Tenet Healthsystem Hahnemann, Llc v. Global Excel Management, Inc. et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM Pursuant to Federal Rules of Civil Procedure 8

E.D. Pa.March 9, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA TENET HEALTHSYSTEM HAHNEMANN, LLC d/b/a HAHNEMANN UNIVERSITY HOSPITAL, CIVIL ACTION Plaintiff, CASE NO. 2:17-cv-00536-LDD v. GLOBAL EXCEL MANAGEMENT, IHC HEALTH SOLUTIONS, INNOVATIVE MEDICAL RISK MANAGEMENT, INC., STANDARD SECURITY LIFE INSURANCE COMPANY OF NEW YORK, IHC ADMINISTRATIVE SERVICES, INC. Defendants. MOTION TO DISMISS PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 8(a) and 12(b)(6) Defendant Innovative Medical Risk Management, Inc., by and through their attorney Richard A. Estacio, hereby files this Motion to Dismiss Plaintiff’s Complaint pursuant to Federal Rules of Civil Procedure 8(a) and 12(b)(6), in support thereof incorporated by reference, the attached Memorandum in Support as if fully set-forth herein. WHEREFORE, Defendant Innovative Medical Risk Management, Inc., respectfully requests that this Court grant the within Motion to Dismiss and dismiss the Complaint with prejudice. Case 2:17-cv-00536-LDD Document 11 Filed 03/09/17 Page 1 of 2 Respectfully Submitted, By: /s/ Richard A. Estacio CERTIFICATE OF SERVICE I hereby certify that on this the 9th day of March, 2017, a true and correct copy of the foregoing MEMORANDUM IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS as filed with the Clerk of the Court for the United States District Court for the Eastern District of Pennsylvania. I certify that service will be accomplished by the CM/ECF system. /s/ Richard A. Estacio Case 2:17-cv-00536-LDD Document 11 Filed 03/09/17 Page 2 of 2 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA TENET HEALTHSYSTEM HAHNEMANN, LLC d/b/a HAHNEMANN UNIVERSITY HOSPITAL, CIVIL ACTION Plaintiff, CASE NO. 2:17-cv-00536-LDD v. GLOBAL EXCEL MANAGEMENT, IHC HEALTH SOLUTIONS, INNOVATIVE MEDICAL RISK MANAGEMENT, INC., STANDARD SECURITY LIFE INSURANCE COMPANY OF NEW YORK, IHC ADMINISTRATIVE SERVICES, INC. Defendants. MEMORANDUM IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS Pursuant to Fed. R. Civ. P. 8(a) and 12(b)(6), Defendant Innovative Medical Risk Management, Inc., respectfully moves this Court to dismiss all counts contained in Plaintiff’s Complaint for failure to state a claim upon which relief can be granted. I. INTRODUCTION AND PROCEDURAL HISTORY Plaintiff, Tenet Healthsystem Hahnemann, LLC d/b/a Hahnemann University Hospital (“Tenet”), filed its original civil action against Defendants Global Excel Management, IHC Health Solutions, Innovative Medical Risk Management, Inc., Standard Security Life Insurance Company of New York, and IHC Administrative Services, Inc. in the Court of Common Pleas in Philadelphia County, Pennsylvania on February 2, 2017. On February 6, 2017 Defendant Global Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 1 of 12 Excel Management, Inc. removed Plaintiff’s action from state court to this court, by filing a Notice of Removal (ECF No. 1). Plaintiff apparently filed this action to recover the cost of certain medical services and materials provided to patient, “W.D.” Plaintiff’s complaint is noticeably devoid of any specific factual allegations supporting its varied claims. Plaintiff seeks payment against all defendants on the same cookie-cutter allegations alleging that each defendant “was the insurance provider, underwriter, and/or third party medical insurance administrator for patient, W.D”. (ECF No. 1-5, Compl. ¶¶4-8). The only smidgen of specificity provided is that the supposed benefits were covered under a “medical health insurance policy, Insurance Plan Code WN401, Global Excel claim number 2242566, IHC claim number 2016068-P00-105”. (Compl. ¶ 1). The remainder of the complaint is a laundry list of vague and conclusory allegations that each defendant “contracted and agreed with another to provide, underwrite, arrange, and/or administer medical insurance to their insureds and members, and to process claims by medical providers, such as Plaintiff”. (See e.g., Compl. ¶ 11, see also ¶¶ 12-13). Upon these lackluster factual allegations, Tenet alleges four claims against all defendants: Count I - Breach of Contract/Intended Third Party Beneficiary; Count II - Quantum Meruit/Unjust Enrichment; Count III - Promissory Estoppel and; Count IV - Unfair Trade Practices. Defendant Innovative Medical Risk Management, Inc. (“IMRM”) seeks to dismiss Plaintiff’s Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Dismissal of all claims raised in the complaint against IMRM is appropriate because the complaint fails to allege specific facts that would support any of the claims asserted. Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 2 of 12 II. LEGAL STANDARD A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). Under Rule 12(b)(6), the defendant bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). Rule 8(a) describes the elements required to form an adequate pleading in federal court. One of the required elements is that the pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief . . . .” Fed. R. Civ. P. 8(a). And Rule 12(b)(6) gives parties a method to test the formal sufficiency of the statement of the claim for relief required by Rule 8(a). To withstand a Rule 12(b)(6) motion to dismiss, the complaint must allege facts sufficient to support the essential elements of a cause of action. Id. The Court may properly grant a motion to dismiss where, as here, the pleading merely offers “labels and conclusions or “a formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). While a plaintiff must provide the grounds of his entitlement to relief, Rule 8 does not mandate the inclusion of “detailed factual allegations” within a complaint. Bell Atlantic Corp v. Twombly, 550 U.S. 544, 545 (quoting Conley, 355 U.S. at 47, 78 S.Ct. 99). However, at the same time, “it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S.Ct. at 1949. “[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.” Twombly, 550 U.S. at 563. A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 3 of 12 Iqbal, 129 S.Ct. at. at 1949. However, Courts are not required, to credit bald or conclusory assertions, or to give weight to legal conclusions contained in the Complaint, when considering a 12(b)(6) motion. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3rd Cir. 1997); Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (directing that district courts “must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions”). All counts asserted by Tenet against IMRM are implausible on their face. Put simply, Tenet’s complaint is almost entirely devoid of facts. Tenet fails to provide even a scintilla of clear and logical factual allegations that would be consistent with its counts. Instead, Tenet relies, chiefly, on labels and conclusory allegations-the exact type of complaint that the law decries. Consequently, Tenet’s claims against IMRM must be dismissed on the basis of legal insufficiency. III. LAW AND ARGUMENT A. Tenet Has Not Stated a Claim for Breach of Contract Tenet’s breach of contract claim against IMRM suffers from a tragic flaw that requires dismissal: the complaint does not allege the prerequisites of an enforceable agreement. A contract is formed under Pennsylvania, when the parties to it (1) reach a mutual understanding, (2) exchange consideration, and (3) delineate the terms of their bargain with sufficient clarity.” Weaverton Transp. Leasing, Inc. v. Moran, 834 A.2d 1169, 1172 (Pa. Super. Ct. 2003). “To state a breach of contract claim, the plaintiff must allege the existence of a contract, a breach of the contract by the defendant, and damages resulting from the breach.” McShea v. City of Philadelphia, 606 Pa. 88, 995 A.2d 334, 340 (2010). Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 4 of 12 In its complaint, Tenet alleges that this breach of contract actions arises from “Defendants failure to pay Plaintiff for benefits provided under medical health insurance policy, Insurance Plan Code WN401, Global Excel claim number 2242655, IHC claim number2016068- P00-105” (Compl. ¶1). Tenet further states that “Defendants contracted and agreed with one another to be responsible for the underwriting, administration, handling, processing, and payment of medical services received to the benefits of their insured and members. (Id at ¶ 13). Tenet’s complaint on this count fails to allege any facts that would support a breach of contract against IMRM. Chiefly, Tenet does not allege the existence of a contract at all with IMRM. The references to specific claim numbers do not invoke IMRM or allege the existence of an IMRM policy of insurance. Instead, it appears that Tenet seeks to obtain the benefits of a contract between an unidentified insurance company and W.D. Yet nowhere in its complaint does Tenet allege that IMRM issued an insurance policy covering W.D. The threadbare and conclusory allegations that the defendants ‘contracted amongst one another’ falls far short. (Compl. ¶¶ 11-13). It is “fundamental contract law that one cannot be liable for a breach of contract unless one is a party to that contract.” Electron Energy Corp. v. Short, 408 Pa. Super. 563, 571, 597 A.2d 175, 178 (1991). The complaint is devoid of anything manifesting IMRM’s assent, actual agreement to be held responsible for payment, or an assignment that brings Tenet into privity with IMRM. Tenet fails to allege the very basic factual elements of a contractual relationship much less the nature, terms and source of the contractual obligations that must be included to satisfy Fed. R. Civ. P. 8(a). Tenet has not stated a plausible breach-of-contract claim because it has presented in its complaint nothing more than a formulaic recitation of the element of the duty owed by the Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 5 of 12 defendants for each claim. One cannot assess whether any defendant owed any duty because of the lack of specific facts to support the existence of the duty. To the extent the duty arises from a contract, the complaint does not identify the contract, explain how the contract was formed, state if the contract is an express or implied contract, or define the scope of the duty owed. In the absence of some specific facts, the complaint is starkly deficient. Consequently, it fails to state a cause of action for breach of contract and must be dismissed under Rule 12(b)(6). B. Tenet Has Not Stated a Claim for Quantum Meruit or Unjust Enrichment Plaintiff also fails to sufficiently plead quantum meruit/ unjust enrichment. To prevail on a claim of unjust enrichment under Pennsylvania law, a plaintiff must allege facts that sufficiently show (1) a benefit conferred on the defendant by the plaintiff; (2) appreciation of such benefit by the defendant; and (3) acceptance and retention of such benefit under circumstances such that it would be inequitable for the defendant to retain the benefit without payment to the plaintiff. EBC, Inc. v. Clark Bldg. Sys., Inc., 618 F.3d 253, 273 (3d Cir. 2010) (citing AmeriPro Search, Inc. v. Fleming Steel Co., 787 A.2d 988, 991 (Pa. Super. Ct. 2001)). Under Pennsylvania law, quantum meruit is simply an action for unjust enrichment involving work and labor, and a plaintiff must prove the same elements as for unjust enrichment. Burton Imaging Group v. Toys “R” Us, Inc., 502 F. Supp. 2d 434 (E.D. Pa. 2007). In its complaint, Plaintiff states that “the provision of medical services to W.D. directly benefited Defendants in light of Defendants’ contractual relationship and obligations in receiving insurance premiums and other valuable consideration from their insured/member and from one another” and that “acceptance of insurance premiums and other valuable consideration from its insured and from one another has unjustly enriched Defendants” (Compl. ¶¶ 40-41). In determining whether the doctrine of quantum meruit applies, a court's focus is not on the intention of the parties, but rather on whether the defendant has been unjustly enriched. Durst Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 6 of 12 v. Milroy General Contracting, Inc., 2012 PA Super 179, 52 A.3d 357 (2012). Plaintiff points to the patient’s payment of premiums to some as yet unspecified insurer and other value from the patient as the “benefit” to IMRM. Even if Tenet had properly alleged that IMRM was W.D.’s health insurer, this claim never gets off the ground because Tenet did not provide the benefit of premiums, the patient provided it. Crucially, Tenet’s loss is not IMRM’s gain in this instance. Tenet does not allege that it paid premiums to its detriment, nor does Tenet allege that IMRM received the benefit of the services provided. A premium is “the periodic payment required to keep an insurance policy in effect.” (Black’s Law Dictionary 9th ed. 2009). It is not a payment made by an insured in exchange for the rendering of specific services by a provider. Such a benefit arises independently of the performance or nonperformance of health care services. To suggest that the patient paid premiums or valuable consideration to one of these unspecified defendants because Tenet performed medical services is illogical. Tenet does not, and indeed cannot, allege that IMRM received payment of premiums or valuable consideration as a result of refusing to pay Plaintiff for medical services rendered to a third person. The requisite connection is not present to state a claim for unjust enrichment. Tenet has alleged nothing that would support the contention that money paid by the patient to IMRM somehow belongs in equity and good conscience to the Tenet. Although Tenet states in its complaint that it provided medical services to patient, W.D. (Compl. ¶ 21), it does not substantiate the nature of these services such that it becomes a benefit conferred on any of the defendants much less IMRM. Besides concluding that accepting insurance premiums and other valuable consideration from a patient has unjustly enriched one or all of the defendants, Tenet does not allege any facts to substantiate on what basis it had a reasonable expectation for Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 7 of 12 compensation. Accordingly, the count against IMRM for quantum meruit/unjust enrichment should be dismissed. C. Tenet Has Not Stated a Claim for Promissory Estoppel Plaintiff also fails to sufficiently plead promissory estoppel. To state a claim of promissory estoppel under Pennsylvania law, a plaintiff must allege: (1) promisor made a promise that would reasonably be expected to induce action or forbearance on part of the promisee; (2) promisee actually took action or refrained from taking action in reliance on promise; and (3) injustice can be avoided only by enforcing the promise. Battiste v. Borough of East McKeesport, 94 A.3d 418 (Pa. Commw. Ct. 2014). “To satisfy the first element of a promissory estoppel claim, plaintiff must plead facts to show the existence of an express promise made by defendants. In meeting this burden, plaintiff cannot rely on a broad and vague implied promise.” Rapid Circuits, Inc. v. Sun Nat'l Bank, No. 10-6401, 2011 WL 1666919, at *18 (E.D.Pa. May 3, 2011). “The promise must be certain and explicit enough so that the full intention of the parties may be ascertained to a reasonable certainty.” Ankerstjerne v. Schlumberger Ltd., Civ. A. No. 03-3607, 2004 WL 1068806, at *5 (E.D.Pa. May 12, 2004). Tenet alleges that “Defendants represented to Plaintiff that Defendants’ insured member had insurance coverage, that the treatment rendered by Plaintiff was authorized, that Defendants would be responsible for payment of the charged for the goods and services rendered” and that it “reasonably relied on said representations and partial payments to its detriment” (Compl. ¶ 46 and 48). With this allegation, Tenet demonstrates its complete inability to articulate an express promise because it cannot even identify which defendant to the action made the representation much less the contents or mode of the representation. The complaint’s vagueness continues by Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 8 of 12 alleging that “Defendants induced Plaintiff to rely upon its prior representation, in part, by making partial payments for the medical treatment” (Compl. 47). Certainly Tenet must know which defendant made a promise and which defendant partially paid its bills. The lack of any allegations of an express promise is absolutely fatal to a claim for promissory estoppel. Additionally, the complaint does not support Tenet’s legal conclusion that it “reasonably relied” to its detriment on any of these unspecified representations. See David v. Neumann Univ., 177 F. Supp. 3d 920, 926 (E.D. Pa. 2016) (finding that “she has not alleged detrimental reliance on any such promise.”). “Promissory estoppel would be rendered meaningless if this Court were to allow [the Plaintiff] to maintain an action for detrimental reliance based on the alleged existence of such a broad and vague implied promise.” C & K Petroleum Prod., Inc. v. Equibank, 839 F.2d 188, 192 (3d Cir. 1988) Tenet states that it relied upon the representations and partial payments to its detriment but does not explain what the “detriment” would be. Would Tenet have decided not to treat the patient in the absence of these yet unspecified representations? Tenet must plead facts that demonstrate some adverse change in position in order to support this element of promissory estoppel. The final “injustice” element to promissory estoppel cannot even be analyzed because Tenet does not identify who made the promise, what the express promise was or exactly how Tenet relied to its detriment on the promise Accordingly, the complaint fails to state a cause of action for promissory estoppel and must be dismissed. D. Tenet’s UTPCLA Claims Must Be Dismissed Plaintiff also fails to sufficiently plead violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. C.S. 201-1, et seq (“UTPCLA”). Pennsylvania's UTPCPL prohibits any person from engaging in “unfair methods of competition and unfair or Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 9 of 12 deceptive acts or practices.” 73 Pa. Cons. Stat. § 201-3. The UTPCPL provides a non-exhaustive list of unfair trade practices that the Act specifically prohibits as well as a “catch all” provision which broadly prohibits “engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” 73 Pa. Cons. Stat. § 201-2(4). 1. Tenet Lacks Standing to Pursue a UTPCLA Claim on its Own Behalf. Tenet’s UTPCLA claim must be dismissed because Tenet - a provider of services - is not a consumer and therefore lacks standing under the statute. The UTPCPL provides a cause of action for: any person who purchases or leases goods or services ... and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by any person of a method, act or practice declared unlawful 73 Pa. Stat. Ann. § 201-9.2. Standing under the UTPCLA does not extend to “a plaintiff lacking any commercial dealings with the defendant”. Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 57 (3d Cir. 1992). Nor does standing extend to a party who made no purchase. Gemini Physical Therapy and Rehab., Inc. v. State Farm Mut. Auto. Ins. Co., 40 F.3d 63, 65 (3d Cir.1994). In this case, Tenet does not allege an assignment from the patient to pursue the rights of the patient. Tenet on its own behalf is plainly not a consumer of any services purportedly offered by IMRM nor does it attempt to allege that it purchased any goods or services from IMRM or had any specific commercial dealings with it. Accordingly, Tenet lacks standing to pursue a UTPCLA claim. 2. The Complaint Fails to State a Claim Under the UTPCLA Setting aside its lack of standing, Tenet fails to articulate facts to support a UTPCLA claim. To establish a claim under the UTPCPA’s catchall provision, a plaintiff must allege: (1) Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 10 of 12 defendant engaged in fraudulent or deceptive conduct; (2) plaintiff justifiably relied upon defendant's fraudulent or deceptive conduct; and (3) plaintiff's justifiable reliance caused ascertainable loss. See Seldom v. Home Loan Servs., Inc., 647 F. Supp. 2d 451, 470 (E.D. Pa. 2009); Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438-39 (Pa. 2004). Tenet’s UTPCLA claim must be dismissed for failure to state a claim under Rule 12(b)(6). The entirety of Plaintiff’s UTPCLA claim consists of an incorporation clause and one additional sentence stating “Defendants, by their specific conduct as set forth above, violated the Pennsylvania Unfair Trade Practice and Consumer Protection Law, and therefore Plaintiff is entitled to the recovery of treble damages, attorney’s fees, and costs.” (Compl. ¶ 54). The conclusory nature of the sole allegation speaks for itself. To proceed with claims under the UTPCLA, consumers must establish that a defendant’s specific alleged misrepresentations caused their loss. DiLucido v. Terminix Int'l, Inc., 450 Pa. Super. 393, 400, 676 A.2d 1237, 1240 (1996). The complaint does not specify which conduct or action IMRM specifically engaged in that allegedly violated the UTPCLA. Much like the analysis for promissory estoppel, above, Tenet does not articulate any specific statements or any fraudulent or deceptive conduct by IMRM. The complaint also fails to explain precisely how Tenet relied to its detriment upon some allegedly fraudulent or deceptive conduct. In Hunt v. U.S. Tobacco Co., 538 F.3d 217 (3d Cir. 2008), the Third Circuit held that general allegations of harm will not suffice to constitute justifiable reliance under the UTPCLA. In that case the consumer alleged that a chewing tobacco manufacturer engaged in deception, including its affirmative misrepresentations and omissions concerning the price of smokeless tobacco products. Id. at 227. The plaintiff concluded that these statements likely misled all consumers to believe that they were purchasing such products Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 11 of 12 at prices borne by a free and fair market. Id. The Third Circuit held that these allegations did not state a claim under the deception prong of the catch-all provision of the UTPCLA absent an allegation that the manufacturer's deception induced the specific plaintiff into purchasing the actual product. Id. Similarly, Tenet has no claim here because it does not allege that it actually purchased any goods or services from IMRM based on any fraudulent or deceptive conduct by IMRM. Because the Plaintiff has no standing and has failed to state a claim under the UTCPL, this cause of action under the UTCPL should be dismissed under Rule 12(b)(6). IV. CONCLUSION Plaintiff’s complaint typifies the kind of pleading that Rule 12(b)(6) is intended to address and remedy. Plaintiff’s failure to state any cognizable claim against Defendant IMRM warrants dismissal. For the foregoing reasons, Defendant IMRM respectfully request that all the counts in Plaintiff’s complaint be dismissed with prejudice. An appropriate Order follows. Case 2:17-cv-00536-LDD Document 11-1 Filed 03/09/17 Page 12 of 12 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA TENET HEALTHSYSTEM HAHNEMANN, LLC d/b/a HAHNEMANN UNIVERSITY HOSPITAL, CIVIL ACTION Plaintiff, CASE NO. 2:17-cv-00536-LDD v. GLOBAL EXCEL MANAGEMENT, IHC HEALTH SOLUTIONS, INNOVATIVE MEDICAL RISK MANAGEMENT, INC., STANDARD SECURITY LIFE INSURANCE COMPANY OF NEW YORK, IHC ADMINISTRATIVE SERVICES, INC. Defendants. ORDER AND NOW, this _____ day of _______________, 2017, after consideration of Defendants’ Motion to Dismiss and all related briefing, and for the reasons set forth in the accompanying Memorandum, it is hereby ORDERED that Defendants’ Motion to Dismiss is GRANTED. ______________________________ Honorable Legrome D. Davis Case 2:17-cv-00536-LDD Document 11-2 Filed 03/09/17 Page 1 of 1