Victory Med. Ctr. Beaumont, L.P. v. Conn. Gen. Life Ins. Co.

• Decision Date: 17 July 2018
• Docket Number: CIVIL ACTION NO. 1:17-CV-48
• Parties: VICTORY MEDICAL CENTER BEAUMONT, L.P., et al., Plaintiffs, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Texas

VICTORY MEDICAL CENTER BEAUMONT, L.P., et al., Plaintiffs, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY, et al., Defendants.

CIVIL ACTION NO. 1:17-CV-48

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS

July 17, 2018

MEMORANDUM AND ORDER

Pending before the court is Defendants Connecticut General Life Insurance Company and Cigna Corporation's (collectively, "Defendants") Motion for Judgment on the Pleadings (#42) (the "Motion"), wherein they seek to dismiss Plaintiff Neil Gilmour's, Trustee for the Grantor Trust of Victory Parent Company, L.L.C. ("Victory Parent"), sole remaining claim on the basis that Victory Parent is a signatory to the settlement agreement (the "Settlement Agreement"), because it signed the Settlement Agreement under its assumed name, Victory Healthcare. Victory Parent opposes the Motion (#45), arguing that there are disputed issues of material fact in the pleadings, particularly as to whether Victory Parent participated in the negotiation and execution of the Settlement Agreement (the "Response"). After considering the Motion, the Response, the pleadings, and the applicable law, the court is of the opinion that Defendants' Motion should be granted in part and denied in part.

I. Background

Victory Medical Center Beaumont, L.P. ("Victory Beaumont") operated a medical center in the greater Beaumont area. In the course of its operations, Victory Beaumont treated hundreds of patients insured by Defendants and invoiced Defendants as an allegedly out-of-network provider. Defendants paid Victory Beaumont's claims with few disputes until April 2013, when Victory Parent maintains that Defendants began bypassing Victory Beaumont's invoiced claims and submitting them to its Special Investigation Unit ("SIU") for investigation. In August 2013, Defendants informed Victory Beaumont that the SIU had completed its investigation and had discovered that Victory Beaumont had engaged in a "fee-forgiveness-protocol," in which a healthcare provider declines to collect payment from the insured for non-covered charges and seeks payment exclusively from the insurance company. Defendants claimed that, because of this protocol, they had a right to deny Victory Beaumont's invoiced claims initially and to request documentation supporting the claims. In light of this discovery, Defendants found Victory Beaumont's documentation unsatisfactory and denied all of its claims. The parties negotiated an agreement to resolve the payment dispute in or around March and April 2015, executing a written Settlement Agreement on April 27, 2015.

The Settlement Agreement represents that the parties "desire[d] to settle, compromise, and release all disputes between them . . . for good and valuable consideration." Doc. No. 42-1, at 1. Pages two through five of the Settlement Agreement detail Defendants' payment obligations and that such payment "irrevocably release[d] and forever discharge[d] Victory - Houston" from any actions whatsoever that Defendants may bring. Doc. No. 42-1, at 2-5. The Settlement Agreement continues to describe the release of any claims by Victory - Houston "whatsoever . . . relating to or arising out of" the Settlement Agreement. Doc. No. 42-1, at 5-6. The Settlement Agreement defines Victory - Houston as "Victory Healthcare, and its affiliates and subsidiaries, including Victory Medical Center - Houston, . . . Victory Surgical Hospital - East Houston . . . , and Victory Medical Center - Beaumont." Doc. No. 42-1, at 1.

Victory Parent filed suit against Defendants on January 31, 2017, alleging, among other claims, that the Settlement Agreement constituted a fraudulent transfer under the Texas Uniform Fraudulent Transfer Act ("TUFTA").¹ Victory Parent argues that, prior to the execution of the Settlement Agreement, Defendants were responsible for paying approximately $3,000,000.00 in claims to Victory Beaumont, whereas under the Settlement Agreement, they agreed to pay only $700,000.00. As a creditor of Victory Beaumont, Victory Parent asserts a stake in the disparity between the funds owed and the funds paid in settlement. Victory Parent maintains that Defendants acted unscrupulously in negotiating an unreasonably low settlement with Victory Beaumont at a time when the latter was insolvent.

The crux of Defendants' argument in their Motion is that Victory Parent filed an assumed name certificate for signatory Victory Healthcare (the "Assumed Name Certificate"), which is also affiliated with Victory Beaumont by the express terms of the Settlement Agreement. The parties to the Settlement Agreement are Defendants and "Victory Healthcare, and its affiliates and subsidiaries, including Victory Medical Center - Houston, . . . Victory Surgical Hospital - East Houston . . . , and Victory Medical Center - Beaumont." Doc. No. 42-1, at 1 (emphasis added). Victory Parent also listed Victory Healthcare under the heading "All Other Names used by the Debtor in the last 8 years" in its Voluntary Petition in the United States Bankruptcy Court for the Northern District of Texas (the "Voluntary Petition"). Doc. No. 42-3. Therefore, Defendants maintain, Victory Parent is a party to and, in effect, signed the Settlement Agreement. Indeed, Robert N. Helms, Jr. ("Helms"), the former Chief Executive Officer of Victory Parent and manager of Victory Beaumont, who submitted an affidavit on behalf of Victory Parent in connection with the Response, also negotiated and signed the Settlement Agreement on behalf of Victory Healthcare. Moreover, Helms signed both the Assumed Name Certificate, wherein Victory Parent assumed the name Victory Healthcare on or about March 25, 2011, as well as the Voluntary Petition, in which Victory Parent presents itself to the United States Bankruptcy Court for the Northern District of Texas as having assumed the name Victory Healthcare. Assumed Name Certificate, Doc. No. 42-2, at 2; Voluntary Petition, Doc. No. 42-3, at 3.

Victory Parent submits no evidence denying its registration for the Assumed Name Certificate for Victory Healthcare, nor does it dispute that its assumed name, Victory Healthcare, appears as a signatory on the Settlement Agreement. Indeed, it explicitly states in its Response that "the Court may take judicial notice of the fact that Victory Parent filed an assumed name certificate for the trade name 'Victory Healthcare.'" Doc. No. 45, at 7. Nevertheless, Victory Parent argues that, because it contends that it did not participate in the execution of the Settlement Agreement, there is a conflict in the pleadings, and, thus, judgment on the pleadings is improper.

II. Analysis

Defendants move for judgment on the pleadings and seek dismissal of Victory Parent's claims under Rule 12(c) of the Federal Rules of Civil Procedure. Rule 12(c) provides: "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." FED. R. CIV. P. 12(c); Mayne v. Omega Protein Inc., 370 F. App'x 510, 514 (5th Cir. 2010); Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002); Hughes v. The Tobacco Inst., Inc., 278 F.3d 417, 420 (5th Cir. 2001). "A motion brought pursuant to [Rule] 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts." Herbert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990); see Great Plains Tr. Co., 313 F.3d at 312; United States v. Renda Marine, Inc., 750 F. Supp. 2d 755, 763 (E.D. Tex. 2010), aff'd, 667 F.3d 651 (5th Cir. 2012), cert. denied, 569 U.S. 918 (2013).

A "judicially noticed fact" is one that "is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot be questioned." Taylor v. Charter Med. Corp., 162 F.3d 827, 829 (5th Cir. 1998) (citing FED. R. EVID. 201(b)); Karch v. JPMorgan Chase Bank, N.A., No. 4:17-CV-00114, 2017 WL 1426755, at *2 (E.D. Tex. Apr. 20, 2017). Rule 12(c) motions are treated as a motion for judgment on the pleadings based on a failure to state a claim upon which relief can be granted. Johnson v. Pharm. USA, Inc., 758 F.3d 605, 610 (5th Cir. 2014) (noting that motions to dismiss under Rule 12(c) are governed by the same standards applicable to motions under Rule 12(b)(6)); Truong v. Bank of Am., N.A., 717 F.3d 377, 381 (5th Cir. 2013); Gentilello v. Rage, 627 F.3d 540, 543-44 (5th Cir. 2010) ("We evaluate a motion under Rule 12(c) for judgment on the pleadings using the same standard as a motion to dismiss under Rule 12(b)(6) for failure to state a claim."); Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir. 2004) (same). The primary focus is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief. United States v. 0.073 Acres of Land, 705 F.3d 540, 543 (5th Cir. 2013); Great Plains Tr. Co., 313 F.3d at 312; Hughes, 278 F.3d at 420. "Pleadings should be construed liberally, and judgment on the pleadings is appropriate only if there are no disputed issues of fact and only questions of law remain." Great Plains Tr. Co., 313 F.3d at 312 (quoting Hughes, 278 F.3d at 420). In making such a determination, the court is restricted to the pleadings and must accept all allegations as true. Hughes, 278 F.3d at 420 (citing St. Paul Ins. Co. v. AFIA Worldwide Ins. Co., 937 F.2d 274, 279 (5th Cir. 1991)); see Great Plains Tr. Co., 313 F.3d at 312. Nevertheless, the court will not accept as true conclusory allegations or unwarranted deductions of fact. Great Plains Tr. Co., 313 F.3d at 313.

The court may, however, consider documents referenced in a plaintiff's complaint and central to the plaintiff's claim and may take judicial notice of publicly filed documents when analyzing a Rule 12(c) motion for judgment on the pleadings. Van Duzer v. U.S. Bank Nat'l Ass'n, ...