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United States ex rel. Notorfransesco v. Surgical Monitoring Associates, Inc.

United States District Court, Eastern District of Pennsylvania

December 12, 2014

UNITED STATES OF AMERICA ex rel. LORRAINE NOTORFRANSESCO Plaintiff-Relator,
v.
SURGICAL MONITORING ASSOC., INC. AND SPECIALTYCARE, INC., et al. Defendants.

MEMORANDUM

TUCKER, C.J.

Defendant/Counterclaimant Surgical Monitoring Associates, LLC (“SMA”) brings claims against Relator/Counter-defendant Lorraine Notorfransesco for breach of contract, implied contract, and promissory estoppel on the basis of Notorfransesco’s alleged disclosure of confidential SMA materials. Notorfransesco moved to dismiss SMA’s counterclaims under Federal Rule of Civil Procedure (“Rule”) 12(b)(6). For the following reasons, Notorfransesco’s motion will be DENIED.

I. FACTUAL AND PROCEDURAL BACKGROUND

From 2006 to 2008, Notorfransesco was an SMA employee. She worked as a Billing and Collections Specialist and, after a promotion, as a Billing Manager. (Def.’s Countercl. ¶ 4, Doc. 53.) On June 5, 2008, Notorfransesco entered into a written confidentiality agreement with SMA. (Id. ¶ 6.) The agreement stated, “Employee shall hold all such confidential or proprietary information in the strictest confidence and not disclose it to any person or entity or use it except as necessary in carrying out employees [sic] work for Corporation.” (Def.’s Countercl. Ex. A., Doc. 53-2.) In defining “Confidential - Protected Health Information, ” the agreement enumerated various items of information, including names, any dates except year, telephone numbers, medical record numbers, and account numbers. (Id.) The agreement also defined “Confidential – Business Information” as “[i]nformation that must be protected from access by anyone other than those specifically authorized to have access based upon need-to-know to perform one’s job.” (Id.) Finally, “Private Information” was defined as “[i]nformation that is internal to the organization which is available to workforce members within the organization.” (Id.) One example of “Private Information” was “client lists.” (Id.)

On June 19, 2008, Notorfransesco also executed a “Receipt of Employee Handbook and Employment-At-Will Statement” acknowledging that she agreed “that it is [her] responsibility to read the Employee Handbook and to abide by all the rules, policies and standards set forth by [SMA].” (Def.’s Countercl. Ex. B, Doc. 53-3.) The Employee Handbook included, in a section titled “Standards of Conduct / Ethics, ” the policy that “[e]mployees shall protect and maintain the confidentiality of private information pertaining to the company and its employees.” (Id.)

SMA alleges that at some time during Notorfransesco’s employ, she removed from SMA’s premises a variety of confidential information for purposes not in connection with or for the benefit of SMA’s business. (Def.’s Countercl. ¶ 9.) On December 1, 2008, Notorfransesco allegedly contacted Mr. Brian Lux, an employee of SMA, and indicated her intention to disclose confidential information to SMA’s direct competitors. (Id. ¶ 12.) After Lux reported this incident, SMA took legal action against Notorfransesco and, on December 22, 2008, the Delaware County Court of Common Pleas ordered a Preliminary Injunction (“PI”) against Notorfransesco prohibiting her from communicating with SMA’s employees, patients, and customers, among others. (See Def.’s Countercl. Ex. D. ¶ 1, Doc. 53-5.) The PI also prohibited Notorfransesco from taking any other action that could “impair, limit, restrict, or hinder [SMA’s] contracts, current business operations or prospective business operations[.]” (Id. Ex. D ¶ 2.) The PI Order, however, did not prohibit or prevent “any other legal remedies or rights, which [Notorfransesco] has or wishes to pursue against [SMA.]” (Id. Ex. D ¶ 3.)

On April 22, 2009, Notorfransesco filed under seal a qui tam complaint against SMA under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3731, for allegedly submitting fraudulent claims for federal healthcare reimbursements. After nearly five years, on March 18, 2014, the U.S. Government declined to intervene as plaintiff. (U.S. and States’ Joint Notice, Doc. 18.) On April 3, 2014, Notorfransesco filed an Amended Complaint and SMA filed its Answer and Counterclaims on October 1, 2014.

SMA contends that, by sharing confidential information with her attorneys and by filing her Complaint and Amended Complaint in the instant action, Notorfransesco violated her obligations and duties owed to SMA. (Def.’s Countercl. ¶¶ 14-17.) More specifically, SMA alleges that Notorfransesco’s filing of an Amended Complaint “placed in the public record” confidential and proprietary information including patient records, invoices, billing records, and customer billing rates. (Id. ¶ 19.) SMA asserts that such disclosure of “commercially-valuable information” can lead to irreparable harm to its business. (Id. ¶ 22.)

Based on these allegations, SMA pleads three counterclaims: breach of contract, implied contract, and promissory estoppel. As relief, SMA seeks: 1) to bar Notorfransesco’s use of confidential information in prosecuting the instant case; 2) an injunction restraining Notorfransesco from using SMA’s confidential information and from engaging in activity that violates her contractual obligation to protect such information; 3) an injunction ordering Notorfransesco to return all property belonging to SMA; 4) an award of amounts paid to Notorfransesco as employment compensation from and after the time she first disclosed confidential information; and 6) compensatory damages.

II. STANDARD OF REVIEW

Rule 8(a)(2) requires that “[a] pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief.” To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 571 (2007)). “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.” Id. (citing Twombly, 550 U.S. at 556). A court must accept as true all allegations contained in a complaint, but need not consider legal conclusions contained therein. Id. A court ruling on a motion to dismiss a counterclaim under Rule 12(b)(6) is to apply the same standard as it does for a complaint. Batoff v. Charbonneau, Civ. A. No. 12-5397, 2013 WL 1124497, at *3 (E.D. Pa. Mar. 19, 2013).

The Third Circuit established a three-step analysis for assessing the sufficiency of a complaint. Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012). First, the court determines the elements a claimant must plead to state a claim. Id. Second, the court identifies and strikes allegations in the complaint that are mere conclusions and thus not entitled to the assumption of truth. Id. These include “unadorned, the-defendant-unlawfully-harmed-me accusation[s], labels and conclusions, a formulaic recitation of the elements of a cause of action, or naked assertion[s].” Argueta v. U.S. Immigration and Customs Enforcement, 643 F.3d 60, 72 (3d Cir. 2011) (quoting Iqbal, 556 U.S. at 678) (internal quotation marks omitted). And third, the court should assess the plausibility of the remaining factual allegations to conclude whether they give rise to an entitlement for relief. Bistrian, 696 F.3d at 365. The plausibility requirement, however, “is not akin to a probability requirement.” Argueta, 643 F.3d at 74 (quoting Iqbal, 556 U.S. at 678) (internal quotation marks omitted).

III. DISCUSSION

In her motion to dismiss, Notorfransesco contends that SMA did not plead facts sufficient to state a claim and SMA’s counterclaim should be dismissed pursuant to Rule 12(b)(6). Under Pennsylvania law, an employee’s duty to maintain an employer’s confidentiality can arise from an express contract or be implied from the confidential employer-employee relationship. See William M. Hendrickson, Inc. v. Nat’l R.R. Passenger Corp., No. 00-CV-3711, 2002 WL 398641, at *17 (E.D. Pa. Mar. 13, 2002) (discussing whether Amtrak owed a duty to maintain a contractor’s trade secrets when no confidentiality agreement existed); Macbeth-Evans Glass Co. v. Schnelbach, 86 A. 688, 691 (Pa. 1913) (“The duty of the servant not to disclose the secrets of the master may arise from an express contract, or it may be implied from their confidential relations.”). A breach of contract claim requires proof of (1) the existence of a contract, (2) a breach of a duty imposed by the contract, and (3) damages. Kirschner v. K & L Gates LLP, 46 A.3d 737, ...


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