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Temple University Hospital, Inc. v. Russell Reimbursement Advisors, Inc.

United States District Court, E.D. Pennsylvania

March 15, 2017

TEMPLE UNIVERSITY HOSPITAL, INC.
v.
RUSSELL REIMBURSEMENT ADVISORS, INC., et al.

          MEMORANDUM

          Legrome D. Davis, J.

         Plaintiff Temple University Hospital, Inc. (“TUH”) sues Defendant National Railroad Passenger Corp. (“Amtrak”) for breach of contract, asserting that Amtrak is obligated to pay $1, 628, 095.28 for inpatient hospital services that TUH provided to a passenger of the Amtrak train 188, which derailed in Philadelphia on May 12, 2015.[1] Second Am. Compl. (ECF 35). In addition, TUH sues Defendants Russell Reimbursement Advisors, Inc. (“RRA”) and MCMC, L.L.C. (“MCMC”), asserting that they acted as agents for Amtrak. TUH's Complaint asserts that RRA's and MCMC's conduct, which was authorized by Amtrak, created a contract binding Amtrak to a promise to pay TUH the sum demanded. Alternatively, if Amtrak did not authorize the making of that promise, the Complaint asserts that RRA and MCMC are individually liable, and Amtrak is liable because it ratified their unauthorized promise. RRA and MCMC jointly move and Amtrak separately moves to dismiss the action for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6); Defs. Mots. (ECF 37, 38) TUH opposes dismissal. TUH Resps. (ECF 40, 41).[2] Jurisdiction is diversity, 28 U.S.C. § 1332.

         The principal inquiry here is whether the Second Amended Complaint provides “sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face, '” as is required by the Supreme Court's decisions in Iqbal and Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). In essence, “we look for well-pled factual allegations, assume their veracity, and then ‘determine whether they plausibly give rise to an entitlement to relief.'” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012) (quoting Iqbal, 556 U.S. at 679); Santiago v. Warminster Twp., 629 F.3d 121, 129-30 (3d Cir. 2010). That inquiry “is ‘a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'” Bistrian, 696 F.3d at 365 (quoting Iqbal, 556 U.S. at 679).

         Here, the Second Amended Complaint is viewed within a broader context than this action alone. After Amtrak's train derailed on May 12, 2015, various health facilities provided urgent medical and rehabilitative services to injured passengers. The Complaint alleges, and the parties do not dispute, that during May 13, 2015, through July 28, 2015, TUH provided inpatient hospital care for 14 of the injured passengers, including the passenger (“A.L.”) whose bill for medical services is at the core of this dispute. Second Am. Compl. ¶¶ 9, 12.

         Many lawsuits ensued from the derailment. On October 13, 2015, the Judicial Panel on Multidistrict Litigation consolidated in this Court all related actions originally filed in and transferred or removed to this Court. In re Amtrak Train Derailment, No. 15-md-2654 (E.D. Pa. 2015) (the “MDL”). On October 27, 2016, the Court approved a global resolution of the MDL. Case Mgmt. Order, dated Nov. 3, 2016 (ECF 145). Amtrak accepted liability in the MDL for compensatory damages and agreed to fund a settlement program. Id. The money available to compensate the many injured passengers is limited by a cap on Amtrak's liability arising “from a single accident.” 49 U.S.C. § 28103(a)(2). A.L. is a plaintiff in the MDL who has agreed to participate in the settlement program.

         Immediately after the derailment, Amtrak voluntarily paid for urgent medical treatment of the injured passengers. However, Amtrak preserved all rights and full control over which medical services and what proportion of the services that it would pay gratuitously. TUH's Complaint alleges, and the parties do not dispute, that Amtrak chose to not pay TUH the demanded sum of $1, 628, 095.64. Second Am. Compl. ¶¶ 26, 29. The Complaint alleges, and the parties do not dispute, that Amtrak paid TUH the sum of $2, 754, 228.49 for inpatient hospital services provided to 13 of the injured passengers, other than A.L. Amtrak Br. at 5 (ECF 38-1).

         TUH acknowledges that A.L. was insured by Medicare. TUH Resp. (ECF 41 at 6, 8 n.5). A.L. had no other health insurance. TUH submits that Medicare would have paid about $265, 469.08 for the inpatient hospital services provided to A.L. Id. TUH acknowledges that it did not receive any Medicare insurance proceeds for the services provided to A.L., because TUH did not timely submit a claim to Medicare within the required one-year period from the date that the inpatient hospital services were provided. Id.

         I. PROCEDURAL BACKGROUND

         On May 27, 2016, TUH commenced this action by filing a complaint against RRA and MCMC, suing to recover payment for the inpatient hospital services provided to A.L. Compl. (ECF 1). The complaint was dismissed for failure to state a claim. Order, dated Sept. 6, 2016 (ECF 11) (ruling that the “Complaint fails to put Defendants on notice of the claims asserted against them, and improperly leaves Defendants as well as the Court guessing which particular claims are being asserted.”). On September 8, 2016, TUH filed an amended pleading, again suing to recover payment for A.L.'s bill from RRA and MCMC. First Am. Compl. (ECF 12). The first amended complaint survived RRA's and MCMC's motion to dismiss. Order, dated Nov. 21, 2016 (ECF 17). TUH was permitted to again amend the pleadings. Order, dated Jan. 31, 2017 (ECF 31). On February 1, 2017, TUH amended the pleadings by adding Amtrak as a defendant and suing to recover payment for A.L.'s bill from Amtrak. Second Am. Compl. (ECF 35). TUH acknowledges that “the causes of action against RRA and MCMC are identical in the first and second amended complaints.” TUH Resp. (ECF 41 at 3-4). On February 17, 2017, RRA and MCMC filed the present dismissal motions. Defs. Mots. (ECF 37, 38).

         The dismissal motions filed by RRA, MCMC, and Amtrak attach a copy of a “Letter of Agreement, ” signed by TUH and RRA on October 23, 2015 (the “Letter”). R&M Mot. (ECF 37-2); Amtrak Mot., Ex. E (ECF 38-4 at 6-8). TUH did not attach a copy of the Letter to any of its pleadings. In addition, Amtrak's dismissal motion attaches email exchanges among various representatives for TUH, RRA, and MCMC. Id., Exs. D, F, G (ECF 38-4 at 2-15). The emails document the parties' discussion about the charges billed by TUH during May 13, 2015, through July 28, 2015, for the 14 injured passengers that TUH treated as inpatients, including A.L. Specifically, the Letter and the emails document the following communications.

         On Thursday, October 22, 2015, at 4:47 p.m., Brenda G. Calia, Sr. Vice President of MCMC, emailed E. Patrick Clarke and Deborah Scialanca of Amtrak, attaching a worksheet. Amtrak Br., Ex. D (ECF 38-4 at 2-4). Calia wrote that the “worksheet came from Temple to Russell [RRA].” Id. The worksheet summarized charges billed by TUH for the 14 injured passengers that TUH treated as inpatients. In line-itemized entries for each patient, the worksheet listed TUH's “Total Charges” and the “Amtrak Settlement offer (75% chgs).” Id. Among other entries, the worksheet listed the total amount of charges billed for all 14 patients, discounted by 25%: “$4, 382, 324.13” (75% of the total charges billed). Id. The worksheet listed the discounted amount for A.L.: “$1, 628, 095.64.” Id. However, Calia noted that charges billed for five of the patients had not been submitted by Amtrak for negotiation. Instead, TUH had listed the charges billed for those five patients on the worksheet and had submitted the worksheet to RRA. The charges billed for A.L. was one of the five bills that TUH unilaterally chose to list on the worksheet. Calia wrote that RRA and MCMC “understand that these bills may not be allowable because they did not come from us (and ultimately, approved by you, Amtrak).” Id. Calia also wrote: “In following our protocol, only bills that were received from Amtrak (initialed and authorized for payment) can be processed.” Id. Calia asked Clarke and Scialanca for further instructions.

         On October 22, 2015, at 6:16 p.m., Amtrak's representative, Scialanca, responded and instructed MCMC's representative, Calia: “I'm not sure why A.L.'s bill is listed as we have written on all his bills ‘do not pay.'” Amtrak Br., Ex. D (ECF 38-4 at 2-4). On October 22, 2015, at 8:15 p.m., Calia responded to Scialanca: “Temple sent those bills directly to [RRA] as they were negotiating with [RRA] on other Amtrak bills. I suspected they were skirting the process we have in place, hence, why I was inquiring about those bills.” Id. “We will let Temple know the bills for A.L. will not be included in our negotiations.” Id.

         On Friday, October 23, 2015, TUH's representative and RRA's representative, Christy Salas, signed the “Letter of Agreement, ” which “sets forth the agreement of the Parties with respect to certain services provided by [TUH].” Amtrak Br., Ex. E (ECF 38-4 at 6-8). Those services were summarized in Exhibit A to the Letter. In substance, Exhibit A listed the same information that was listed earlier on the worksheet. In line-itemized entries for each patient, Exhibit A listed the “Total Charges” billed by TUH, and the “Amtrak Settlement offer (75% chgs).” Id. Exhibit A listed the total amount of charges billed for all 14 patients, discounted by 25%: “$4, 382, 324.13” (75% of the total billed charges). Id. Exhibit A listed the discounted amount for A.L.: “$1, 628, 095.64.” Id. On its face, the Letter stated that it was “effective as of October 26, 2015.” Id.

         On October 23, 2015, at 6:34 p.m., MCMC's representative, Calia, emailed RRA's representative, Salas, stating: “Amtrak DOES NOT want ANY of A.L. bills paid.” Amtrak Br., Ex. E (ECF 38-4 at 11-13). Calia attached the emails sent the day before on October 22, 2015, highlighting in red Amtrak's earlier instructions that A.L.'s bills were not to be paid.

         On Monday, October 26, 2015, at 9:02 a.m., RRA's representative, Salas, emailed TUH's administrative director for patient accounts, Philip Palma. Amtrak Br. at 5 (ECF 38-4 at 15). Salas wrote: “I heard back from Amtrak regarding the 5 outstanding bills you sent. The only bill in question is the $2m bill for A.L. Amtrak is not paying any of his bills at this time.” Id.

         II. Allegations of the Second Amended Complaint and the Parties' Contentions

         TUH's Complaint asserts that Amtrak “retained” RRA and MCMC “to act as its agents to negotiate the payment of the charges incurred by certain patients who were treated by TUH.” Second Am. Compl. ¶ 9. The Complaint asserts that on October 23, 2016, representatives of RRA and MCMC “signed a written agreement” promising to pay TUH $4, 382, 324.13 for the medical services that TUH provided to the 14 injured passengers, which total included the sum of $1, 628, 095.28 for the inpatient hospital services provided by TUH to A.L. Id. ¶ 12.

         As to whether RRA and MCMC acted within the scope of their authority as agents for Amtrak, the Complaint asserts alternative claims. Count III of the Complaint asserts that RRA and MCMC had Amtrak's authority to “enter into the agreement with TUH.” Second Am. Compl. ¶ 28. The “agreement” was a promise to pay TUH $4, 382, 324.13 in total for the inpatient hospital services that TUH provided to the 14 injured passengers, which total included the sum of $1, 628, 095.28 for the inpatient hospital services provided by TUH to A.L. Id. ¶¶ 12, 28. And, it is also asserted, Amtrak is bound by that “written agreement.” Id. ¶ 28.

         Alternatively, Count I of the Complaint asserts that Amtrak's “agents, ” RRA and MCMC, “exceeded the scope of their authority for Amtrak.” Second Am. Compl. ¶¶ 9, 12, 17. The Complaint alleges that on October 22, 2015, RRA and MCMC “proposed to Amtrak that Amtrak pay TUH $4, 382, 324.13” for the inpatient hospital services that TUH provided to the 14 injured passengers. Id. ¶ 10. The Complaint also alleges that on October 22, 2015, Amtrak “told” RRA and MCMC that “they were not authorized to enter into the proposed agreement and that Amtrak would agree to pay only $2, 754, 228.49 for thirteen (13) of these patients.” Id. ¶ 11. The Complaint asserts that on October 23, 2015, RRA acted without Amtrak's authority by “sign[ing] a written agreement” promising to pay TUH $4, 382, 324.13 for the services that TUH provided to all 14 injured passengers, which total included the sum of $1, 628, 095.28 for the services provided to A.L. Id. ¶¶ 9, 12. And, it is asserted, RRA and MCMC are bound by that agreement and “are liable to TUH for their unauthorized conduct.” Id. ¶ 17.

         In addition, TUH's Complaint asserts that even if RRA and MCMC acted beyond the scope of their authority as agents for Amtrak by entering into the agreement promising to pay for the inpatient hospital services provided to A.L., Amtrak “ratified the unauthorized conduct” by paying TUH “$2, 754, 228.29 pursuant to the terms of that agreement.” Second Am. Compl. ¶ 24. And, the Complaint asserts, Amtrak affirmed and is bound by the unauthorized promise contained in the “agreement” signed by RRA. Id. ¶¶ 12, 24-25.

         Amtrak maintains that it never agreed to pay for the inpatient hospital services that TUH provided to A.L. Amtrak Br. at 3, 10 (ECF 38-1). Amtrak also maintains that it did not ever authorize RRA or MCMC to negotiate or agree to pay for the inpatient hospital services provided A.L. Id. at 3, 9. Amtrak acknowledges that it hired MCMC to “negotiate medical bills incurred by injured passengers at various health care facilities, ” including TUH. Id. at 4. However, Amtrak asserts that it did not hire RRA and did not even know of its existence until this dispute arose. Id. at 5 (“At the time the [Letter of ] Agreement was signed, Amtrak was unaware that RRA even existed, much less was negotiating on its behalf.”). The record does not establish whether RRA is subsidiary or affiliate of MCMC, or a subcontractor, or some other entity. See id. at 5 n.2 (“RRA is apparently owned by the same parent corporation as MCMC.”).

         Furthermore, Amtrak maintains that it did not affirm or ratify any promise or conduct by either RRA or MCMC as to TUH's charges for the inpatient hospital services provided to A.L. Amtrak asserts that it “promptly disavowed and clearly repudiated” any purported agreement by RRA or MCMC to pay for the services provided to A.L. Amtrak Br. at 3, 10. Amtrak also maintains: “At no time did Amtrak manifest any intention to pay A.L.'s bill or act in any way inconsistent with its disaffirmance as to paying A.L.'s bill.” Id. at 10 (internal quotation marks and alteration omitted). Furthermore, Amtrak contends that its payment of the charges billed for the other 13 injured passengers, “did not obligate Amtrak to pay A.L.'s bill.” Id.

         RRA and MCMC seek dismissal of TUH's claim for breach of contract based principally on two asserted defects. R&M Br. (ECF 37 at 3-18). They maintain that TUH has not alleged the existence of an enforceable contract. Id. at 2, 8-12. Specifically, they maintain that the Complaint does not allege any facts that would constitute consideration for the pled agreement to pay for the inpatient hospital services provided by TUH to A.L. This is so, they maintain, because the Complaint alleges, and the parties do not dispute, that TUH had already provided the services to all 14 of the hospital inpatients at the time the Letter was signed. RRA and MCMC maintain that past consideration, as a matter of law, cannot support an enforceable contract. Id. And, ...


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