Ohio Valley Health Servs. & Educ. Corp. Health Plan v. Riley

• Decision Date: 10 December 2015
• Docket Number: Civil Action No. 5:15CV65 (STAMP)
• Citation: 149 F.Supp.3d 709
• Court: U.S. District Court — Northern District of West Virginia
• Parties: Ohio Valley Health Services & Education Corporation Health Plan, Ohio Valley Health Services & Education Corporation Dental Plan, Ohio Valley Health Services & Education Corporation, Ohio Valley Medical Center and East Ohio Regional Hospital, Plaintiffs, v. Michael D. Riley, West Virginia Insurance Commissioner, West Virginia Offices of the Insurance Commissioner and Health Plan of the Upper Ohio Valley, Inc., Defendants.

149 F.Supp.3d 709

Ohio Valley Health Services & Education Corporation Health Plan, Ohio Valley Health Services & Education Corporation Dental Plan, Ohio Valley Health Services & Education Corporation, Ohio Valley Medical Center and East Ohio Regional Hospital, Plaintiffs,

v.Michael D. Riley, West Virginia Insurance Commissioner, West Virginia Offices of the Insurance Commissioner and Health Plan of the Upper Ohio Valley, Inc., Defendants.

Civil Action No. 5:15CV65 (STAMP)

United States District Court, N.D. West Virginia.

Signed December 10, 2015

David J. Berardinelli, Walter P. Deforest, Deforest Koscelnik Yokitis & Berardinelli, Pittsburgh, PA, for Plaintiffs.

Julie A. Warren, Office of the Attorney General, Charleston, WV, Allen M. Lopus, Clark Hill Thorp Reed, Wheeling, WV, for Defendants.

MEMORANDUM OPINION AND ORDER DENYING AS MOOT PLAINTIFFS' FIRST MOTION TO DISMISS THE COUNTERCLAIM AND GRANTING PLAINTIFFS' SECOND MOTION TO DISMISS THE COUNTERCLAIM

FREDERICK P. STAMP, JR., UNITED STATES DISTRICT JUDGE

I. Background¹

Plaintiff Ohio Valley Health Services & Education Corporation (“OVHS&E”) maintains two employee benefit plans, the Ohio Valley Health Services & Education Corporation Health Plan and the Ohio Valley Health Services & Education Corporation Dental Plan (collectively, “OVHS&E Health and Dental Plans”). OVHS&E is the parent corporation of the Ohio Valley Medical Center (“OVMC”) and the East Ohio Regional Hospital (“EORH”). OVHS&E Health and Dental Plans entered into an Administrative Services Agreement (“ASO”) with defendant The Health Plan of the Upper Ohio Valley, Inc. (“Upper Ohio Valley Health Plan”) to provide third-party administrative services. Those services include paying claims approved and paid for by the OVHS&E Health and Dental Plans. The Upper Ohio Valley Health Plan has served as such an administrator since 1999.

Between January 2005 and April 2013, OVHS&E Health and Dental Plans ran short of funding. Because of the lack of funds, the OVHS&E Health and Dental Plans waited to approve claims for payment by the Upper Ohio Valley Health Plan until sufficient funds became available. Although approval for claims remained pending, Wheeling Hospital (and other service providers) nonetheless entered into Hospital Service Agreements with the Upper Ohio Valley Health Plan. Wheeling Hospital then filed an action under Civil Action 5:10CV67 (“Wheeling Hospital litigation”), wherein it sued OVHS&E, OVMC, EORH, and the Upper Ohio Valley Health Plan for attorney's fees and prejudgment interest concerning the pending and delayed payments. This Court ultimately dismissed Wheeling Hospital's claims against OVHS&E, OVMC, and EORH. The remaining defendant in the Wheeling Hospital litigation, Upper Ohio Valley Health Plan, entered into arbitration with Wheeling Hospital. Ultimately, Wheeling Hospital and Upper Ohio Valley Health Plan reached a settlement.

The plaintiffs have now filed this civil action, wherein they seek declaratory relief and injunctive relief. ECF No. 1. Defendant Upper Ohio Valley Health Plan also filed a counterclaim, which is currently at issue and has been amended. ECF Nos. 9 and 21, respectively. In that amended counterclaim, Upper Ohio Valley Health Plan asserts five counterclaims. In Count I, it asserts a breach of contract claim against OVHS&E and OVHS&E Health and Dental Plans regarding the ASOs. Count II is a breach of contract and express indemnification claim against OVHS&E and OVHS&E Health and Dental Plans for failure to indemnify Upper Ohio Valley Health Plan for the settlement and costs of past litigation.² Under Count III, Upper Ohio Valley Health Plan alternatively pleads a claim of implied indemnification against OVHS&E and OVHS&E Health and Dental Plans. Count IV is a claim of unjust enrichment against OVMC and EORH regarding the ASOs and the settlement of past litigation. Under Count V, Upper Ohio Valley Health Plan alternatively asserts a claim of unjust enrichment against OVHS&E.

A. First Motion to Dismiss by Plaintiffs

The plaintiffs OVHS&E, OVMC, and EORH filed a motion to dismiss Upper Ohio Valley Health Plan's counterclaim (“first motion to dismiss”). ECF No. 16. It appears, however, that those plaintiffs filed their first motion to dismiss as to Upper Ohio Valley Health Plan's initial counterclaim. ECF No. 9. The Upper Ohio Valley Health Plan has since amended its counterclaim. Nonetheless, in their first motion to dismiss, OVHS&E, OVMC, and EORH assert that they are not parties to the ASOs at issue. Because of that, they argue that the Upper Ohio Valley Health Plan's breach of contract counterclaim cannot prevail. No response or reply was filed to the first motion to dismiss.

B. Second Motion to Dismiss by Plaintiffs

The plaintiffs later filed a second motion to dismiss the amended counterclaim (“second motion to dismiss”). ECF No. 25. In their motion, the plaintiffs argue that the breach of contract claim against OVHS&E and OVHS&E Health and Dental Plans (Count I) should be dismissed because OVHS&E was not a party to the ASOs. Even if the ASOs bound OVHS&E, they believe that the Upper Ohio Valley Health Plan has inadequately pleaded its breach of contract claim. Next, the plaintiffs contend that the indemnification claim against OVHS&E and the OVHS&E Health and Dental Plans (Count II) should be dismissed because the ASOs expressly preclude indemnification in this case. The plaintiffs further assert that those express provisions of the ASOs defeat the Upper Ohio Valley Health Plan's claims for implied indemnification (Count III) against OVHS&E and the OVHS&E Health and Dental Plans. As to Count III, OVHS&E and OVHS&E Health and Dental Plans believe that not only is implied indemnification inapplicable if the underlying claim is contractual, but that Upper Ohio Valley Health Plan also inadequately pleaded that claim. Finally, the plaintiffs argue that Counts IV and V, which are unjust enrichment against OVMC and EORH and unjust enrichment against OVHS&E (respectively), cannot proceed because (1) an express contract exists and (2) Upper Ohio Valley Health Plan has inadequately pleaded those claims.

The Upper Ohio Valley Health Plan filed a response in opposition. ECF No. 51. It first argues that OVHS&E is bound by the ASOs because it is a “Plan Sponsor.” Upper Ohio Valley Health Plan also believes that OVHS&E is a “real party in interest” regarding the rights and obligations of the OVHS&E Health and Dental Plans. Therefore, the ASOs should legally bind OVHS&E. Regarding the indemnification provision, the Upper Ohio Valley Health Plan believes that such an interpretation is inconsistent with the ASOs. The Upper Ohio Valley Health Plan further argues that it has adequately pleaded all of its claims. The plaintiffs filed a reply, wherein they essentially reassert their previous arguments.

For the reasons set forth below, the plaintiffs' second motion to dismiss the amended counterclaim (ECF No. 25) is GRANTED and the first motion to dismiss the counterclaim (ECF No. 16) is DENIED AS MOOT.

II. Applicable Law

In assessing a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must accept all well-pled facts contained in the complaint as true. Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc , 591 F.3d 250, 255 (4th Cir.2009). However, “legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement fail to constitute well-pled facts for Rule 12(b)(6) purposes.” Id. (citing Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) ). This Court also declines to consider “unwarranted inferences, unreasonable conclusions, or arguments.” Wahi v. Charleston Area Med. Ctr., Inc. , 562 F.3d 599, 615 n. 26 (4th Cir.2009).

It has often been said that the purpose of a motion under Rule 12(b)(6) is to test the formal sufficiency of the statement of the claim for relief; it is not a procedure for resolving a contest about the facts or the merits of the case. 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (3d ed. 1998). The Rule 12(b)(6) motion also must be distinguished from a motion for summary judgment under Federal Rule of Civil Procedure 56, which goes to the merits of the claim and is designed to test whether there is a genuine issue of material fact. Id. For purposes of the motion to dismiss, the complaint is construed in the light most favorable to the party making the claim and essentially the court's inquiry is directed to whether the allegations constitute a statement of a claim under Federal Rule of Civil Procedure 8(a). Id. § 1357.

A complaint should be dismissed “if it does not allege ‘enough facts to state a claim to relief that is plausible on is face.’ ” Giarratano v. Johnson , 521 F.3d 298, 302 (4th Cir.2008) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). “Facial plausibility is established once the factual content of a complaint ‘allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Nemet Chevrolet , 591 F.3d at 256 (quoting Iqbal , 129 S.Ct. at 1949 ). Detailed factual allegations are not required, but the facts alleged must be sufficient “to raise a right to relief above the speculative level.” Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

III. Discussion

As discussed earlier, plaintiffs OVHS&E, OVMC, and EORH filed the first motion to dismiss regarding the Upper Ohio Valley Health Plan's initial counterclaim. Following that first motion, the Upper Ohio Valley Health Plan filed an amended counterclaim, to which the plaintiffs filed a second motion to dismiss. In analyzing the parties' arguments, this Court will, when relevant, view them through the lens of assuming without deciding that ERISA does not preempt the Prompt Pay Act and indemnification claims.³ This Court will address the first and second...