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Kimberton Healthcare Consulting v. Primary Physiciancare

December 6, 2011

KIMBERTON HEALTHCARE CONSULTING, INC.
v.
PRIMARY PHYSICIANCARE, INC.



The opinion of the court was delivered by: Baylson, J.

MEMORANDUM RE: MOTION TO DISMISS AND FOR A MORE DEFINITE STATEMENT

I. Introduction

This dispute arises from a confidentiality agreement (the "Confidentiality Agreement") and a Consulting Services Partner Agreement (the "Consulting Agreement") executed by Plaintiff Kimberton Healthcare Consulting, Inc. d/b/a DialysisPPO ("Plaintiff" or "DPPO") and Defendant Primary PhysicianCare, Inc. ("Defendant" or "PPC") in connection with discussions about a possible business relationship whereby DPPO would provide health plan consulting and management services to PPC's clients. DPPO brought this action against PPC, alleging that PPC unlawfully disclosed and misused confidential and proprietary information that DPPO conveyed to PPC during those discussions in breach of the contracts and in violation of Pennsylvania law. Presently before the Court is PPC's motion to dismiss for failure to state a claim and for a more definite statement pursuant to Rules 12(b)(6) and 12(e) of the Federal Rules of Civil Procedure.

II. Factual and Procedural Background

DPPO is a Pennsylvania corporation that provides renal dialysis benefits consulting and related management services. (Cplt. ¶¶ 1-2.) PPC is a privately held medical management company with headquarters in North Carolina. (Id. ¶ 3.) PPC provides benefit administration services for welfare benefit plans. (Id. ¶ 4.)

On October 24, 2007, in connection with talks about a possible business relationship, DPPO and PPC entered into the Confidentiality Agreement because DPPO proposed to disclose certain confidential and propriety information regarding its business to PPC. (Id. ¶ 7.) The Confidentiality Agreement designated certain confidential and propriety information, including "benefit plan language" and "renal dialysis benefit instrument combinations" developed by DPPO as "Confidential Information." (Id. ¶ 8.) The Confidentiality Agreement specified that the Confidential Information was to be considered propriety and confidential to DPPO and held in confidence by PPC. (Id.) Specifically, the Confidentiality Agreement provided that PPC would not disclose, publish, or otherwise reveal any Confidential Information received from DPPO to any other party, except with specific prior written authorization of DPPO. (Id. ¶ 9.) The Confidentiality Agreement also provided that PPC would not use the Confidential Information other than for the purposes of its business with DPPO. (Id. ¶ 10.)

On December 20, 2007, DPPO and PPC entered into the Consulting Agreement. (Id. ¶ 11.) In the Consulting Agreement, DPPO agreed to assist PPC's clients in reducing medical claims for renal dialysis service for self-funded health plan participants and beneficiaries with End Stage Renal Disease. (Id. ¶ 12, 22.) The Consulting Agreement prohibited PPC from disclosing any of DPPO's Confidential Information to PPC's clients until and unless the clients themselves had executed confidentiality agreements with DPPO. (Id. ¶ 13.) In the Consulting Agreement, PPC expressly acknowledged the confidential and propriety character of the Confidential Information. (Id. ¶ 14.) PPC also agreed not to use the Confidential Information to develop or have a third party develop competing or similar services. (Id. ¶¶ 16, 21.)

According to DPPO, after the execution of the Consulting Agreement, PPC allegedly incorporated language similar to DPPO's Confidential Information in certain benefits plan documents while acting as a third-party administrator for a health plan without providing notice or compensation to DPPO for the use of the Confidential Information. (Id. ¶¶ 17-19.) PPC has allegedly begun offering its clients at no charge a dialysis cost containment program based on DPPO's Confidential Information. (Id. ¶ 20.)

On July 19, 2011, DPPO brought this diversity action against PPC, alleging various causes of action under Pennsylvania state law, including breach of contract (Count I), misappropriation of confidential and proprietary information (Count II), violation of the Pennsylvania Uniform Trade Secrets Act ("PUTSA"), Pa. Cons. Stat. §§ 5301 et seq. (Count III), unfair competition (Count IV), and conversion (Count V). (Cplt. ¶¶ 25-57.) On September 20, 2011, PPC filed a motion seeking dismissal of Counts II, IV, and V for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and an order requiring DPPO to file a more definite statement as to Counts I and III under Federal Rule of Civil Procedure 12(e). (ECF No. 7.) On October 11, 2011, DPPO filed a response to PPC's motion. (ECF No. 8.) On October 18, 2011, PPC filed a reply in further support of its motion. (ECF No. 9.)

III. The Parties' Contentions

PPC argues that DPPO's common law tort claims for misappropriation of confidential and proprietary information, unfair competition, and conversion should be dismissed because they are preempted by PUTSA and barred by the gist of the action and economic loss doctrines. Moreover, PPC argues that DPPO should be required to file an amended complaint that contains a more definite statement of the timing of the alleged misconduct supporting its breach of contract claim and its claim for violation of PUTSA.

In response, DPPO contends that it is premature for the Court to decide whether PUTSA preempts DPPO's claims for misappropriation of confidential and proprietary information, unfair competition, and conversion on a motion to dismiss. DPPO also contends that it is premature for the Court to decide whether these claims are barred by the gist of the action and economic loss doctrines on a motion to dismiss, and in any event, these doctrines are inapplicable because DPPO's common law torts claims are extraneous to the contract. DPPO further contends that PPC's motion for a more definite statement should be denied because it is not required to plead specific allegations regarding the timing of the alleged misconduct under the Federal Rules of Civil Procedure.

IV. Legal Standards

A. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. ยง 1332 because the parties are citizens of different states and the amount in controversy exceeds the sum or ...


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