Calais Reg'l Hosp. v. Anthem Health Plans of Me., Inc. (In re Calais Reg'l Hosp.), Case No. 19-10486
| Decision Date | 04 March 2020 |
| Docket Number | Adv. Proc. No. 19-1015,Case No. 19-10486 |
| Citation | 616 B.R. 449 |
| Parties | IN RE: CALAIS REGIONAL HOSPITAL, Debtor Calais Regional Hospital, Plaintiff v. Anthem Health Plans of Maine, Inc., d/b/a Anthem Blue Cross Blue Shield, Defendant |
| Court | U.S. Bankruptcy Court — District of Maine |
Sage M. Friedman, Esq., Andrew Helman, Esq., Katherine Krakowka, Kelly McDonald, Esq., Murray Plumb & Murray, Portland, ME, for Plaintiff.
Bodie B. Colwell, Esq., PretiFlaherty, Portland, ME, Christopher R. Drury, Esq., Eric S. Goldstein, Jaime Ashley Welsh, Shipman & Goodwin LLP, Hartford, CT, for Defendant.
Michael A. Fagone, United States Bankruptcy Judge Many would agree that the market for healthcare in this country differs, in several material respects, from the markets for other goods. Some would agree that the healthcare market suffers from several anomalies. The plaintiff in this adversary proceeding, a critical access hospital in Calais, Maine, seeks to wield fraudulent transfer law to address one of these perceived anomalies: pricing. More specifically, the plaintiff asserts that the defendant, an insurance company, did not pay reasonably equivalent value for the healthcare services that the plaintiff provided to insured patients. The plaintiff seeks to recover amounts in excess of the amounts that the defendant agreed to pay for those services.
The defendant contends that the complaint fails to state a claim upon which relief may be granted and must therefore be dismissed. The defendant's motion to dismiss is well-founded and will be granted in substantial part.
In most instances, the Rule 12(b)(6) prism is translucent. To determine whether a pleading states a claim upon which relief can be granted, the allegations contained in the pleading are separated into two groups: (1) the well-pleaded allegations of fact, which must be credited as true and viewed in the light most favorable to the pleader, and (2) legal conclusions and unadorned recitals of statutory elements, which must be disregarded. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A factual allegation will fall into the second group and be disregarded if it is "so threadbare or speculative" that it fails "to cross the line between the conclusory and the factual." Peñalbert-Rosa v. Fortuño-Burset, 631 F.3d 592, 595 (1st Cir. 2011) (quotation marks omitted). The fate of a Rule 12(b)(6) motion usually hinges solely on the well-pleaded factual allegations in the complaint. Young v. Lepone, 305 F.3d 1, 10-11 (1st Cir. 2002). In the right case, however, this narrow vantage can be expanded. For example, the Court may consider facts susceptible to judicial notice and implications from documents incorporated into the complaint, Newman v. Krintzman, 723 F.3d 308, 309 (1st Cir. 2013), and may do so without converting the proceeding into one for summary judgment, Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993).
As is often the case, the Rule 12(b)(6) framework has been clouded by a defendant eager to bring a nascent lawsuit to an early end. Here, Anthem has asked the Court to look to a number of extrinsic documents that, in Anthem's view, "show that Anthem actually provided reasonably equivalent value for the services ... provided to Anthem's members[.]" [Dkt. No. 8 p. 2.] Given the relative lack of detail for many of the central factual allegations, Anthem's effort to provide additional details is understandable. Some of the extrinsic documents may be closely connected with the claims advanced by Calais Regional Hospital ("CRH"), such that consideration of the documents in this procedural setting might be permissible. And yet, CRH has avoided incorporating the documents into the complaint and has reserved the right to challenge Anthem's characterization of them. More fundamentally, Anthem's motion does not present an opportunity to resolve the parties' dispute about whether Anthem did, or did not, provide reasonably equivalent value to CRH. See 5B Wright & Miller, Federal Practice & Procedure § 1356 (3d ed.) () (footnote omitted); see also Janvey v. Wieselberg, No. 3:10-CV-1394-N, 2014 WL 2883897, at *2 (N.D. Tex. June 25, 2014) (). Examination of the extrinsic documents is not necessary to grant Anthem the relief it seeks. As such, the Court will neither consider these extrinsic documents nor convert the motion to one under Rule 56. See Carione v. United States, 368 F. Supp. 2d 186, 191 (E.D.N.Y. 2005) (). With one exception (which is noted below), the facts are derived solely from the allegations in the complaint. Allegations included in the complaint but omitted from the following recitation have been disregarded as conclusory or immaterial.
CRH is a non-profit corporation operating as a critical access hospital in Calais, Maine. Anthem is a corporation that provides insurance to individuals, either directly or through employer-based health plans. On September 17, 2019 (the "Petition Date"), CRH filed its chapter 11 case and now continues as a debtor-in-possession.
During the six years prior to the Petition Date, CRH entered into one or more contracts ("Contracts") with Anthem regarding the rates Anthem agreed to pay CRH for goods or medical services ("Medical Services") for individuals insured by Anthem ("Insureds"). During that same period, CRH also entered into one or more agreements with Anthem regarding repayment of amounts allegedly overpaid by Anthem to CRH under the Contracts ("Collection Agreements"). For example, under the Collection Agreement made in July 2019, CRH agreed to a settlement payment plan for calendar year 2018, consisting of certain weekly deductions from Anthem's regular payments to CRH in 2019, followed by a lump-sum payment due at the end of December 2019.1
During the six years prior to the Petition Date, CRH provided Medical Services to Insureds. During this period, CRH billed Anthem for the Medical Services provided to Insureds and received payments from Anthem in amounts less than the billed amounts. After receipt of these payments, CRH wrote off, parted with, or otherwise released unpaid accounts receivable or claims for further payment from Anthem. The rates paid by Anthem to CRH for some or all of the Medical Services provided by CRH were less than the rates Anthem or an affiliate paid to other hospitals in Maine and outside of Maine for the same or similar services. Anthem or an affiliate paid higher rates to certain hospitals due to the negotiating power or bargaining leverage of those hospitals and not as a result of value added to services by those hospitals.
Independent auditors for CRH included the following note in the hospital's audited financial statements for calendar year 2018: The auditors made similar notes regarding the hospital's financial improvement plans from 2013 to 2017.
With the universe of facts properly assembled, the plausibility standard can be applied. A complaint states a plausible claim if the factual content permits the reasonable inference that the plaintiff is entitled to the relief it seeks. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (). "If the facts articulated in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is vulnerable to a motion to dismiss." Privitera v. Curran (In re Curran), 855 F.3d 19, 25 (1st Cir. 2017) (quotation marks omitted). The elements of a cause of action are "part of the background against which a plausibility determination should be made" and "may be used ... to shed light upon the plausibility of the claim." See Rodriguez-Reyes v. Molina-Rodriguez, 711 F.3d 49, 54 (1st Cir. 2013). To tether the Rule 12(b)(6) analysis to the elements of the claims raised by CRH, the discussion begins with an overview of the statutes under which the claims arise.
In Count I, CRH seeks to avoid constructive fraudulent transfers under 11 U.S.C. § 544 and the Uniform Fraudulent Transfer Act, Me. Rev. Stat. Ann. tit. 14, §§ 3571 - 3582 ("UFTA"). In Count II, CRH seeks to avoid those same transfers under 11 U.S.C. § 548. More specifically, CRH seeks judgment in an amount equal to the difference between: (a) the amount Anthem paid CRH for Medical Services provided to Insureds and (b) the reasonably equivalent value of those Medical Services. Count III also relies on section 544 and UFTA, but seeks an order avoiding the Contracts and Collection Agreements and the obligations that CRH incurred under them. Count IV similarly invokes section 548 in an effort to avoid the Contracts and Collection Agreements and obligations that CRH incurred under them.
Section 544(b)(1) generally permits the trustee to "avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502[.]" 11 U.S.C. § 544(b)(1). CRH looks to Me. Rev. Stat. Ann. tit. 14, §§ 3575 and 3576 as the applicable law that...
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