United States District Court, E.D. Pennsylvania
TEMPLE UNIVERSITY HOSPITAL, INC.
RUSSELL REIMBURSEMENT ADVISORS, INC., et al.
Legrome D. Davis, J.
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. 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,
Jurisdiction is diversity, 28 U.S.C. § 1332.
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).
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.
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.
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
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.
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).
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.
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.
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.
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.”
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.
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.
Allegations of the Second Amended Complaint and the
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.
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.
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.
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.
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.”).
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
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.