Scroggins v. LifePoint Health
MEMORANDUM OPINION AND ORDER: it is ORDERED that the motion for summary judgment (Doc. # 16 ) is DENIED. Signed by Chief Judge William Keith Watkins on 2/7/2017. (kh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
MARILYN R. SCROGGINS,
on behalf of herself and others
) CASE NO. 2:16-CV-338-WKW
MEMORANDUM OPINION AND ORDER
Before the court is Defendant’s motion to dismiss for lack of subject matter
jurisdiction (Doc. # 16), which was converted to a motion for summary judgment
(Doc. #18). Plaintiff responded in opposition (Doc. # 21), and Defendant replied.
(Doc. # 22). Having considered the motion, the court concludes that it is due to be
JURISDICTION AND VENUE
The court exercises jurisdiction pursuant to 28 U.S.C. § 1332(d)(2)(A). The
parties do not contest personal jurisdiction or venue.
STANDARDS OF REVIEW
Subject Matter Jurisdiction
A Rule 12(b)(1) motion challenges the district court’s subject matter
jurisdiction and takes one of two forms: a “facial attack” or a “factual attack.” A
“facial attack” on the complaint “require[s] the court merely to look and see if the
plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the
allegations in his complaint are taken as true for the purposes of the motion.”
Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990). In contrast, “factual
attacks” challenge “the existence of subject matter jurisdiction in fact, irrespective
of the pleadings, and matters outside the pleadings, such as testimony and
affidavits, are considered.” Id.
These two forms of attack are significantly different. When an attack is
facial, “a plaintiff is afforded safeguards similar to those provided in opposing a
Rule 12(b)(6) motion—the court must consider the allegations in the complaint to
be true.” Id. However, on a factual attack,
the trial court may proceed as it never could have under 12(b)(6) or
Fed. R. Civ. P. 56. Because at issue in a factual 12(b)(1) motion is
the trial court’s jurisdiction—its very power to hear the case—
there is substantial authority that the trial court is free to weigh the
evidence and satisfy itself as to the existence of its power to hear
the case. In short, no presumptive truthfulness attaches to the
plaintiff’s allegations, and the existence of disputed material facts
will not preclude the trial court from evaluating for itself the merits
of the jurisdictional claims.
Id. (quoting Williamson v. Tucker, 645 F.2d 404, 412–13 (5th Cir. 1981)1). In this
case, the defendant’s attack is factual. (Doc. # 16 at 5.)
However, despite the less deferential standard that typically applies to a
See Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc) (adopting as
binding precedent all of the decisions of the former Fifth Circuit handed down prior to the close
of business on September 30, 1981).
factual attack, a different standard applies when the defendant’s attack also
implicates an element of the cause of action. In such cases,
the proper cause of action for the district court . . . is to find that
jurisdiction exists and deal with the objections as a direct attack on
the merits of the plaintiff’s case. . . . This refusal to treat indirect
attacks on the merits as Rule 12(b)(1) motions provides, moreover,
a greater level of protection to the plaintiff who in truth is facing a
challenge to the validity of his claim: the defendant is forced to
proceed under Rule 12(b)(6) . . . or Rule 56 . . . both of which
place great restrictions on the district court’s discretion.
Id. (quoting Williamson, 645 F.2d at 415–16).
To succeed on summary judgment, the movant must demonstrate “that there
is no genuine dispute as to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). “[T]he court must view the
evidence and the inferences in the light most favorable to the nonmovant.” JeanBaptiste v. Gutierrez, 627 F.3d 816, 820 (11th Cir. 2010).
The party moving for summary judgment “always bears the initial
responsibility of informing the district court of the basis for the motion.” Celotex
Corp. v. Catrett, 477 U.S. 317 (1986). This responsibility includes identifying the
portions of the record illustrating the absence of a genuine dispute of material fact.
Id. Alternatively, a movant who does not have a trial burden of production can
assert, without citing the record, that the nonmoving party “cannot produce
admissible evidence to support” a material fact. Fed. R. Civ. P. 56(c)(1)(B); see
also Fed. R. Civ. P. 56 advisory committee’s note (“Subdivision (c)(1)(B)
recognizes that a party need not always point to specific record materials. . . . [A]
party who does not have the trial burden of production may rely on a showing that
a party who does have the trial burden cannot produce admissible evidence to carry
its burden as to the fact.”).
If the movant meets its burden, the burden shifts to the nonmoving party to
establish—with evidence beyond the pleadings—that a genuine dispute material to
each of its claims for relief exists. Celotex, 477 U.S. at 324. A genuine dispute of
material fact exists when the nonmoving party produces evidence allowing a
reasonable fact finder to return a verdict in its favor. Waddell v. Valley Forge
Dental Assocs., 276 F.3d 1275, 1279 (11th Cir. 2001). On the other hand, “[i]f the
evidence is merely colorable or is not significantly probative, summary judgment
may be granted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50 (1986).
“A mere ‘scintilla’ of evidence supporting the [nonmovant’s] position will
not suffice; there must be enough of a showing that the [trier of fact] could
reasonably find for that party,” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.
1990), and the nonmoving party “must do more than simply show that there is
some metaphysical doubt as to the material facts,” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986). Conclusory allegations based on
subjective beliefs are likewise insufficient to create a genuine dispute of material
fact and do not suffice to oppose a motion for summary judgment. Holifield v.
Reno, 115 F.3d 1555, 1564 n.6 (11th Cir. 1997). Hence, when a non-movant fails
to set forth specific facts supported by appropriate evidence sufficient to establish
the existence of an element essential to his case and on which the non-movant will
bear the burden of proof at trial, summary judgment is due to be granted in favor of
the moving party. Celotex Corp., 477 U.S. at 323.
On May 19, 2015, Plaintiff Marilyn Scroggins and her husband, David
Scroggins, were involved in an automobile accident in Covington County,
Alabama. Ms. Scroggins was transported by ambulance to Andalusia Regional
Hospital (“ARH”) in Andalusia, Alabama, for treatment of injuries sustained in the
accident. Defendant LifePoint Health (“Lifepoint”), a for-profit corporation, owns
and operates Andalusia Regional Hospital.
When Ms. Scroggins arrived at Andalusia Regional Hospital, she was
disoriented from the accident and her injuries, and she was given medication that
caused her to be further disoriented. (Doc. # 21-2 at ¶ 3.) A female hospital
employee wearing what appeared to be a nurse’s uniform asked David Scroggins
for Ms. Scroggins’s insurance information. (Doc. # 21-1 at ¶ 2.) David Scroggins
gave the employee Ms. Scroggins’s insurance card for a healthcare policy through
United Healthcare Insurance (”UHC”). (Doc. # 21-1 at ¶ 2.) The employee
informed David Scroggins that she needed to make a copy of the card, left the
room with the card, and later returned the card to him. (Doc. # 21-1 at ¶ 2.)
Defendant Lifepoint has submitted the affidavit of Donna Airhart Waters,
Lifepoint’s Vice President of Revenue Cycle operations, who stated that she
looked at Ms. Scroggins’s hospital records and that, on a hospital intake form, Ms
Scroggins listed her automobile insurer, but not her health insurer. (Doc. # 16-1 at
¶¶ 5–6.) Lifepoint did not submit a copy of the intake forms to which Ms. Waters
referred.2 Lifepoint contends that, because Ms. Scroggins did not state on the
intake forms that she had healthcare insurance, Lifepoint was unaware of the
existence of her health insurance when it billed only her auto insurer for the
hospital treatment cost.
Lifepoint billed Allstate, Ms. Scroggins’s automobile insurer, for the
$11,740.75 undiscounted balance of Ms. Scroggins’s hospital bill. Allstate paid
$5,000.00 of the bill, leaving a balance of $6,740.75.
On August 10, 2015,
Lifepoint filed a hospital lien in the Covington County Probate Court for the
After Ms. Scroggins was released from the hospital, she filed a personal
injury suit for damages arising from the accident. On December 23, 2015, Ms.
Scroggins’s personal injury attorney, Earl W. Long, IV, provided notice of Ms.
Scroggins’s health insurance to MRA, Lifepoint’s third party vendor handling
patient accounts that are to be paid partially or entirely by automobile insurers.
The evidence submitted by Lifepoint underscores the need for discovery prior to
resolving the factual disputes presented in the motion, including an opportunity for discovery of
the original intake record to which Ms. Waters referred.
(Doc. # 16-1 at ¶ 8.) Subsequently, Parallon, Lifepoint’s third party vendor for
patient accounts paid partially or entirely by health insurance, billed UHC for the
undiscounted balance on the account. (Doc. # 16-1 at ¶ 8.) UHC denied the claim
on grounds of untimely notice, and on grounds that the amount it would have paid
on the bill was equal to or less than the $5,000.00 already paid by Allstate. (Doc. #
16-1 at ¶ 9.) On March 7, 2016, after UHC denied coverage, Lifepoint wrote off
the remaining balance on Ms. Scroggins’s account.3 (Doc. # 16-1 at ¶ 9.)
Ms. Scroggins’s personal injury suit settled, but the insurers involved would
not provide Ms. Scroggins with the settlement proceeds unless Ms. Scroggins
would agree that the amount of the hospital lien would be paid with settlement
funds. (Doc. # 21-3 at ¶ 4.) Ms. Scroggins agreed because otherwise she would
have been unable to access any of the settlement funds. (Doc. # 21-3 at ¶ 4.) Ms.
Scroggins’s UIM carrier, Allstate, issued a check for $6,740.75 to “Andalusia
Regional Hospital [a.k.a. Lifepoint] and Marilyn Scroggins and Attorney(s) Long
& Long, PC.” (Doc. # 21-3 at 10.) Ms. Scroggins and Long & Long endorsed the
check, and, on May 4, 2016, Mr. Long mailed the endorsed Allstate check to
Andalusia Regional Hospital. (Doc. # 21-3 at 8, 11.)
Meanwhile, on May 12, 2016, Ms. Scroggins filed the instant lawsuit on her
own behalf and on behalf of a putative class. Ms. Scroggins alleges that Lifepoint
has a pattern and practice of failing to properly bill health insurers and of failing to
The record does not contain evidence that, prior to July 19, 2016, Lifepoint notified Ms.
Scroggins that it had written off her account balance.
reflect the health insurer’s negotiated discount on the bill whenever it believes it
can obtain a greater payment from another source by doing so. In Count I of the
complaint, Ms. Scroggins claims that, as a third party beneficiary to the health
insurance contract, she was damaged because she lost or could not access money
she otherwise would have received from her tort recovery and her automobile
insurer. (Doc. # 19 at 11-12.) In Count II, Ms. Scroggins alleges that Lifepoint
was unjustly enriched because “it received and retained the benefit” of the
$6,740.75 from the tort recovery and of the $5,000.00 paid by Allstate as Ms.
Scroggins’s automobile insurer. Ms. Scroggins claims that she is entitled to the
$6,740.75 and that some or all of the $5,000.00 payment would have covered
copays or bills to other healthcare providers. In Counts III and IV, Ms. Scroggins
seeks declaratory judgment and injunctive relief. (Doc. # 19 at 14-15.)
Ms. Scroggins’s complaint was served on Lifepoint on May 16, 2016. On
May 19, 2016, Lifepoint released the hospital lien. (Doc. # 16-1.) On July 19,
2016, Lifepoint filed a motion to dismiss for lack of jurisdiction4 arguing, among
other things, that Ms. Scroggins had no standing because Lifepoint never cashed
the $6,740.75 UIM proceeds check from Allstate. (Doc. # 16.) Also on July 19,
Because the motion to dismiss went to the elements of Ms. Scroggins’s claims, and
because the motion relied on affidavits and documents outside the pleadings, the court converted
the motion to a motion for summary judgment. (Doc. # 18.) See Lawrence, 919 F.2d at 1530
(“When the jurisdictional basis of a claim is intertwined with the merits, the district court should
apply a Rule 56 summary judgment standard when ruling on a motion to dismiss which asserts a
factual attack on subject matter jurisdiction.”). Thereafter, Plaintiff responded in opposition
(Doc. # 21), and Defendant replied (Doc. # 22).
2016,5 Lifepoint’s CFO, Shirley Smith, mailed the $6,740.75 check back to Mr.
Long without endorsing it, enclosed with the following letter:
Dear Mr. Long,
Enclosed please find your check in the amount of $6,740.75 that was
sent to [Lifepoint] on behalf of patient, Marilyn Scroggins. We have
researched her patient account and have confirmed that no additional
payments are due on the account. After learning that Mrs. Scroggins
had commercial health insurance at the time of her admission, we
determined that the hospital had been paid in full for the services she
received and was not due any additional funds. Mrs. Scroggins’s
patient account has a zero balance and, as a result, the hospital lien
has been lifted.
(Doc. # 21-3 at 12-14.)
On July 26, 2016, Mr. Long ping-ponged the check to Lifepoint, explaining
that “the offer of settlement is hereby rejected.”
On August 3, 2016, Lifepoint’s attorney returned serve, sending the check
back to Mr. Long, still not endorsed by Lifepoint,6 enclosed with the following
Dear Mr. Long,
I am in receipt of your letter of July 26, 2016 to Shirley Smith of
[Lifepoint]. As its lawyer in connection with the Scroggins v.
Lifepoint case, please accept this in reply to your letter.
[Lifepoint] cannot accept your firm’s check on behalf of Ms.
Lifepoint’s letter was dated July 19, 2016 and mailed by overnight mail on Wednesday,
July 20, 2016, at 10:30 a.m. (Doc. # 21-3 at 12, 14.)
The $6,740.75 UIM proceed check from Allstate will be void if not presented for
payment on or before April 22, 2016. (Doc. # 21-3 at 18.)
Scroggins, because Ms. Scroggins does not owe [Lifepoint] any
money. Contrary to the view of Ms. Scroggins’s counsel in the class
action, the return of the check was not an attempt to settle that case.
We are not asking, and have not asked, Ms. Scroggins to release any
claim she might have in exchange for the return of the check, nor are
we requesting that she consent to the dismissal of her case (though we
do contend that the case should be dismissed). The funds do not
belong to [Lifepoint] and should be returned for that reason.
Accordingly, your firm’s original check is enclosed.
(Doc. # 21-3 at 17-18.)
Article III of the Constitution “extends the jurisdiction of federal courts to
only ‘Cases” and ‘Controversies.’ ” Strickland v. Alexander, 772 F.3d 876, 882
(11th Cir. 2014). There are “three strands of justiciability doctrine—standing,
ripeness, and mootness—that go to the heart of the Article III case or controversy
requirement.” Harrell v. The Fla. Bar, 608 F.3d 1241, 1247 (11th Cir. 2010)
(citation, internal quotation marks, and alterations omitted). Lifepoint’s motion
implicates standing and mootness. “To satisfy Article III's standing requirements,
a plaintiff must show (1) [she] has suffered an ‘injury in fact’ that is (a) concrete
and particularized and (b) actual or imminent, not conjectural or hypothetical; (2)
the injury is fairly traceable to the challenged action of the defendant; and 3) it is
likely, as opposed to merely speculative, that the injury will be redressed by a
favorable decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC),
Inc., 528 U.S. 167, 180–81 (2000). “A case is moot when it no longer presents a
live controversy with respect to which the court can give meaningful relief.”
Ethredge v. Hail, 996 F.2d 1173, 1775 (11th Cir. 1993).
Lifepoint argues that there is no case or controversy because Lifepoint
allegedly billed Ms. Scroggins’s health insurer as soon as it had notice of the
existence of her health insurance. Therefore, according to Lifepoint, it never
breached the contract with the health insurer or unjustly retained a benefit to which
it was not entitled. Lifepoint’s challenge in this regard is a factual challenge that
goes to the elements of Ms. Scroggins’s claims.7 The evidence is conflicting
regarding the timing of Lifepoint’s actual and/or constructive knowledge of the
existence Ms. Scroggins’s health insurance in relation to the billing of Ms.
Scroggins’s auto and health insurers.
Therefore, with respect to Lifepoint’s
arguments based on the alleged timing of its notice of Ms. Scroggins’s health
insurance, the motion is due to be treated as a summary judgment motion and
denied on grounds that there exists a material factual dispute.
Lifepoint further argues that Ms. Scroggins was never injured by any alleged
unjust enrichment or breach of contract,8 because (1) on March 7, 2016, Lifepoint
See Matador Holdings, Inc. v. HoPo Realty Investments, L.L.C., 77 So. 3d 139, 145-46
(Ala. 2011) (setting forth the elements of an unjust enrichment claim in Alabama, including that
a claim for unjust enrichment exists if “(1) the donor of the benefit . . . acted under a mistake of
fact or in misreliance on a right or duty, or (2) the recipient of the benefit . . . engaged in some
unconscionable conduct, such as fraud, coercion, or abuse of a confidential relationship.”
(citation and internal quotation marks omitted)); Barrett v. Radjabi-Mougadam, 39 So. 3d 95, 98
(Ala. 2009) (setting forth the elements of a breach of contract claim, including the requirement
that the defendant must have breached the contract and that the plaintiff must have been injured
by the breach).
The alleged lack of injury or unjust enrichment goes to the elements of Ms. Scroggins’s
claims. See supra, note 7.
“zeroed out” Ms. Scroggins’s account after Ms. Scroggins’s health insurer denied
her claim; (2) on May 19, 2016, Lifepoint cancelled the hospital lien; and (3) in
July 2016, Lifepoint returned the $6,740.75 Allstate UIM proceed check to Ms.
Scroggins. Therefore, according to Lifepoint, Ms. Scroggins has no standing to
bring this suit, or, alternatively, her claims are moot.
Standing is determined as of the time of the filing of the original complaint.
Cook v. Bennett, 792 F.3d 1294, 1298 (11th Cir. 2015). Ms. Scroggins filed this
lawsuit on May 12, 2016. At that time, Lifepoint had not released the hospital
lien,9 and Ms. Scroggins remained unable to access settlement funds because of the
In addition, Lifepoint was (and still is) in possession of the $5,000.00
proceeds from Allstate’s first check, which Lifepoint admits was either “equal to or
greater than” the amount Ms. Scroggins’s health insurer would have paid, had it
been timely billed. (Doc. # 16-1 at 4.) It is not possible to know at this stage of
discovery whether or to what extent the $5,000.00 exceeded the combined sum of
any copayment plus any payment from the health insurer. Ms. Scroggins argues,
however, that some or all of the $5,000.00 should have been available for copays
or other medical bills arising out of the accident, especially if Lifepoint had billed
her health insurer for her hospital stay and/or had billed her and the insurer in
accordance with the discount due under Lifepoint’s contract with the health
insurer. Based on the limited evidence currently available, it is not possible to
Ms. Scroggins has not alleged that the hospital lien wrongfully injured her credit record
or prevented her from obtaining employment or financing.
state with confidence that, at the time this lawsuit was filed, Ms. Scroggins had not
been injured by a breach of contract or unjust enrichment.
“If events that occur subsequent to the filing of a lawsuit . . . deprive the
court of the ability to give the plaintiff . . . meaningful relief, then the case is moot
and must be dismissed.” Al Najjar v. Ashcroft, 273 F.3d 1330, 1336 (11th Cir.
2001). Lifepoint argues that its cancellation of the lien after the filing of this
lawsuit, combined with its return of the $6,740.75 Allstate UIM proceeds check to
Ms. Scroggins, effectively mooted Ms. Scroggins’s claims by eliminating any
injury to Ms. Scroggins. This argument is unavailing for several reasons. First,
neither party appears to recognize that the $6,740.75 UIM proceeds check was not
a check from her or her attorney; it appears to be a check directly from Allstate to
be drawn on an Allstate account.10 Second, there is some question (1) whether Ms.
Scroggins was deprived of interest that could have been earned on the $6,740.75
before Lifepoint returned it and (2) whether, as a result of Lifepoint’s failure to
endorse the check before returning it, Ms. Scroggins continues to be deprived of
the use of the $6,740.75 on grounds that she cannot cash the check. Third, there is
no explanation in the evidence of why Lifepoint held the check for 10 weeks. In
any event, Lifepoint continues to retain the full amount of the $5,000.00 check
Because the check was from Allstate and not from Lifepoint, there is no factual basis
for the parties’ dispute over whether Lifepoint’s attempt to return the check represents a valid
attempt to moot the named Plaintiff’s claim with a rejected settlement offer. Because the check
is not from Ms. Scroggins or her attorneys, there is also no merit in Lifepoint’s contention that
Ms. Scroggins never lost interest on or use of the money because the funds were supposedly
available to her unless and until Lifepoint cashed the check.
from Allstate, and, as noted above, it is not clear at this stage of discovery whether
proceeds of that check represent unjust enrichment and/or an injury resulting from
breach of contract.
Accordingly, at this time, the motion is due to be denied on grounds that
further discovery is needed and material facts are in dispute. Fed R. Civ. P. 56(a)
(“The court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.”).
Cf. Williamson, 645 F.2d at 415 (“Where the defendant’s
challenge to the court’s jurisdiction is also a challenge to the existence of a federal
cause of action, the proper course of action for the district court . . . is to find that
jurisdiction exists and deal with the objection as a direct attack on the merits of the
plaintiff's case” under Rule 56, where appropriate).
In the event that further discovery reveals an absence of jurisdiction for the
reasons stated in Lifepoint’s motion or for any other reason, the parties are
expected to promptly bring the matter to the court’s attention.
Accordingly, it is ORDERED that the motion for summary judgment (Doc.
# 16) is DENIED.
DONE this 7th day of February, 2017.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
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