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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 239 SEPTEMBER TERM, 1996 ___________________________________

KANAIYALAL J. PATEL

v. HEALTHPLUS, INC., et al.

___________________________________

Cathell, Davis, Harrell, JJ. ___________________________________ Opinion by Cathell, J. ___________________________________

Filed:

November 8, 1996

In this case, a physician had a contractual relationship with a Health Maintenance Organization HMO that required him to perform services for the HMO's members. In return, he was to receive

certain fees from the HMO that were to be paid pursuant to the terms of the contract. Disputes arose as to whether he was being,

or had been, paid the correct sums in the manner contractually required. He initiated suit in the District Court against the HMO

for sums due for services rendered to one of the HMO's subscribers. He won. He then sued the HMO again in the District Court for sums

due for services rendered to another one of the HMO's subscribers. While that was pending, he initiated another suit in the District Court against the HMO for sums due for services rendered yet another of the HMO's subscribers. All of the subsequent actions or

potential actions could have been filed at the time of the initial action. The HMO instituted a declaratory judgment action in the

circuit court asking that court to declare that the fees claimed in the subsequent two cases, as well as numerous other cases, were uncollectible because the doctrine of res judicata applied. The

circuit court agreed and declared that the maintenance of the subsequent suits was barred.

- 2 Kanaiyalal J. Patel, M.D., is the appellant who appeals from the granting of motions for summary judgment and for dismissal in favor of HealthPlus, Inc. (HealthPlus), appellee, a health

maintenance organization (HMO), and Sandra Sheppard (Sheppard), a HealthPlus employee.1 In the first of the actions mentioned above,

appellant recovered fees owed to him by appellee for services he rendered pursuant to the same contract at issue in the subsequent two cases and in the declaratory judgment action. presents three questions: I. Did the Circuit Court know and understand the material provisions of the "contract" allegedly before it and did the Circuit Court know if this was the same "contract" before the District Court in Civil No. 523594-94 (the V.S. case)? II. Does the Doctrine of Res Judicata apply to preclude the 270 alleged claims against HealthPlus and two additional cases filed by Dr. Patel? III. Does the Doctrine of Res Judicata preclude Dr. Patel's counterclaims in Civil No. CAL 95-02017 and was the dismissal thereof and the two additional cases proper? Questions two and three are actually the same question, i.e., did the trial court properly apply the principles of res judicata in the granting of the motions? them simultaneously. Accordingly, we shall later address Appellant

Ms. Sheppard is also an appellee. When we resolve the issue in respect to her, it will be apparent. Otherwise, our use of the word appellee refers to HealthPlus.

1

- 3 Question one alleges no error. It merely asks this Court if In respect

the trial court understood the terms of an agreement. to this question, appellant states in his argument:

Before the transaction test can be applied, the transactions or lack thereof must be understood by the trial court on a Motion for Summary Judgment. . . . . . . . In order for the Circuit Court to determine that the "contract[s]" that Judge Kelly ruled on [were] the identical contract[s] . . . before it . . . would require the Circuit Court to demonstrate that it knew this intention to be the case. . . . . . . . Nor is it possible . . . to see that the Circuit Court understood what "contract[s]" it determined had been ruled on in the District Court . . . . The Court of Special Appeals must now determine if the Circuit Court was legally correct . . . . Neither the District Court decision . . . [allegedly creating res judicata] [n]or the sworn evidence before the Circuit Court . . . can be relied upon to determine the intention of the parties under the "contract" . . . . . . . [T]he intention of the Circuit Court . . . is not disclosed any further than it was based solely on Alvey v. Alvey, supra, and Rosenstein v. Hynson, supra. That is all that Appellant can . . . interpret from a fair reading of the decision. Appellant believes the Circuit Court decision[s] . . . are legally wrong. All we can interpret from a reading of appellant's first question and the argument in support of it is that appellant's

- 4 position is that the circuit court has to be wrong because

appellant does not understand what happened.

Maryland Rules 8-

504(3) and (4) require that questions presented state "the legal propositions involved," and the brief must contain a "clear concise statement of the facts material to a determination of the questions presented." Appellant's first question appears merely to state a

disagreement with the result rather than to assign reversible error. Thus, we shall not directly address it because we cannot It appears, however,

perceive what it is we are asked to address.

that we may answer question one, whatever it may be, as we address questions two and three. We note that the trial courts' decisions2

were based completely on their application of res judicata principles. The second and third questions presented by appellant are: Does the Doctrine of Res Judicata apply to preclude the 270 alleged claims against HealthPlus and two additional cases filed by Dr. Patel? Does the Doctrine of Res Judicata preclude Dr. Patel's counterclaims in Civil No. CAL 95-02017 and was the dismissal thereof and the two additional cases proper? In order to respond adequately to these questions (really one question), we first note that certain of appellant's arguments will require us to examine the contractual nature of the tripartite relationship that generally exists when some types of health

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There were two decisions by two trial judges.

- 5 maintenance organizations are involved. In stating appellant's

arguments and in later addressing the res judicata issue, we are concerned primarily with the nature of the contract between

appellant, a physician, and the HMO, not in whether fee computations were accurately made or procedures adequately followed or even understood. If there is one general contract between

appellant and appellee as to fees, certain res judicata principles may apply. If the arrangement is a series of contracts between

appellant and appellant's patients, other principles may apply. With respect to the relationship among appellant, HealthPlus, and Sheppard, appellant argues that HealthPlus is an HMO that "arranges health benefits" for its members by contracting with private practicing physicians. Dr. Patel does not disagree that HealthPlus arranged for him to provide services to HealthPlus patients, but he asserts strongly that he still makes his own professional determination about each person referred being his patient in return for accepting what HealthPlus would pay for that service. Dr. Patel states that each patient is referred by a primary physician, not by himself. Thus, there is no series of transactions with the HealthPlus patients. Each patient is referred to Dr. Patel for different reasons and each is treated according to his or her needs. This is not a mere series of transactions between HealthPlus and Dr. Patel. . . . . . . . There never was an expectation that the physician provider had to sue HealthPlus over every breach of contract at one time if a claim could not be resolved.

- 6 This Court can well understand the reluctance of some physician providers to take action against HealthPlus or any other HMO or insurance company when they are receiving a large percentage of their patients on referral from such an organization. [Emphasis added.] As is apparent, appellant contends that each visit with a patient who was a member of the HMO was a separate "transaction," i.e., a separate contractual arrangement. In order, therefore, to address appellant's arguments and answer the questions presented, we must establish what a health maintenance organization, in a general sense, is.3 examine the contract between the parties in the We must also context of

HMO/physicians, HMO/subscribers, and physician/patient relationships. HMO is a generic term for prepaid health coverage plans that provide medical services to a relatively large population at a fixed rate. There are five salient characteristics of HMOs.

1) HMOs assume the contractual responsibilities for providing health care services to subscribers (subscribers and members are used interchangeably). 2) HMOs are closed health care systems, providing services only to a defined and enrolled clientele. 3) Members are voluntarily enrolled.

The first HMO may have been the Boston Dispensary, as it operated before World War I. See Barbara A. Shickich, Legal Characteristics of the Health Maintenance Organization, in Healthcare Facilities Law

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