned information
to SCSC amounted to defamation per se. “A communication is defamatory per se if it
imputes: (1) criminal conduct; (2) a loathsome disease; (3) misconduct in a person’s trade,
profession, office, or occupation; or (4) sexual misconduct.” Newman, 875 N.E.2d at 739. In
alleging that SIHO committed defamation per se, CSSC claimed that the communication at
issue “is of a kind that tends to damage a reputation in the community and/or discourage
others from dealing or associating with CSSC” and was “calculated to harm [CSSC’s]
reputation in its trade, profession and business.” Appellant’s App. p. 21. The statement at
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issue here falls short of the type of statement covered by a claim of defamation per se
because the statement does not impute any misconduct in CSSC’s business or trade. Notably,
a health care provider may have a rational business reason for declining participation in an
insurance provider’s network, and an unwillingness to participate does not, without more,
indicate any misconduct by the health care provider. Thus, even if the statement that CSSC
decided not to participate in SIHO’s network was false, it is not defamatory per se. As such,
we conclude that CSSC has failed to state a claim upon which relief can be granted. We
accordingly affirm the trial court’s order dismissing CSSC’s claim against SIHO without
prejudice.
The judgment of the trial court is affirmed.
BARNES, J., and BROWN, J., concur.
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