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Kennedy Krieger Institute, Inc. v. Brundage Management Company, Inc.

United States District Court, District of Maryland, Northern Division

March 3, 2015

KENNEDY KRIEGER INSTITUTE, INC., et al., Plaintiffs,
v.
BRUNDAGE MANAGEMENT COMPANY, INC., EMPLOYEE BENEFIT PLAN, et al., Defendants.

MEMORANDUM OPINION

William D. Quarles, Jr., United States District Judge

Kennedy Krieger Institute, Inc. and its affiliates (collectively, "the Plaintiffs") sued Brundage Management Company, Inc. ("Brundage"), Brundage Management Co., Inc. Employee Benefit Plan ("the Plan"), Benefit Management Administrators, Inc. ("BMA"), and Inetico, Inc. ("Inetico") for breach of contract, fraud, [1] and violating the Texas Insurance Code. Pending are four motions to dismiss. No hearing is necessary. See Local Rule 105.6 (D. Md. 2011). Because the Court lacks personal jurisdiction over some of the Defendants, the case will be transferred to the United States District Court for the Western District of Texas.

I. Background[2]

A. The Parties Kennedy

Krieger Institute, Inc. ("Kennedy Krieger") is a non-profit Maryland corporation. ECF No. 1 at ¶ 1. Kennedy Krieger "is the parent corporation of Kennedy Krieger Children's Hospital, Inc. and Kennedy Krieger Associates, Inc." Id. Brundage is a Texas corporation with its principal place of business in Texas. Id. at ¶ 4. Brundage "provides medical and other health care benefits to its employees by sponsoring and/or providing a self-funded group health plan . . . ." Id. at ¶ 5. The Plan "covers inpatient treatment for mental health and behavioral health issues . . . ." Id. at ¶ 13. The Plan "designates Brundage as the plan administrator." Id. at ¶ 14.

BMA is a Texas corporation with its principal place of business in Texas. Id. at ¶ 6. BMA is the claims administrator of the Plan. Id. at ¶ 14. Inetico is a Florida corporation with its principal place of business in Florida. Id. at ¶ 7. Inetico "provides third-party administration services on behalf of some or all of the foregoing entities." Id. at ¶ 14.

B. The Hospitalization of John Doe

Jane Doe[3] was an employee of Brundage and was covered by the Plan. ECF No. 1 at ¶ 15. Jane Doe had a minor son, John Doe, who was also covered by the Plan. Id. at ¶ 16. Jane Doe and John Doe are not Maryland citizens.[4]

John Doe is "a developmentally disabled individual." Id. at ¶ 16. He suffered from "significant mental health issues, including but not limited to significant and frequent self-injury, aggression, and pica (consumption of non-nutritive substances such as dirt)." Id. at ¶ 17. Mr. Doe was receiving treatment near his home from a local physician. Id. The physician referred Mr. Doe to Kennedy Krieger which "has a nationally renowned inpatient program for treating children who suffer from severe behavioral dysfunction, aggression, and disruptive behavior."[5]

"In November 2012, Kennedy Krieger's Neurobehavioral Unit team evaluated Mr. Doe and determined that it would be appropriate for him to be admitted to the Neurobehavioral Unit." Id. at ¶ 22. On November 21, 2012, the Plaintiffs sent an authorization request to Brundage, BMA, and Inetico. Id. at ¶ 23. The Plaintiffs informed the Defendants that "Mr. Doe posed significant risks to himself and others, other attempts at treatment had not been successful, the lack of hospitalization posed significant risks, and a four-month inpatient admission to the Neurobehavioral Unit at Kennedy Krieger was medically necessary." Id. at ¶ 24.

Before February 14, 2013, Inetico told the Plaintiffs that "inpatient services at Kennedy Krieger's Neurobehavioral Unit were covered under the [] Plan, and authorized the first seven days of coverage." Id. at ¶ 27. On February 14, 2013, the Plaintiffs admitted Mr. Doe to the Neurobehavioral Unit in Maryland. Id. at ¶ 28.

On February 22, 2013, Inetico informed the Plaintiffs that any further inpatient care of Mr. Doe would not be covered by the Plan because it was "not medically necessary." Id. at ¶ 31. The Plaintiffs' physicians believed that releasing Mr. Doe "would be unethical" and continued his inpatient care. Id. at ¶ 30. After several months of treatment, the Plaintiffs' "physicians and staff successfully treated Mr. Doe, and he was released after completing the program." Id. at ¶ 35. The final bill for the Plaintiffs' services was $750, 000, which remains unpaid. Id. at ¶ 36.

Brundage denied Ms. Doe's claim. See id. at ¶¶ 37-38. "Ms. Doe authorized the Plaintiffs to file appeals of the denial of benefits." Id. at ¶ 38. "In ruling on the appeals, Brundage, Benefit Management Administrators, and/or [Inetico] came to the conclusion that the treatment was "not medically necessary." Id. at ¶ 39.

"In an attempt to dissuade Ms. Doe from pursuing the matter any further, [] Brundage falsely advised Ms. Doe that it would be bankrupt if ordered to pay, and suggested that she would be fired if she pursued the matter further."[6]Id. at ΒΆ 41. Because of Brundage, Ms. Doe ...


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