4th Circuit rules hospital cannot relitigate claims against insurance company

By Elizabeth Alt | May 1, 2018

NEW ORLEANS — The Louisiana 4th Circuit Court of Appeal has ruled that a local hospital cannot relitigate claims that have been dismissed in federal court in its suit against Blue Cross and Blue Shield of Louisiana.

The insurance company requested judicial review after a trial court ruling in December denied its exceptions for res judicata. Blue Cross claimed that St. Charles Surgical Hospital LLC and the Center for Restorative Breast Surgery LLC were “attempting to relitigate claims in Orleans Parish Civil District Court” on the same issues that a federal district court dismissed and permanently enjoined in a final judgment.

“Plaintiffs-Respondents’ claims for fraud and abuse of process are barred by the doctrine of res judicata,” the court wrote. The opinion was written by Judge Regina Bartholomew-Woods, with Judges Daniel L. Dysart and Paula A. Brown also on the panel.

St. Charles Surgical Hospital and the Center for Restorative Breast Surgery sued Louisiana Health Service and Indemnity Co., doing business as Blue Cross and Blue Shield of Louisiana, in 2010. The suit alleges that the insurance provider refused to pay claims after verbally agreeing to pay when the hospital staff inquired over the phone whether certain claims would be covered. St. Charles Surgical Hospital, which said it is an out-of-network provider for Blue Cross, filed complaints for breach of contract, negligent misrepresentation, detrimental reliance, unjust enrichment and fraud.

The hospital dismissed its claim of fraud with prejudice in 2015 and filed a new suit in February 2017. The trial court dismissed St. Charles Surgical Center’s claims with prejudice in March 2017.

In the opinion, Bartholomew-Woods said that the only difference between the two filings were the dates provided for the alleged misconduct. The court noted that the new dates used in the civil court filing “could have and should have been asserted in the federal proceeding.”

Bartholomew-Woods stated the Louisiana Supreme Court recently ruled that “[w]hen a state court is required to determine the preclusive effects of a judgment rendered by a federal court exercising federal question jurisdiction, it is the federal law of res judicata that must be applied.”

The appeals court found that Blue Cross was correct in alleging that the plaintiffs are relitigating claims that are the same or similar to ones already litigated and dismissed in federal court and ruled that the federal law of res judicata must be applied.

Blue Cross also alleged that the trial court erred in denying its writ for cause of action. Bartholomew-Woods wrote, “Based on the bare allegations of the Petition, Plaintiffs-Respondents have alleged a cause of action for abuse of process, and the trial court correctly denied Defendants-Relators’ exception of no cause of action." She noted that regardless, their claims are “barred by res judicata."

The appeals court reversed the trial court ruling to deny the exception for res judicata, and St. Charles Surgical Hospital's complaints were dismissed with prejudice.

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