State Dept. Of Human Services Ex Rel. Palmer v. Unisy

637 N.W.2d 142 (2001)

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Nature of the Case

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Facts

P entered into a contract with D to help manage the program and serve as the fiscal agent. D was responsible for reimbursing Medicaid providers. P contracted with several HMOs, including Heritage and Care Choices, to provide care to eligible recipients. P agreed to pay the HMOs a predetermined monthly fee for each Medicaid recipient enrolled in the HMO in return for providing the recipient any and all medical services needed during the month. The 'capitation rate' was paid whether or not a recipient actually received medical services during the month. The 'capitation rate' was determined at the beginning of each fiscal year using statistics and data of the actual medical costs of Medicaid recipients who received medical care on a fee-for-service basis during the preceding fiscal year, and was essentially the quotient of the number of months an individual was eligible for Medicaid services and the amount expended during those months on the individual. P entered into written contracts with Heritage and other HMOs to provide medical care to Medicaid recipients based on the capitation rates calculated by D. P later determined D miscalculated the capitation rates used in the contracts. They were higher than they should have been if properly calculated. P overpaid the HMOs between $15 million and $17.5 million in 1994 and 1995. P then sought to recover this amount from D based upon its mistakes. D filed cross-petitions against Heritage and other HMO’s. D claimed Heritage was not entitled to retain the alleged overpayments. D submitted expert evidence that the capitation rates were inflated. Heritage submitted evidence that P did not believe Heritage was liable for the overpayments, and that it had no intention of pursuing any action against Heritage. The district court granted summary judgment for Heritage. It determined unjust enrichment was not available as a theory of recovery because the claim was governed by a written contract. It also rejected the indemnification and contribution theories. D appealed.