Williams v. The Lasik Inst.
| Decision Date | 29 September 2021 |
| Docket Number | 2:20-cv-02402-JPM-tmp |
| Parties | TAMARA WILLIAMS, on behalf of herself and all similarly situated persons, Plaintiff, v. THE LASIK INSTITUTE, LLC; JAMES RYNERSON, M.D.; JAMES M. RYNERSON, M.D. PSC; VISION GROUP HOLDINGS, LLC; AUDAX GROUP, LIMITED PARTNERSHIP; AUDAX MANAGEMENT COMPANY, LLC; LVI SUPER INTERMEDIATE HOLDINGS, INC.; LVI INTERMEDIATE HOLDINGS, INC. d/b/a VISION GROUP HOLDINGS, LLC; LVI HOLDCO, LLC; AG LVI HOLDINGS, LLC; 9597930 CANADA, INC.; MARK JAMIE COHEN; AVI A. WALLERSTEIN; MICHAEL C. FONDO; LISA ANN MELAMED; RAYMOND R. MONTELEONE; BEN L. COOK; MARK A. HOCKENSON; BILL WOLZ; CHRIS FOLSON; ERIKA JACKSON, Defendants. |
| Court | U.S. District Court — Western District of Tennessee |
ORDER GRANTING THE RYNERSON AND LVI DEFENDANTS' MOTIONS TO DISMISS FOR FAILURE TO STATE A CLAIM
Before the Court are two Motions to Dismiss for failure to state a claim under Rule 12(b)(6). The first was filed by Defendants James Rynerson M.D. and James M. Rynerson, M.D. PSC (collectively, the “Rynerson Defendants”) on October 13, 2020. (ECF No. 85.) The second Motion was filed by Defendants The Lasik Vision Institute, LLC (“LVI”), LVI Intermediate Holdings, Inc., d/b/a Vision Group Holdings, LLC (“Vision Holdings”) and LVI Super Intermediate Holdings, Inc. (“LVI Super”); Mark Jamie Cohen and Avi Wallerstein (collectively, the “Canada, Inc. Control Person Defendants”); and Lisa Ann Melamed, Raymond R Monteleone, Ben L. Cook, Mark A. Hockenson, William Wolz, Chris Folsom, and Erika Jackson (collectively, the “Vision Group Officer Defendants”) (all collectively, the “LVI Defendants”), also on October 13, 2020. (ECF No. 86.) Each Motion seeks an Order dismissing Plaintiff's Second Amended Class Action Complaint (“Complaint”) (ECF No. 75) with prejudice. (ECF No. 85 at PageID 1189-90; ECF No. 87 at PageID 1233.) For the reasons set forth below, both Motions to Dismiss are GRANTED.
A. Factual Background
This is an action for undisclosed fee-splitting by a physician in violation of Tenn. Code Ann. §§ 63-6-225(a) & 63-6-226(a) and misrepresentation of services in violation of the Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-109(a)(1). (Complaint, ECF No. 75 ¶¶ 1, 4.) In July 2018, Plaintiff Tamara Williams (“Williams”) (Id. ¶ 146.) Plaintiff alleges that “[s]he was informed that Defendant Rynerson operated the James M. Rynerson PSC eye clinic, which was located inside LVI's space and that Dr. Rynerson would perform her eye surgeries and be responsible for her care.” (Id.) Later in July 2018, Plaintiff underwent both PRK procedures with Rynerson. (Id. ¶¶ 149.) Plaintiff alleges that prior to the procedures, at the request of “Rynerson (or his agents), ” Plaintiff made a “$100 deposit to be paid to Defendant Rynerson PSC for her surgeries” and that “upon information and belief, this payment went into the Rynerson PSC bank account . . . .” (Id. ¶¶ 147-48.) Plaintiff alleges that following her surgeries, “[t]he total medical charges to Plaintiff for Defendant Rynerson's medical services was $3, 718 (less her $100 she previously paid to Defendant Rynerson PSC) for a net total of $3, 618.” (Id. ¶ 150.) She alleges that she “financed Rynerson's medical fees through a credit lender known as CareCredit [and] has timely made all payments due under this arrangement.” (Id. ¶ 151.) Plaintiff alleges that she “reasonably believed that whatever funds that CareCredit would advance on her behalf for the medical services she received from Defendant Rynerson would be tendered to Defendant Rynerson PSC, just as she had paid her $100.00 deposit to Defendant Rynerson PSC” and that “[u]pon information and belief, CareCredit in fact did just this.” (Id. ¶ 152.)
Plaintiff alleges that despite her belief that her payments would go to Rynerson PSC, LVI in fact kept most of the fees paid by her and the Class Members. (Id. ¶ 70.) Plaintiff bases many of the allegations in her Complaint on deposition testimony from Rynerson and LVI (through its legal counsel, Ericka Jackson) taken in a separate case, Walker v. The Lasik Vision Institute, LLC, No. CT-000475-16 (ECF Nos. 75-3, 75-5). (See ECF No. 75 ¶ 86-136, 154, 170.) Specifically, she alleges, “LVI billed patients for all medical services, collected all medical payments and then paid Rynerson a fee for each eye surgery.” (Id. ¶ 96.) (citing Rynerson Deposition, ECF No. 75-3 at PageID 1044, 20:3-10.) Plaintiff further alleges:
(Id. ¶ 69-70.)
The Management Services Agreement between Rynerson, Rynerson PSC, and LVI (“MSA”) (see generally ECF No. 75-4) designates the sum that LVI was to retain as a “Management Fee.” (Id. at PageID 1085.) Under the MSA, the Management Fee includes reimbursement for LVI's “out-of-pocket expenses” such as supplies, legal fees, and salaries of support staff; a “Facility Fee” for use of LVI's space; an “Equipment Fee” for use of LVI's equipment; and an “overhead fee.” (Id. at PageID 1084-85, 1091.) However, Plaintiff alleges:
Defendant Erica Jackson, Vision Holdings and LVI have all admitted under oath [in Walker v. LVI] that LVI never truly charged [such fees] . . . . [and] that these so-called fees did not represent fair market value for the services that LVI ostensibly provided to Tennessee physicians such as [] Rynerson . . . .
(citations omitted.)
Plaintiff alleges that this was all part of a “scheme” that LVI and Vision Holding[s][1] “concocted . . . that attempted, albeit thinly, to disguise the fact that they were . . . dividing medical fees” “as opposed to charging a reasonable fee for their alleged management assistance that was not contingent on medical payments.” (Id. ¶ 63, 71.) Specifically, she alleges that “LVI Super[, ][2] [] Vision Holdings[, ] and LVI[] would recruit ophthalmologists for their eye surgical centers so that medical fees for eye surgeries could be generated and then divided between LVI and these physicians.” (Id. ¶ 64.) She alleges that Rynerson was recruited as a “figurehead” to enable LVI to facially comply with Tennessee law prohibiting the corporate practice of medicine and entered into sham MSAs with LVI that falsely purported to give him ownership and management responsibilities over LVI's eye clinic locations (Id. ¶ 86-102.) (citations omitted.) Plaintiff further alleges that these MSAs falsely purported to give Rynerson and Rynerson PSC access to a bank account where patient fees were collected and to charge the Rynerson Defendants for LVI's management responsibilities, but that, in reality, the payment structure functioned as described above. (Id. ¶ 104-16.) (citations omitted.) She alleges that Rynerson had full knowledge of this “sham” from the time he entered into the MSAs. (Id. ¶ 104, 122-23, 129.) (citations omitted.) (“Rynerson knew that LVI would manage these accounts just to pay him a per fee price, which he viewed as ‘how the game was to be played.'”)
Plaintiff alleges that “[a]t no time did any Defendant or any other person or entity disclose to Plaintiff that LVI and/or Vision Holdings were dividing medical fees with Rynerson, Rynerson PSC or any other person.” (Id. ¶ 153.) She alleges that deposition testimony from Walker “conclusively establishes [that] LVI, Vision Holdings, Rynerson and Rynerson PSC never disclosed the division of these fees.” (Id. ¶ 154.) (citing Jackson Deposition, ECF No. 75-5 at PageID 1105-06, 45:22-46:1.) Plaintiff alleges that (Id. ¶ 156.)
Plaintiff alleges that following her surgeries she “experienced significant pain in her eyes as well as clouded and blurred vision.” (Id. ¶ 157.) She alleges that despite her several attempts to obtain a follow-up examination, she was “always” told that “no one was available to see her for follow-up care.” (Id. ¶ 157-58.) She alleges that “the truth was that Defendant Rynerson had no economic incentive to provide any follow-up care to Plaintiff because he would receive no further medical fees from LVI or Vision Holdings for her care.” (Id. ¶ 158.) B. Procedural Background
This action was removed from the Chancery Court of Shelby County Tennessee on June 8, 2020. (ECF No. 1.) Plaintiff filed her First Amended Class Action Complaint on July 20, 2020. (ECF No. 42.) The Rynerson Defendants filed a Motion to Dismiss under 12(b)(6) (ECF No. 43), which was mooted when the Court granted Plaintiff leave to amend her complaint. (ECF No. 72.) Plaintiff filed her Second Amended Class Action Complaint (the “Complaint”) on September 11, 2020. (ECF No. 75.) In her Complaint, Plaintiff alleges seven...
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