Pulmonary Assocs. of Charleston PLLC v. Greenway Health, LLC

Decision Date16 December 2020
Docket NumberCIVIL ACTION FILE NO. 3:19-cv-167-TCB
Citation508 F.Supp.3d 1268
Parties PULMONARY ASSOCIATES OF CHARLESTON PLLC, Neurosurgical Specialists of West County, Inc., Medlock Pediatrics, P.C., and C.R. Magness, M.D., Plaintiffs, v. GREENWAY HEALTH, LLC and Greenway Health, Inc., Defendants.
CourtU.S. District Court — Northern District of Georgia

Brett Andrew Ialacci, Badham & Buck, LLC, Birmingham, AL, C. Cooper Knowles, The Law Office of C. Cooper Knowles, LLC, Sandy Springs, GA, Gabriel A. Panek, Pro Hac Vice, John T. Nicolaou, Jonathan D. Selbin, Pro Hac Vice, Lieff, Cabraser, Heimann & Bernstein, LLP, New York, NY, James C. Bradley, Michael J. Brickman, Pro Hac Vice, Nina Fields Britt, Pro Hac Vice, Richardson, Patrick, Westbrook & Brickman, LLC, Mt. Pleasant, SC, Mark P. Chalos, Lieff Cabraser Heimann & Bernstein LLP, Nashville, TN, Timothy C. Bailey, Bailey Javins & Carter LC, Charleston, WV, for Plaintiff Pulmonary Associates of Charleston PLLC.

Brett Andrew Ialacci, Badham & Buck, LLC, Birmingham, AL, Gabriel A. Panek, Pro Hac Vice, John T. Nicolaou, Jonathan D. Selbin, Pro Hac Vice, Lieff, Cabraser, Heimann & Bernstein, LLP, New York, NY, James Marvin Feagle, Skaar and Feagle, Tucker, GA, Justin Tharpe Holcombe, Kris Kelly Skaar, Skaar & Feagle, LLP, Woodstock, GA, Mark P. Chalos, Lieff Cabraser Heimann & Bernstein LLP, Nashville, TN, James C. Bradley, Richardson, Patrick, Westbrook & Brickman, LLC, Mt. Pleasant, SC, for Plaintiffs Neurological Specialists of West County, Inc., Medlock Pediatrics, P.C., Magness, C.R., M.D.

Adam P. Schwartz, Pro Hac Vice, David Matthew Allen, Erin J. Hoyle, Joseph W. Swanson, Carlton Fields, PA, Tampa, FL, Christopher B. Freeman, Carlton Fields, Atlanta, GA, for Defendants.

ORDER

Timothy C. Batten, Sr., United States District Judge This case comes before the Court on the motion [65] to dismiss the second amended complaint by Defendants Greenway Health, LLC and Greenway Health, Inc. (collectively, "Greenway").

I. Background

This case involves a contract dispute between four medical providers and a software development company. In 2000, Greenway developed software called Prime Suite, which coordinates health care services for patients through electronic health records (EHR) technology.

In 2010, the Centers for Medicare and Medicaid Services ("CMS") set forth initial benchmarks for EHR technology. Providers who demonstrated that their EHR vendor complied with the meaningful use ("MU") criteria would receive an incentive payment that year.

Greenway soon began marketing its EHR technology, Prime Suite, as compliant with CMS's MU requirements. Later that year, Plaintiff Medlock began using Prime Suite. Plaintiff NSWC followed one year later.

In 2012, CMS heightened its MU criteria. Greenway subsequently announced that Prime Suite was compliant with this iteration of CMS requirements as well. In 2017, Plaintiffs Pulmonary and Dr. Magness contracted with Greenway to use Prime Suite.

Until 2018, Plaintiffs used Prime Suite to attest to their meaningful use of certified EHR technology. Accordingly, they received incentive payments from CMS.

In September 2018, Greenway disclosed to its customers that Prime Suite failed to meet two MU metrics related to the "patient portal" feature in Prime Suite. A similar disclosure followed in October. In both disclosures, Greenway represented that it would remediate any errors by November 2018.

In December 2018, Greenway informed consumers that it was "actively remediating these issues" and making "significant progress addressing issues, improving the quality of the solution and demonstrating progress to the certifying body." [55] ¶¶ 107, 110.

In February 2019, Greenway announced that it had agreed to settle claims brought by the United States Department of Justice ("DOJ") related to the reporting features in Prime Suite.

In May 2019, Greenway communicated to its customers that it was "continu[ing] to work through the issues" with Prime Suite, but that it had "discovered additional issues" that it could not immediately remediate. In August 2019, it disclosed that Prime Suite contained errors preventing its users from attesting to meaningful use in 2018.

Now, Greenway admits that Prime Suite still lacks the requisite features to comply with CMS requirements for certifying meaningful use.

On November 25, 2019 Plaintiffs filed this suit. After Plaintiffs amended [15] their complaint on January 14, 2020, Defendants moved [21] to dismiss it.

On June 29, the Court granted [50] the motion to dismiss as to counts 1–3 for fraud but denied it as to counts 4–6 seeking damages for breaches of contract. The order also granted Plaintiffs leave to file an amended complaint, which they did [55] on July 13.

Now, Defendants have moved to dismiss the second amended complaint for failure to state a claim.

II. Legal Standard

To survive a 12(b)(6) motion, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 547, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Chandler v. Sec'y of Fla. Dep't of Transp. , 695 F.3d 1194, 1199 (11th Cir. 2012). The Supreme Court has explained this standard as follows:

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. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully.

Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal citation omitted); Resnick v. AvMed, Inc. , 693 F.3d 1317, 1325 (11th Cir. 2012).

Thus, a claim will survive a motion to dismiss only if the factual allegations in the complaint are "enough to raise a right to relief above the speculative level," and "a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. While all well-pleaded facts must be accepted as true and construed in the light most favorable to the plaintiff, Powell v. Thomas , 643 F.3d 1300, 1302 (11th Cir. 2011), the Court need not accept as true plaintiff's legal conclusions, including those couched as factual allegations, Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

III. Discussion
A. Counts Five and Six for Breach of Documentation and Service Warranties

Greenway argues that counts five and six should be dismissed for two reasons.1

First, Greenway contends that the parties contractually agreed to a repair or replacement provision that required Plaintiffs to notify Greenway of any software deficiencies and allow it the opportunity to cure before filing suit. It argues that Plaintiffs failed to allege that they complied with the contractual notice provision.

Second, Greenway urges that even if Plaintiffs had sufficiently alleged that they gave notice, they are barred from seeking their claimed damages by the parties' contractual limitations on available remedies.

1. Notice of Plaintiffs' Claims

Before Greenway can be deemed to have breached the express warranties in counts five and six, Plaintiffs must have provided it with notice of the defect so that it might have a reasonable opportunity to cure. McDonald v. Mazda Motors of Am., Inc. , 269 Ga.App. 62, 603 S.E.2d 456, 460 (2004). It is only upon Greenway's refusal or failure to remedy the defect that it can be held liable for breach of an express warranty. See id.

Greenway argues that Plaintiffs did not notify it that they construed the defects as a breach of warranty. Accordingly, it contends that its opportunity to cure the defects was not triggered, and therefore that it cannot be held liable for breach.

Plaintiffs first respond that notice is an affirmative defense and that they need not tailor their allegations to address affirmative defenses at the pleading stage. They also argue that they gave sufficient notice, that Greenway suffered no prejudice from any purported failure to give notice, and that any additional notice would have been futile.

Under Georgia law, Plaintiffs need not "alleged the satisfaction of conditions precedent to state a breach of contract claim, even if the right to recover depends on performance of the conditions precedent." Reserve, LLC v. Flagstar Bank, FSB , No. 1:09-cv-3078-TCB, 2011 WL 13176330, at *4 (N.D. Ga. Apr. 26, 2011) (citing Brogdon v. Nat'l Healthcare Corp. , 103 F. Supp. 2d 1322, 1335 (N.D. Ga. 2000) ); see also Crawford & Co. v. Cognizant Tech. Sols. U.S. Corp. , No. 1:19-cv-674-SDG, (N.D. Ga. Mar. 27, 2020) (same). Instead, Federal Rule of Civil Procedure 9(c) provides that "in pleading conditions precedent, it suffices to allege generally that conditions precedent have occurred or been performed." See also Ralls Corp. v. Huerfano River Wind, LLC , 27 F. Supp. 3d 1303, 1324 (N.D. Ga. 2014) (concluding that the plaintiff satisfied Rule 9(c) by "alleging generally that all conditions precedent have been satisfied or waived").

Here, Plaintiffs aver that Dr. Magness requested compensation from Greenway for its failure to provide software that met the parties' contractually agreed-upon specifications. See [55] ¶ 190. This satisfies the low standard for pleading notice for this Plaintiff. See Martinelli Ginetto SpA v. Sample Dyeing Serv., Inc. , No. 4:09-cv-46-HLM, 2010 WL 11505451, at *12 (N.D. Ga. Jan. 12, 2010) (pointing out that "a party need only give notice that the transaction is troublesome and must be monitored" (citing Oden & Sims Used Cars v. Thurman , 165 Ga.App. 500, 301 S.E.2d 673, 673 (1983) )); see also Camden , 2011 WL 13176330, at *4 (finding that the plaintiff met its pleading burden where it averred that it "furnished ‘all information and documentation required for the issuance of a final disbursement’ ").

However, the remaining Plaintiffs fail to meet their light burden of pleading—even generally—satisfaction of the notice requirement. Instead, Plain...

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