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Progenyhealth, Inc. v. Caresource Management Group, Co.

United States District Court, E.D. Pennsylvania

June 16, 2017



          Joyner, J.

         Before the Court are Defendants' Motion to Dismiss (Doc. No. 11), Plaintiff's Response in Opposition thereto (Doc. No. 14), Defendants' Reply in Further Support thereof (Doc. No. 15), and Plaintiff's Sur Reply in Further Opposition thereto (Doc. No. 16). For the reasons below, Defendants' Motion is GRANTED.

         I. Facts [1]

         Defendant CareSource Management Group, Co. (“CareSource”) is a managed health plan provider that contracts with state agencies to provide managed healthcare plans to the public, including to Medicaid and other state-supported healthcare recipients. (Compl. at ¶¶ 10-14). In order to provide adequate services, CareSource regularly enters into subcontractor agreements with specialized vendors. Id. at ¶ 11. For instance, CareSource contracted with ProgenyHealth, Inc. (“ProgenyHealth”), the plaintiff in this case, to provide neonatal medical and case management and utilization management services pursuant to a contract with the State of Ohio. Id. at ¶¶ 7, 12.

         Sometime after contracting with ProgenyHealth to provide services in Ohio, CareSource responded to requests for proposals extended by the Georgia Department of Community Health (the “Georgia RFP”) and the Indiana Family and Social Service Administration (the “Indiana RFP”). CareSource in turn requested that ProgenyHealth submit Letters of Intent that would permit it to use ProgenyHealth's information in their responses to both RFPs. Id. at ¶ 17. In both RFPs, Defendants praised ProgenyHealth for its achievements and depicted ProgenyHealth as its “partner.” Id. at ¶¶ 21, 26, 45. Ultimately, Defendants were awarded the Indiana and Georgia contracts but elected not to enter into a subcontract with ProgenyHealth in either case. Id. at ¶¶ 43, 56.

         Plaintiff alleges that Defendants relied on ProgenyHealth's success and reputation in order to win both the Indiana and Georgia contracts. Id. at ¶¶ 39, 53. ProgenyHealth asserts that by neither retaining it for either contract nor compensating ProgenyHealth for the use of its name and reputation, Defendants were unjustly enriched. Id. at ¶¶ 76, 82.

         ProgenyHealth further alleges that CareSource made promises and misrepresentations to it regarding future dealings under the Indiana and Georgia contracts. Id. at ¶¶ 84, 94. ProgenyHealth asserts that it had 104 meetings with CareSource, many of which centered on the implementation of ProgenyHealth's services under the Indiana and Georgia contracts. Id. at ¶¶ 58-59. ProgenyHealth also points to several email exchanges occurring between September and November 2016, in which CareSource purportedly promised that ProgenyHealth would be involved in the Indiana contract. Id. at ¶ 67. ProgenyHealth refers to a similar group of email exchanges occurring between September 2015 and November 2016, regarding the Georgia contract. Id. at ¶ 64. Then, in March 2016, the parties prepared a draft Delegated Services Agreement, which provided that ProgenyHealth would furnish services under the Georgia contract. Id. at ¶ 65. Likewise, in October 2016, CareSource forwarded a draft Delegated Services Agreement, which departed from the standard contract, for ProgenyHealth to perform services in Indiana. Id. at ¶ 68.

         ProgenyHealth asserts that the numerous meetings, email exchanges, and draft Delegated Services Agreements amount to a promise and representation that Defendants would retain ProgenyHealth to provide services under both the Indiana and Georgia contracts. ProgenyHealth further alleges that it was induced by these promises and representations, at its detriment, to hire and train additional personnel to accommodate the new programs in Indiana and Georgia. Id. at ¶ 70. Against this backdrop, ProgenyHealth brings suit against CareSource, CareSource Indiana, and CareSource Georgia (“Defendants”), alleging promissory estoppel, negligent misrepresentation, and fraudulent misrepresentation claims.

         II. Standard

         Federal Rule of Civil Procedure 12(b)(6) requires a court to dismiss a complaint if the plaintiff has failed to “state a claim on which relief can be granted.” In evaluating a motion to dismiss, the court must take all well-pleaded factual allegations as true, but it is not required to blindly accept “a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Although a plaintiff is not required to plead detailed factual allegations, the complaint must include enough facts to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In conducting this evaluation, the court is permitted to consider exhibits attached to the complaint as well as the complaint itself. Fed.R.Civ.P. 10(c).

         In conducting this analysis, the “court must take note of the elements a plaintiff must plead to state a claim.” Santiago v. Warminister Twp., 629 F.3d 121, 130 (3d Cir. 2010)(internal quotations and alterations omitted). The court should then “identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. “Finally, where there are well pleaded-factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.” Id.

         III. Discussion

         (A) Unjust Enrichment (Counts I and II)

         Under Pennsylvania law, a plaintiff may recover for unjust enrichment by proving: “[1] benefits conferred on defendant by plaintiff, [2] appreciation of such benefits by defendant, [3] and acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of ...

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