Dallas Court of Appeals: HCN Not Liable for Terminating Provider Contract

The Dallas court of Appeals has concluded that a healthcare network did not breach its contract with a health care  provider when it terminated his relationship as a network provider.

In McConnell v. Coventry Health Care National Network, et al., the insurance carrier’s HCN contract allowed the carrier to notify the HCN of any “clinical, quality of care, customer service, billing issues or other provider related issues with a Provider.” The carrier notified the network about a particular healthcare providers comments in a patient’s medical records which disparaged the carrier’s claims handling decisions and actions.

The network notified the healthcare provider by letter that the carrier was concerned about his unprofessional comments in the patient’s medical record. The network advised the provider that the medical record “is intended to record the objective findings and the results of treatment. The use of medical records to cast aspersions on the motives of the insurance carrier is not acceptable.” The provider was warned again by the network to refrain from disparaging comments later that same year. Finally, the provider proceeded to perform surgery that was not supported by the patient’s MRI results and “despite a Designated Doctor Exam which contradicted [the provider’s] diagnosis and treatment recommendations.

Ultimately, the HCN terminated the provider’s network contract in accordance with the provider contract.

The healthcare provider sued the HCN and the network alleging various tort and contract theories of recovery. The trial court granted summary judgment in favor of both the HCN and the insurance carrier. The court concluded that the provider’s contract claim against the HCN was abandoned when the provider dropped it from his pleadings and failed to obtain leave of court to reurge them. The court also concluded that the tort claims against the HCN failed as a matter of law:

McConnell alleged that Coventry told other network providers that McConnell could not see patients after his termination even as an out-of-network provider. McConnell also alleged Coventry interfered with his business relationship with his patients by attempting to dictate what McConnell could say in the patients’ medical records. Neither allegation identifies conduct that would be actionable under a recognized tort. See Sturges, 52 S.W.3d at 726 (plaintiff must prove “defendant’s conduct would be actionable under a recognized tort”). In general, conduct pursuant to a valid contract cannot not be said to be independently tortious or wrongful. The summary judgment evidence indicates that the conduct McConnell complains about was based on Coventry’s exercise of its legal rights under its contract with McConnell. See Calvillo v. Gonzalez, 922 S.W.2d 928, 929 (Tex. 1996) (per curiam) (defendant’s exclusive contract with hospital justified as a matter of law his interference with another party’s prospective business relations); Schoellkopf v. Pledger, 778 S.W.2d 897, 904 (Tex. App.—Dallas 1989, writ denied) (enforcing or complying with one’s own contract does not constitute unjustifiable interference with another’s contract). Coventry states its contract required treating doctors, except in emergencies, to refer patients to other network providers where available. Further, Coventry’s assertion that medical records were only for objective medical findings and the results of treatment was based on McConnell’s agreement to cooperate with the carrier’s medical review programs and to comply with all applicable carrier policies and procedures.

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Here, Coventry proved its conduct was based on the exercise of its legal rights under the contract with McConnell and therefore was not independently tortious. Because the conduct was not independently tortious, Coventry conclusively negated an essential element of McConnell’s tortious interference with prospective business relations claim and was entitled to summary judgment. We conclude the trial court did not err by granting summary judgment on this claim.

The court also granted the carrier’s summary judgment motion with respect to the provider’s tortious interference with contractual relations cause of action, concluding that the carrier’s actions were justified under its contract with the HCN.

Generally, justification is established as a matter of law when the acts the plaintiff complains of as tortious interference with contract are merely the defendant’s exercise of its own contractual rights. Id. at 81; ACS Investors, Inc. v. McLaughlin, 943 S.W.2d 426, 431 (Tex. 1997). Enforcing or complying with one’s own valid contract does not constitute unjustifiable interference with another’s contract. Schoellkopf v. Pledger, 778 S.W.2d 897, 904 (Tex. App.—Dallas 1989, writ denied); Maynard v. Caballero, 752 S.W.2d 719, 721 (Tex. App.—El Paso 1988, writ denied) (“An action to protect one’s contractual right is also ordinarily justification for interference with another’s contract.”). Interference with contractual relations is privileged where the party possesses an equal or superior interest to that of the plaintiff in the subject matter. Schoellkopf, 778 S.W.2d at 904 (citing Black Lake Pipe Line Co. v. Union Constr. Co., 538 S.W.2d 80, 91 (Tex. 1976)). Liberty’s contract with Coventry allowed Liberty to notify Coventry of issues with providers and seek Coventry’s resolution of those issues. The contract provides in part: [Liberty] may identify clinical, quality of care, customer service, billing issues or other provider related issues with a Provider. These issues or “incidents” shall be screened internally by [Liberty] to remove duplicates and ensure merit. Once merit is established, the incident will be forwarded to Coventry for resolution. The summary judgment evidence is clear that Liberty identified issues with McConnell’s comments placed in patient medical reports and notified Coventry as allowed by the contract. Because Liberty did exactly what its contract with Coventry allowed it to do, we conclude Liberty established its justification defense as a matter of law and the trial court did not err by granting summary judgment on the tortious interference with contract claim.

In addition, the court ruled that the provider failed to present summary judgment evidence raising a genuine issue of material fact on the falsity element of his business disparagement claim. The court affirmed the judgment of the trial court that the provider take nothing.