Law Office of Brent Gaines v. Healthport Techs., LLC., Case No. 16-CV-00030-SMY-SCW

Decision Date02 May 2018
Docket NumberCase No. 16-CV-00030-SMY-SCW
PartiesLAW OFFICE OF BRENT GAINES, individually and on behalf of all others similarly situated, Plaintiff, v. HEALTHPORT TECHNOLOGIES, LLC. Defendant.
CourtUnited States District Courts. 7th Circuit. Southern District of Illinois
MEMORANDUM AND ORDER

This matter is before the Court on Defendant Healthport Technologies, LLC's ("Healthport") motion to dismiss Plaintiff's Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) (Doc. 8). Healthport argues that Plaintiff lacks standing, that its settlement offer renders Plaintiff's claims moot, and that because the conduct complained of is not unlawful, it cannot support a claim under the statutes asserted by Plaintiff. Plaintiff opposes the motion (Doc. 16). For the following reasons, the motion is GRANTED.

Background

Defendant Healthport manages medical record requests for healthcare providers. It is an LLC with its principal place of business of Georgia and its sole member is a Delaware corporation. Plaintiff is a law firm that represents clients seeking Social Security benefits. It is located in Belleville, Illinois.

The nature of Plaintiff's work requires that it obtain its clients' medical records. Occasionally, a client believes, but is not certain, that he/she was treated by a particular provider. In the interest of due diligence, Plaintiff sends medical records requests to these facilities in order to determine whether they treated the client. Plaintiff sent such requests to two of Healthport's clients, one in Illinois and one in Missouri. In both instances, Healthport informed Plaintiff that it had found no record of treatment and presented a bill for what it called a "Basic Fee." (1-1 at 5-6).

Plaintiff filed a four Count class action lawsuit in the Circuit Court of St. Clair County, Illinois, alleging that Healthport's Basic Fees violated Illinois and Missouri's medical records release statutes and consumer protection statutes in those states and Georgia. The putative class is comprised of Missouri and Illinois attorneys and law firms who were charged Healthport's Basic Fee when no records were provided. Healthport removed the case to this Court under 28 U.S.C. § 1332(d).

Discussion
F.R.C.P. 12(b)(1) - Subject Matter Jurisdiction

After Plaintiff filed its Complaint in this matter, Healthport made an offer to settle Plaintiff's claims. Plaintiff did not accept the offer (Doc. 8 at 4-5). Healthport now argues that subject matter jurisdiction is lacking because the settlement offer mooted Plaintiff's case in regards to any previously assessed charges and because Plaintiff lacks standing to seek injunctive relief or to recover money damages (Doc. 8). "When evaluating a facial challenge to subject matter jurisdiction under Rule 12(b)(1), a court should use Twombly-Iqbal's 'plausibility' requirement, which is the same standard used to evaluate facial challenges to claims under Rule 12(b)(6)." Id. at 174.

The Seventh Circuit has explained the requirements for Article III standing as follows:

To establish Article III standing, 'a plaintiff must show (1) it has suffered an 'injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, thatthe injury will be redressed by a favorable decision. Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015).

Here, Plaintiff claims that it has been charged an illegal fee and that it is entitled to monetary damages and injunctive relief to ensure that the problem does not continue.

Standing to seek injunctive relief requires only "a reasonable probability of imminent, tangible harm." Taylor v. Stewart, 479 Fed. App'x 10, 13 (7th Cir. 2012) (internal citations and quotations omitted); accord Slapper v. Amnesty Int'l, USA, 133 S.Ct. 1138, 1160-1161 (2013) (collecting cases with varying articulations of standard, including "reasonable probability"). On the one hand, Healthport argues there is an insufficient likelihood of a subsequent, similar injury. At the same time however, it complains of Plaintiff frequently engaging in a practice not uncommon within the plaintiff bar, has offered a settlement and release that applies only to previous, but not prospective charges, and admits no wrongdoing. Under these facts, coupled with Plaintiff's allegations, it is plausible, if not likely that this situation will present itself again. Therefore, Plaintiff has standing to seek injunctive relief.

Regarding money damages, the fact that Plaintiff has not paid the disputed fees does not foreclose a finding that it has suffered an injury that may justify the award of money damages. While Healthport might well be correct that none of the statutes under which Plaintiff makes its claims allow for damages, that is not a challenge to subject-matter jurisdiction, but rather the basis for a Rule 12(b)(6) dismissal.1 Under Rule 12(b)(1), the question is whether an allegedly invalid, uncollected debt can serve as the basis for standing to sue for damages. Several courts have answered this question in the affirmative. See, e.g., Huyer v. Wells Fargo & Co., 295 F.R.D. 332, 341 (S.D. Iowa 2013) ("Being subject to an invalid debt satisfies Article III standing requirements.") (quoting Aho v. AmeriCredit Fin. Servs., Inc., 277 F.R.D. 609, 623 n.14 (S.D.Cal. 2011)). Consistent with these decisions, this Court finds Healthport's assessment of "Basic Fees," even if unpaid, amounts to an injury-in-fact for purposes of Article III standing.

Next, Healthport contends that Plaintiff's case is moot because it made an offer to settle. The Supreme Court recently addressed this issue in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016). In rejecting Petitioner Campbell-Ewald Co.'s argument that its offer of judgment to Respondent Gomez mooted the case, the Supreme Court held:

Under basic principles of contract law, Campbell's settlement bid and Rule 68 offer of judgment, once rejected, had no continuing efficacy. See Genesis Healthcare, 569 U.S., at —, 133 S.Ct., at 1533 (KAGAN, J., dissenting). Absent Gomez's acceptance, Campbell's settlement offer remained only a proposal, binding neither Campbell nor Gomez. See App. to Pet. for Cert. 59a ("Please advise whether Mr. Gomez will accept [Campbell's] offer...."). Having rejected Campbell's settlement bid, and given Campbell's continuing denial of liability, Gomez gained no entitlement to the relief Campbell previously offered. See Eliason v. Henshaw, 4 Wheat. 225, 228, 4 L.Ed. 556 (1819) ("It is an undeniable principle of the law of contracts, that an offer of a bargain by one person to another, imposes no obligation upon the former, until it is accepted by the latter...."). In short, with no settlement offer still operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset.
***
[W]hen the settlement offer Campbell extended to Gomez expired, Gomez remained emptyhanded; his TCPA complaint, which Campbell opposed on the merits, stood wholly unsatisfied. Because Gomez's individual claim was not made moot by the expired settlement offer, that claim would retain vitality during the time involved in determining whether the case could proceed on behalf of a class. While a class lacks independent status until certified, see Sosna v. Iowa, 419 U.S. 393, 399, 95 S.Ct. 553, 42 L.Ed.2d 532 (1975), a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.

Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 670-72 (2016).

The Supreme Court's rationale applies to the instant facts. The Release Healthport offered does not admit fault, does not require it to pay any damages, and does not waive the challenged fees prospectively (in general or as to Plaintiff) (Doc. 8-1). As a unilateral Release, itdoes not have the force of a contract. It does not grant Plaintiff full relief and therefore cannot moot Plaintiff's claims. See, Already, LLC v. Nike, Inc., 133 S. Ct. 721, 726-27 (2013) ("A case becomes moot—and therefore no longer a 'Case' or 'Controversy' for purposes of Article III'when the issues presented are no longer 'live' or the parties lack a legally cognizable interest in the outcome.'").

For these reasons, Healthport is not entitled to dismissal for lack of subject matter jurisdiction.

F.R.C.P. 12(b)(6) - Failure to State a Claim

In order to state a claim upon which relief may be granted, a Complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "Detailed factual allegations" are not required, but the plaintiff must allege facts that when "accepted as true ... state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

When considering a motion to dismiss under Rule 12(b)(6), the Court accepts as true all facts alleged in the Complaint and construes all reasonable inferences in favor of the plaintiff. Savory v. Lyons, 469 F.3d 667, 670 (7th Cir. 2006). Healthport advances three arguments in support of Rule 12(b)(6) dismissal: (1) that the Illinois and Missouri records statutes at issue confer upon it the right to collect a fee for searches that do not turn up records; (2) that choice oflaw considerations prevent the application of Georgia law; and (3) that the Georgia law under which Plaintiff wishes to proceed does not provide a grounds for relief.

First and Second Causes of Action - Violations of Georgia's...

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