7th Circuit Reinstates Pain Clinic’s Claim Against Billing Provider

Katie Stancombe for www.theindnalawyer.com

A chronic pain clinic that lost more than a year’s worth of insurance claims through its billing software had its potentially multi-million-dollar breach of contract claim against the provider reinstated Wednesday by the 7^th Circuit Court of Appeals.

Pain Center of Indiana LLC, a clinic that treats patients who suffer from chronic pain, contracted in 2003 with SSIMED LLC, a company that provides medical-billing software and related services. Over time, problems arose with unpaid claims filed through SSIMED’s Practice Manager and EMRge software, but Pain Center nevertheless signed a second contract three years later, but Pain Center said the problems continued.

After hiring a billing specialist in 2011, the pain center discovered thousands of unpaid claims in the Client Center of Project Manager, which hadn’t been opened in 18 months. Pain Center tried to recover payment, but the insurers refused to pay the stale claims. Dr. Anthony Alexander, the sole founder and member of Pain Center, said he had never known about the Client Center or how it functioned.

The pain center sued SSIMED in 2013 for claims including breach of contract, warranty, implied duty of good faith and four tort claims. The claims arose from alleged shortcomings in SSIMED’s software and services. It also alleged that Practice Manager and EMRge software and related billing services caused the losses.

U.S. District Court Judge Richard Young previously granted summary judgment in favor of SSIMED, stating the entire suit was untimely. He held that the Uniform Commercial Code’s four-year limitations period applied, reasoning that the agreements in question were mixed contracts for goods and services in which goods predominate.

The 7^th Circuit affirmed Young on all rulings except for summary judgment on the breach of contract claim, which the court reversed. The 7^th Circuit found Young correctly identified the predominant thrust test in Insul–Mark Midwest, Inc. v. Inc. v. Modern Materials, Inc., 612 N.E.2d at 554, used in Indiana for resolving such a question, but erred in its application.

“The predominant thrust of the two agreements is medical billing and IT services, not the sale of goods,” Chief Judge Diane Wood wrote Wednesday in Pain Center of SE Indiana, LLC v. Origin Healthcare Solutions LLC, No. 17-1276.

“So the UCC and its four-year limitations period do not apply. Instead, the breach-of-contract claims are subject to Indiana’s ten-year statute of limitations for written con-tracts and are timely.”

“Pain Center mounts a halfhearted effort to convince us to find as a matter of law that SSIMED breached the contracts and is liable for $15 million in damages. That’s a serious overreach,” Wood wrote. “We hold only that the breach-of-contract claims are timely.”

The case was remanded for further proceedings.