Magellan Sworn Statements Re Case Management & Utilization Review

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EXHIBIT A

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EXHIBIT B

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EXHIBIT C

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EXHIBIT D

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EXHIBIT A

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION ) ) ) ) Plaintiff, ) v. ) MAGELLAN BEHAVIORAL HEALTH, INC., ) ) ) Defendant.

CUMBERLAND HEIGHTS FOUNDATION, INC.,

Civil Action No. 3:10-00712 Judge Nixon/Magistrate Judge Griffin Electronically Filed

DEFENDANT’S RESPONSE IN OPPOSITION TO PLAINTIFF’S MOTION FOR INJUNCTIVE RELIEF Defendant Magellan Behavioral Health, Inc. (“Magellan”) respectfully submits this response in opposition to the motion for injunctive relief filed by Plaintiff Cumberland Heights Foundation, Inc. (“Cumberland Heights”) in the Chancery Court for Davidson County, Tennessee prior to removal of the action to this Court. For the reasons set forth below, Plaintiff’s request for extraordinary injunctive relief should be denied.

INTRODUCTION This is a breach of contract case in which Plaintiff asks the court to circumvent the parties’ contractual dispute resolution remedies and reinstate a contract, during the pendency of a yet to be commenced arbitration. Magellan had the absolute right to terminate the contract based on Magellan’s conclusion, after an eight-month period of review of Plaintiff’s performance, that the quality of patient care being provided by Plaintiff was clinically inappropriate, below Magellan’s clinical guidelines, and in violation of Magellan’s policies and procedures, all of which placed Magellan members at risk of harm. In essence, the injunctive relief Plaintiff asks this Court to order is the equivalent of an order for specific performance of a services contract, a remedy that is not available to Plaintiff for breach of contract. To the extent Plaintiff disputes Magellan’s absolute right to terminate its contract with Plaintiff, the sole remedy in arbitration is monetary damages. Regardless of the outcome of such 2402084

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arbitration, the end result with be that the parties’ contractual relationship is over. There is no legal basis for this Court to reinstate a contract for the intervening period pending that inevitable outcome.

Plaintiff is a provider of alcohol and drug addiction treatment services to individuals on an inpatient and outpatient basis in Tennessee. (Dkt. #1-1, Complt.) Magellan is a managed behavioral health care company that specializes in managing behavioral health care benefits, including benefits for substance abuse treatment services. (Kennedy Aff. ¶6.)1 Magellan contracts with health insurance companies, employers, and health benefit plans (“Magellan customers”) to manage and administer behavioral health care benefits for their covered members (“Magellan members”). (Id.) Magellan also contracts with behavioral health care service providers, such as Cumberland Heights, to participate in Magellan’s network. (Id. ¶7.)

In 2000, Magellan and Plaintiff entered into a Facility and Program Participation Agreement (the “Provider Agreement”), for mental health and/or substance abuse treatment services to be provided by Plaintiff to Magellan members. (Dkt. #1-1, Ex. E, p.39) (a copy of the Agreement is appended hereto for ease of reference.) As a member of Magellan’s network, Plaintiff agreed to accept negotiated, “in-network” rates for covered services provided to Magellan members in exchange for complying with Magellan’s policies, procedures and guidelines. (Id. §2.4.2.) The initial term of the Provider Agreement was for one year and it automatically renewed on a year-to-year basis unless terminated by either party. (Id. §11.1.) The Provider Agreement could be terminated by either party with cause immediately or without cause upon 90 days written notice. (Id. §§11.2, 11.3, 11.4.)

Beginning in October 2009, in response to internal and external complaints and concerns, Magellan initiated an inquiry and review process of Cumberland Heights’ performance focused on 1

All references to affidavits and declarations filed on behalf of Defendant in opposition to Plaintiff’s motion for injunctive relief, which are being filed contemporaneously with this response, are referred to by the last name of the declarant and the paragraph number of the declaration.

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Cumberland Heights’ treatment records and quality of care of Magellan members. (Kennedy Aff. §§42-43.) This review process continued over the next eight months. (Id. ¶¶42-72.) Based on the findings and results of that process, Magellan terminated the Provider Agreement with cause on July 1, 2010 due to Plaintiff’s failure to comply with Magellan Policies and Procedures and failure to provide clinically adequate care.

(Kennedy Aff. ¶¶75-76; Henschen Aff. ¶¶17-18.)

As a result of the

termination of the Provider Agreement, Magellan removed Plaintiff from Magellan’s network of providers; however, Plaintiff remains free to admit and to treat Magellan members on an “out-ofnetwork” basis rather than as an “in-network” contracted provider. (Kennedy Aff. ¶¶78-80.) Plaintiff cannot dispute that the Provider Agreement permits Magellan to terminate it, with or without cause; but, disputes whether Magellan had sufficient grounds to terminate the Agreement under the with cause provision.

Three weeks after the Provider Agreement was terminated, Plaintiff filed a Verified Complaint and Motion for Injunctive Relief in state court seeking “immediate” relief in the form of a mandatory injunction to reinstate the Provider Agreement and force Magellan to treat it as an “in-network” provider, not for existing or continuing patient care, but for new – as yet unknown – Magellan members who may seek admission to Cumberland Heights during arbitration proceedings. (Dkt. #1-1, Complt. at pp. 14-15.) On July 27, 2010, Magellan timely removed this action on the basis of diversity of citizenship of the parties. (Dkt. # 1, Notice of Removal.)

In considering Plaintiff’s request for injunctive relief, there are several significant points to bear in mind: o First, this lawsuit is not about continuing the care of Magellan members who were

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patients of Cumberland Heights as of July 1, 2010,2 the date of termination of the Provider Agreement, since 31 of those 33 Magellan members completed their treatment programs at Cumberland Heights on an “in-network” basis and the other 2 members transferred to other facilities. (Jameson Decl. ¶58.)

Instead, this lawsuit is about forcing Magellan to approve – as new patients – Magellan members who may seek admission in the future at Cumberland Heights so that Cumberland Heights may continue to hold itself out as an approved Magellan “in-network” provider and collect reimbursement for covered services provided to such members. o Second, this lawsuit is not about Magellan members being denied admission to Cumberland Heights.

Instead, Magellan members remain free to seek admission at Cumberland

Heights, as an “out-of-network” provider.

In fact, since the date the Provider Agreement was

terminated through August 4, 2010, approximately 43 Magellan members have been admitted for inpatient services at Plaintiff on an “out-of-network” basis. (Jameson Decl. ¶59.) o Third, this lawsuit is about alleged money damages. New patients who are Magellan members can seek – and have been approved for – admission to and treatment from Cumberland Heights. Currently, as an “out-of-network” provider, Cumberland Heights is entitled to reimbursement at “out-of-network” rates for covered services provided to Magellan members and seek additional payment from those members. As an “in-network” provider, Cumberland Heights was limited to reimbursement at the negotiated contract rate and was prohibited from balance billing Magellan members for covered services. (Jameson Decl. ¶¶60-61.) Plaintiff claims that its removal from Magellan’s network of providers will ruin Plaintiff financially; however, that claim rings hollow since the only possible “harm” to Cumberland Heights is the monetary difference, if any, between “in-

2

The Magellan members who were patients as of July 1, 2010 include those who were admitted to detoxification, inpatient and residential. It does not include Magellan members who were receiving services on an outpatient basis.

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network” and “out-of-network” rates of reimbursement plus the balance billed to Magellan members.

As these alleged damages are readily quantifiable, there is no basis for injunctive relief. o Fourth, this lawsuit is about Cumberland Heights seeking judicial relief from having allowed itself to become dependent on Magellan for a substantial portion of its revenues notwithstanding the fact that it assumed the risk that Magellan could terminate the contract at will on 90 days notice at any time. Confronted with the terms of the Provider Agreement, Cumberland Heights attempts to recruit the Court’s help to force Magellan to continue under a contract that Magellan can, and has, terminated. o Fifth, this lawsuit is not about whether Magellan has the right to terminate the Provider Agreement, because the Agreement expressly allows either party to terminate the parties’ contract immediately with cause or upon 90 days notice without cause. Consequently, the maximum period for which Cumberland Heights could claim damages, in any event, is limited to 90 days. o Finally, Cumberland Heights ignores the fact that the parties’ Provider Agreement contains detailed contractual remedies – remedies that Cumberland Heights is in the process of pursuing – that Plaintiff is asking the court to suspend contrary to the plain terms of the contract.

STATEMENT OF FACTS Cumberland Heights’ rights and remedies in this case are controlled by the terms of the parties’ contract. The Provider Agreement gives either party the right to terminate the Provider Agreement immediately “with cause” or “without cause” upon 90 days written notice. (Provider Agreement, §§ 11.2, 11.3 and 11.4.) Additionally, in the event of a dispute, the Provider Agreement contains an express dispute resolution process that requires a period of good faith negotiations followed by binding arbitration, if desired. (Id. §10.) The dispute resolution provision further requires that where, as here, the dispute pertains to matters governed by Magellan’s Policies and Procedures, the remedies afforded under the Policies and Procedures must be fully exhausted before Plaintiff may invoke the right to

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arbitration. (Id.) In short, by entering into the Provider Agreement, both parties accepted the risk of termination by the other party at any time and agreed to limit their remedies and abide by the express dispute resolution provisions.

Notwithstanding its agreement to these controlling provisions, Cumberland Heights now seeks a so-called “status quo” preliminary injunction, the effect of which will be to ignore the dispute resolution provision of the Provider Agreement and issue a mandatory preliminary injunction forcing Magellan to continue recognizing it as an “in-network” provider. In essence, the Plaintiff asks this Court to enhance Plaintiff’s position beyond any remedy available to it in arbitration by rewriting the parties’ contractual remedies and forcing Magellan to approve the admission of future, unknown Magellan members (with as yet unidentifiable medical, psychiatric and substance abuse conditions, differing treatment needs, and varying terms of coverage and benefit amounts), to Cumberland Heights, so that Cumberland Heights can attract and be paid for those members even though Magellan has concluded serious quality of care concerns exist.

A.

The Terms of the Provider Agreement.

The Provider Agreement between Plaintiff and Magellan is purely a matter of private contract between private parties. The termination of that Provider Agreement has nothing to do with Plaintiff’s licensing or accreditation as a provider of alcohol and drug addiction services. Consequently, no Magellan members who desire admission are being denied treatment. Plaintiff offered alcohol and drug treatment services to individuals for many years before entering into the Provider Agreement with Magellan and Plaintiff remains free to continue offering those services to individuals following Magellan’s termination of the Provider Agreement.

1.

The Economics of Being an “In-Network” versus “Out-of-Network” Provider.

The economic effect of the termination of the Provider Agreement is limited to the difference in reimbursement rates that Cumberland Heights is entitled to receive for covered services. (Jameson 2402084

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Decl. §61.) Prior to termination, Cumberland Heights was reimbursed for covered services provided to Magellan members as an “in-network” provider in accordance with the negotiated fee schedule, depending upon the terms of the various insurance policies or health benefit plans.

(Provider

Agreement §21..) Post-termination, Cumberland Heights is reimbursed at a different rate as an “outof-network” provider. (Id. ¶15.) Significantly, however, as an “out-of-network” provider, Cumberland Heights now may “balance bill” Magellan members for the difference between Cumberland Heights’ standard charges and the out-of-network rates, a billing practice that is expressly prohibited under Magellan’s provider agreements with “in-network” providers, including Cumberland Heights. (Id. ¶15, 17.)

In the thirty days following termination, approximately 43 Magellan members have received covered inpatient services at Cumberland Heights.3 (Jameson Decl. ¶59.) Cumberland Heights is being reimbursed at “out-of-network” rates for covered services provided, and, Cumberland Heights can balance bill the Magellan members.

(Id. ¶60.) Cumberland Heights concedes, through the

affidavit of Jay Crosson, that its alleged “harm” is the difference between “in-network” and “out-ofnetwork” reimbursement rates for Magellan members (plus any claimed reduction in total patient census), which is an amount that is both quantifiable and compensable in money damages.4 (Dkt #21, ¶18.) Magellan notes that although Mr. Crosson provides his estimated calculation of lost revenues for the “Blue Cross/Magellan” members, Mr. Crosson fails to address and account for the additional revenue Cumberland Heights may now collect through “balance billing.” In any event, Plaintiff’s

3

This estimate covers the period from July 2 to August 4, 2010, and does not include Magellan members who received covered outpatient services at Cumberland Heights for the same time period.

4

Magellan disputes that a reduction in census would be an element of recoverable damages because the Provider Agreement expressly states that Magellan “shall have no obligation to refer Members to [Cumberland Heights].” (Provider Agreement §12.3.)

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estimation of lost revenues demonstrates that the real issue in this case is not whether it is paid for its services, but rather how much it is paid.

2.

The Parties’ Provider Agreement and the Right to Terminate “With” or “Without” Cause.

Under the Provider Agreement, Plaintiff agreed to provide covered substance abuse treatment services for Magellan members and to abide by Magellan Policies and Procedures.

(Provider

Agreement. §§2.1, 2.2.) As clearly stated in the Provider Agreement, Plaintiff’s failure to comply with Magellan Policies and Procedures could result in sanctions including, but not limited to, the loss of reimbursement and/or termination of the Provider Agreement. (Id.) The Provider Agreement gave either party the right to terminate “without cause” or “with cause.” Under Section 11.2, either party can terminate the Provider Agreement “without cause” upon ninety (90) days prior written notice. Under Section 11.3, Magellan may terminate immediately “with cause,”5 under the following circumstances, in pertinent part: Magellan shall have the right to terminate this Agreement immediately by giving written notice to Facility upon the occurrence of any of the following events: * * * (i) Facility’s breach of any of the terms or obligations of this Agreement; (j) Any occurrence of serious misconduct which brings Magellan to the reasonable interpretation that Facility may be delivering clinically inappropriate care; or (k) Facility’s breach of Magellan Policies and Procedures.

5

The Agreement also contains a termination “with cause” by Facility provision that allows Cumberland Heights to terminate the Agreement immediately upon Magellan’s “material breach of any of the terms or obligations of this Agreement.” (Agreement § 11.4.)

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3.

Magellan’s Decision to Terminate the Provider Agreement.

Magellan’s decision to terminate the Provider Agreement with Cumberland Heights on July 1, 2010 was the culmination of an eight month period of inquiry, review and investigation. (Dkt. #1-1, p.57, Ex. G; Kennedy Aff. ¶¶42-76.) Magellan’s inquiry, review and investigation process began in October 2009 to address concerns raised by Magellan’s customers and within Magellan about Plaintiff’s compliance with Magellan Policies and Procedures. (Id. ¶¶28-44.) Those concerns included Plaintiff’s failure to maintain accurate and complete treatment records. (Id. ¶¶40-42.) As the eightmonth review process progressed, Magellan requested a sample of patient treatment records for review, undertook a site review of additional treatment records, initiated a written corrective action plan, and conducted a follow-up site visit. (Kennedy Aff. ¶¶ 42-76 and Exs. 2, 3, 5.) All of those activities were directed to and focused on Plaintiff’s compliance with Magellan Policies and Procedures regarding record-keeping requirements and revealed serious issues about quality of care.

Magellan terminated the Provider Agreement solely based on the findings and results of the inquiry, review and investigation process.

(Kennedy Aff. ¶¶72-76 and Ex. 5, 6.) As stated in

Magellan’s letter to Plaintiff, the “termination is due to your facility’s inability to provide services to members that meet Magellan’s Medical Necessity Criteria,6 in particular, failing to meet Magellan standards by providing the appropriate medical/behavioral coordination, treatment of patients overall physical health and lack of family involvement within a timely manner.” (Kennedy Aff. ¶76 and Ex. 6.) These identified failures constituted clear breaches of Cumberland Heights’ contractual obligations under Section 2.1 of the Provider Agreement to provide quality health care in compliance with

6

Magellan’ Medial Necessity Criteria are based upon the requirements of the various insurance policies or benefit plans of Magellan’s customers that those policies or plans will only pay for “medically appropriate care.” (Cox Decl. ¶15.)

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Magellan Policies and Procedures.7 By letter to Cumberland Heights dated August 6, 2010, Magellan summarized the results of the second site visit. (Kennedy Aff. ¶72 and Ex. 5.)

4.

Binding Dispute Resolution Provisions under the Provider Agreement.

The parties also agreed on a detailed method of resolving any disputes between them arising under the Provider Agreement. Section 10 of the Agreement, together with Magellan Policies and Procedures which are incorporated by reference, set forth the specific administrative and arbitration remedies available that the Plaintiff agreed would control the current dispute: In the event that a dispute between Magellan and Facility arises out of or is related to this Agreement, the parties to the dispute shall negotiate in good faith to attempt to resolve the dispute. In the event the dispute is not resolved within 30 days . . . and if any party wishes to pursue the dispute, it shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association. . . . If the dispute pertains to a matter which is generally administered in accordance with Magellan Policies and Procedures involving, for example, credentialing or quality improvement, then the Magellan Policies and Procedures must be fully exhausted by Facility before Facility may invoke its right to arbitration under this Section. . . .

(Provider Agreement §10.) Both the Provider Agreement and Magellan Policies and Procedures provide that concerns regarding quality of care, non-compliance with Magellan policies and procedures may be identified, reviewed and investigated at any point while the provider is participating in the Magellan network and may constitute grounds for termination with cause. (Id. §2.2; Jameson Decl. ¶23.). Magellan Policies and Procedures further provide that in the event Magellan terminates a provider from the network following such investigation and review, the provider has a right to request an administrative appeal hearing within 30 days of notice of termination. (Provider Agreement §10.)

7

Section 2.1 requires Cumberland Heights to provide “Medically Necessary Covered Services” to Magellan members in compliance with, among other requirements, “Magellan’s Policies and Procedures,” Section 2.1 further requires that Cumberland Heights “shall provide Covered Services in a manner which: (a) offers quality health care; (b) offers health care delivery in a cost-effective manner; (c) documents the medical care in conformance with Federal, State and local laws and regulations and Magellan’s accreditation guidelines. . . .” (Provider Agreement § 2.1)

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As required by the Provider Agreement, a provider is required to exhaust its administrative appeal remedy before invoking its right to arbitration. (Id.) Plaintiff has taken advantage of the dispute resolution provisions that it likes, and timely requested an administrative appeal. That appeal has just concluded. The termination decision was upheld and, if Plaintiff wishes to pursue the dispute, Plaintiff has the right to invoke arbitration.

Plaintiff has not exercised that right or indicated when it intends to do so.

B.

Magellan’s Review of Cumberland Heights Quality of Clinical Care.

The events leading up to the termination of the Provider Agreement and the removal of Cumberland Heights from Magellan’s network of providers are critical to understanding the reasons for the decision and this Court’s consideration of the factor of likelihood of success on the merits and the balance of harm for purposes of the requested injunctive relief.

1.

Magellan’s Managed Care Services and Network of Providers.

In its role as a behavioral health organization responsible for clinical and quality oversight of its network facilities and for case management coordination between its members and providers, Magellan’s team of medical doctors and other clinicians monitor the quality of care by its network providers and review on a prospective, concurrent and retrospective basis the treatment services proposed and provided to Magellan’s members. (Kennedy Aff. ¶9.) This review process enables Magellan to make informed decisions concerning the initial and, as necessary, continued authorization of benefits under its members’ insurance policies and benefit plans. (Id.) To facilitate this review process, Magellan has implemented policies and procedures that establish its requirements and standards governing its relationship and interaction with its network of providers, which includes over 67,000 credentialed individual and facility providers. (Id.) Magellan’s policies and procedures guide the manner in which a Magellan member or provider requests authorization for covered services and by which Magellan reviews those requests and the treatment provided. (Cox Decl. ¶5.)

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Magellan’s network providers are required to sign a provider agreement promising to be bound

by Magellan Policies and Procedures, including policies regarding quality of care. (Jameson Decl. ¶10, 23.) Magellan’s regional network credentialing committees (“RNCCs”) oversee its network of providers, which committees are comprised of Magellan employees and independent clinicians.

(Kennedy Decl. ¶13; Jameson ¶34.) The duties of the RNCCs include provider reviews, site visits and treatment record reviews, review of member complaints, review of quality of care and adverse incident events, review of requests for provider credentialing, and review of appeals and complaints.

Cumberland Heights is within the Southeast Care Management Center (“Southeast CMC”) of Magellan and the RNCC for that region has oversight responsibility for Cumberland Heights.

(Kennedy Decl. ¶14.) The Medical Director for Magellan’s Southeast CMC is Dr. Brian Kennedy.

(Kennedy Aff. ¶2.) Dr. Kennedy supervises all clinical programs that involve the coordination and review of medical treatment for Magellan members and is responsible for quality of care management under the purview of the Southeast CMC. (Id. ¶¶11-12.) Dr. Kennedy also participates in and serves as the chair of the RNCC for the Southeast CMC. (Id. ¶13).

2.

Magellan’s Role in the Authorization of Benefits for “In-Network” Patients.

Magellan has a detailed, multi-step review process for authorizing requested benefits as well as a member appeal process in the event benefits are denied. (Cox Decl. ¶¶5-28.) During the initial admission process, a provider, such as Cumberland Heights, transmits information about the member who is seeking treatment along with the provider’s recommended treatment plan. (Id. ¶¶9-10.) A nonphysician, licensed care manager for Magellan reviews the information and, if the care manager agrees, authorizes benefits for the proposed treatment and the number of days of care.8 (Id. ¶¶10-16.) A 8

Care managers are not authorized to deny requests for benefits. Denials can only be made by a physician. (Cox Decl. ¶20.)

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similar authorization review is followed if a Magellan member or provider requests authorization for continued and/or additional days of treatment. (Id. ¶¶17-19.)

If a care manager does not authorize the proposed treatment, a “peer-to-peer” consultation is scheduled where a physician at the provider facility and a physician at Magellan confer and discuss the appropriate medically necessary care. (Cox Decl. ¶20.) If benefits are not authorized at that point, the member is offered an informal provider review and may appeal the benefits decision. (Id. ¶¶21-24.) If the request for preauthorization or concurrent review is denied, the member may appeal (Id. ¶23.)

Depending upon the member’s insurance policy or benefit plan, the member may pursue further appeals. (Cox Decl. ¶25.)

A critical and necessary component of this process is for Magellan to receive complete information from the provider about the Magellan member and the proposed treatment so that Magellan may make informed decisions as to whether the levels and types of treatment proposed meet the established medically necessary criteria under the member’s insurance policy or benefit plan.

(Kennedy Aff. ¶¶15-22; Cox Decl. ¶14.) The only information the clinicians at Magellan have available to make that evaluation is the information submitted by providers. (Kennedy Aff. ¶15; Cox Decl. ¶14.)

As a result, Magellan clinicians are entirely dependent upon the provider, such as

Cumberland Heights, to provide complete, accurate and current personal, medical and psychological information about the member. (Kennedy Aff. ¶¶15-22; Cox Decl. ¶27.) It necessarily follows that each step of the treatment decision, authorization and appeal process is entirely dependent upon the information submitted by the provider. (Cox Decl. ¶27, 28.) When that information is neither complete nor accurate, appropriate clinical decisions are very difficult to make. (Kennedy Aff. ¶22.)

The overriding goal of this process is to assure that the appropriate levels of care based on medical necessity, under criteria selected by Magellan’s customers, are provided to Magellan members.

(Kennedy Aff. ¶27; Cox Decl. ¶28.)

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3.

The October 6, 2009 Appeal Hearing.

The parties have sharply different views about the significance of a benefit appeal conducted under the process described above, identified as the October 6 appeal and conducted by Blue Cross Blue Shield of Tennessee (“BCBST”). Cumberland Heights suggests that the termination of its Provider Agreement, eight months after that appeal, is the direct result of Magellan exacting retribution for the results of that hearing, which it contends was “to the great embarrassment and frustration of Magellan.” (Dkt. #1-1, p.16, ¶23.) The affidavits of Dr. Kennedy and Dr. Henschen refute this false and unsubstantiated characterization. (Kennedy Aff. ¶29, 39; Henschen Aff. ¶14.)

The case presented on October 6 followed the review and appeal process outlined above. Upon this patient’s original admission, Magellan approved benefits for the days requested. (Kennedy Aff. ¶30.) Cumberland Heights then requested additional benefits, which were denied by Magellan as not medically necessary based upon the information provided at that time by Cumberland Heights. (Id. ¶31.) The case proceeded through peer-to-peer consultation and the first level appeal, and Magellan upheld its decision. (Id. ¶32.) The Magellan member remained at Cumberland Heights and received the treatment recommended by Cumberland Heights, with a member of the patient’s family agreeing to assume financial responsibility. (Id. ¶33.) The Magellan member later pursued her appeal rights with BCBST. (Id. ¶34.)

It was not until the October 6 hearing that information was learned regarding the impact that the suicide of the Magellan member’s former roommate at Cumberland Heights had on the Magellan member. (Kennedy Aff. ¶35.) When the importance of that information was revealed, all of the reviewers, including Magellan’s physicians participating in the hearing, agreed that benefits should be approved. (Id. ¶36.) At that point, the benefits appeal process was complete and achieved the result it was designed to achieve. (Id. ¶37.) None of the Magellan representatives were upset or disagreed with, or were embarrassed or frustrated about the decision. (Id. ¶¶38-39.)

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4.

Magellan’s Inquiry and Review of Cumberland Heights.

The October 6 appeal, however, highlighted concerns that were shared by Magellan and BCBST about the failure of Cumberland Heights to provide complete and accurate treatment records reflecting the treatment for Magellan members. (Kennedy Aff. ¶¶39-40.) Dr. Kennedy reported those concerns to the RNCC. (Id. ¶42.) On October 12, 2009, the RNCC determined to undertake a review of Cumberland Heights in accordance with Magellan’s policies and procedures regarding network provider quality performance reviews. (Id. ¶43.) By letter dated October 16, 2009, Magellan advised Cumberland Heights of Magellan’s request to review four patient records and Magellan’s requirement that Cumberland Heights conduct quality of care surveys with Magellan members upon discharge. (Id. ¶¶44-45 and Ex. 2.)

Cumberland Heights failed to provide copies of the treatment records in a timely manner, which was reported back to the RNCC. (Id. ¶46-47.) Rather than act on the basis of incomplete information, the RNCC directed Magellan staff to conduct a site visit to review additional treatment records. (Id. ¶48.)

5.

The Occurrence of a “Sentinel Event” at Cumberland Heights.9

At about the same time the RNCC directed the site visit, Magellan learned about a patient at Cumberland Heights who had overdosed on the drug methadone smuggled into Cumberland Heights by the patient. (Kennedy Aff. ¶50.) Magellan considered this incident to be a “sentinel event” because it involved serious injury to a patient and “signaled” the need for immediate investigation and response. (Id. ¶54, 56.) The patient suffered from both substance addiction and psychiatric problems with a history of overdose and had just been released to Cumberland Heights from a hospital for drug

9

A “sentinel event” is any unanticipated event in a health care setting resulting in death or serious physical or psychological injury to a patient or the risk of such injury. (Kennedy Aff. ¶49.)

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overdose. (Id. ¶51) The very next day, while at Cumberland Heights, he ingested enough methadone to cause him to pass out and decline to the point that he nearly died. (Id.) This sentinel event raised even more serious concerns about Cumberland Heights’ quality of care. (Id. ¶¶54-56.)

6.

The January 2010 Site Visit.

As directed by the RNCC and in accordance with the Provider Agreement and Magellan Policies and Procedures for provider treatment record reviews, a team of Magellan reviewers conducted a site visit at Cumberland Heights in January 2010 for the purposes of reviewing six member treatment records. (Kennedy Aff. ¶57; Jameson Decl. ¶26, 29.) Based on this review, the team identified a number of concerns about Cumberland Heights’ treatment records, including: lack of physician notes, charts without biosocial information, incorrect dates, verbatim notes across multiple charts, two charts contained information about another patient, physician notes lacked vital signs, no nursing notes or daily clinical notes, family counseling sessions were not documented or were not timely, financial waiver forms10 included in some charts contained language prohibited by the Provider Agreement.

(Kennedy Aff. ¶59; Jameson Decl. ¶37.)

After the site visit, Cumberland Heights

“reaudited” its own files and found some additional treatment information not included in the treatment records provided to Magellan, which it subsequently submitted to Magellan. (Kennedy Aff. ¶58.)

Cumberland Heights acknowledged problems with its treatment records. (Id.) 7.

The March Corrective Action Plan for Cumberland Heights.

The findings of the January site review team were reported to the RNCC. (Kennedy Aff. ¶59) In accordance with Magellan Policies and Procedures, it ultimately was decided that a Corrective Action Plan (“CAP”) would be implemented to allow Cumberland Heights an opportunity to improve.

10

A financial waiver form is an agreement that a provider may ask a patient to sign whereby the patient agrees to pay any amounts not covered by insurance. Magellan generally prohibits “in-network” providers from using such forms, except where proposed treatment has not been authorized by Magellan. This prohibition is incorporated into the Provider Agreement at § 2.4.6.

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(Id. ¶¶60-61.) By letter dated March 17, 2010, Dr. Kennedy summarized the findings of the site review team and specified ten deficiencies that Magellan required Cumberland Heights to correct immediately. (Id. ¶63 and Ex. 3.) Those deficiencies were as follows: (1)

Correct the Financial Waiver so that it is consistent with your contract with Magellan.

(2)

Review all patient records to ensure they are HIPAA compliant.

(3)

Make sure patient charts contain full documentation of all treatment activities that are specific to that particular patient.

(4)

Improve clinical notes to reflect patient’s mental status, functioning and program participation.

(5)

Biosocial histories are to be present in all patient records. The name of the clinician completing these is to be clearly documents with signature and degree.

(6)

Family sessions to be completed on all patients or, if not, a note is to be entered stating why.

(7)

Comprehensive physician progress notes covering patient’s mental status, functioning, medications etc. signed and dated the day written.

(8)

Daily physician progress notes written on all patients in detox.

(9)

U[tilization] R[eview] personnel expected to present accurate clinical information when reviewing with Magellan Health Services.

(10)

All sentinel events to be reported to Magellan in a timely manner.

(Kennedy Aff. Ex. 3.)

In response to the March 17 letter and CAP, Cumberland Heights

acknowledged a number of “human errors” and promised to correct other problems. (Id. ¶64 and Ex. 4.) Cumberland Heights response letter was provided to the RNCC. (Id. ¶67.)

8.

The June 30, 2010 Site Review.

The RNCC determined to conduct a follow-up site review to monitor the progress of Cumberland Heights and the promises it had made to correct the deficiencies identified. (Kennedy Aff. ¶67; Jameson Decl. ¶39.) Magellan contacted Cumberland Heights the day before the site visit and requested that Cumberland Heights make twenty-five patient files available for review. (Id. ¶37.)

The site visit team conducted its review on June 30, 2010. (Id. ¶38.) While the site team noted some improvements

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were

comprehensive, clinical documentation reflected general improvement, and medical director notes were well written), the team identified several continuing and significant deficiencies in recordkeeping and quality of care at Cumberland Heights, which included: •

Notes completed by other MDs were cursory and lacked necessary medical information.

Accurate, thorough and timely documentation is critical to the coordination and continuity of the patient’s care, including assessment of co-morbidities, medical, psychological, social and environmental concerns.

•

Mental Status Examinations were largely incomplete and failed to provide information important to the coordination of patient care.

•

Charts for members with co-morbid medical conditions lacked documentation of needed medical consultations. Given the frequent interplay of medical and psychological issues, the lack of documentation places our members at risk, and specific examples of such risks are described below.

•

Charts for members with co-morbid conditions did not indicate that medication interactions were reviewed and documented.

•

Treatment plans were not signed in the majority of charts. Not only is this required, but the absence of signatures prevents everyone who reviews the chart from knowing the identity of the person who recommended a course of treatment and the opportunity to fully discuss treatment options.

•

Chart entries were signed with initials rather than a full signature.

•

Family sessions were not documented or did not occur in a timely manner. On average, family sessions occurred during the third week of treatment. Magellan regards the family support group to be critically important to the member’s treatment, both while in the facility and especially upon discharge.

(Kennedy Aff. ¶69-70.)

Of even greater concern to the site review team than the incomplete or inadequate documentation issues were specific issues relating to quality of care of Magellan members in the treatment records it reviewed. (Kennedy Aff. ¶71; Jameson Aff. ¶43.) Those issues, which were set out in Magellan’s letter dated August 6, 2010, included: Patient #1– Clinical note stated physician told the member to “go home and call her dealer”; the member then asked for a phone and left against medical advice.

Patient #2 – Patient with dual diagnosis (substance abuse and depression) was admitted on Lexapro but chart noted that a psychiatric evaluation was not completed because the patient was being seen by an outside psychiatrist; however, Magellan reviewer believed a psychiatric evaluation should have been done by Cumberland Heights.

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Patient #3 – Nursing assessment note documented drug allergy to penicillin; however, all other chart documentation stated NKDA (no known drug allergy). The inconsistency in this member’s chart suggests a failure to adequately assess the member for drug allergies and document same.

Patient #3 – Psychiatric evaluation was ordered; however, a psychiatric evaluation was not completed until 15 days later.

Patient #3 – Family session did not occur timely.

Patient #4 – Family session did not occur timely.

Patient #4 – Medical complications of Addison’s disease were known to the attending physician regarding this patient with orthostatic hypotension resulting in fainting and transfer to outside acute hospital. The patient was on Nortriptyline and Coumadin, however, there is no documented indication that medications were reviewed or discontinued. Further, no attempt was made to address patient’s pain.

Patient #5 – Magellan authorized 3 days of detoxification; however, facility documented a COWS level of 1 with no detoxification protocol needed/provided; patient should have been stepped down to the next level of care rather remaining in detoxification.

Patient #6 – Patient with depression had several medical complications noted in treatment record, without corresponding documentation of assessment and treatment. These conditions included: o Hypothyroidism; however, there was no documentation of thyroid function tests being performed or medication prescribed. o Lumbar disc disease with significant pain contributory to addiction to pain meds; however, no documented neurological evaluation or exam, no documented attempt to secure neurological consultation, no documented treatment plan to address pain in connection with addiction issues, and physical exam performed by nurse practitioner o This patient had undergone a psychiatric hospitalization one year before admission to Cumberland Heights for depression related to marital problems; however, there was no documentation of family sessions being conducted during stay at Cumberland Heights.

Patient #7 – Psychiatric evaluation was recommended in biopsychosocial evaluation due to patient report of depression with dysphoric mood and affect; however, no psychiatric evaluation found in chart.

Patient #7 – Marital discord identified as an issue upon admission; however, no family session was conducted until third week after admission.

Patient #8 – No biopsychosocial evaluation was found in chart despite 9-day length of stay with no documentation of mitigating factors to explain lack of evaluation; facility policy states, however, that biopsychosocial evaluation is to be completed within five days of admission, inclusive of detoxification days.

(Kennedy Aff. ¶71 and Ex. 5.)

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Magellan Sworn Statements, pp. 35

The Chief Medical Officer of Magellan, Dr. Gary Henschen, who participated in the June 30 site visit, explains in detail in his affidavit why Cumberland Heights treatment records led him and the team of reviewers to conclude that their quality of care concerns were of such a serious nature that they needed to report their findings immediately to the RNCC. (Henschen Aff.) For the limited sample of treatment records reviewed, the range of issues identified in these files was startling. (Id.; Jameson Decl. ¶43.) The treatment records revealed one Magellan member being told “go home and call your dealer.” (Henschen Aff. ¶24.) Another member, who had several “co-morbidities” that complicated the treatment of the member’s substance abuse issues, was treated only for the substance abuse issues despite the complicating medical issues of hypothyroidism and lumbar disc disease. (Henschen Aff. ¶30.) In a more clear cut example of Cumberland Height’s failure to provide quality care and comply with its own standards as well as Magellan’s standards, Cumberland Heights failed to obtain a psychiatric examination for a patient that it had identified as needing a psychiatric exam. (Henschen Aff. ¶31.) Yet another patient, who had a very complicated medical history including Addison’s Disease and was on multiple medications, fainted at Cumberland Heights, indicating to Dr. Henschen that Cumberland Heights was ill-equipped to evaluate and treat patients with co-morbidities.

(Henschen ¶28.)

A different patient was re-admitted to Cumberland Heights after having been

discharged from treatment there only two weeks previous; yet, the fact that the treatment had failed did not prompt Cumberland Heights to consider the need for a fresh psychiatric examination. (Henschen ¶26.)

Despite the risk of harm to its patients, none of these instances prompted Cumberland Heights to review its protocols and guidelines to consider whether it might elevate the quality of its care.

While Cumberland Heights may defend the findings made by Magellan in these cases on the basis of “no harm, no foul,” that is not Magellan’s standard. Magellan’s standards are set out in the Provider Agreement, Magellan Policies and Procedures and clinical guidelines. Magellan determines whether

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those standards have been met by its network providers. (Jameson Decl. ¶¶9-10.) Cumberland Heights failed in a shockingly high percentage of the files reviewed by the June 30 site review team to provide the quality of care contractually required of Cumberland Heights as an “in-network” provider

by Magellan.

(Henschen Aff. ¶37.)

This failure constituted grounds to terminate the Provider

Agreement. (Id. ¶18, 37; Kennedy Aff. ¶¶74-76.)

C.

The Decision to Terminate the Provider Agreement.

The site review team immediately reported its findings to Dr. Kennedy. (Henschen Aff. ¶16.)

Faced with the significance of these findings, particularly for a facility already under a CAP, Dr. Kennedy convened an ad hoc, or specially set, meeting of the RNCC. (Kennedy Aff. ¶73.) The RNCC determined to terminate the Provider Agreement with Cumberland Heights, effectively immediately, and that decision was approved. (Id. ¶75.)

Magellan promptly notified Cumberland Heights of the termination decision by telephone, followed by a letter sent via facsimile. (Kennedy Aff. ¶76 and Ex. 6; Jameson Decl. ¶¶56-57.)

Recognizing that Magellan members were patients at Cumberland Heights and might have special needs or sensitivities, Magellan assigned care managers to assist its members in making decisions about the continuity of their care. (Cox Decl. ¶31.) To minimize disruption in their treatment, Magellan determined that (Jameson Decl. ¶55.) Of the 33 Magellan members who were inpatient at Cumberland Heights on July 1, 31 members remained at Cumberland Heights and received “innetwork” benefits. (Id. ¶58.)

D.

Consequence of the Termination of the Provider Agreement and Removal from Magellan’s Network.

The removal of Cumberland Heights from Magellan’s network of providers means that members who seek admission and treatment from Cumberland Heights after July 1 may do so at “outof-network” benefits. (Jameson Decl. ¶60.) After July 1, Cumberland Heights may no longer hold itself out as being an approved Magellan “in-network” provider and is reimbursed for services at the 2402084

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“out-of-network” instead of “in-network” rates, but also is allowed to balance bill the members who continued to receive care or who were admitted post-termination. (Jameson Decl. 65-66.) This does not mean that Magellan members are denied access to treatment at Cumberland Heights or that Cumberland Heights is deprived of all revenues from treatment of Magellan members. (Kennedy Aff. ¶78.) Cumberland Heights remains free to provide treatment to any individuals, including Magellan members. (Id.) Magellan’s termination of Cumberland Heights Provider Agreement has not, in any way, endangered any patients. (Id. ¶79.) Magellan continues to have provider contracts with many quality substance abuse treatment facilities, including Vanderbilt University, Centennial Medical Center, Skyline Medical Center, Summit Medical Center, Rolling Hills, New Life Lodge, LaPaloma Treatment Center, Lakeside Behavioral, Blount Memorial, Cornerstone of Recovery, The Village, Focus Healthcare of Tennessee and Parkridge Valley. (Kennedy Aff. ¶79.)

ARGUMENT PLAINTIFF’S REQUEST FOR EXTRAORDINARY INJUNCTIVE RELIEF SHOULD BE DENIED. A.

PRELIMINARY

The Standard for Preliminary Injunctive Relief.

Preliminary injunctive relief is “an extraordinary and drastic remedy.” Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S. Ct. 1865, 138 L.Ed.2d 162 (1997). Injunctive relief is considered to be “‘one of the most drastic tools in the arsenal of judicial remedies.’” Bonnell v. Lorenzo, 241 F.3d 800, 808 (6th Cir.), cert. denied 534 U.S. 951 (2001) (citing Hanson Trust PLC v. ML SCM Acquisition, Inc., 781 F.2d 264,273 (2d Cir. 1986)). The issuance of an injunction is not a matter to be taken lightly, as “[t]here is no power the exercise of which is more delicate, requires greater caution, deliberation, and sound discretion, or is more dangerous in a doubtful case, than the issuance of an injunction.” Early v. Bristol Mem’l Hosp., 508 F.Supp. 35, 36 (E.D. Tenn. 1980) (citing Rizzo v.

Goode, 423 U.S. 362, 379 (1976)). The primary purpose of preliminary injunctive relief is to maintain

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the status quo pending a determination on the merits. Blaylock v. Cheker Oil Co., 547 F.2d 962, 965 (6th Cir. 1976).

“A preliminary injunction is an extraordinary remedy which should only be granted if the movant carries his or her burden of persuasion.” AmMed Direct, LLC v. Liberty Med. Supply, Inc., 2009 WL 3680539, at *4 (M.D. Tenn. Sept. 23, 2008) (copy in separate appendix); Stenberg v. Cheker Oil Co., 573 F.2d 921, 925 (6th Cir. 1978). “Moreover, ‘the proof required for the movant to prevail is much more stringent than the proof required to survive a summary judgment motion’ given the extraordinary nature of a preliminary injunction and the exercise of power required from the court.”

Id. (quoting Leary v. Daeschner, 228 F.3d 729, 739 (6th Cir. 2000).

Courts are to consider four factors when deciding whether to issue a preliminary injunction: “(1) the likelihood that the party seeking the injunction will succeed on the merits of the claim; (2) whether the party seeking the injunction will suffer irreparable harm without the grant of extraordinary relief; (3) the probability that granting the injunction will cause substantial harm to others; and (4) whether the public interest is advanced by the issuance of the injunction.” United States v. Edward Rose & Sons, 384 F.3d 258, 261 (6th Cir. 2004) (quoting Washington v. Reno, 35 F3d 1093, 1099 (6th Cir. 1994)). These factors are to be balanced and no single factor is determinative in the court’s consideration of whether the injunctive relief should be issued. In re DeLorean Motor Co., 755 F.2d 1223, 1229 (6th Cir. 1985). Here, the balance of factors weighs heavily against the injunctive relief requested.

B.

Plaintiff Cannot Demonstrate a Strong Likelihood of Success on the Merits.

“The first factor to consider is whether the plaintiff has demonstrated ‘a strong likelihood of success on the merits.’” Certified Restoration Dry Cleaning Network, LLC. v. Tenke Corp., 511 F.3d 535, 543 (6th Cir. 2007) (quoting Tumblebus Inc. v. Cranmer, 399 F.3d 754, 760 (6th Cir. 2004)). “[A] finding that there is simply no likelihood of success on the merits is usually fatal.” Gonzales v. Nat’l

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Bd. of Medical Examiners, 225 F.3d 620, 625 (6th Cir. 2000). To meet this burden, a plaintiff “must show more than a mere possibility of success” on its substantive claim to establish the requisite strong likelihood of success on the merits. Six Clinics Holding Corp., II v. Cafcomp Sys., Inc., 119 F.3d 393, 402 (6th Cir. 1997); see also Becton v. Thomas, 48 F. Supp. 2d 747 (W.D. Tenn. 1999).

1.

The Provider Agreement, Including the Unilateral Right to Terminate With or Without Cause, Must Be Enforced as Written.

Cumberland Heights simply cannot make the requisite showing here. Cumberland Heights challenges Magellan’s exercise of its contractual right to terminate the Provider Agreement, but ignores the clear language of the Provider Agreement that allows Magellan not only the right to terminate the Provider Agreement with cause, as it did here, but also without cause upon 90 days notice. (Provider Agreement § 11.2-11.3.)

Under Tennessee law,11 “the cardinal rule of contract interpretation is to ascertain and give effect to the intent of the parties.” Allmand v. Pavletic, 292 S.W.3d 618, 630 (Tenn. 2009) (citations omitted). The intent of the parties is presumed to be that expressed in the body of the contract. Kafozi v. Windward Cove, LLC, 184 S.W.3d 693, 698 (Tenn. Ct. App. 2005). In construing contracts, courts must give the words expressing the parties’ intentions their usual, natural, and ordinary meaning. Id. Where the language of a contract is unambiguous, a court must interpret the contract as written. Sutton v. First Nat’l Bank of Crossville, 620 S.W.2d 526, 530 (Tenn. Ct. App. 1981).

Contract provisions permitting one or both parties to unilaterally terminate the contract – with or without cause – routinely are interpreted and enforced as written. See, e.g., Gaston Drugs v.

Metropolitan Life Ins. Co., 653 F.Supp. 1104, 1110-1111 (S.D. Ohio 1986) (refusing to grant injunctive relief against termination of contractual relationship where contract specifically provided for 11

While federal jurisprudence supplies the procedural analysis for injunctive relief, state law supplies the substantive law for Plaintiff’s breach of contract claim in this diversity action. Certified Restoration, 511 F.3d at 541. Under the parties’ choice of law provision in the Agreement, Tennessee law governs. (Provider Agreement ¶12.6.)

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termination); Wright v. Magellan Behavioral Health, Inc., 2007 WL 1983789 at *4 (E.D. Tenn. July 3, 2007) (exercising right to terminate agreement, as set forth in termination clause in agreement, is proper) (copy in separate appendix).

Where, as here, one party to a contract contests termination, but termination is plainly permitted under the agreement, the likelihood of success on the merits is miniscule and injunctive relief is not appropriate. See Smith Wholesale Co., Inc. v. R.J. Reynolds Tobacco Co., 2005 WL 3239929 at *1 (E.D. Tenn. Nov. 29, 2005) (copy in separate appendix). As recognized by the court in Smith Wholesale, where contracts are entered into and are clearly subject to termination by either party, with or without cause, the granting of an injunction to the continue the contract would be “quite extraordinary relief” in view of the plain contractual terms, and should be denied. Id.; see also Am. Standard, Inc. v. Meehan, 517 F. Supp. 2d 976, 983-84 (N.D. Ohio 2007) (denying preliminary injunction against contract termination where the contract expressly provided right to terminate).

Here, Plaintiff claims a breach of contract for wrongful termination of the Provider Agreement, but its plain and unambiguous terms provide for termination by either party, with or without cause.

(Provider Agreement §§ 11.2-11.3.) Magellan exercised that clear contractual right, and it cannot be disputed that “Magellan shall have the right to terminate” by giving written notice12 of Cumberland Heights’ breach of its obligations and/or breach of Magellan Policies and Procedures. (Provider Agreement § 11.3, emphasis added.) The process of review undertaken by Magellan and the reasons

12

Plaintiff complains that Magellan did not technically comply with the method of giving written notice of termination, but that allegation is of no consequence. Magellan provided Cumberland Heights with actual notice of the termination on July 1, 2010 by first placing a telephone call to Cumberland Heights to inform it of the termination, which was promptly followed with a written notice letter delivered by facsimile. Compl. ¶¶ 26, 28. Even though this form of notice was not technically compliant with the notice requirements (Agreement § 12.8), such technical deficiency does not void the termination, particularly where Cumberland Heights acknowledges that it received actual notice of the termination.

See, e.g., Eagle-Picher Indus., Inc. v. West Virginia, 285 F.3d. 522, 529 (6th Cir. 2002) (statutory notice provisions); Barnes v. Bradley County Mem. Hosp., No. 04-6317, 2006 WL 20551 at *4 (suggesting technical non-compliance with contractual notice provision is of no consequence if party received actual notice) (citing Wilson v. Hudson’s Lessee, 16

(footnote continued on following page …)

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for termination are detailed in the Statement of Facts, above.

While Plaintiff may challenge

Magellan’s reasons for the termination and may seek damages or other contractual remedies if it proves Magellan's reasons are not valid, Plaintiff cannot challenge Magellan’s right to terminate and cannot seek injunctive relief to prevent the termination. Given the right to terminate, it would be “quite extraordinary” to grant injunctive relief to order Magellan to continue to hold Cumberland Heights out as if it were an “in-network” provider. For this reason alone, Plaintiff’s request for injunctive relief must be denied.

Moreover, to the extent Plaintiff disputes that Magellan properly exercised its right to terminate the Provider Agreement “with cause,” it is beyond dispute that the Provider Agreement can be terminated “without cause” by either party upon ninety days notice. (Provider Agreement § 11.2) Assuming, without conceding, that Magellan did not have a basis to terminate the Provider Agreement “with cause,” Magellan nevertheless was entitled, at any time, to terminate the Provider Agreement upon ninety days notice. Accordingly, as a matter of law under the express terms of the parties’ Provider Agreement, the Provider Agreement is terminable at will by either party and Magellan cannot be in breach of the Provider Agreement for having done so. Thus, the only possible remaining dispute under the Provider Agreement is limited to whether Cumberland Heights was entitled to ninety days prior notice and, if so, whether Cumberland Heights is entitled to damages during that narrow, ninety day window. It would be quite extraordinary for this Court to grant injunctive relief for such a limited contractual dispute compensable in money damages. Indeed, any injunctive under these circumstance

(… footnote continued from previous page) Tenn. 398, 410 (1835), Union Planters Corp. v. Harwell, 578 S.W.2d 87, 90 (Tenn. Ct. App. 1978); Davis v. Aetna Ins. Co., 65 S.W.2d 235, 237-38 (Tenn. Ct. App. 1932)).

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would only briefly delay the inevitable.13 See Wayside Farm, Inc. v. Bowen, 698 F.Supp. 1356, 1365 (N.D. Ohio 1988) (finding injunctive relief “unjustifiable” where injunction would only prolong an inevitable result).

Moreover, the Provider Agreement is a services contract, and an injunction

reinstating it would constitute an order for specific performance in contravention of well-established law. Bunns v. Walkem Development Co., 53 Tenn. App. 680 385 S.W.2d 917, 923 (1964), cert. denied (Tenn. 1965) (adopting the general rule that specific performance may not be granted for breach of contracts for personal services.)

Because the terms of the Provider Agreement expressly permitted Magellan to terminate the Provider Agreement with or without cause, Cumberland Heights cannot make the requisite showing of a strong likelihood of success on the merits of its claim for breach of contract. Absent such a showing, Cumberland Heights is not entitled to the extraordinary relief it seeks.

2.

The Underlying Facts Regarding the Reasons for Termination Are Hotly Contested; Accordingly, Cumberland Heights Cannot Satisfy the Strong Likelihood of Success on the Merits Requirement.

The facts on which Cumberland Heights bases its claim, that is, Magellan’s reasons for terminating the Provider Agreement, are hotly contested. Cumberland Heights does not, and cannot, dispute that Magellan has a contract right to terminate the Provider Agreement with cause. The sole 13

Regardless, any injunction entered by the Court in this matter could only remain in effect until arbitration commences pursuant to the parties’ Agreement. The Sixth Circuit has made plain in Performance Unlimited, Inc. v. Questar Publishers, Inc. that a court’s injunction should not continue once arbitration proceeds: [A] “district court’s authority to issue [preliminary] injunctive relief extends only until the arbitrators can determine the temporary injunctive relief necessary to maintain the status quo.” Grall, 836 F.Supp. at 430 (citing Merrill Lynch, Pierce Fenner & Smith, Inc. v. Salvano, 999 F.2d 211, 215 (7th Cir. 1993)).

“Once assembled, an arbitration panel can enter whatever temporary injunctive relief it deems necessary to maintain the status quo . . . ‘Courts are ill-advised to extend the injunction once arbitration proceeds.’” Id. at 431 (quoting Salvano, 999 F.2d at 215)). . . . Furthermore, once the arbitration begins, it is for the arbitrators to decide how to maintain the status quo during the pendency of the arbitration process. This approach will both minimize the district court’s involvement in the merits of this contractual dispute, and it will preserve the ability of the arbitration panel to fully address the merits of the dispute. (Emphasis added.)

Performance Unlimited, Inc. v. Questar Publishers, Inc., 52 F.3d at 1386 (6th Cir. 1995).

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issue, as framed by the complaint, is whether Cumberland Heights can prove that Magellan’s eightmonth long review, conducted by different, high-level personnel with Magellan, was all a subterfuge to exact retribution for a routine decision about benefits for a single member.

The declarations submitted in opposition to the motion for injunctive relief state the hard, clinical facts that required the termination of Cumberland Heights as a provider and rebut Cumberland Heights unfounded and baseless suspicions as to Magellan’s motives.

Cumberland Heights was

terminated on the basis of clinical and medical opinions about the deficiencies with Cumberland Heights’ treatment record-keeping and quality of care. Cumberland Heights’ case is based almost entirely upon an allegation that Magellan’s stated bases for termination for cause are not genuine.

Deflecting attention away from its clear quality of care deficiencies, Cumberland Heights has concocted a theory, unsupported by any “facts,” that Magellan terminated the Provider Agreement in retaliation for Cumberland Heights’ advocating on behalf of a patient at an appeal hearing on October 6, 2009. Cumberland Heights makes up, whole cloth, the notion that this appeal caused Magellan “great embarrassment and frustration,” an unsupported allegation lacking any basis in fact and absolutely rebutted by the unqualified declarations by the individuals with personal knowledge of the proceedings and deliberations at the October 6 hearing.

All of the declarants steadfastly and

unequivocally deny the allegations of retaliation, and state the facts regarding the quality of care provided by Cumberland Heights that required its termination as an in-network provider.

Moreover, Magellan has presented detailed evidence supporting the quality of care and patient safety concerns that led Magellan to the unfortunate, but necessary determination to termination the Provider Agreement for cause in order to fulfill its obligation to ensure that its “in-network” providers do not present a risk of harm to its members. This evidence includes multiple site reviews where the overwhelming majority of the patient charts reviewed revealed significant quality of care concerns and risks to patient safety. Doubtless recognizing that Magellan is best suited to articulate the standard of

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care that Magellan requires of an in-network provider, Cumberland Heights merely argues in its brief that the clinical findings were pretextual and asks the Court to accept on faith Cumberland Heights’ version of the facts and its clinical opinions while totally disregarding Magellan’s documented version of the facts and its clinical opinions. Such groundless speculation by Cumberland Heights falls far short of its burden to demonstrate ‘a strong likelihood of success on the merits.’”

Certified

Restoration, 511 F.3d at 543. At the most, because the parties have sharply differing views about the underlying reasons for Magellan’s decision to terminate the Provider Agreement and Magellan’s clinical findings and results of its site visits. Particularly with respect to the clinical findings, those competing views will need to be the subject of qualified, independent expert opinion testimony to assist the trier of fact in determining the respective merits of the parties’ positions. At this preliminary stage, however, because the underlying facts are so hotly contested and Plaintiff’s flimsily circumstantial allegations so summarily rebutted by fact witnesses with actual knowledge of the events, it is impossible to conclude that the Plaintiff has demonstrated a strong likelihood of success on the merits regarding Magellan’s reasons for termination. Accordingly, Plaintiff cannot carry its burden as to this factor.

C.

There Is No Threat of Immediate and Irreparable Harm.

As to the second factor of immediate and irreparable harm, the record amply demonstrates that there is no threat of irreparable harm if the injunction is denied. An injury is irreparable only if it cannot be undone through monetary remedies. Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th Cir. 1992) (“As a general rule, a plaintiff has not established irreparable harm where damages would adequately compensate it for the asserted harm.”); Overstreet v. Lexington-Fayette Urban County Gov’t., 305 F.3d 566, 578 (6th Cir. 2002). “[A] plaintiff’s harm is not irreparable if there is an adequate remedy at law.” Becton v. Thomas, 48 F. Supp. 2d 747, 762 (W.D. Tenn. 1999) (citing CSX Transport, Inc. v. Tennessee St. Bd. of Equalization, 964 F.2d 548, 551 (6th Cir. 1992)). As the United

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States Supreme Court has held, “the temporary loss of income, ultimately to be recovered, does not usually constitute irreparable injury.” Sampson v. Murray, 415 U.S. 61, 90, 94 S.Ct. 937, 952-53, 39 L.Ed.2d 166 (1974).

“Mere injuries, however substantial, in terms of money, time and energy

necessarily expended in the absence of [an injunction], are not enough.”

Id. (quoting Virginia

Petroleum Jobbers Assn. v. FPC, 259 F.2d 921 (D.C. Ct. App. 1958)). Furthermore, the plaintiff must demonstrate that the irreparable injury contemplated is real and actual, not prospective. Detroit Newspaper Publishers Ass’n v. Detroit Typographical Union No. 18, 471 F.2d 872, 877 (6th Cir. 1972) (overturning preliminary injunction where alleged injury to movant was “probable loss over time,” which does not constitute irreparable harm). Finally, a party who claims injury as the result of a breach of contract by another is under an affirmative duty to mitigate his damages and, to the extent he fails to do so, he cannot recover such damages. Cook & Nichols, Inc. v. Peat, Marwick, Mitchell & Co., 480 S.W.2d 542,545 (Tenn. Ct. App. 1971) 1.

Cumberland Heights Cannot Prove “Immediate” Harm.

Any threat of harm to Cumberland Heights, itself, certainly cannot be characterized as immediate. First, there was no apparent urgency in Cumberland Heights’ claim, as demonstrated by Cumberland Heights’ delay in filing this lawsuit and seeking injunctive relief. See Advisory Info. and Mgmt. Sys., Inc. v. Prime Computer, 598 F.Supp. 76, 89 (M.D. Tenn. 1984) (movant’s delay belies its claim to irreparable harm). Here, Cumberland Heights waited twenty-one (21) days from the date it received notice of immediate termination of the Provider Agreement to initiate a lawsuit and request injunctive relief to prevent the termination.

Second, Cumberland Heights is not precluded from admitting Magellan members even though it is no longer a member of Magellan’s network of providers. In the one month following termination, approximately 43 Magellan members have sought admission and received on an “out-of-network” basis at Cumberland Heights for which Cumberland Heights has or will receive reimbursement at “out-

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Magellan Sworn Statements, pp. 46

of-network” rates and has the ability to balance bill the member. (Jameson Decl. ¶59-60.) Under these circumstances, there can be no claim of “immediate” harm.

2.

Cumberland Heights Cannot Prove Irreparable Harm.

The irreparable “harm” posited by Cumberland Heights is two-fold: (1) alleged harm to the facility itself (financial ruin, cease of operations, massive layoffs) and (2) alleged harm to its patients (thousands of patient will be deprived of treatment). These wildly misleading characterizations of the consequences of Cumberland Heights removal from Magellan’s network are wholly unsupported.

Cumberland Heights is now an “out-of-network” provider and not only remains free to admit new Magellan members as patients, but has admitted and treated new approximately 43 Magellan members during the first month after termination. (Jameson Decl. ¶64.) Although Magellan concluded that Cumberland Heights does not meet the quality standards necessary to remain an approved Magellan “in-network” provider, Magellan respects the right of its members to select the provider of their choice for treatment needs and the termination of the Provider Agreement here does not restrict any member’s right to seek treatment at Cumberland Heights. (a)

None of Magellan’s Members are Being Denied Treatment.

Cumberland Heights has made much of its concerns about its patients being deprived of appropriate alcohol and drug treatment services. While harm to third parties may be considered under appropriate circumstances in an injunction hearing, Wayside Farm, Inc. v. Bowen, 698 F.Supp. 1356, 1365 (N.D. Ohio 1988), the facts in this case clearly show that the treatment needs of Magellan members are not jeopardized by the termination of the Provider Agreement,14

14

The line of provider termination cases, including Wayside Farm, Inc. v. Bowen, discussing harm to third parties as a consideration at the injunction phase are injunction cases arising from termination or decertification of the as a provider of federally funded Medicare or Medicaid programs. In contrast, the instant case only involves the termination of a private contract between private parties, and does not affect Cumberland Heights licensing or certification as a provider.

Moreover, the Medicare/Medicaid provider cases generally involve long-term care facilities with primarily elderly patients.

Here, however, Cumberland Heights patients stay for a relatively shorter periods of time, typically twenty-eight days or

(footnote continued on following page …)

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Magellan Sworn Statements, pp. 47

Magellan members are continuing to be seen at Cumberland Heights. Not only did 31 of the 33 Magellan members at Cumberland Heights on July 1 complete their treatment there, another 43 Magellan members were admitted for residential treatment services at Cumberland Heights in the thirty one days following termination.

Magellan does not provide substance abuse services;

Cumberland Heights providers substance abuse services. The only reason that Magellan members will not receive care at Cumberland Heights is if Cumberland Heights refuses to accept them.

Cumberland Heights’ concern for “the irreparable harm to thousands of patients” by denying them access to care, (Dkt. #1-1, p.20, ¶ 32) ignores the other fine facilities in the Magellan network.

Including Vanderbilt Medical Center and Summit Medical Center locally, Magellan has thirteen other providers in Tennessee alone that can provide services to Magellan members.

The baseless allegation that Magellan is causing irreparable harm to thousands of patients ignores these facts, but speaks volumes about the monetary nature of Cumberland Heights’s real complaint. Cumberland Heights remains free to accept patients just as it always has done, and, in fact, it should continue to do so to fulfill its affirmative duty to mitigate any damages it claims to have suffered as a result of Magellan’s alleged wrongful termination of the Provider Agreement. Cook & Nichols, 480 S.W.2d at 545. Insofar as Cumberland Heights suggests that the difference between Cumberland Heights standard rates and the out-of-network rates create an economic disincentive for patients to be admitted to Cumberland Heights, Cumberland Heights can easily remove that disincentive by waiving its right to “balance bill” those patients. The outlandish suggestion that Magellan is endangering “thousands of patients” ignores three important facts:

(1) on average,

(… footnote continued from previous page) less. In fact, all of the Magellan members who were in Cumberland Heights at the time the Agreement was terminated have either completed their treatment at Cumberland Heights or have already been transferred to another facility to complete their treatment. Accordingly, the Court’s denial of the requested injunction in this case will have no effect on existing patients, unlike the Medicare/Medicaid cases.

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Magellan Sworn Statements, pp. 48

Cumberland Heights treats approximately 65 Magellan members per month; (2) in the one month period since termination, 43 new Magellan members have sought and received treatment at Cumberland Heights; and (3) in any event, Magellan has an absolute contractual right to terminate the Provider Agreement without cause on ninety days notice. The court need look no further than the affidavit of Jay Crosson submitted by Cumberland Heights to reject the melodramatics allegations about the potential irreparable harm to future patients and conclude that Cumberland’s claims are purely monetary – the alleged loss of revenue to Cumberland Heights. (b)

Cumberland Heights Alleged Harm is Not Irreparable Because It Can Be Remedied with Money Damages.

As to the alleged irreparable harm to the facility itself, Cumberland Heights claims that Magellan’s “wrongful termination” will force Cumberland Heights to cease operations and/or lay off hundreds of employees. (Verified Complaint ¶ 34). Despite these conclusory allegations of doom and gloom to its operations, they are financial injuries that are not “irreparable” because they can be redressed through monetary remedies. As the Sixth Circuit has held, “a plaintiff has not established irreparable harm where damages would adequately compensate it for the asserted harm.”

Basicomputer Corp., 973 F.2d at 511. Moreover, to the extent that Magellan’s termination of the Provider Agreement will cause the drastic results described by Cumberland Heights, such results cannot be attributed to Magellan. Rather, they are due solely to Cumberland Heights entering into a contract that conditioned such a large portion of its revenue on the right of either party to terminate the contract at any time on 90 days notice.

Cumberland Heights bears sole responsibility for any

consequences of the inevitable termination of the parties’ relationship that Cumberland Heights claims are not compensable in money damages.

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Magellan Sworn Statements, pp. 49

The only conceivable harm to Cumberland Heights as a result of its change in status to an outof-network15 rather than an in-network provider is the difference in the rate of reimbursement for covered services provided to Magellan members. That harm, if any, is readily quantifiable and fully compensable in money damages, as illustrated by the affidavit of Jay Crosson, Cumberland Heights’ Director of Patient Accounting. (Dkt #21.) In other words, this case is about a projected reduction in revenues, which unquestionably is an economic loss, and capable of being remedied by monetary damage and not the basis for injunctive relief. Sampson v. Murray, 415 U.S. at 90, 94 S.Ct. at 952-53.

The potential loss of revenues is quantifiable, and not likely to be great. If the contract were terminated wrongfully, the measure of damages will be the difference between the reimbursement rates for “in-network” providers versus “out-of-network” providers (which, as mentioned above, Cumberland Heights now is permitted to “balance bill” as an out-of-network provider). Cumberland Heights’ damages can be easily calculated as the difference in total reimbursements that it receives for each member it treats as an “out-of-network” provider (that is, the “out-of-network” rate + balance billing) and the reimbursement that it otherwise would have received as an “in-network” provider (that is, the “in-network” rate). While Magellan expects that the difference to Cumberland Heights resulting from the termination of the Provider Agreement is not significant, and potentially could result in enhanced revenues from balance billing, it is certainly easily ascertained. Regardless, even if the “with cause” termination was wrongful, the Provider Agreement is terminable by Magellan without cause upon 90 days notice, and so the maximum time period for which Cumberland Heights has a claim for damages is 90 days from the date of termination.

15

The “out-of-network” reimbursement rates do not necessarily translate into less revenue for Cumberland Heights because it is no longer contractually prohibited from billing patients directly for the balance or remainder due on its standard charges, a practice called “balance billing.” Regardless, even if Cumberland can show reduced revenues as a result of being paid at the lower “out-of-network” reimbursement rate, those damages are clearly monetary and do not establish irreparable harm.

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Magellan Sworn Statements, pp. 50

(c)

Since Cumberland Heights has Placed Its Financial Strength at Issue, a Review of its Balance Sheet Undermines the Harm Alleged.

Cumberland Heights’ claims that it will be forced to cease operations and/or layoff hundreds of employees invites examination of Cumberland Heights’ financial statements, attached as Exhibit H to its Verified Complaint. According to Cumberland Heights’ balance sheet, it had a cash balance of over $2,000,000 as of December 31, 2009, and other current assets of over $3,000,000, for a current assets balance of more than $5,000,000. Doubtless, Cumberland Heights will disagree with any conclusions that might be drawn from the financial facts reflected on its balance sheet, but it cannot deny that its financial health is a fact to be considered in evaluating its alleged harm. Cumberland Heights cannot disagree that its damages are the direct result of the contract that it signed; that is why it seeks injunctive relief.

Cumberland Heights cannot deny that its damages are easily quantifiable.

Cumberland Heights’ claims are for damages; accordingly there is no element of irreparable harm as required to support the award of an injunction.

D.

The Balance of Harm Weighs Heavily in Favor of Magellan.

The Court also must consider “whether enforcement of the injunction will cause ‘substantial harm’ to others.” Int’l Sec. Mgmt. Group, Inc. v. Sawyer, 2006 WL 1638537 at * 8 (M.D. Tenn. June 6, 2006) (citing Leary v. Daeschner, 228 F.3d 729, 736 (6th Cir. 2000)) (copy in separate appendix).

This factor “requires a court to balance the harm a plaintiff would suffer if its request for a preliminary injunction was denied with the harm the defendants would suffer if they were to be preliminarily enjoined.” Int’l Sec. Mgmt. Group, Inc. v. Sawyer, 2006 WL 1638537 at * 8 (M.D. Tenn. June 6, 2006) (copy in separate appendix). “It also requires a court to assess the impact a preliminary injunction might have on relevant third parties.” Id. (citing Corporate Exp. Office Products v. Warren, 2002 WL 1901902, at *27 (W.D. Tenn. May 24, 2002)) (copy in separate appendix).

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Magellan Sworn Statements, pp. 51

As noted above, Magellan’s members face no harm as a result of the termination as they can obtain treatment at any one of Magellan’s “in-network” facilities in the Middle Tennessee area.

Moreover, Magellan members who wish to receive treatment from Cumberland Heights on an “out-ofnetwork” basis can do so and have done so. Cumberland Heights, itself, faces only the possibility of a quantifiable drop in its revenue stream.

The harm to Magellan, however, is real. If the Court grants the injunctive relief sought, the Court will force Magellan to contract with Cumberland Heights against its will, contrary to the terms of the Provider Agreement, and contrary to the established law that specific performance is not an available remedy for breach of a services contract. Bunns, 385 S.W.2d at 923. Cumberland Heights is not merely seeking to preserve status quo, as it would have the Court believe. Rather, Cumberland Heights seeks to expand its remedial rights and improve its position under the contract, which is not the proper purpose of a preliminary injunction. Advisory Info., 598 F.Supp. at 89 (citing Morgan v.

Fletcher, 518 F.2d 236, 239 (5th Cir. 1975)) (denying preliminary injunction that would expand plaintiff’s contractual position). In Advisory Information, the movant (“AIMS”), a full line dealer of hardware, software systems and service bureau operations, sought injunctive relief to prevent the defendant (“Prime”), a manufacturer of small and medium-sized computers, from refusing to supply it with hardware for resale unless the hardware was to be incorporated into a system with application software or dealer services prior to sale or lease. Advisory Info. and Mgmt. Sys., Inc. v. Prime Computer, 598 F.Supp. 76, 80 (M.D. Tenn. 1984). Applying the four preliminary injunction factors, the court considered the harm to Prime that would be caused by “expand[ing] AIMS’ position under the contract” and acknowledged that an injunction would “greatly disrupt” Prime’s distribution system.

Id. Rewriting the contract here via injunction would similarly disrupt Magellan’s operation.

Magellan is charged with monitoring its “in-network” providers, and the mere status as a Magellan contracted “in-network” provider connotes Magellan’s approval of the facility as providing

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Magellan Sworn Statements, pp. 52

quality care.

To mandate Cumberland Heights’ reinstatement as an in-network provider despite

Magellan’s serious concerns about the quality of care for its members at the facility would subject Magellan to potential third party claims for offering Cumberland Heights as an “in-network” facility in the event a patient is injured at Cumberland Heights. In addition, a mandatory injunction reinstating Cumberland Heights to the Magellan network will require Magellan to expend substantial resources to implement heightened scrutiny. An injunction would further tie Magellan’s hands in the event that it continues to find quality of care issues, forcing Magellan to come before this Court before taking any action in that regard, including but not limited to enforcement of a possible admissions hold under Magellan’s policies and procedures due to its established concerns about quality of care and patient safety. Federal court is not the appropriate forum in which to review the multitude of quality of care decisions that are made on a daily basis by managed care companies.

E.

The Public Interest Weighs in Favor of Magellan.

There can be no greater public interest than insuring the safety of patients in health care treatment facilities, particularly those who are “at risk” and emotionally and medically compromised and who seek treatment at substance abuse facilities such as Cumberland Heights. Magellan’s sole interest and motivation is in ensuring that its members receive the highest level of clinically sound care at facilities that Magellan contracts with and designates as “in-network.” Cumberland Heights, on the other hand, has solely a financial motivation.

It has asked the Court to reinstate the Provider

Agreement, notwithstanding that it is terminable at will by either party without cause, because it believes that being an “in-network” provider enhances it financially. If an injunction were granted and a Magellan member who goes to Cumberland Heights because it is a network facility is harmed and subsequently determines that Magellan knew about the patient safety issues that it has identified, that member and the member’s family will undoubtedly seek to hold Magellan responsible.

If an

injunction is not granted, the only harm is that Cumberland will lose the monetary difference between

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Magellan Sworn Statements, pp. 53

an “in-network” rate and an ‘out-of-network” rate plus amounts recovered through balance billing.

Between the two positions, there is no question that the public interest weighs heavily in Magellan’s favor.

“Tennessee has a strong public policy in favor of upholding contracts.” AmeriGas Propane, Inc. v. Crook, 844 F. Supp. 379, 390 (M.D. Tenn. 1993); see also St. Paul Surplus Lines Ins. Co. v.

Bishops Gate Ins. Co., 725 S.W.2d 948, 951 (Tenn. Ct. App. 1986); Ballard v. North American Life & Casualty, 667 S.W.2d 79, 82 (Tenn. Ct. App.1983). Magellan exercised its contractual rights to terminate the Provider Agreement according to its plain language, and it would be wholly contrary to public policy to now deny Magellan its agreed upon right of termination.

Furthermore, the parties agreed to remedies in the event a dispute arose between them. The remedies contracted for in the Provider Agreement do not include injunctive relief. Rather, the Provider Agreement provides both parties the ability to terminate the contractual relationship and requires the parties to submit any dispute to an arbitrator. Provider Agreement §§ 10.1, 11.2, 11.3.

Because the parties set forth the specified remedies available under the Provider Agreement, and because injunctive relief from the Court is not one of them, public policy dictates that the Court should not grant Cumberland Heights injunctive relief to block Magellan’s exercise of its contractual rights.

The Sixth Circuit’s holding that injunctive relief may be granted until an agreed-to arbitration proceeds involves a strict “status quo” preliminary injunction.

Performance Unlimited, Inc. v.

Questar, 52 F.3d at 1386. The Questar Court was very careful to state that it was only granting the relief it thought was necessary to preserve the status quo pending the initiation of the arbitration. Id. Cumberland Heights is not merely asking for the status quo here. Rather, Cumberland Heights asks the Court to affirmatively instruct Magellan to reinstate the Provider Agreement, making Cumberland Heights an in-network provider for new patients indefinitely and allowing it to hold itself out as a

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Magellan Sworn Statements, pp. 54

Magellan network provider throughout the entirety of the arbitration proceedings.

The relief

Cumberland Heights requests goes well beyond the relief that this Court is empowered to grant.

This also is not a case where Cumberland Heights is in danger of going out of business without Magellan’s in-network reimbursements. Cumberland Heights relies on Frontier Health Inc. v. Shalala, 113 F.Supp.2d 1192, 1193 (E.D. Tenn. 2000) as an example of injunctive relief granted to preserve the status quo (i.e. keeping the movant in business pending arbitration). Unlike Frontier Health, Inc., which sought to enjoin the revocation of its Medicare/Medicaid eligibility and associated loss of 60% of its revenue (Frontier Health, Inc., 113 F.Supp.2d at 1193), Cumberland Heights claimed loss is limited to the difference between in-network rates and out of network rates plus balance billing.

F.

The Balance of All Factors Weight Heavily in Favor of Denying Injunctive Relief.

A weighing of the factors that must be satisfied in order to obtain an award of injunctive relief is unnecessary as Cumberland Heights cannot carry its burden of proving even one of these factors. It waited three weeks to file its lawsuit; there can be no finding of a need for immediate relief.

Cumberland Heights cannot obtain an order forcing Magellan to contract with it ad infinitum because Cumberland Heights agreed that Magellan could terminate the contract on ninety days notice; accordingly, there can be no claim of irreparable harm. In order to satisfy the standard of “substantial likelihood of success on the merits,� the court would have to conclude that Cumberland Heights knows more about the quality of care required by Magellan under the Provider Agreement than Magellan; the proof regarding the reasons for termination is at best so hotly disputed as to be incapable of resolution at this early stage of these proceedings. In balancing the interests of the parties, Cumberland Heights seeks in-network recognition and payment in accordance with the Provider Agreement while seeking relief from both the quality of care standards required by the contract and the dispute resolution provisions of the contract; the sanctity of contract requires the rejection of such a position.

Cumberland Heights builds its argument regarding public interest on the premise that only it can 2402084

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Magellan Sworn Statements, pp. 55

provide its services. Even if the Court were to ignore the services provided by Vanderbilt University and the other fine facilities within the Magellan network, it cannot overlook that this suit is not brought by either Magellan members or Magellan customers, who are the real parties in interest when analyzing whether the public interest is implicated in this proceeding. Lawsuits are resolved on the facts; the facts in this proceeding prove that Cumberland Heights cannot carry its burden on even one of the required elements, and compel the conclusion that the balancing of these factors requires the denial of injunctive relief.

G.

Rule 65 Bond Requirement.

If the Court should grant the award of injunctive relief despite the insurmountable defects in the Plaintiff’s case, then the Court should require a bond of no less than $3,000,000 to protect Magellan against two elements of damages. If injunctive relief is granted, the Court would be ordering Magellan to represent that Cumberland Heights meets the quality of care standards required by Magellan of an “in-network” provider, with the result that there would be two elements of damages. First, there is the liability risk that Magellan assumes when holding out as an “in-network” provider an organization that is demonstrably failing to provide that quality of care. Finally, there is the reputational risk to Magellan with both its customers and members when forced to hold out as an “in-network” provider a facility that it knows is unable, and refuses, to provide that quality of care. These two elements of damages require that the issuance of injunctive relief be conditioned upon posting a bond in the amount of $3,000,000.

CONCLUSION For all of the foregoing reasons, Plaintiff cannot make the requisite showing necessary to support its request for injunctive relief. Accordingly, Plaintiff’s motion should be denied.

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Magellan Sworn Statements, pp. 56

Respectfully submitted,

/s/ Robert S. Patterson Robert S. Patterson (TN BPR # 6189) Patricia Head Moskal (TN BPR # 11621) John M. Scannapieco (TN BPR # 14473) Amy D. Hampton (TN BPR # 22026) BRADLEY ARANT BOULT CUMMINGS LLP 1600 Division Street, Suite 700 P.O. Box 340025 Nashville, TN 37203 (615) 252-2335 rpatterson@babc.com pmoskal@babc.com jscannapieco@babc.com Attorneys for Defendant

CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing was served electronically by operation of the Court’s electronic filing system or via U.S. first class mail, postage pre-paid, to George Nolan, Leader, Bulso & Nolan, PLC, 414 Union Street, Suite 1740, Nashville, Tennessee 37219 on this 19th day of August, 2010.

/s/ Robert S. Patterson Robert S. Patterson

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION CUMBERLAND HEIGHTS FOUNDATION, INC., Plaintiff, V.

MAGELLAN BEHAVIORAL HEALTH, INC., Defendant.

) ) ) ) ) Civil Action No. 03:10-00712 ) ) Judge Nixon/Magistrate Judge Griffin ) ) ) )

AFFIDAVIT OF GARY M. HENSCHEN, M.D.

The Affiant, Gary M. Henschen, M.D., being first duly sworn, deposes and states as follows: 1.

Affidavit.

I am over the age of eighteen (18) years and am competent to make this

The matters set forth in this Affidavit are based upon my training, education,

knowledge and experience, my personal knowledge of facts, and my review of the business and clinical records of Magellan Health Services, Inc. and Magellan Behavioral Health, Inc. ("Magellan").

2.

I am a physician licensed in Tennessee, North Carolina, Georgia

Pennsylvania, New Jersey, and Iowa, and the Chief Medical Officer-Behavioral Health at Magellan Health Services, Inc. Psychiatry and Neurology.

I am ce1iified in Psychiatry by the American Board of

I graduated from the University of North Carolina School of

Medicine at Chapel Hill in 1975, and completed my residency in psychiatry at Duke University Medical Center, Durham, North Carolina in 1982, after training in internal medicine and serving as a flight surgeon in the U.S. Army.

Attached to this Declaration as Exhibit 1 is my

curriculum vitae.

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 1 of 18 PageID #: 354

Magellan Sworn Statements, pp. 90

3.

I am submitting this Affidavit in response to the complaint and motion

for injunctive relief filed by Cumberland Heights Foundation, Inc. ("Cumberland Heights"). I offer my testimony in this matter for two reasons: (a) I am familiar with Magellan's clinical guidelines and standards expected of facilities such as Cumberland Heights; and (b) I participated in the June 30 site visit at Cumberland Heights, one of the events discussed in this litigation.

4.

The treatment of patients with substance abuse is not limited to only the

substance abuse recovery process. Patients with substance abuse issues frequently have a combination of medical, psychological and enviromnental problems. For example, addictive disease is often accompanied by underlying psychological problems such as depression, bipolar disorder, or personality disorders. The presence of two or more diagnoses comprising both mental and physical health is refe1Tedto as a "dual diagnosis" or co-morbidities.

5.

Addiction treatment commonly begins with detoxification, or "detox,"

which is the process of ridding the body of certain toxins while helping manage the withdrawal symptoms, often with medication.

6.

Patients who are treated for drug or alcohol abuse must be assessed,

evaluated and treated for other physical health and psychological problems. Patients who present with abuse issues are considered to be medically "fragile" and may have a variety of other health issues for which Magellan requires the highest quality of clinical care. Studies show that when people use drugs/alcohol for a long period of time, their brains experience changes that exist long after use is discontinued. Accordingly, strong clinical programs that provide medically supervised care help cleanse the body of drug/alcohol-related toxins while helping the patient through uncomfortable and often painful withdrawal symptoms.

Concurrently, behavioral therapy helps the patient examine the origins of addiction while teaching them and their suppmi group the skills needed to maintain sobriety.

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 2 of 18 PageID #: 355

Magellan Sworn Statements, pp. 91

7.

Magellan's philosophy is to promote the delivery of quality, behavioral

health care to our members. In supp01i of this philosophy, we adopt, develop, and distribute clinical guidelines and Medical Necessity Criteria. In order for a provider to qualify as an "innetwork" provider, we require by contract that Magellan providers comply with Magellan's policies and procedures, and guidelines.

8.

My review of Magellan's clinical guidelines governing the quality of care

required of its in-network providers is based on my clinical experience, which includes: (a)

I was in private practice for fifteen years during which time I was a

provider of substance abuse treatment services; (b)

I have served as the medical director of a hospital, and I am trained and

experienced with quality of care programs and monitoring; (c)

Prior to my appointment as Chief Medical Officer for Magellan, I was

Magellan's medical director for the Southeastern Region and chaired the Regional Network Credentialing Committee ("RNCC") that has oversight of quality of care issues; (d)

I have been involved in the development of the clinical care guidelines

and policies and procedures required of Magellan's providers nationwide.

9.

Magellan's clinical guidelines are based upon the American Psychiatric

Association's Clinical Practice Guideline on the Treatment of Patients with Substance Use

Disorders, Second Edition, and also upon other sources of information and guidance in the development of these guidelines. Magellan revises, modifies, amplifies and supplements these guidelines in order to define Magellan's quality of care standards.

10.

Magellan reviews its guidelines every other year, and solicits input from

within the company, patients, providers, health care plans and other professionals from all over the country.

Magellan Sworn Statements, pp. 92

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 3 of 18 PageID #: 356

11.

Based upon the totality of this input, Magellan promulgates its clinical

guidelines and policies and procedures that define the standards of care required of "innetwork" providers of Magellan.

12.

In considering the Magellan clinical standards that apply to facilities like

Cumberland Heights, it is useful to consider the eight levels of care available for psychiatric and behavioral care: (a)

The most intensive level of care is hospitalization of patients requiring

24-hour medical and nursing care and monitoring. The next most intensive level of care is termed "subacute hospitalization" and is for patients who present some risk of hann to themselves or others, but not the imminent risk of harm that would necessitate 24-hour medical and nursing care. (b)

Residential treatment, such as that offered by Cumberland Heights, is the

next most intense level of care and is defined as 24-hour level of care for persons with long term or severe mental disorders that are medically monitored. (c)

Stepping down

in

intensity

are

"Supervised

Living,"

"Partial

Hospitalization," "Intensive Outpatient Programs" and "Outpatient Treatment."

13.

In evaluating the clinical standards of care required by Magellan, it is

Magellan's philosophy to provide treatment at the most appropriate, least restrictive level of care necessary to provide safe and effective treatment and meet the patient's biopsychosocial needs. In layman's te1111s,one of our goals is to help our members return to nonnal, healthy lives. In order to achieve this goal, Magellan requires its "in-network" providers to provide Magellan members with all of the medical, psychological, behavioral, and counseling services they need, in addition to treatment for substance abuse in accordance with Magellan's clinical guidelines and Policies and Procedures.

Magellan Sworn Statements, pp. 93

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 4 of 18 PageID #: 357

It is my understanding that Cumberland Heights attributes the termination

14.

of its provider agreement and removal from Magellan's network to be the result of a decision

by BlueCross BlueShield of Tennessee ("BCBST") to ove1ium Magellan's decision not to authorize additional benefits in a specific case following an appeal of that benefits decision, referred to as a Level II grievance hearing by BCBST, sometime in October 2009. I deny that the October 2009 was the reason for the termination of the Cumberland Heights' provider contract.

15.

I am personally familiar with the appeal of benefits process for Magellan

members and Level II grievance hearings by BCBST. These appeal hearings are routine and regularly occur as paii of the review process regarding treatment authorization decisions for Magellan members.

It is inconceivable that Magellan representatives would become upset

over such a decision.

16.

I personally participated

in the Cumberland Heights'

site review

conducted by Magellai1 on June 30, 2010 Upon presenting the site visit team's report to Dr. Brian Kennedy,

Medical Director for Magellan's

Southeast Care Management Center

("Southeast CMC"), Dr. Kennedy convened a called meeting of the RNCC for the Southeast CMC. 17.

After receiving the report of the site visit team, the RNCC concluded that

Cumberland Heights' provider contract should be terminated effective i1mnediately due to Cumberland Heights' failure to meet Magellan's standards for quality clinical operations and concerns for patient safety.

18.

The deicision to terminate Cumberland Heights' provider contract was

based on multiple factors, including (i) the results and findings of the treatment record review during the June 30 site visit that revealed serious quality of care and patient safety issues in almost every record reviewed, (ii) violations of Magellan's policies and procedures, including Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 5 of 18 PageID #: 358

Magellan Sworn Statements, pp. 94

its adopted practice guideline on the Treatment of Patients with Substance Use Disorders, Second Edition, of the American Psychiatric Association, and (iii) the fact that Cumberland Heights was already under a Corrective Action Plan ("CAP") issued in March 2010 for quality of care concerns and deficiencies identified during a prior site visit that conducted by Magellan in January 2010, which Cumberland Heights had failed to c01Tect.

19.

Magellan required Cumberland Heights, as an in-network provider of

residential care for Magellan members with substance abuse issues, to provide quality care for the full range of substance abuse, psychiatric, medical and behavioral issues.

20.

During the June 30 site visit, the site review team identified senous

quality of care and patient safety concerns in almost every one of the randomly selected treatment records for Magellan members for the period March 2010 through June 2010. This was a small sampling of treatment records for the total number of Magellan members who received treatment services from Cumberland Heights during calendar year 2010.

To

accurately represent the scope of the problems identified regarding quality of care and patient safety and Cumberland Heights' non-compliance with Magellan policies and procedures, the small sample of treatment records reviewed must be extrapolated to the entire total number of Magellan members treated at Cumberland Heights.

21.

I have reviewed Magellan's August 6, 2010 letter summanzmg the

findings of the June 30, 2010 site visit, which accurately reflects those results. A copy of the August 6, 2010 letter is attached as Exhibit 2.

22.

I have also reviewed Cumberland Heights' August 9, 2010 letter

responding to Magellan's site visit findings. A copy of the August 9, 2010 letter is attached as Exhibit 3.

23.

The specific patient concerns identified by Magellan and responded to by

Cumberland Heights are addressed below on a case by case basis.

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 6 of 18 PageID #: 359

Magellan Sworn Statements, pp. 95

24.

Patient #1: "go home and call your dealer." According to Cumberland

Heights' treatment records, this patient left the facility against medical advice before completing the program after the doctor told her to "go home and call your dealer." (a)

This patient with "co-morbidities" was admitted with complaints of pain

and anxiety, along with a dependence on opiods. She required both quality clinical care for her physical health, as well as quality psychiatric counseling and treatment for her substance abuse issues; (b)

The patient left against medical advice before completing her treatment

plan and notwithstanding her condition at admission; (c)

As the patient left the facility, she told a staff member that her doctor had

told her to "go home and call your dealer;" (d)

In my medical opinion, based upon the treatment records provided for

this patient by Cumberland Heights, it failed to provide quality care for this Magellan member under Magellan's standards for network providers for the following reasons: (i)

The facility failed to manage the patient's anxiety and pain;

(ii)

The facility failed to manage her emotional state, as is evident in

the fact that she left the program; (iii)

The facility created a medical record recording the patient's

statement that her doctor had told her to leave and call her dealer, which at a minimum, reflects the emotional state of the patient, and at a maximum, if the statement is true, reflects the callous attitude of her treating physician toward a patient that was medically and psychologically fragile upon admission; and (iv)

There is nothing in the facility's treatment records provided to the

site review team to suggest that there had been any follow up with this patient. A patient who clearly needed medical and psychological care was allowed to leave Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 7 of 18 PageID #: 360

Magellan Sworn Statements, pp. 96

the facility against medical advice, without any apparent reaction or review and investigation of the circumstances by the facility.

25.

Patient #2: No psychiatric evaluation:

According to Cumberland

Heights' treatment record, this member was admitted for treatment without Cumberland Heights' conducting a psychiatric evaluation. (a)

The member previously had been a resident of Cumberland Heights less

than one year earlier and had been released to the care of her psychiatrist. (b)

The member was recently re-admitted to Cmnberland Heights.

(c)

The treatment record provided by Cumberland Heights reflected that the

member did not receive a psychiatric evaluation upon admission. (d)

The treatment record revealed the following problems with the clinical

care of this patient: (i)

A member admitted to a substance abuse treatment facility with a

psychiatric diagnosis should be given a psychiatric exam upon admission, which would include a complete mental status examination. That is a basic quality of care issue and something that is expected of any provider under standard medical practice. (ii)

Whether the member had undergone a prior psychiatric exam or

had a treating psychiatrist outside of Cumberland Heights does not excuse Cumberland Heights' failure to conduct a psychiatric exam upon admission. A complete psychiatric examination is imperative in patients with a history of psychiatric diagnosis and treatment. (iii)

The fact that the patient returned to Cumberland Heights within

months after being discharged suggests that prior treatment was ineffective and required Cumberland Heights to re-evaluate the member's case.

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 8 of 18 PageID #: 361

Magellan Sworn Statements, pp. 97

(iv)

Based upon the records provided by Cumberland Heights,

Cumberland Heights violated the policies and procedures of Magellan that require a psychiatric examination upon admission and failed to provide this member with the quality of care required of Magellan in-network providers.

26.

Patient #8. Continuing problems without re-evaluation: Based on the

treatment records provided, this member was admitted to Cumberland Heights without a biopsychosocial evaluation. The member previously was a resident at Cumberland Heights and was discharged.

Two weeks later, the member relapsed and returned to Cumberland

Heights, and was admitted for residential detoxification.

The relapse indicates that the

member's prior therapy was ineffective, despite having been treated with the most intensive level of care provided by Cumberland Heights. Yet, Cumberland Heights did not re-assess the patient with a psychiatric evaluation upon re-admission. (a)

Cumberland Heights excuses its failure to re-assess and to conduct a

psychiatric evaluation on the basis that the re-admission was a continuing course of care. (b)

The failure to re-assess the member upon re-admission violates

Magellan's policies and procedures, and falls below the quality of care standards required by Magellan of "in-network" providers.

This patient was re-admitted for

detoxification after treatment by Cumberland Heights; the facility's prior treatment did not work and the provider should have devoted more, not fewer, resources to a Magellan member who failed to respond to the care previously provided.

27.

Patient #3: Drug Reaction. Based on the treatment records provided for

this member, the records variously indicated "no known drug allergies" or an allergy to penicillin. (a)

Patients with substance abuse issues are medically fragile patients.

Magellan Sworn Statements, pp. 98

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 9 of 18 PageID #: 362

(b)

Patients receiving treatment at Cumberland Heights are often treated with

pharmaceuticals. (c)

Drug reactions are a senous medical concern.

Magellan requires its

provider facilities to protect its members against adverse drug reactions.

Magellan

requires its provider facilities to report and to record accurately in the member's treatment record any history of medication allergies for the patient's safety. (d)

There was nothing in the treatment record to indicate that Cumberland

Heights had identified this conflicting information or acted to resolve that conflict. (e)

Based upon the treatment records provided by Cumberland Heights, it

violated the policies and procedures of Magellan and failed to provide the quality of care required of in-network providers by Magellan.

28.

Patient #4: Co-morbidities and drug interactions.

According to

Cumberland Height's records, this member had a complicated medical history. In addition to depression and an addiction to opioids, the member had Addison's Disease, a relatively rare endocrine disorder. While at Cumberland Heights, this member had a syncopal episode during which the patient fainted and had to be transported to and admitted to a local hospital. The member was evaluated for a small bowel obstruction, but it was detennined that the member had been dehydrated. (a)

Any time a patient faints, there is a risk of physical injury. When a

medically fragile patient faints, the facility should be alerted to carefully examine the patient for potential medical issues and possible drug interactions. The facility also should be ale1ied to examine its policies and procedures for treatment of patients and for protecting those patients against possible drug interactions. (b)

An evaluation of this member's fainting episode and hospitalization

should examine the interrelatedness of his medical conditions.

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 10 of 18 PageID #: 363

Magellan Sworn Statements, pp. 99

(i)

The member was addicted to opioids or pain killers. Some of the

side effects of opioids include fatigue and light-headedness. (ii)

This member suffered from Addison's Disease, which also can

cause fatigue and light headedness. (iii)

Patients with Addison's Disease may experience an "Addison's

Crisis," which is a potentially fatal medical emergency that may include, among other symptoms, dehydration, low blood pressure and syncope, or loss of consc10usness. (c)

An evaluation of this member also should examine the member's various

medications and their side effects and interactions. (i)

The member was addicted to opioids, or painkillers. Some of the

other side effects of opioids are sedation, depression and constipation. (ii)

The member was being treated for depression with nortryptiline.

The side effects of nortryptiline include sedation, constipation and orthostatic hypotension, which is a sudden drop in blood pressure when sitting or standing, which can result in syncope, falls and fractures. (iii)

This member also was being treated with Coumadin. The patient

was at risk for a subdural hematoma (bleeding around the brain) and other internal bleeding if the member fell and received an injury. The member was placed at great risk with the use of nmiryptiline, known to cause orthostatic hypotension and subsequent falls. With this member, such a fall could have proved fatal. (iv)

This variety of medications could interact, leaving the member

especially vulnerable to those interactions because of the member's complicated medical history.

Magellan Sworn Statements, pp. 100

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 11 of 18 PageID #: 364

(d)

In defending its treatment of this patient, Cumberland Heights illustrates

how its standards of care fail to conform to those required by Magellan. (e)

In my opinion and based upon my evaluation and interaction of similar

facilities nationwide, the case illustrates the following problems with the quality of care provided by Cumberland Heights: (i)

Whether Cumberland Heights can deal with substance abuse

patients with co-morbidities; (ii)

Whether Cumberland Heights is equipped to evaluate and to treat

patients who have substance abuse issues that are complicated by serious medical conditions such as Addison's Disease; (iii)

Whether Cwnberland Heights 1s equipped to deal with the

potential interactions of the drugs required to be taken by patients with serious medical conditions; (iv)

Whether Cumberland Heights has a basic understanding of

psychopham1acology and prominent side effects of psychotropic medications; (v)

Why this case and incident was not analyzed against existing

protocols and clinical standards; and (vi)

Perhaps most impo1iantly, why this event, which required the

hospitalization of a patient, did not prompt a peer review process that analyzed both existing protocols and clinical standards.

29.

Patient #5: Appropriate levels of care. Cumberland Heights provided

Magellan information on which it relied to approve three days of detoxification for this member; yet, a review of the patient's medical record did not support the need for this level of care.

Magellan Sworn Statements, pp. 101

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 12 of 18 PageID #: 365

(a)

As noted elsewhere, Cumberland Heights seeks authorization for

treatment by providing information to Magellan on which Magellan necessarily relies to assist in dete1mining the appropriate level of care. (b)

As discussed above, Magellan's goal is to assist its members to return to

healthy, 1101mallives as soon as possible. It is detrimental to this goal to treat patients with a more restrictive level of care than necessary. Patients must not hide from, but must confront and deal with, the issues in their lives.

This is not an issue of

reimbursement; Magellan's compensation for the services it provides is not dependent on how much of the insurance companies' money it authorizes, or refuses to authorize to be spent. (c)

In reliance upon information phoned

111

by Cumberland Heights, the

member was admitted to a residential detox program. (d)

A review of the patient's medical record on June 30 revealed that the

member never demonstrated withdrawal symptoms. (e)

Based upon the records provided by Cumberland Heights, Cumberland

Heights violated the most basic policies and procedures of Magellan, which is to properly assess the level of care required to treat patients' illnesses in a maimer designed to restore them to healthy, normal life as soon as possible.

30.

Patient #6: Coordination of care of medical specialists. This member

presented with an addiction to pain killers and with a number of co-morbidities that interrelated with the member's substance abuse issues; yet, there was no indication that Cumberland Heights did anything other than treat the abuse issues without regard to the necessity of coordinating the care of the member's interrelated medical issues. (a)

The member had a number of medical issues that were not treated while

at Cumberland Heights, including: Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 13 of 18 PageID #: 366

Magellan Sworn Statements, pp. 102

(i)

Hypothyroidism, in which the diagnosis of hypothyroidism was

included in the member's written history, but no attempt to assess the status of this disease was made by obtaining thyroid function tests. Furthennore, no attempt was made to treat the patient's reported hypothyroidism, a disease wellknown to contribute to depression, a diagnosis attributed to this patient; (ii)

Lumbar disc disease with significant pain contribut01y to

addiction to pain medications; however, there was no documented complete neurological evaluation or exam, no documented attempt to secure neurological consultation, and no documented treatment plan to address pain in connection with addiction issues; (iii)

The physical exam was performed by a nurse practitioner rather

than a doctor; (iv)

This member had undergone a psychiatric hospitalization one year

before admission to Cumberland Heights for depression related to marital problems; however, there was no documentation of family sessions being conducted during the member's stay at Cumberland Heights; and (v)

This member also signed out of the facility against medical advice

after a three week stay. (b)

Based upon the records provided by Cumberland Heights, Cumberland

Heights violated Magellan's policies and procedures and standards for quality of care, which is to address and treat all of the inten-elated medical conditions that impact the health of patients with co-morbidities, especially when they contribute to the pain syndrome that precipitated the addiction in the first place. It is simply insufficient to suggest that a facility can treat substance abuse issues without also addressing the underlying medical and behavioral issues that lead to the abuse of painkillers.

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 14 of 18 PageID #: 367

Magellan Sworn Statements, pp. 103

31.

Patient #7. Failure to provide care recommended by Cumberland

Heights. Cumberland Heights' persom1el determined that this member needed a psychiatric

evaluation upon admission. The evaluation was never performed. (a)

Patients with substance abuse problems often have both medical and

psychiatric issues. It is not enough to wean them off the substance to which they are addicted without addressing underlying causes for addiction. (b)

In this case, the Cumberland Heights counselor who admitted the

Magellan member identified the need for a psychiatric evaluation. (c)

Based upon the records provided by Cumberland Heights, Cumberland

Heights failed to perform an evaluation that it identified as imp01iant to the quality of care being provided to this patient. This is not a case of a failure to treat a co-morbidity for which Cumberland Heights may have needed to refer the patient to a specialist, or a case where a specific event should have but did not generate an examination of the facility's protocols and clinical guidelines. This is an instance where the facility failed to perform a task that it identified for itself, the most fundamental task asked of any treatment facility, a psychiatric examination.

32.

The findings described above are based on what was found

111

Cumberland Heights' own treatment records.

33.

Under its provider contract, Cumberland Heights contractually agreed to

comply with all of Magellan's Policies and Procedures. While Cumberland Heights may argue that its actions did not fall below a standard of medical care, the fact is that its clinical care fell below the standards of care required by Magellan under its Policies and Procedures, and did not meet Magellan's requirements for "in-network" providers.

34.

The purpose of the site visit at Cumberland Heights on June 30 was to

conduct a follow-up treatment record review, compile our findings, and report those findings to Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 15 of 18 PageID #: 368

Magellan Sworn Statements, pp. 104

the RNCC at its next meeting.

Before the site visit, I had not considered terminating

Cumberland Heights' provider agreement with cause.

35.

Upon completing the June 30 site review at Cumberland Heights, the

findings prompted a conversation among the site review team about whether the quality of care concerns required immediate repmiing within Magellan. The site review team does NOT make any decisions, but is required to report and to review its findings with the RNCC. The team agreed that our findings were sufficiently serious to merit prompt review by the RNCC. 36.

The findings by the Magellan site visit team cam1ot be dismissed on the

basis of Cumberland Heights' failure to provide the team with information that could have been found in Cmnberland Heights' "electronic medical records." Without regard to what might otherwise be available at the facility, other clinicians providing patient care must be able to rely upon the treatment records created and produced by Cumberland Heights. (a)

Magellan relies upon treatment records transmitted by Cumberland

Heights in making decisions to authorize treatment and benefits, just as it relied on Cumberland Heights to produce complete treatment records for review on June 30. (b)

Other clinicians providing care to Magellan members likewise must be

able to rely upon Cumberland Heights' treatment records. Members who seek treatment for substance abuse are medically fragile, many present with co-morbidities, and it is entirely predictable they will require hospitalization or treatment by other medical professionals. (c)

Problems with treatment recordkeeping are problems with the quality of

clinical care. In many cases, Cumberland Heights is only one of many health care providers for Magellan members. All of the providers who treat Magellan members should be able to rely upon the accuracy and completeness of the treatment records provided by Magellan "in-network" providers.

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 16 of 18 PageID #: 369

Magellan Sworn Statements, pp. 105

(d)

The suggestion that Cumberland Heights holds additional infom1ation in

its electronic medical record that it failed to deliver to Magellan during a site visit is an admission that none of Magellan's members' other medical providers can be assured that they will be provided a complete and accurate treatment record.

37.

The Magellan site review team found serious problems with all of the

Cumberland Heights treatment records reviewed on June 30, 2010. (a)

Had we found problems with even a single file, Magellan would have

required Cumberland Heights to elevate its care to the quality standards required by Magellan's policies and procedures. Problems appearing in even one of eight treatment records would require some action because of the implications of that en-m¡ rate to the high volume of Magellan members who receive treatment at this facility. (b)

Our actual review found problems with every treatment record, some

more serious than others. The discovery of problems in such a high percentage of the charts sampled in a follow up site visit for a facility on a CAP was both very surprising and a source of significant concern to me. We found different types of problems in the eight treatment records reviewed, all of which implicated Magellan's policies and procedures and indicated a failure to comply with Magellan's standards for the quality of member care for "in-network" facilities. (c)

In my professional opinion, based upon my education, knowledge,

training and experience, the problems identified in the Cumberland Heights treatment records reviewed on June 30 in the aggregate compelled the conclusion that Cumberland Heights was not providing the quality of care to Magellan members that is required by Magellan of its "in-network" providers and that Magellan members in treatment there were at risk of ham1.

Magellan Sworn Statements, pp. 106

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 17 of 18 PageID #: 370

FURTHER AFFIANT SAYETH NOT.

SWORN TO AND SUBSCRIBED BEFORE ME this day of August, 2010.

J.ltl2_

=k a::U Q·~ o~7wuc'W

My Commission Expires on \ \ -

1- - 2DI /

Magellan Sworn Statements, pp. 107

Case 3:10-cv-00712 Document 29 Filed 08/19/10 Page 18 of 18 PageID #: 371

Magellan Sworn Statements, pp. 108

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