Opinion
No. HHD X07 CV 07 5019865S
November 24, 2010
MEMORANDUM OF DECISION
I
The plaintiffs, Lawrence Memorial Hospital, Inc., John Dempsey Hospital, Stamford Hospital and The William W. Backus Hospital, commenced this litigation on February 13, 2007 against the defendants, Health Net, Inc., Health Net of Connecticut, Inc., and Health Net of the Northeast, Inc. The defendants are health care companies that offer health insurance plans to their members. Pursuant to contracts between the defendants and each of the plaintiffs, the plaintiffs provide medical services to the defendants' members in exchange for compensation by the defendants in accordance with the contracts. The plaintiffs are suing the defendants alleging improper denial, underpayment and untimely payment of medical claims and interest.
The William W. Backus Hospital moved to be made a plaintiff on April 22, 2008 and the court, Pittman, J. granted the motion on May 5, 2008. Additionally, Johnson Memorial Hospital, Inc., was originally a plaintiff, but withdrew from the litigation on June 24, 2010.
In the plaintiffs' amended complaint, dated April 18, 2008, the plaintiffs allege that the defendants breached their respective contracts (counts one, nine, seventeen and thirty-three); breached the covenant of good faith and fair dealing (counts two, ten, eighteen and thirty-four); violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., by violating the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-815 et seq. (counts three, eleven, nineteen and thirty-five); violated CUTPA (counts four, twelve, twenty and thirty-six); made fraudulent misrepresentations (counts five, thirteen, twenty-one and thirty-seven); made negligent misrepresentations (counts six, fourteen, twenty-two and thirty-eight); were negligent (counts seven, fifteen, twenty-three and thirty-nine); and owe money in quantum meruit (counts eight, sixteen, twenty-four and forty).
Section 42-110b(a) provides that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."
Section 38a-815, in relevant part, provides: "[n]o person shall engage in this state in any trade practice which is defined in section 38a-816 as, or determined pursuant to sections 38a-817 and 38a-818 to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance, nor shall any domestic insurance company engage outside of this state in any act or practice defined in subsections (1) to (12), inclusive, of section 38a-816 . . ."
Counts twenty-five through thirty-two are the corresponding counts of the amended complaint pertaining to Johnson Memorial Hospital, Inc. See footnote 1.
On June 1, 2009, the defendants moved to strike those counts alleging violations of CUTPA/CUIPA (counts three, eleven, nineteen and thirty-five) and of CUTPA (counts four, twelve, twenty and thirty-six) on the grounds that they are barred by the applicable statute of limitations. The defendants also move to strike the CUTPA counts on the grounds that they are legally insufficient as the plaintiffs improperly seek to assert CUTPA claims arising from insurance practices that are not based on alleged violations of CUIPA. The plaintiffs filed a memorandum in opposition to the motion on August 14, 2009 and this court heard oral argument on February 1, 2010. The parties thereafter attempted to stipulate to certain facts, but were unable to do so. They reargued the matter on September 20, 2010 and the plaintiffs submitted an additional brief on October 4, 2010.
II
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any [complaint] . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, 270, 709 A.2d 558 (1998). "It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). When ruling on a motion to strike, the court must "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) American Progressive Life Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 120, 971 A.2d 17 (2009).
III
A.
As a threshold matter, this court recognizes that "ordinarily, [a] claim that an action is barred by the lapse of the statute of limitations must be pleaded as a special defense, not raised by a motion to strike." (Internal quotation marks omitted.) Greco v. United Technologies Corp., 277 Conn. 337, 344 n. 12, 890 A.2d 1269 (2006). "In two limited situations, however, we will allow the use of a motion to strike to raise the defense of the statute of limitations. The first is when `[t]he parties agree that the complaint sets forth all the facts pertinent to the question whether the action is barred by the [s]tatute of [l]imitations and that, therefore, it is proper to raise that question by [a motion to strike] instead of by answer.' . . . The second is where a statute gives a right of action which did not exist at common law, and fixes the time within which the right must be enforced, the time fixed is a limitation or condition attached to the right — it is a limitation of the liability itself as created, and not of the remedy alone." (Citation omitted; internal quotation marks omitted.) Forbes v. Ballaro, 31 Conn.App. 235, 239-40, 624 A.2d 389 (1993).
In the present case, the second exception applies because the plaintiffs allege violations of CUTPA — a statutory right of action that did not exist at common law. See Associated Investment Co. Ltd. Partnership v. Williams Associates IV, 230 Conn. 148, 159, 645 A.2d 505 (1994). Thus, the court addresses the defendants' statute of limitations argument here. See, e.g., J.E. Robert Co. v. Signature Properties, LLC, Superior Court, complex litigation docket at Hartford, Docket No. X04 CV 07 5026084 (March 1, 2010, Shapiro, J.); White Oak Corp. v. American International Group, Inc., Superior Court, complex litigation docket at Hartford, Docket No. X09 CV 07 4027319 (July 6, 2009, Shortall, J.T.R.) ( 48 Conn. L. Rptr. 198, 201).
B.
The plaintiffs allege in their amended complaint that starting in 2001 the defendants routinely denied, underpaid and untimely paid medical claims and interest. In response to this court's order at a June 5, 2008 status conference and a corresponding interrogatory by the defendants, the plaintiffs filed lists of sample claims that include the patient's claim number, the admission date, the discharge date, the total charges, the amount owed, the interest owed, the administrative costs owed and the alleged improper practices. By agreement of the parties, the lists can be considered part of the complaint.
As noted above, this matter was commenced on February 13, 2007, but the parties entered into a tolling agreement on April 4, 2007 that tolled the applicable statute of limitations as of August 3, 2006. A review of the sample lists indicates that many of the alleged improper practices occurred on medical claims for the defendants' members who were admitted and discharged from the plaintiffs' hospitals in 2000 to 2003. The statute of limitations for a CUTPA action is three years after the occurrence of a violation. General Statutes § 42-110g(f); see also Bellemare v. Wachovia Mortgage Corp., 94 Conn.App. 593, 606 n. 6, 894 A.2d 335 (2006) ("[p]ursuant to the clear and unambiguous language of [General Statutes] § 42-110g(f), no cause of action can be maintained under CUTPA if brought more than three years after the unfair practice occurs"), aff'd, 284 Conn. 193, 931 A.2d 916 (2007). The defendants argue that the three-year period begins from the act or occurrence and that any occurrences three years prior to the commencement of the action are time barred. Thus, they assert that any claim for acts more than three years before the tolling agreement date of August 3, 2006 is barred.
The plaintiffs counter that although the practices commenced in 2001, they continue presently and, therefore, are all within the three-year period. They stress that this court's focus should be on general practices as opposed to any specific patient billing including the continual failure to pay interest. In addition, they argue that the continuing course of conduct tolled the statute of limitations.
Our Supreme Court has found that if the acts which "form the basis of the CUTPA claim occurred more than three years prior to the commencement of the action, that claim is time barred." Willow Springs Condominium Assn., Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 46, 717 A.2d 77 (1998). Put another way, "[t]o the extent that the CUTPA claim relies on any alleged conduct which occurred more than three years before suit was commenced . . . it is time-barred by the three-year CUTPA limitations period." Blumberg Associates Worldwide, Inc. v. Brown Brown of Connecticut, Inc., Superior Court, complex litigation at Hartford, Docket No. X04 CV 08 5023532 (July 14, 2009, Shapiro, J.). In the present case, this court cannot determine when any alleged occurrences happened based upon the allegations of the complaint or the lists of sample claims.
The parties and the court devised the lists as a way to deal with the numerous medical claims involved here. Whether due to lack of discovery or other reasons, the lists do not provide sufficient information for the court to decide the issue. Dates of denial, underpayments or untimely payments would seemingly be within the plaintiffs' knowledge, but the court gives the plaintiffs the benefit of the doubt at this stage.
Additionally, it cannot be determined whether the continuing course of conduct doctrine applies here. "It is axiomatic that [w]hen the wrong sued upon consists of a continuing course of conduct, the statute does not begin to run until that course of conduct is completed." (Internal quotation marks omitted.) Bellemare v. Wachovia Mortgage Corp., supra, 94 Conn.App. 608. "In its modern formulation . . . in order [t]o support a finding of a continuing course of conduct that may toll the statute of limitations there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto. That duty must not have terminated prior to commencement of the period allowed for bringing an action for such a wrong . . . Where we have upheld a finding that a duty continued to exist after the cessation of the act or omission relied upon, there has been evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act . . . The continuing course of conduct doctrine reflects the policy that, during an ongoing relationship, lawsuits are premature because specific tortious acts or omissions may be difficult to identify and may yet be remedied." (Internal quotation marks omitted.) Bednarz v. Eye Physicians of Central Connecticut, P.C., 287 Conn. 158, 170, 947 A.2d 291 (2008).
The court notes that the defendant ordinarily raises the statute of limitations as a special defense and then the plaintiff in their reply must plead a continuing course of conduct and should then allege supporting facts. See Bellemare v. Wachovia Mortgage Corp., supra, 94 Conn.App. 607 n. 7; see also Practice Book § 10-57. But that has not occurred in this case because the defendants chose to raise the statute of limitations in their motion to strike as they are permitted to do as noted above. Without the benefit of supporting facts, it is impossible for the court to determine whether there is a continuing course `of conduct.
The plaintiffs do not argue that a special relationship exists, but, rather, they assert that the defendants' later conduct is related to their prior acts in the sense that it is similar and wrongful and thus "continuing." The "second general category addresses situations in which, because of a continuous course of contacts or dealings, it cannot be said with precision when a specific act or omission occurred in the course of the relationship." Partitions, Inc. v. Blumberg Associates, Inc., Superior Court, judicial district of Hartford, Docket No. CV 98 0576664 (October 9, 2001, Beach, J.).
After discovery in the present case, it presumably can be said with specificity when a particular claim and its interest were denied, underpaid or untimely paid. Furthermore, this is not a situation where the plaintiffs had no knowledge of the alleged wrongful act; they knew that requests for payment were denied, underpaid or untimely paid — and such knowledge terminates any possible tolling. See Connell v. Colwell, 214 Conn. 242, 255, 571 A.2d 116 (1990) (finding that statute of limitations in medical malpractice matter tolled only until decedent became aware of problem); see also S. Pope, Inc. v. Pope Exterminating, Superior Court, judicial district of Middlesex, Docket No. 66712 (November 17, 1993, Higgins, J.) ( 8 C.S.C.R. 1288, 1289) ("[t]he `continuing course of conduct' doctrine has been held inapplicable where the complainants admit they were already aware of the problem" [internal quotation marks omitted]). Nevertheless, the court denies the motion to strike the disputed counts because it is currently impossible to say what may be timely given the information submitted by the plaintiffs.
The court rejects the argument that the failure to pay a claim for one patient is related to the failure to pay on another patient because such a broad interpretation, particularly when the plaintiffs knew of the occurrences, eviscerates the statute of limitations. See S. Pope, Inc. v. Pope Exterminating, supra, 8 C.S.C.R. 1289 ("to allow [the plaintiffs] to now come forward and pursue these allegations . . . after knowing of the violations for almost a decade would violate the purpose of a statute of limitations, which is to prevent the unexpected enforcement of stale claims concerning which the persons interested have been thrown off their guard by want of prosecution" [internal quotation marks omitted]). Nevertheless, it seems reasonable that different acts on a particular claim could be related, e.g., the initial denial of a claim may be related to the underpayment or untimely payment of that claim.
C.
The defendants also seek to strike counts four, twelve, twenty and thirty-six on the additional grounds that the plaintiffs improperly allege CUTPA counts arising from insurance practices not predicated on CUIPA. They argue that CUTPA counts related to insurance practices must be based on alleged violations of CUIPA and cannot be asserted as stand-alone CUTPA counts. In response, the plaintiffs argue that they assert their CUTPA/CUIPA counts based on violations of CUIPA and their CUTPA counts based on public policy violations.
"[T]he legislature has manifested an intention to make insurance practices the subject of two regulatory statutes, CUIPA and CUTPA . . . [T]he mere existence of one regulatory statute does not affect the applicability of a broader, nonconflicting statute, particularly when both statutes provide for concurrent coverage of their common subject matter." (Internal quotation marks omitted.) Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11 (1986). "CUIPA and CUTPA claims . . . [are] independent actions based on factual inquiries and sources of duty separate from actions on the policy." Lees v. Middlesex Ins. Co., 219 Conn. 644, 657, 594 A.2d 952 (1991).
"Following Mead, numerous superior courts have operated under the assumption that a CUTPA claim related to an insurance practice must be predicated upon a CUIPA claim." DeCrescenzo v. CPM Ins. Services, Inc., Superior Court, judicial district of New Haven, Docket No. CV 07 5010892 (December 19, 2007, Cosgrove, J.) ( 44 Conn. L. Rptr. 679, 682); see also State v. Acordia, Inc., Superior Court, complex litigation docket at Waterbury, Docket No. X10 CV 07 4020455 (April 19, 2010, Dubay, J.) ( 49 Conn. L. Rptr. 709, 713) ("Connecticut courts have consistently held that for insurance-related conduct to constitute a violation of CUTPA, the conduct must also constitute a violation of CUIPA. Put another way, when a CUTPA claim is based on insurance practices, it is the CUIPA allegation that forms the basis of the claim rather than the more generalized requirements of CUTPA"). Nevertheless, in Preston v. Chartkoff, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 00 0071112 (July 5, 2001, Nadeau, J.), the court explained: "What Mead actually said was: Our Supreme Court has held that a private cause of action may be asserted under CUTPA to enforce alleged CUIPA violations . . . [A] CUTPA violation premised on CUIPA requires allegations of sufficient facts to demonstrate a `general business practice.' . . . Therefore, Mead does not require all CUTPA actions in insurance cases to arise out of CUIPA as the defendant argues; rather, it merely prescribes what type of CUIPA violation — those acts constituting a general business practice — may rise to the level of an action in CUTPA." (Citations omitted; internal quotation marks omitted.) Therefore, a CUTPA count may stand if a plaintiff's allegations are sufficient on some basis other than CUIPA to establish a cause of action under CUTPA. See id.; see also State v. Acordia, supra, 49 Conn. L. Rptr. 716 n. 3 ("an insurance company could engage in conduct which would violate CUTPA and not violate CUIPA and still be liable under CUTPA if the conduct was not . . . related to its insurance business").
In these contested counts, the plaintiffs herein are not claiming a violation of CUIPA as the basis for their CUTPA claims. Rather, citing the remedial nature of CUTPA and claiming that the defendants have engaged in deceptive practices constituting a violation of public policy, the plaintiffs argue that the CUTPA counts stand even if no violation of CUIPA occurred. The plaintiffs' allegations do not establish, however, a CUTPA cause of action on a basis other than CUIPA. All of their allegations — the routinely denying, underpaying or untimely paying claims and interest — relate to the defendants' insurance business and are covered by CUIPA. Specifically, unfair claim settlement and payment practices constitute unfair and deceptive acts in the insurance business under General Statutes §§ 38-816(6) and (15). Therefore, the motion to strike these counts is granted.
Indeed, the CUTPA-only allegations and the CUTPA/CUIPA allegations are seemingly redundant.
Accordingly, the defendants' motion to strike is denied in part and granted in part.