Burton v. William Beaumont Hosp., 04-72735.

• Decision Date: 03 December 2004
• Docket Number: No. 04-72735.,04-72735.
• Citation: 347 F.Supp.2d 486
• Parties: Jennifer BURTON; Francis Burton; and Nia Burton, by her next friend, Francis Burton; On Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. WILLIAM BEAUMONT HOSPITAL; Beaumont Properties, Inc.; American Hospital Association; John Does 1 Through 10, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

347 F.Supp.2d 486

Jennifer BURTON; Francis Burton; and Nia Burton, by her next friend, Francis Burton; On Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. WILLIAM BEAUMONT HOSPITAL; Beaumont Properties, Inc.; American Hospital Association; John Does 1 Through 10, Defendants.

No. 04-72735.

United States District Court, E.D. Michigan, Southern Division.

December 3, 2004.

COPYRIGHT MATERIAL OMITTED

Frank J. Kelley, Jennifer M. Fitzgerald, Steven D. Weyhing, Lansing, MI, for Plaintiff.

Gordon J. Walker, Bloomfield Hills, MI, Leonard M. Niehoff, Ann Arbor, MI, for Defendant.

MEMORANDUM AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS

COHN, District Judge.

I. Introduction

This is a health-care case that plaintiffs eventually seek to certify as a class action.¹ Plaintiffs Jennifer Burton, Francis Burton, and Nia Burton² (collectively referred to as the Burtons) are suing Defendants William Beaumont Hospital and Beaumont Properties, Inc. (collectively referred to as Beaumont),³ American Hospital Association (AHA), and John Does 1 through 10.

The complaint is highly argumentative and is not in conformity with Fed.R.Civ.P. 8(a), which calls for, inter alia, "a short and plain statement of the claim showing that the pleader is entitled to relief...." The Burtons assert the following claims in the complaint, listed by count number: (1) third-party breach of contract; (2) breach of contract; (3) breach of duty of good faith and fair dealing; (4) breach of charitable trust; (5) violation of the Michigan Consumer Protection Act (MCPA), Mich. Comp. Laws § 445.901 et seq.; (6) violation of the Emergency Medical Treatment and Active Labor Act (EMTALA), 42 U.S.C. § 1395dd; (7) unjust enrichment/constructive trust; (8) injunctive/declaratory relief; (9) violation of federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.; (10) violation of 42 U.S.C. § 1983 (alleging violations of the Fifth and Fourteenth Amendments of the United States Constitution); (11) civil conspiracy/concert of action; and (12) aiding and abetting.⁴

Before the Court is (1) Beaumont's Motion to Dismiss and (2) AHA's Motion to Dismiss. For the reasons that follow, the motions are GRANTED IN PART and DENIED IN PART.

II. Background

A. Factual Background⁵

Jennifer Burton and Nia Burton received medical treatment at Beaumont's Emergency Room.⁶ The Burtons did not have health insurance at the time of their treatment at Beaumont. The Burtons claim that Beaumont required them to sign forms that guaranteed payment of the medical charges. They also say that Beaumont billed them "excessive and inflated rates" for medical care and "aggressively pursued the collection of these inflated charges" through "numerous harassing bills and collection letters...."⁷

The Burtons do not challenge the quality of the medical care they received. Rather, they claim that because the Internal Revenue Service has granted Beaumont tax-exempt status under 26 U.S.C. § 501(c)(3), Beaumont has a duty to provide free or discounted medical care to the uninsured and that the Burtons have a right to bring suit to enforce this duty. The Burtons say that Beaumont "provide[s] little charity to [its] uninsured patients" and charges its uninsured patients "the highest and full undiscounted cost for medical care at grossly inflated rates from the actual cost of providing such services...." The Burtons claim that they are third-party beneficiaries of a contract between the government and Beaumont based on Beaumont's § 501(c)(3) status.

AHA is a not-for-profit association of health-care provider organizations.⁸ AHA educates and informs its members on health-care issues and advocates on behalf of its members with respect to national health-care policy development. The Burtons claim that AHA conspired with Beaumont to breach (1) Beaumont's alleged contracts between (a) the government and Beaumont and (b) Beaumont and the Burtons, (2) Beaumont's alleged duty of good faith and fair dealing, and (3) the MCPA. The Burtons further allege that AHA aided and abetted the same breaches and violations. The Burtons base these claims primarily on AHA's advocacy on behalf of its members with respect to health-care policy issues and AHA's communications to its members about billing and collections.

B. Procedural Background

This action is one of dozens of lawsuits filed across the country recently by uninsured patients alleging that hospitals are, inter alia, violating federal law regarding providing charity care. Several claimants in these cases filed with the Judicial Panel on Multidistrict Litigation (JPML) a motion to transfer and consolidate the pending actions to a single district court under 28 U.S.C. § 1407. The JPML entitled the proceedings "In re Not-for-Profit Hospitals/Uninsured Patients Litigation," MDL No. 1641. Based on the motion before the JPML, the Burtons filed a Motion to Stay Proceedings Pending Transfer to Multidistrict Litigation (MDL). At the time of the Burtons' motion to stay, actions like this one were before 21 federal district courts.⁹ The Court denied the Burtons' motion and ordered this action to proceed in the regular course. See Sept. 28, 2004 Order, Docket No. 9.

On October 19, 2004, the JPML issued an order denying the other claimants' motion to transfer and consolidate on the basis that "centralization would neither serve the convenience of the parties and witnesses nor further the just and efficient conduct of this litigation." In re Not-For-Profit Hospitals/Uninsured Patients Litigation, 341 F.Supp.2d 1354 (Jud.Pan.Mult.Lit.2004). Additionally, the Panel noted that the movants "have failed to persuade us that these actions share sufficient common questions of fact to warrant Section 1407 transfer." Id. The JMPL listed sixteen actions considered for consolidation and transfer. Of those, district courts have ruled on three. The Court's review of the dockets of the other cases reveals that twelve of the cases have pending motions to dismiss by the defendants. The defendants in one case have to date not filed a motion to dismiss or any other dispositive motion. AHA is among the named defendants in all but one of the sixteen actions listed in the JMPL order.

Notably, the three district courts that have ruled on these lawsuits to date have found that the plaintiffs have failed to state causes of action. In Kizzire v. Baptist Health Sys., Inc., 343 F.Supp.2d 1074, 1075 (N.D.Ala.2004), the only other published opinion to date regarding a case like this one, the district court concluded that the doctrine of res judicata barred all of the plaintiffs' claims against the defendants except for an EMTALA claim because the plaintiffs' claims against the defendants were compulsory counterclaims that plaintiffs were required to assert in a prior state-court action. Id. at 1082-84.¹⁰ In Amato et al. v. UPMC et al., No. 04-0125 (W.D.Pa. Nov. 23, 2004) United States Magistrate Judge Robert Mitchell issued a Report and Recommendation recommending that the defendants' motion to dismiss the complaint be granted. Id. at 1. As is true in this case, the primary allegation against the defendants in Amato was the plaintiffs' claim that the defendant hospital breached an alleged contract with the United States government by virtue of its status as a 26 U.S.C. § 501(c)(3) organization and that the plaintiffs should recover for the breach as third-party beneficiaries of the contract. Id. at 4. The Magistrate Judge concluded that the plaintiffs (1) did not state a claim for third-party breach of contract, (2) did not state a claim for breach of a charitable trust and that they did not have standing to enforce such a claim, and (3) did not state a claim for an EMTALA violation. Id. at 6-10. The Magistrate Judge recommended that the district court decline to exercise supplemental jurisdiction over the plaintiffs' state-law claims, which were claims identical to those the Burtons bring here against Beaumont (except for the MCPA violation).¹¹ Id. at 3, 10. Finally, in Darr et al. v. Sutter Health, No. 04-02624, 2004 WL 2873068 (N.D.Cal. Nov. 30, 2004), the district court consolidated two similar cases and ruled that the plaintiffs failed to state a claim against the defendant hospital. Id. at 2. Again, the Darr complaint brought identical claims against the defendant hospital as the Burtons bring against Beaumont, with the exception of the EMTALA, 42 U.S.C. § 1983, and MCPA claims.¹² The district court held that the plaintiffs in Darr failed to state a claim for (1) third-party breach of contract and (2) violation of FDCPA. Id. at 7-8. The court declined to exercise supplemental jurisdiction over the remaining state-law claims. Id. at 9.

III. Discussion

A. Legal Standard

A Fed.R.Civ.P. 12(b)(6) motion seeks dismissal for a plaintiff's failure to state a claim upon which relief can be granted. "The court must construe the complaint in the light most favorable to the plaintiff, accept all the factual allegations as true, and determine whether the plaintiff can prove a set of facts in support of its claims that would entitle it to relief." Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 360 (6th Cir.2001). "To survive a motion to dismiss under Rule 12(b)(6), a `complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory.'" Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 319 (6th Cir.1999) (quoting Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988)). The complaint must allege more than "bare assertions of legal conclusions" to survive a Rule 12(b)(6) motion. Scheid, 859 F.2d at 436.

B. The Claims

As an initial matter, Beaumont correctly notes that this case involves claims arising under federal and state law. Beaumont says that the Burtons have failed to state a claim for any of the...