Med. Mut. of Ohio v. FrontPath Health Coal.

• Decision Date: 27 January 2023
• Docket Number: L-21-1226
• Citation: 2023 Ohio 243
• Parties: Medical Mutual of Ohio, et al. Appellants v. FrontPath Health Coalition Appellee
• Court: Ohio Court of Appeals

2023-Ohio-243

Medical Mutual of Ohio, et al. Appellants v. FrontPath Health Coalition Appellee

No. L-21-1226

Court of Appeals of Ohio, Sixth District, Lucas

January 27, 2023

Trial Court No. CI0201703154

Richard M. Knoth, Scott C. Holbrook, Breaden M. Douthett Sean E. McIntyre, and Hallie R. Israel, for appellants.

John J. McHugh, III, for appellee.

DECISION AND JUDGMENT

PIETRYKOWSKI, J.

{¶ 1} Appellants, Medical Mutual of Ohio and Medical Mutual Services, L.L.C. (collectively "Medical Mutual"), appeal from the judgments of the Lucas County Court of Common Pleas, dismissing with prejudice two counts from their amended complaint, and later denying a motion to amend. For the reasons that follow, we reverse.

I. Facts and Procedural Background

{¶ 2} Medical Mutual and appellee, FrontPath Health Coalition ("FrontPath") are competitors for public contracts to provide health benefit services to municipal corporations in northwest Ohio, in this case Wood County and the City of Toledo. At a very basic level, Medical Mutual alleged that FrontPath recruited to serve on its board, public officials who were the health benefit decision makers for the municipal corporations. FrontPath then encouraged and aided those public officials in using their influence and authority to steer public contracts for the provision of health benefit services to FrontPath.

{¶ 3} Medical Mutual initiated the present action on June 27, 2017, when it filed a four-count complaint against appellee, FrontPath Health Coalition. The first count sought a judgment declaring that the contracts between FrontPath and Wood County and the city of Toledo were null and void. The second count contained a claim for civil liability for criminal acts, alleging that FrontPath aided and abetted government employees in entering into the contracts in violation of Ohio law. The third count contained a claim for tortious interference with a contractual or business relationship. Finally, the fourth count contained a claim for violation of the Ohio Valentine Act- which prohibits conspiracy against trade-alleging that FrontPath engaged in monopolistic behavior with regard to the market for purchase of health insurance services.

{¶ 4} On November 5, 2018, Medical Mutual amended its complaint. The amended complaint added a fifth count alleging a violation of the Corrupt Practices Act under R.C. 2923.31.

{¶ 5} Shortly thereafter, FrontPath moved to dismiss the amended complaint pursuant to Civ.R. 12(B)(6). On June 24, 2019, the trial court granted FrontPath's motion as to Counts I, II, IV, and V, dismissed those claims with prejudice, and denied Medical Mutual's alternative motion to further amend its complaint.

{¶ 6} Following continued discovery, Medical Mutual moved for leave to file a second amended complaint on January 30, 2020. The second amended complaint sought to add as defendants, FrontPath's President and Chief Executive Officer, Susan Szymanski, and City of Toledo Health Care Cost Containment Committee member and FrontPath Board of Trustee member, Don Czerniak. In addition to the original five counts in the amended complaint, the proposed second amended complaint also sought to add three claims: Count VI, a civil Corrupt Practices Act claim premised upon alleged violations of the Defend Trade Secrets Act, 18 U.S.C. § 1832; Count VII, a claim for theft of protectable trade secrets under 18 U.S.C. § 1832, et seq.; and Count VIII, a claim for theft of trade secrets under R.C. 1333.61, et seq. {¶ 7} On June 16, 2020, the trial court denied Medical Mutual's motion for leave to file a second amended complaint.

{¶ 8} Eventually, in September 2021, the matter proceeded to a jury trial on Count III, which was the claim for tortious interference with a contractual or business relationship. Following a month-long trial, the jury returned with a verdict award for Medical Mutual in the amount of $1,781,750.00. The jury declined to award punitive damages.

II. Assignments of Error

{¶ 9} Medical Mutual has timely appealed, and now asserts three assignments of error for our review:

1. The trial court erred by dismissing with prejudice Count V of MMO's First Amended Complaint setting forth an Ohio Corrupt Practices Act claim (the "CPA claim").

2. The trial court erred by dismissing with prejudice Count II of MMO's First Amended Complaint setting forth a claim for civil liability for criminal acts (the "civil liability claim").

3. The trial court erred by denying MMO's motion for leave to amend its complaint to assert claims against new defendants Donald Czerniak and Susan Szymanski.

III. Analysis

{¶ 10} Medical Mutual's first and second assignments of error argue that the trial court erred when it dismissed with prejudice the Corrupt Practices Act violation claim and the civil liability for criminal acts claim, respectively. Because those assignments of error involve similar questions of law, we will address them together, beginning with the civil liability for criminal acts claim. We will then address Medical Mutual's third assignment of error regarding the trial court's denial of leave to amend the complaint.

A. Civ.R. 12(B)(6) Dismissal of Claims

{¶ 11} "Ohio is a notice-pleading state." Maternal Grandmother v. Hamilton Cty. Dept. of Job and Family Servs., 167 Ohio St.3d 390, 2021-Ohio-4096, 193 N.E.3d 536, ¶ 10. "This means that outside of a few specific circumstances * * * a party will not be expected to plead a claim with particularity. Rather, a 'short and plain statement of the claim' will typically do." Id., quoting Civ.R. 8(A). "The purpose of notice pleading is clear: to simplify pleadings to a short and plain statement of the claim and to simplify statements of the relief demanded * * * to the end that the adverse party will receive fair notice of the claim and an opportunity to prepare his response thereto." (Internal quotations omitted.) Wells Fargo Bank, N.A. v. Horn, 142 Ohio St.3d 416, 2015-Ohio-1484, 31 N.E.3d 637, ¶ 13, quoting Anderson v. BancOhio Natl. Bank, 1st Dist. Hamilton No. C-840913, 1985 WL 8844, *1 (Nov. 27, 1985).

{¶ 12} "A motion to dismiss for failure to state a claim upon which relief can be granted is procedural and tests the sufficiency of the complaint." State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs., 65 Ohio St.3d 545, 548, 605 N.E.2d 378 (1992). "In order for a trial court to dismiss a complaint under Civ.R. 12(B)(6) for failure to state a claim upon which relief can be granted, it must appear beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to the relief sought." Ohio Bur. of Workers' Comp. v. McKinley, 130 Ohio St.3d 156, 2011-Ohio-4432, 956 N.E.2d 814, ¶ 12, citing O'Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242, 327 N.E.2d 753 (1975), syllabus. "The allegations of the complaint must be taken as true, and those allegations and any reasonable inferences drawn from them must be construed in the nonmoving party's favor." Id., citing O'Brien at syllabus. However, "while we are to assume the facts alleged in the complaint are true, we do not assume the legal conclusions alleged to be drawn from those facts are also true and disregard any unsupported conclusions included among the facts alleged in the complaint." STE Invests., LLC v. Macprep, Ltd., 6th Dist. Ottawa No. OT-21-036, 2022-Ohio-2614, ¶ 14; Morrow v. Reminger & Reminger Co., L.P.A., 183 Ohio App.3d 40, 2009-Ohio-2665, 915 N.E.2d 696, ¶ 7 (10th Dist.) ("The court need not, however, accept as true unsupported legal conclusions in the complaint."). "A motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted." Wilson v. Riverside Hosp., 18 Ohio St.3d 8, 10, 479 N.E.2d 275 (1985).

{¶ 13} "Appellate review of a trial court's decision to dismiss a complaint pursuant to Civ.R. 12(B)(6) is de novo. STE Invests. at ¶ 14, citing Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5.

1. Civil Liability for Criminal Acts Claim

{¶ 14} In its second assignment of error, Medical Mutual argues that the trial court erred in dismissing its claim for civil liability for criminal acts.

{¶ 15} In Jacobson v. Kaforey, 149 Ohio St.3d 398, 2016-Ohio-8434, 75 N.E.3d 203, ¶ 13, the Ohio Supreme Court held that "R.C. 2307.60 creates a civil cause of action for damages resulting from any criminal act, unless otherwise prohibited by law." R.C. 2307.60(A)(1) provides,

Anyone injured in person or property by a criminal act has, and may recover full damages in, a civil action unless specifically excepted by law, may recover the costs of maintaining the civil action and attorney's fees if authorized by any provision of the Rules of Civil Procedure or another section of the Revised Code or under the common law of this state, and may recover punitive or exemplary damages if authorized by section 2315.21 or another section of the Revised Code.

{¶ 16} Relevant here, Medical Mutual alleged:

12. Over the course of several years, FrontPath has enlisted employees of the Governmental Employers to serve as directors/trustees of FrontPath and function on behalf of FrontPath and pursue its interests (collectively, "Government-Affiliated Trustees"). These Government-Affiliated Trustees played significant roles for FrontPath. For example, Ms. Pam Boyer, while performing duties as human resource/benefits manager for Wood County, served for years on the FrontPath Board, even serving the governance role as Board Chairperson. Ms. Boyer acted on behalf of FrontPath to thwart Plaintiff's business efforts in Northwest Ohio. * * *

14. Plaintiffs regularly submit bids, or would submit bids in an unconflicted offering environment, to the Governmental Employers

...