Superior MRI Services, Inc. v. Alliance Healthcare Services, Inc. et al

Filing 60

MEMORANDUM OPINION re 59 Order on Motion to Dismiss. Signed by District Judge Sharion Aycock on 1/24/2014. (psk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION
SUPERIOR MRI SERVICES, INC., and
SUPERIOR MRI SERVICES, INC. as
Successor-in-Interest of P & L
CONTRACTING, INC.
V.

PLAINTIFFS
CAUSE NO.: 3:12CV113-SA-SAA

ALLIANCE HEALTHCARE SERVICES,
INC., formerly ALLIANCE IMAGING, INC.,
and D/B/A ALLIANCE IMAGING and
ALLIANCE IMAGING, INC., and
JOHN DOES DEFENDANTS I THROUGH X

DEFENDANTS

MEMORANDUM OPINION
Defendant Alliance Healthcare Services (Alliance) seeks dismissal of this case pursuant
to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). In particular, Alliance asserts that
Superior MRI Services, Inc., (Superior) lacks standing to assert any allegations as it is not a
successor-in-interest to P&L Contracting. Because Superior MRI Services, Inc. was not in
existence at the time P&L Contracting dissolved, the contracts at issue could not have been
legally assigned to Superior. Therefore, Superior MRI Services has no standing to pursue claims
on behalf of P&L Contracting. Moreover, Plaintiff has failed to state a claim for which relief can
be granted. For the reasons listed below, the Motion to Dismiss [9] is GRANTED.
Factual and Procedural Background
P&L Contracting, Inc. was created in October of 2006 and offered mobile MRI Imaging
Services to Mississippi hospitals as approved by the Mississippi Department of Health. While
operational, P&L executed contracts with several hospitals, including Yalobusha General
Hospital, King’s Daughter Hospital, Sharkey-Issaquena Community Hospital, South Sunflower
County Hospital, North Sunflower County Hospital, Tri-Lakes Hospital, Stone County Hospital,

and Tallahatchie General Hospital. P&L entered bankruptcy in January of 2012, and formally
dissolved on November 15, 2012.

In its bankruptcy filings, P&L claims it assigned its

outstanding MRI Service Agreements to Superior MRI Services as of October 1, 2011.
According to the Mississippi Secretary of State records, however, Superior MRI Services, Inc.,
was not incorporated until November 28, 2011.
The Complaint filed by Superior alleges that Alliance acquired an unfair advantage in
placing mobile scanners as fixed sites and in not complying with the Mississippi Certificate of
Need laws. Moreover, Superior claims that Alliance tortiously interfered with its business
relations by violating the Mississippi State Board of Health rules and regulations with regards to
Certificates of Need, tortiously interfered with contracts, and violated the Federal Trade
Commission Act.

Plaintiff additionally seeks injunctive relief due to Alliance’s alleged

violations of Board of Health regulations.
Alliance contends the Complaint must be dismissed as there is no individual right of
action provided by the Federal Trade Commission Act or the Mississippi Certificate of Need
laws; Superior lacks standing to assert tortious interference claims on behalf of P&L
Contracting; and no injunctive or equitable relief is available.
Motion to Dismiss Standard
When considering a motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6), the Court accepts the plaintiff’s factual allegations as true and makes reasonable
inferences in the plaintiff’s favor. Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L.
Ed. 2d 868 (2009). The complaint must contain “more than an unadorned, the defendantunlawfully-harmed-me accusation,” but need not have “detailed factual allegations.” Id., 129 S.
Ct. 1937 (citation and quotation marks omitted). The plaintiff’s claims must also be plausible on

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their face, which means there is “factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id., 129 S. Ct. 1937 (citation
omitted). The Court need not accept as true “[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements.” Id., 129 S. Ct. 1937 (citation omitted).
Discussion and Analysis
Alliance contends that Superior MRI Services, Inc., has no standing to assert the tortious
interference claims on behalf of P&L Contracting. The three requirements of Article III standing
are familiar: the plaintiffs must allege an injury in fact that is fairly traceable to the defendant’s
conduct and is likely to be redressed by a favorable ruling. See, e.g., Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992); Nat’l Solid Waste
Mgmt. Ass’n v. Pine Belt Reg’l Solid Waste Mgmt. Auth., 389 F.3d 491, 498 (5th Cir. 2004);
Procter & Gamble Co. v. Amway Corp., 242 F.3d 539, 560 (5th Cir. 2001).
This Plaintiff satisfies those requirements. Superior alleges it has lost business due to
Alliance’s supposed disregard of the Mississippi Certificate of Need laws, and an award of
damages could remedy that loss. Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787 (5th
Cir. 2011). However, even where Article III standing requirements are satisfied, prudential
considerations require that a party “generally must assert [its] own legal rights and interests, and
cannot rest [its] claim to relief on the legal rights or interests of third parties.” Warth v. Seldin,
422 U.S. 490, 499, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975). The goal of the prudential standing
requirements is to “determine whether the plaintiff ‘is a proper party to invoke judicial resolution
of the dispute and the exercise of the court’s remedial powers.’” Procter & Gamble, 242 F.3d at
560 (quoting Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 106 S. Ct. 1326, 1334 n.8,
89 L. Ed. 2d 501 (1986)). “These judicially created limits concern whether a plaintiff’s grievance

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arguably falls within the zone of interests protected by the statutory provision invoked in the suit,
whether the complaint raises abstract questions or a generalized grievance more properly
addressed by the legislative branch, and whether the plaintiff is asserting his or her own legal
rights and interests rather than the legal rights and interests of third parties.” Procter & Gamble,
242 F.3d at 560. Unlike a dismissal for lack of constitutional standing, which should be granted
under Rule 12(b)(1), a dismissal for lack of prudential or statutory standing is properly granted
under Rule 12(b)(6). See Blanchard 1986, Ltd. v. Park Plantation, LLC, 553 F.3d 405, 409 (5th
Cir. 2008).
Alliance contends that because there was no valid assignment of rights in the applicable
contracts from P&L to Superior MRI and there was no valid merger, Superior MRI has no
standing to contest any alleged interference with those contracts.
P&L Contracting was created in October of 2006, and according to the Mississippi
Secretary of State records, was dissolved on November 15, 2012. A bankruptcy action filed on
P&L Contracting’s behalf lists its MRI Service Agreements as assigned to Superior MRI
Services on October 1, 2011. Superior MRI Services, however, was not in existence on October
1, 2011. Indeed, that entity was created pursuant to the Articles of Incorporation on November
28, 2011. See Miss. Code Ann. § 79-4-2.03 (providing that “[u]nless a delayed effective date is
specified, the corporate existence begins when the articles of incorporation are filed.”). No other
evidence of assignment has been produced or asserted by Superior MRI.1 Indeed, the Complaint
states only that Superior MRI is a “successor in interest” without providing further explanation.

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Although the contracts attached to Plaintiff’s Response are outside the record for purposes of a 12(b)(6) motion,
the Court notes that the language in those contracts provides that the contracts “shall not be assignable by P&L
Contracting without prior written consent of” the contracting hospitals. Superior has failed to include any written
permission for assignments from P&L Contracting to Superior MRI for MRI services.

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Superior does, however, contend in response to the Motion to Dismiss that P&L
Contracting and Superior MRI were merged, and that merger was recognized by the Department
of Health.

However, no Plan of Merger or Articles of Merger have been filed with the

Mississippi Secretary of State evidencing such action. See Miss. Code Ann. §§ 79-4-11.02,
11.06 (requiring a plan of merger and articles of merger once completed to be filed with the
Mississippi Secretary of State). Moreover, Plaintiff has failed to put forth case law or other
authority that the Department of Health’s acknowledgment that a merger was ongoing is
conclusive as to their legal status. Accordingly, the Court finds no evidence in the public record
for the conclusion that Superior MRI has prudential standing to enforce the rights of P&L
Contracting in this cause of action.2 Therefore, all claims of P&L Contracting are dismissed and
Superior MRI Services, as successor in interest of P&L Contracting, Inc., is dismissed as a party
plaintiff.
To the extent that Superior MRI Services has pled a cause of action for tortious
interference with business relations or contract on its own behalf, the Court also dismisses those
claims.

Plaintiff lists three instances it contends were affected by Alliance’s conduct: (1) Tri-

Lakes Hospital’s termination of Plaintiff’s contract on November 17, 2011; (2) a proposed
contract to North Mississippi Medical Center-Eupora in February of 2009; and (3) a proposed
contract to North Mississippi Medical Center-Clay County, which was not accepted. As noted
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Plaintiff also puts forth evidence that John Park and David Dunigan, the incorporators of Superior MRI
Services “met and [b]egan acting on behalf of Superior MRI Services” in September of 2011 by applying
for an IRS assigned Employer Identification Number and opening a checking account in Superior MRI
Services’ name. However, the Court finds further support for the position that there is no prudential
standing for Superior in the statutory provision that hold persons purportedly act as or on behalf of a
corporation, where there has been no incorporation under the Mississippi Business Corporation Act,
“jointly and severally liable for all liabilities created while so acting.” Miss. Code Ann. § 79-4-2.04.
Therefore, pre-incorporation activity by individuals is not ratified as a corporate undertaking by the
corporation once incorporated. Thus, those actions taken by the individuals, who in September of 2011,
were “discuss[ing] the formation of Superior MRI Services, Inc.” did not a corporation make.

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above, Superior MRI was not in existence on November 17, 2011 or February of 2009, therefore,
the Plaintiff in this case was not a party in interest to those contracts. No date is given for the
proposed Clay County contract.
Regardless of whether Superior MRI was a party in interest to the contracts and
prospective contracts, Plaintiff has failed to state a claim for which relief can be granted. Rule 8
of the Federal Rules of Civil Procedure sets out the fundamental pleading standard for civil
litigation and governs all claims in a civil suit, requiring “a short plain statement of the claim
showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). “A plaintiff’s obligation to
provide the ‘grounds of his ‘entitle[ment] to relief’ requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S.
at 555, 127 S. Ct. 1955. Factual allegations must be enough to raise a right to relief above the
speculative level. Id. Although the Supreme Court in Twombly stressed that it did not impose a
probability standard at the pleading stage, the allegation of a mere possibility of relief does not
satisfy the threshold requirement of Rule 8(a)(2) that the “plain statement” of a claim include
factual “allegations plausibly suggesting (not merely consistent with)” an entitlement to relief.
Id. at 557, 127 S. Ct. 1955; see also Ashcroft v. Iqbal, 556 U.S. 662, 684, 129 S. Ct. 1937, 173 L.
Ed. 2d 868 (2009).
To state a claim for tortious interference with a business relationship under Mississippi
law, a plaintiff must show that: (1) the acts were intentional and willful; (2) that they were
calculated to cause damage to the plaintiffs in their lawful business; (3) that they were done with
the unlawful purpose of causing damage and loss, without right or justifiable cause on the part of
the defendant (which constitutes malice); and (4) that actual damage or loss resulted. O.W.O.
Invs., Inc. v. Stone Inv. Co., Inc., 32 So. 3d 439, 448-49 (Miss. 2010); Biglane v. Under the Hill

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Corp., 949 So. 2d 9, 15-16 (Miss. 2007). The Mississippi Supreme Court derived these factors
from the similar tort of wrongful interference with contract. Par Indus., Inc. v. Target Container
Co., 708 So. 2d 44, 48-49 (Miss. 1998). Whether the defendant’s acts were intentional or willful
does not require an outright confession to that effect, but rather may be inferred. Id. at 48 (citing
Liston v. Home Ins. Co., 659 F. Supp. 276, 281 (S.D. Miss. 1986)). Regarding tortious
interference with contract, the district court stated that “the requisite intent is inferred when
defendant knows of the existence of a contract and does a wrongful act without legal or social
justification that he is certain or substantially certain will result in interference with the contract.”
Liston, 659 F. Supp. at 281. “Because the actions for tortious interference with contract and with
business relations have identical elements, we can apply the Liston test for intentional or willful
conduct to the claim of tortious interference with business: (1) knowledge, (2) action, and (3)
substantial certainty.” Amsouth Bank v. Gupta, 838 So. 2d 205, 214 (Miss. 2002).
Plaintiff’s Complaint mentions the proposed contracts with North Mississippi-Eupora and
Clay County, and then claims in a conclusory fashion that Superior MRI did not receive those
contracts because Alliance offered to set up mobile scanners at those sites full time in violation
of the Mississippi Certificate of Need laws. This type of pleading does not comply with Iqbal
and Twombly. In particular, Plaintiff fails to overcome the plausibility burden imposed by those
cases. Plaintiff enumerates the elements of the torts but fails to make factual, not conclusory,
allegations regarding at least the first two prongs – that the conduct was willful and intentional
and calculated to bring about damage to the Plaintiff’s business. Accordingly, Counts I and II of
Plaintiff’s Complaint are dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).
Plaintiff attempts to additionally bring a cause of action under the Federal Trade
Commission Act. As the Fifth Circuit has explained, “[T]here is no private cause of action for

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violation of the FTC Act.” Fulton v. Hecht, 580 F.2d 1243, 1248 n.2 (5th Cir. 1978).
Accordingly, Count III is also dismissed.
Further, Plaintiff bases her tortious interference claims and her request for injunctive
relief on the allegation that Alliance failed to comply with the Mississippi Certificate of Need
regulations. As noted by the Mississippi Supreme Court, “a mere violation of a statute or
regulation will not support a claim where no private cause of action exists.” Tunica County v.
Gray, 13 So. 3d 826, 829 (Miss. 2009). “[T]he general rule for the existence of a private right of
action under a statute is that the party claiming the right of action must establish a legislative
intent, express or implied, to impose liability for violations of that statute.” Doe v. State ex rel.
Miss. Dep’t of Corrections, 859 So. 2d 350, 355 (Miss. 2003). Indeed, the Mississippi Supreme
Court has declined to find a “private right of action for violations of various statutes and
regulations” in the absence of legislative intent.” Id. The Plaintiff has failed to establish that the
legislature intended to create a private right of action under the Certificate of Need regulations.
In fact, Plaintiff has indicated that it has participated in the administrative process by filing a
complaint with the State Board of Health.
In order to determine if a private cause of action exists under a statute, the Court must
first look to the language of the statute and any relevant legislative history in order to ascertain
the legislative intent. Gray, 13 So. 3d at 830. The Mississippi Code grants authority to the State
Department of Health to issue certificates of need for health care facilities and major medical
equipment.

The State Department of Health is also tasked with adopting and utilizing

procedures for conducting certificate of need reviews. Miss. Code Ann. § 41-7-197(1). The
procedures require notice sent from the State Department of Health, a hearing conducted by a
designated hearing officer, sworn testimony, and representation by counsel. Id. The State Health

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Officer makes all final decisions. The statute additionally contemplates judicial appeals of the
State Health Officer’s written findings. Miss. Code Ann. § 41-7-197(3). “The [Certificate of
Need] statutory scheme provides an administrative remedy followed by judicial review. Absent
extraordinary circumstances, we regard such procedural remedies a party’s exclusive route of
redress for administrative grievances.” Durant v. Humphreys County Mem. Hosp., 587 So. 2d
244, 252 (Miss. 1991). As noted above, Plaintiff has instituted an administrative claim against
Alliance, and has alerted the State Department of Health as to the violations of the Certificate of
Need laws it feels that Alliance has committed. Thus, Plaintiff’s sole remedy is through the
administrative process outlined under Title 41 of the Mississippi Code. Plaintiff’s claims are
dismissed.
Conclusion
Plaintiff has failed to state a claim upon which relief can be granted. Plaintiff has not put
forth any allegations or facts rebutting that they are indeed a successor in interest to P&L
Contracting. Further, Plaintiff’s tortious interference claims do not surpass the plausibility
burden imposed by Iqbal and Twombly. The Mississippi Certificate of Needs laws and the
Federal Trade Commission Act cannot be enforced through private causes of action.
Accordingly, for these reasons, Plaintiff’s complaint must be dismissed.
SO ORDERED, this the 24th day of January, 2014.
/s/ Sharion Aycock_________
U.S. DISTRICT JUDGE

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