                         Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE                                         NEWS RELEASE #035


FROM: CLERK OF SUPREME COURT OF LOUISIANA



The Opinions handed down on the 1st day of July, 2014, are as follows:


BY CLARK, J.:


2013-CC-2985      AARON EMIGH, ET AL.   v. WEST CALCASIEU CAMERON HOSPITAL, ET AL.
                  (Parish of Calcasieu)

                  For the reasons provided herein, we affirm the trial court’s
                  ruling   overruling  Blue   Cross’s  exception and remand for
                  proceedings consistent with this opinion.
                  AFFIRMED AND REMANDED.

                  VICTORY, J., dissents for the reasons assigned by Justice Guidry.
                  GUIDRY, J., dissents and assigns reasons.
07/01/14

                         SUPREME COURT OF LOUISIANA

                                   NO. 2013-CC-2985

                               AARON EMIGH, ET AL.

                                         VERSUS

               WEST CALCASIEU CAMERON HOSPITAL, ET AL.

           ON SUPERVISORY WRITS TO THE FOURTEENTH JUDICIAL
              DISTRICT COURT FOR THE PARISH OF CALCASIEU


CLARK, JUSTICE

       A putative class action was filed against West Calcasieu Cameron Hospital

(hereinafter referred to as “WCCH”) for alleged violations of La. R.S. 22:1874, also

known as the “Balance Billing Act.” This suit was expanded to name several health

insurance issuers as defendants. The current claim under review is asserted by the

plaintiff Laura Delouche against her insurer, Louisiana Health Service & Indemnity

Company, d/b/a Blue Cross and Blue Shield of Louisiana (hereinafter referred to as

“Blue Cross”). We granted certiorari to determine whether a cause of action exists,

whereby Delouche can pursue a legal remedy against Blue Cross. For the reasons

that follow, we affirm the lower court’s denial of Blue Cross’s exception of no cause

of action and remand for proceedings consistent with this opinion.

                     FACTS AND PROCEDURAL HISTORY

       On or about August 13, 2010, Delouche was injured in an automobile accident

and received treatment at WCCH in Calcasieu Parish. As alleged in the petition for

damages, Delouche was insured by Blue Cross at the time of the accident under an

individual Blue Saver High Deductible policy.1 Pursuant to this policy of health



       1
         Delouche had a $1,700 deductible amount, which she must annually satisfy before Blue
Cross tenders any payment for health care costs.
insurance, Delouche paid premiums and agreed to use specific providers in exchange

for reduced health care rates, known in the policy as the “Allowable Charge.”2

WCCH was a “contracted health care provider” with Blue Cross, as defined in La.

R.S. 22:1872(6). As such and pursuant to the Provider Agreement between WCCH

and Blue Cross, WCCH contractually agreed to accept these reduced rates as payment

in full for services provided to the Blue Cross insured (Delouche). Additionally,

WCCH agreed to hold the insured (Delouche) harmless for any amounts other than

any applicable deductible, co-pay, and/or coinsurance.

       At the time of treatment, Delouche notified WCCH that she was insured by

Blue Cross; however, WCCH refused to accept her insurance and ignored the agreed

upon reduced price. Instead, WCCH charged Delouche the full, undiscounted amount

of $718.00 and asserted a lien against any tort recovery Delouche may receive from

a third party as a result of the automobile accident. This practice of rejecting

insurance and collecting or attempting to collect full charges is referred to as “balance

billing” and is prohibited by law. See La. R.S. 22:1874. Delouche sued WCCH for

this practice of over-billing.3

       In a supplemental petition, Delouche added Blue Cross as a defendant,

claiming Blue Cross was liable for WCCH’s failure to perform. Blue Cross filed

several exceptions, including an exception of no cause of action. The trial court




       2
          The Blue Saver policy defines “Allowable Charge” as: “[t]he lesser of the billed charge or
the amount established by Us or negotiated as the maximum amount allowed for all Provider
services covered under the terms of this Contract.” This term represents the maximum amount the
health care provider can bill an insured for a covered service, procedure, or treatment.
       3
         The liability of a health care provider for balance billing is the central issue in the
underlying class action against WCCH and is not currently before this court in this case. While
balance billing in the context of La. R.S. 22:1874 is not a concern in this matter, we considered its
legal consequences in a separate case. See Anderson v. Ochsner, 13-2970 (La. __) _ So.3d _.

                                                 2
overruled the exception, and the court of appeal denied writs, with one dissenting

judge noting that a full opinion was required.4

      Blue Cross filed a writ application with this court. We granted certiorari to

determine whether the factual allegations in Delouche’s petition give rise to any cause

of action against Blue Cross.5

                                   APPLICABLE LAW

      The peremptory exception of no cause of action is designed to test the legal

sufficiency of a petition by determining whether a party is afforded a remedy in law

based on the facts alleged in the pleading. La. Code Civ.P. art. 927; Everything on

Wheels Subaru, Inc. v. Subaru South, Inc., et al., 616 So.2d 1234, 1235 (La. 1993).

All well-pleaded allegations of fact are accepted as true and correct, and all doubts

are resolved in favor of sufficiency of the petition so as to afford litigants their day

in court. La. Code Civ.P. art. 865; Kuebler v. Martin, 578 So.2d 113, 114 (La. 1991).

The burden of demonstrating that a petition fails to state a cause of action is upon the

mover. Fink v. Byrant, 01-0987, p. 4 (La. 11/28/01), 801 So.2d 346, 349.

      In Greemon v. City of Bossier City, 2010-2828, p. 8 (La. 7/1/11), 65 So. 3d

1263, 1268, this court explained Louisiana’s fact pleading system:

              Louisiana’s Code of Civil Procedure uses a system of pleading
      based upon the narration of factual allegations. See Montalvo v. Sondes,
      93–2813, p. 6 (La.5/23/94), 637 So.2d 127, 131. As described in La.
      Code Civ.P. art. 854: “No technical forms of pleading are required. All
      allegations of fact of the petition, exceptions, or answer shall be simple,
      concise, and direct, and shall be set forth in numbered paragraphs.” The
      fact-pleading requirement replaces an earlier “theory of the case”
      pleading requirement. See La. Code Civ.P. art. 862, Official Revision
      Comments—1960, cmt. (b). Because the “theory of the case” pleading
      requirement has been abolished, “[s]o long as the facts constituting the
      claim or defense are alleged or proved, the party may be granted any
      relief to which he is entitled under the fact-pleadings and evidence.” Cox

      4
          Emigh v. West Calcasieu Cameron Hospital, 13-1038 (La. App. 3 Cir. 11/26/13), _ So. 3d
_.
      5
          Emigh v. West Calcasieu Cameron Hospital, 13-2985 (La. 3/14/14), 134 So.3d 1184.

                                               3
      v. W.M. Heroman & Co., Inc., 298 So.2d 848, 855 (La.1974), overruled
      on other grounds by A. Copeland Enterprises, Inc. v. Slidell Memorial
      Hosp., 94–2011, p. 9 (La.6/30/95), 657 So.2d 1292, 1299. However,
      even though the “theory of the case” need no longer be pled, La. Civ. P.
      art. 891 provides that a petition “shall contain a short, clear, and concise
      statement of all causes of action arising out of, and of the material facts
      of, the transaction or occurrence that is the subject matter of the
      litigation.” (Emphasis added.)

      The sufficiency of a petition subject to an exception of no cause of action is a

question of law, and a de novo standard is applied to the review of legal questions;

this court renders a judgment based on the record without deference to the legal

conclusions of the lower courts. See Foti v. Holliday, 2009–0093, p. 6 (La.10/30/09),

27 So.3d 813, 817.

                                   DISCUSSION

      To determine whether any valid cause of action exists, we must examine the

factual allegations contained in the petition. We note that typically evidence is not

allowed to be admitted to support or controvert an exception of no cause of action.

See La. Code Civ. P. art. 931. However, the parties, without objection, admitted the

contracts at issue, thereby expanding what the court may examine in determining

whether a legal remedy exists. (See City of New Orleans v. Bd. of Directors of

Louisiana State Museum, 98-1170 (La. 3/2/99), 739 So. 2d 748, 756, wherein the

court recognized the jurisprudential exception to the rule that allows evidence

admitted without an objection to enlarge the pleadings.)

      Delouche alleges Blue Cross “agreed and promised that if its insureds were

treated by a contracted health care provider, such as WCCH, the provider would

submit claims to the insurer, and that all that the insured would be required to pay to

the provider for covered services would be any deductible, co-payment, co-insurance

or other amounts as provided for in the policy of insurance as the insured[’]s

responsibility.” Delouche alleges that WCCH did not comply with its obligations.

                                           4
Thus, as averred in her petition, Blue Cross is liable for WCCH’s failure to perform

as promised by Blue Cross. The petition generally alleges liability under a breach of

contract theory and also detrimental reliance. Moreover, Delouche contends Blue

Cross “has failed to take reasonable steps to enforce the agreement and promise

described above, and has allowed and encouraged WCCH” to engage in this

prohibited billing practice.

       In support of her lawsuit, Delouche contends the petition clearly states a cause

of action. She, an insured, entered into a contract with Blue Cross whereby she

agreed to pay premiums in exchange for the availability of negotiated group discounts

for health care costs.6 She contends she upheld her obligation but did not receive the

       6
          Delouche points to the policy language to support her argument: “[the insured] will not be
billed the $[] difference between the Hospital’s billed charge and the Allowable Charge for the
Covered Service.”

Further, The policy offers these two examples of coverage. Because the record has not yet revealed
whether WCCH was a PPO Provider Hospital or a Participating Hospital with Blue Cross, both
examples illustrated in the policy are included:

       EXAMPLE: You have a Subscriber Only (single Member) PPO policy with a
       $1,700 annual Deductible Amount. You have 100% / 0% Coinsurance when You
       receive Covered Services from Hospitals in the PPO Network and 80% / 20%
       Coinsurance when you receive Covered Services from Hospitals that are not in the
       PPO Network. You receive Covered Services at a Hospital that are not Emergency
       Medical Services and the charge for the service is $3,000. We have negotiated an
       Allowable Charge of $1,000 with our PPO Hospitals for this service. We have
       negotiated an Allowable Charge of $1,200 with our Participating Hospitals for this
       service. You have previously met Your annual $1,700 Deductible Amount.

       Scenario 1: When You Go To A PPO Provider Hospital

       When you receive Medically Necessary Covered Services from a PPO Hospital, We
       pay the PPO Provider Allowable Charge, less any applicable Coinsurance amount
       that You pay. Because of the agreement that this Hospital signed with Us to be in
       Our PPO Network, the Hospital will accept the Allowable Charge of $1,000 for Your
       Covered Service as payment in full. You pay nothing (Your 0% Coinsurance of the
       Allowable Charge) and We pay $1,000 (Our 100% Coinsurance of the Allowable
       Charge). Also, because of Our Agreement with this Hospital, You will not be billed
       for the $2,000 difference between the Hospital’s billed charge and the Allowable
       Charge for the Covered Service.

       Had you not met Your Deductible Amount in the above example, the Allowable
       Charge of $1,000 would count toward Your Deductible Amount of $1,700.

       Scenario 2: When You Go To A Participating Hospital


                                                 5
promised discount. Additionally, Delouche argues Blue Cross promised that the

provider (WCCH) would file all claims with Blue Cross on her behalf, as the insured,

but WCCH did not submit her claim to Blue Cross. Instead, WCCH actively rejected

her insurance. Delouche contends this is an additional example of Blue Cross

disregarding its promise to her. Blue Cross’s failure to deliver what it promised

subjects it to liability.

       Blue Cross, in defending its exception of no cause of action, argues the sole

object of the contract between itself and its insured, Delouche, is payment of covered

medical expenses. Blue Cross asserts it did not promise that a third party contracted

provider would honor its billing obligations. Rather, the billing obligations of the

provider as established by the Provider Agreement between Blue Cross and WCCH

are simply accessories to and a means of fulfilling the underlying object of paying for

covered benefits. Thus, as argued by Blue Cross, if WCCH’s performance is not the

object of the insurance contract between Blue Cross and Delouche, it stands to reason

that WCCH’s non-performance cannot constitute a breach of the insurance contract

by Blue Cross. Further, Blue Cross contends that it is not obligated to police the acts

of a provider or act as its surety.

       The trial court, in overruling Blue Cross’s exception, found there to be a valid

cause of action under La. Civ. Code art. 1977, which provides:



       When you receive Medically Necessary Covered Services from a Participating
       Hospital, We pay our Coinsurance percentage of the Participating Provider
       Allowable Charge, less any applicable Coinsurance amount that You pay.

       Because of this agreement that this Hospital signed with Us to be in Our Participating
       Provider Network, the Hospital will accept the Allowable Charge of $1,200 for Your
       Covered Service as payment in full. We pay $960 (Our 80% Coinsurance of the
       Allowable Charge) and You pay $240 (Your 20% Coinsurance of the Allowable
       Charge). Also because of Our Agreement with this Hospital, You will not be billed
       for the $1,800 difference between the Hospital’s billed charge and the Allowable
       Charge for the Covered Service.



                                                 6
       The object of a contract may be that a third person will incur an
       obligation or render a performance.


       The party who promised that obligation or performance is liable for
       damages if the third person does not bind himself or does not perform.


       This civilian concept known as promesse de porte-fort contemplates a contract

in which the object is that a third party will undertake a certain obligation; in the

event of non-performance of that obligation by the third party, the promisor becomes

liable to the promisee. Blue Cross, as mentioned above, argues the object of the

contract is solely to pay for covered health care services. Delouche acknowledges

that payment of covered medical bills is an obvious object of the contract, but she

contends the object extends beyond mere payment based on the terms and conditions

of the contract of insurance. Rather, the object is to also secure reduced health care

costs and tender payment for those negotiated, discounted costs.7 We agree with

Delouche.

       In this two-contract health care system that affects the majority of health

insurance policies in this state, the insurance issuer, such as Blue Cross, promises to

its insureds, such as Delouche, coverage and the availability of discounted rates based

on the existence of its contract with its contracted providers, such as WCCH. The

purpose of a health insurance contract and the very reason insureds obligate

themselves to the payment of premiums and a restricted choice of in-network

providers, is to receive coverage and the benefits of negotiated, reduced health care

costs. To narrowly construe the object to mean only payment of covered charges, as

Blue Cross argues, ignores the raison d’etre of the contract: an economic benefit to


       7
           Delouche also asserts that a second object of the contract is that the provider will file a
claim with Blue Cross. However, she concedes the primary object of promising discounted rates
exists even if the promise that the provider would submit the claim is not found to be a legitimate
object of the contract. As such, we limit our discussion to the contention that the promise of lowered
rates is the object of the contract.

                                                  7
the insured. Holding otherwise is illogical based on the terms of this high deductible

policy, where the promised reduced rate attaches the instant a medical charge is

incurred, regardless of whether a deductible has been satisfied. The insurance policy

at issue promised that even the out-of-pocket expenses that count towards Delouche’s

deductible would be subject to a discount.8 If all that was promised by Blue Cross

was coverage of the maximum amount, the incentive to have insurance, specifically

a high deductible policy, dissipates insofar as the insured could simply pay the non-

discounted bill herself without also incurring the costs of premiums. For these

reasons, we find an object of the contract is the entitlement to discounted health care

costs.

         The actual billing of this promised, discounted charge is performed by a third

party. Thus, Blue Cross is promising that a third party will render a performance,

which fits squarely within the context of La. Civ. Code art. 1977.9

         Blue Cross avers this interpretation as argued by Delouche amounts to

suretyship or vicarious liability; however, we observe that Blue Cross itself entered

into the contract with Delouche and made certain assurances. The fact that Blue

Cross could only deliver based on third party performance does not make Blue Cross

immune to liability. Thus, we find, at a minimum, the material facts alleged in the

petition are sufficient to survive an exception of no cause of action under La. Civ.




         8
          For instance, under the facts of this case, because Delouche had not yet satisfied her
deductible, her personal financial responsibility would be less than the $718.00 maximum charge
had her insurance been honored.
         9
          Even if we found mere payment of medical bills was the object of the contract, we find
WCCH’s failure to accept Delouche’s insurance at all, despite Blue Cross’s assurances to the
contrary, still exposes Blue Cross to liability under La. Civ. Code art. 1977.

                                               8
Code art. 1977. We expressly offer no opinion as to the success of this claim, only

that Delouche is afforded the right to judicially assert an action against Blue Cross.10

                                   FACTUAL DEFENSES

        Blue Cross acknowledges that WCCH, as the provider, contractually agreed

to file claims for services rendered to insureds for payment by Blue Cross. Blue

Cross further points to policy language that instructs an insured how to file his/her

own claim. Blue Cross argues that, despite these provisions, no claim for the

treatment after the accident was ever filed in this matter by either WCCH or

Delouche. Without a submitted claim, there was nothing to process. Thus, Blue

Cross avers it cannot be liable. Next, Blue Cross argues Delouche did not meet any

of her $1,700.00 deductible and because the charge of $718.00 was less than the

deductible, Blue Cross would not pay any of this amount regardless of the

circumstances. Lastly, in defense, Blue Cross relies on the following contractual

language to support its argument that its liability is limited by virtue of the policy

between itself and Delouche:

       Non Responsibility for Acts of Providers:

       We will not be liable for or on account of any fault, act, omission,
       negligence, misfeasance, malfeasance or malpractice on the part of any
       Hospital or other institution, or any agent or employee thereof, or on the
       part of any Physician, Allied Provider, nurse, technician or other person
       participating in or having to do with Your care or treatment.


       We find these factual defenses are relevant to the merits of this case and are not

appropriate to consider at this stage of the proceeding. Accordingly, we expressly



       10
           Insofar as Delouche relies on other theories of the law in her suit against Blue Cross, we
offer no opinion as to their existence as valid causes of action or to their ultimate success. Nothing
in this opinion should be construed as limiting her ability to pursue any theory of her case to the
extent the law allows nor should it be construed as endorsing one remedy over any others. Rather,
having found the factual allegations in Delouche’s petition give rise to her right to proceed, we
pretermit discussion of additional claims.

                                                  9
decline to entertain them and offer no conclusions as to the success of the underlying

claims or defenses of Delouche and Blue Cross, respectively.

                                  CONCLUSION

      To conclude, we find Delouche’s petition sufficiently alleges facts to survive

Blue Cross’s exception of no cause of action. For the reasons provided herein, we

affirm the trial court’s ruling overruling Blue Cross’s exception and remand for

proceedings consistent with this opinion.

AFFIRMED AND REMANDED.




                                         10
07/01/14

                   SUPREME COURT OF LOUISIANA

                                NO. 2013-CC-2985

                              AARON EMIGH, ET AL.

                                      VERSUS

               WEST CALCASIEU CAMERON HOSPITAL, ET AL.

     ON SUPERVISORY WRITS TO THE FOURTEENTH JUDICIAL
        DISTRICT COURT FOR THE PARISH OF CALCASIEU

VICTORY, J., dissents for the reasons assigned by J. GUIDRY.
07/01/14




                   SUPREME COURT OF LOUISIANA

                                NO. 2013-CC-2985

                            AARON EMIGH, ET AL.

                                      VERSUS

            WEST CALCASIEU CAMERON HOSPITAL, ET AL.



Guidry, Justice, dissents and assigns reasons.

      I respectfully dissent from the majority’s holding that the plaintiff has asserted

a cause of action against her health insurer under either the Health Care and

Consumer Billing and Disclosure Protection Act, La. Rev. State. 22:1871 et seq.

(commonly known as the “Balance Billing Act”) or La. Civ. Code art. 1977.

      The function of the peremptory exception of no cause of action is to question

whether the law extends a remedy to the plaintiff under the factual allegations of the

petition. Kinchen v. Livingston Parish Council, 07-0478 (La. 10/16/07), 967 So.2d

1138. Here, the plaintiff seeks to recover damages against her health insurer for her

health care provider’s alleged violations of the Balance Billing Act. However, in my

view, the legislature has not provided the insured a private right of action under the

Balance Billing Act against the health care provider for improper billing or collection

practices; therefore, it certainly has not provided the insured with an action against

her health insurer for her health care provider’s alleged violation of the Act. As I

explained in my dissent in the companion case of Yana Anderson v. Ochsner Health

System and Ochsner Clinic Foundation, 13-CC-2970 (La. _/_/14), __ So.3d __,

                                           1
(Guidry, J., dissenting), the legislature has expressly provided two remedies for a

health care provider’s violations of the Balance Billing Act. Specifically, an insured

may file a complaint with the Consumer Protection Division of the Department of

Justice pursuant to La. Rev. Stat. 22:1877(A)(1), which delegates to the attorney

general the discretion to pursue remedies under the Louisiana Unfair Trade Practices

Act, La. Rev. Stat. 51:1401 et seq. Alternatively, in the event the health care provider

maintains an action at law seeking to enforce a lien against the insured for an amount

in excess of the reimbursement rate, the insured is entitled to attorneys fees and costs

if the suit is successfully defended. La. Rev. Stat. 22:1874(B).

      I also find no merit in the majority’s reliance on La. Civ. Code art. 1977 to

circumvent the insured’s lack of privity of contract to support her breach of contract

claims. The plaintiff pleaded the provisions of not only her contract with her health

insurer, but also the provider agreement between the health insurer and the health care

provider. While the majority concedes the insured is not a party to the provider

agreement, it suggests by virtue of the insured’s contract with her insurer, who

allegedly promised discounted rates, that the insurer has guaranteed the health care

provider’s performance of its obligations under the Balance Billing Act. However,

there is no promesse de porte-fort as alleged by the insured, because if there is no

private right of action for an insured against the health care provider who violates the

Act, there can be no cause of action by the insured against the health insurer for its

failure to guarantee the performance of the health care provider under the Balance

Billing Act.




                                           2
