Wesley Health System, LLC v. Forrest County Board of Supervisors et al
Filing
43
ORDER granting in part and denying in part Forrest County Board of Supervisors' 25 Motion to Dismiss; granting Wade Spruill's 27 Motion to Dismiss; denying AAA Ambulance Service's 29 Motion to Dismiss; and deferring ruling on Spruill's 36 Motion for Sanctions. Signed by District Judge Keith Starrett on October 9, 2012 (dsl)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION
WESLEY HEALTH SYSTEM, LLC
d/b/a WESLEY MEDICAL CENTER
V.
PLAINTIFF
CIVIL ACTION NO. 2:12-CV-59-KS-MTP
FORREST COUNTY BOARD OF
SUPERVISORS d/b/a FORREST GENERAL
HOSPITAL, et al.
DEFENDANTS
MEMORANDUM OPINION AND ORDER
For all the reasons stated below, the Court grants in part and denies in part
the Motion to Dismiss [25] filed by the Forrest County Board of Supervisors,1 grants
the Motion to Dismiss [27] filed by Wade Spruill, and denies the motion to dismiss
[29] filed by AAA Ambulance Service. Finally, the Court stays consideration of Spruill’s
Motion for Sanctions [36].
I. BACKGROUND
Plaintiff Wesley Medical Center alleges that Defendants – Forrest General
Hospital, Wade Spruill, and AAA Ambulance Service – conspired to divert patients
from Wesley to Forrest General. Plaintiff alleges that the Defendants ignored patients’
desire to receive medical services at Wesley, intentionally falsified medical records to
justify transporting patients to Forrest General, fraudulently obtained a
disproportionate share of trauma funds from the State of Mississippi, intentionally
1
Throughout this opinion, the Court will refer to the Board of Supervisors as
“Forrest General Hospital” or “Forrest General.”
interfered with Wesley’s business practices, defamed Wesley by making false
statements about the quality and type of services it offered, and ignored Mississippi’s
Trauma System destination guidelines. Plaintiff asserted claims under the Racketeer
Influenced and Corrupt Organizations (“RICO”) Act,2 claims under the Sherman Act,3
civil conspiracy, intentional interference with business relations, and defamation.
II. FORREST GENERAL’S MOTION TO DISMISS [25]
“Motions to dismiss under Rule 12(b)(6) are viewed with disfavor and are rarely
granted.” Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009) (punctuation
omitted). “To survive a Rule 12(b)(6) motion to dismiss, [a plaintiff’s complaint] need
only include a short and plain statement of the claim showing that the pleader is
entitled to relief.” Hershey v. Energy Transfer Partners., L.P., 610 F.3d 239, 245 (5th
Cir. 2010) (punctuation omitted). However, the “complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.”
Great Lakes Dredge & Dock Co. LLC v. La. State, 624 F.3d 201, 210 (5th Cir. 2010)
(punctuation omitted).
“To be plausible, the complaint’s factual allegations must be enough to raise a
right to relief above the speculative level.” Id. (punctuation omitted). “The complaint
need not contain detailed factual allegations, but must state more than mere labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
2
18 U.S.C. § 1861, et seq.
3
15 U.S.C. § 1, et seq.
2
PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 615 F.3d 412, 417 (5th Cir. 2010)
(punctuation omitted). When determining whether a plaintiff has stated a valid claim
for relief, the Court must “accept all well-pleaded facts as true and construe the
complaint in the light most favorable to the plaintiff.” Great Lakes Dredge & Dock Co.
LLC, 624 F.3d at 210. However, the Court will not accept as true “conclusory
allegations, unwarranted factual inferences, or legal conclusions.” Id. Legal conclusions
may provide “the complaint’s framework, [but] they must be supported by factual
allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 664, 129 S. Ct. 1937, 1940, 173 L. Ed. 2d
868 (2009). A plaintiff must provide more than “threadbare recitals of a cause of
action’s elements, supported by mere conclusory statements, which do not permit the
court to infer more than the mere possibility of misconduct.” Hershey, 610 F.3d at 246
(punctuation omitted).
Of course, a “party may state as many separate claims . . . as it has, regardless
of consistency.” FED. R. CIV. P. 8(d)(3). The goal of this rule is “to afford a flexible
procedural basis to permit full presentation of all relevant facts and legal theories at
trial and to facilitate the final settlement of the dispute on its merits at that trial.” Am.
Bridge Div., U.S. Steel Corp. v. Director, Office of Workers’ Compensation Programs,
679 F.2d 81, 83 (5th Cir. 1982). Accordingly, plaintiffs may plead contradictory grounds
for relief. See Tenn. Gas Pipeline Co. v. Miss. Cent. R.R. Co., 164 F. Supp. 2d 823, 82829 (N.D. Miss. 2001). This principle has bearing on the present case insofar as Plaintiff
pled both that Forrest General merely owns an interest in AAA, and that Forrest
General controls AAA. Rule 8 permits such contradictory pleading.
3
A.
RICO
“RICO creates a civil cause of action for any person injured in his business or
property by reason of a violation” of 18 U.S.C. § 1962. Davis-Lynch, Inc. v. Moreno, 667
F.3d 539, 550 (5th Cir. 2012). “Reduced to its three essentials, a civil RICO claim must
involve: (1) a person who engages in (2) a pattern of racketeering activity (3) connected
to the acquisition, establishment, conduct, or control of an enterprise.” Huntington
Nat’l Bank v. McCann, 268 F. App’x 359, 365 (5th Cir. 2008). To establish that
Defendants engaged in a “pattern of racketeering activity,” Plaintiff must show that
Defendants committed at least two acts of racketeering activity, as defined by 18
U.S.C. § 1961(1). 18 U.S.C. § 1961(1), (5). Forrest General argues that it is immune
from civil RICO liability because it is a government entity and, therefore, incapable of
forming the specific intent necessary to commit any of the predicate acts alleged by
Plaintiff.
Forrest General is a subdivision of Forrest County, Mississippi. See Enroth v.
Memorial Hosp. at Gulfport, 566 So. 2d 202, 206 (Miss. 1990); Martin v. Memorial
Hosp., 86 F.3d 1391, 1399 (5th Cir. 1996). Substantial authority exists for the
proposition that government entities are incapable of forming malicious intent.4
4
See Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 404
(9th Cir. 1991); Andrade v. Chojnacki, 65 F. Supp. 2d 431, 449 (S.D. Tex. 1999);
County of Oakland by Kuhn v. Detroit, 784 F. Supp. 1275, 1283 (E.D. Mich. 1992);
Smallwood v. Jefferson County Gov’t, 743 F. Supp. 502, 504 (W.D. Ky. 1990);
Massey v. Oklahoma City, 643 F. Supp. 81, 85 (W.D. Okla. 1986); Dale v. State of
Mo. Governor Jay Nixon’s Office, 2011 U.S. Dist. LEXIS 50304, at *7-*8 (S.D. Tex.
May 10, 2011).
4
However, Plaintiff alleged that Defendants committed at least ten acts of kidnapping.
In Mississippi, “[k]idnapping is not a specific intent crime.” Milano v. State, 790 So. 2d
179, 187 (Miss. 2001); see also Williams v. Puckett, 2000 U.S. Dist. LEXIS 22998, at *15
(S.D. Miss. July 20, 2000). “[I]t is sufficient that the surrounding circumstances
resulted in a way to effectively become a kidnapping as opposed to the actual intent to
kidnap.” Id. Therefore, Forrest General’s inability to form specific malicious intent is
irrelevant to the kidnapping allegations.
B.
Sherman Act
Section 1 of the Sherman Act provides: “Every contract, combination in the form
of trust or otherwise, or conspiracy, in restraint of trade or commerce among the
several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. To state
a claim under Section 1 of the Sherman Act, “a plaintiff must show that the defendants
(1) engaged in a conspiracy (2) that restrained trade (3) in a particular market.” Tunica
Web Adver. v. Tunica Casino Operators Ass’n, 496 F.3d 403, 409 (5th Cir. 2007)
(punctuation omitted).
1.
Intra-Corporate Conspiracy
First, Forrest General argues that it is incapable of conspiring with the other
Defendants because it owns and/or controls them. “Section 1 of the Sherman Act . . .
reaches unreasonable restraints of trade effected by a contract, combination or
conspiracy between separate entities. It does not reach conduct that is wholly
unilateral.” Copperweld Corp. v. Independence Tube Corp., 467 US. 752, 768, 104 S. Ct.
2731, 81 L. Ed. 2d 628 (1984) (punctuation omitted).
5
[A]n internal “agreement” to implement a single, unitary firm’s policies
does not raise the antitrust dangers that § 1 was designed to police. The
officers of a single firm are not separate economic actors pursuing
separate economic interests, so agreements among them do not suddenly
bring together economic power that was previously pursuing divergent
goals.
Id. at 769, 104 S. Ct. 2731. Therefore, “officers or employees of the same firm do not
provide the plurality of actors imperative for a § 1 conspiracy.” Id. Likewise, “§ 1 is not
violated by the internally coordinated conduct of a corporation and one of its
unincorporated divisions,” Id. at 770, 104 S. Ct. 2731, and “the coordinated activity of
a parent and its wholly owned subsidiary must be viewed as that of a single enterprise
for purposes of § 1 of the Sherman Act.” Id. at 771. Coordination among such parties
“does not represent a sudden joining of two independent sources of economic power
previously pursuing separate interests.” Id.
“[S]ubstance, not form, should determine whether an entity is capable of
conspiring under § 1.” American Needle, Inc. v. NFL, 130 S. Ct. 2201, 176 L. Ed. 2d 947
(2010) (punctuation omitted).
[T]he question is not whether the defendant is a legally single entity or
has a single name; nor is the question whether the parties involved seem
like one firm or multiple firms in any metaphysical sense. The key is
whether the alleged contract, combination or conspiracy is concerted
action – that is, whether it joins together separate decisionmakers. The
relevant inquiry, therefore, is whether there is a contract, combination or
conspiracy amongst separate economic actors pursuing separate economic
interests, such that the agreement deprives the marketplace of
independent centers of decisionmaking, and therefore of diversity of
entrepreneurial interests, and thus of actual or potential competition.
Id. at 2212 (punctuation and internal citations omitted). The “inquiry is one of
competitive reality.” Id.
6
Plaintiff alleged that AAA is “owned in part and/or controlled by” Forrest
General. In Copperweld, the Supreme Court only addressed whether a parent
corporation and its wholly-owned subsidiary could conspire in violation of Section 1 of
the Sherman Act. Copperweld, 467 U.S. at 755, 104 S. Ct. 2731. In American Needle,
the Court held that “competitive reality” – rather than corporate form – determined
whether defendants were capable of conspiring. American Needle, 130 S. Ct. at 2212.
The allegations of the Amended Complaint could be construed either way – AAA may
be merely “owned in part” by Forrest General without any substantial control exerted
upon it, or it may be “controlled by” Forrest General. The Court must construe the
Amended Complaint in the light most favorable to Plaintiff. Great Lakes Dredge &
Dock Co. LLC, 624 F.3d at 210. Additionally, Plaintiff is permitted to plead alternative
theories of the case. FED. R. CIV. P. 8(d)(3). Therefore, the Court finds that Plaintiff
alleged sufficient facts to create a plausible claim that Forrest General and AAA are
separate economic actors pursuing separate economic interests.5
2.
State Action Doctrine
The Fifth Circuit has provided the following concise history of the state action
5
Forrest General argues that Mississippi Code Section 41-55-9 establishes, as
a matter of law, that Forrest General controls AAA. That statute provides that the
“board of trustees of any hospital owned separately or jointly” by a county “may . . .
own, operate, and maintain a public ambulance service as an integral part of its
governmental function of operating and maintaining a hospital . . . .” MISS. CODE
ANN. § 41-55-9. As Forrest General noted in briefing, substance – not form –
controls the Court’s analysis under Copperweld and American Needle. While this
statute may grant Forrest General the authority to maintain an ownership interest
in AAA, it does not speak to the economic reality of their relationship.
7
doctrine:
In Parker v. Brown, 317 U.S. 341, 63 S. Ct. 307, 87 L. Ed. 315 (1943), the
Supreme Court held that Congress did not intend for the antitrust laws
to apply to states acting in their capacities as sovereigns. In subsequent
cases, the Court extended the state action doctrine to cover, under certain
circumstances, acts by private parties that stem from state power or
authority, California Retail Liquor Dealers Association v. Midcal
Aluminum, Inc., 445 U.S. 97, 100 S. Ct. 937, 63 L. Ed. 2d 233 (1980), as
well as acts by political subdivisions, cities and counties. Town of Hallie
v. City of Eau Claire, 471 U.S. 34, 105 S. Ct. 1713, 85 L. ed. 2d 24 (1985).
Martin, 86 F.3d at 1397.
As noted above, Forrest General is a subdivision of Forrest County, Mississippi.
Id. at 1399; Enroth, 566 So. 2d at 206. Therefore, to be entitled to the protection of the
state action doctrine, Forrest General must demonstrate that the alleged
anticompetitive activity was “authorized by the State pursuant to state policy to
displace competition with regulation or monopoly public services.” Hallie, 471 U.S. at
39, 105 S. Ct. 1713. It is not enough that Mississippi simply declared Forrest General’s
alleged activity to be lawful. Id. Rather, “a local entity seeking protection from federal
antitrust laws must prove a state policy to displace competition.” Surgical Care Ctr.
of Hammond, L.C. v. Hosp. Serv. Dist. No. 1 of Tangipahoa Parish, 171 F.3d 231, 234
(5th Cir. 1999).
Although Forrest General is not required to “point to a specific, detailed
legislative authorization,” Hallie, 471 U.S. at 39, 105 S. Ct. 1713, it must demonstrate
a “clearly articulated and affirmatively expressed state policy to displace competition
with regulation,” and that “the legislature contemplated the kind of action complained
of.” Id. at 44, 105 S. Ct. 1713. This standard “resists any insistence upon a particular
8
formula or expression, so long as it is clear from the nature of the policy articulated
that the state contemplates . . . a displacement of competition.” Surgical Care Ctr., 171
F.3d at 234. A mere “naked grant of authority” will not suffice. Id. Forrest General
must point to a “statute that in empowering a [county] necessarily contemplates the
anticompetitive activity,” rather than one “that merely allows a [county] to do what
other businesses can do.” Id. at 235.
Forrest General cites Mississippi Code Section 41-59-5, which requires the
Mississippi Department of Health (“MDOH”) to “establish and maintain a program for
the improvement and regulation of emergency medical services . . . in the State of
Mississippi.” MISS. CODE ANN. § 41-59-5(1). As part of this program, the legislature
required MDOH to “provide for the regulation and licensing of public and private
ambulance service, inspection and issuance of permits for ambulance vehicles, training
and certification of EMS personnel, . . . and other related EMS activities.” MISS. CODE
ANN. § 41-59-5(2). The statute authorizes MDOH to “promulgate and enforce such
rules, regulations and minimum standards as needed to carry out the provisions of” the
statute, MISS. CODE ANN. § 41-59-5(3), and directs MDOH to “develop a uniform
nonfragmented statewide trauma care system.” MISS. CODE ANN. § 41-59-5(5). As part
of the system, MDOH “promulgate[d] regulations specifying the methods and
procedures by which Mississippi-licensed acute care facilities shall participate in the
statewide trauma system.” Id. Among these regulations are guidelines for determining
whether a patient qualifies as a “trauma” patient and where the EMS provider should
9
transport them.6
Therefore, Forrest General argues that the Mississippi legislature has clearly
stated a policy to regulate the “classification of patient injury” and displace any private
efforts in that field with its own anticompetitive activity. Forrest General contends
that Plaintiff’s alleged injury, the “misclassification of patient injury,” is a foreseeable
result of this policy. This argument ignores the substantive factual allegations of the
Amended Complaint and mischaracterizes Plaintiff’s claims.
Plaintiff does not allege anticompetitive activity in the field of regulating EMS
services. Rather, Plaintiff alleges anticompetitive activity in the field of providing EMS
services. Plaintiff claims that Forrest General conspired to falsify medical records,
intentionally misclassify patients’ injuries, and transport patients to a facility at which
they did not wish to receive medical treatment. The ultimate goal of the alleged
conspiracy is to restrain trade in the field of EMS services, and the statute cited by
Forrest General does not evince a state policy of displacing competition in that field.
In fact, the statute contemplates the existence of private EMS services. See MISS. CODE
ANN. § 41-59-5(2) (“. . . board shall provide for the regulation and licensing of . . .
private ambulance services . . .”). Furthermore, Mississippi Code Section 41-55-9
merely grants community-owned hospitals the authority to own and operate
6
Forrest General attached a copy of the “Consolidated Trauma Activation
Criteria and Destination Guidelines” to its motion [26-1] and directed the Court to a
full copy of the Board’s regulations online. Plaintiff objects to the Court’s
consideration of these matters outside the pleading. Of course, the Court may
consider matters of public record when deciding a motion to dismiss. Norris v.
Hearst Trust, 500 F.3d 454, 461 n. 9 (5th Cir. 2007).
10
ambulance services. See MISS. CODE ANN. § 41-55-9 (“. . . board of trustees of any
hospital owned . . . by one or more of such counties . . . may . . . own, operate, and
maintain a public ambulance service . . .”). Therefore, Forrest General has failed to
demonstrate the existence of a clear state policy to displace competition in the field of
EMS services, and the Court rejects Forrest General’s state action argument.
3.
Local Government Antitrust Act
Next, Forrest General argues that it is immune from antitrust damages under
the Local Government Antitrust Act. “Congress endorsed and expanded the state
action doctrine by the Local Government Antitrust Act of 1984, which protects
municipalities against antitrust damage claims.” Martin, 86 F.3d at 1397. The LGAA
provides: “No damages, interest on damages, costs, or attorney’s fees may be recovered
under [15 U.S.C. §§ 15, 15A, or 15C] from any local government, or official or employee
thereof acting in an official capacity.” 15 U.S.C. § 35(a). However, 15 U.S.C. § 26
provides that any person damaged by an antitrust violation may seek injunctive relief,
and that they shall receive their costs and reasonable attorney’s fees if successful. 15
U.S.C. § 26; Woolen v. Surtran Taxicabs, Inc., 801 F.2d 159, 168 (5th Cir. 1986); Wicker
v. Union Cnty. Gen. Hosp., 673 F. Supp. 177, 186 (N.D. Miss. 1987).
Therefore, Plaintiff may not recover any damages from Forrest General for
alleged antitrust violations. However, Plaintiff may seek injunctive relief against
Forrest General, and, if successful, Plaintiff may recover costs and fees. Woolen, 801
F.2d at 168.
C.
Civil Conspiracy
11
Under Mississippi law, the elements of a civil conspiracy are: “(1) two or more
persons or corporations; (2) an object to be accomplished; (3) a meeting of the minds on
the object or course of action; (4) one or more unlawful overt acts; and (5) damages as
the proximate result.” Gallagher Bassett Servs. v. Jeffcoat, 887 So. 2d 777, 786 (Miss.
2004). Forrest General argues that it is incapable of conspiring with AAA and Spruill,
citing the intra-corporate conspiracy doctrine. The Mississippi Supreme Court has
never addressed the intra-corporate conspiracy doctrine. Blades v. Countrywide Home
Loans, Inc., No. 1:06-CV-1000-LG-JMR, 2007 U.S. Dist. LEXIS 69903, at *6 (S.D. Miss.
Sept. 18, 2007). The federal courts in this state have applied it to state-law civil
conspiracy claims, though, holding that “a corporation cannot conspire with itself any
more than a private individual can, and it is the general rule that the acts of the agent
are the acts of the corporation.” Frye v. Am. Gen. Fin., Inc., 307 F. Supp. 2d 836, 843
(S.D. Miss. 2004); see also Cooper v. Drexel Chem. Co., 949 F. Supp. 1275, 1285 (N.D.
Miss. 1996).
The Court must determine, therefore, how it should apply an aspect of federal
law, the intra-corporate conspiracy doctrine, to a Mississippi tort claim. The answer
is uncertain. The Mississippi Supreme Court has not adopted the intra-corporate
conspiracy doctrine – much less the “economic reality” standard cited above. See
American Needle, 130 S. Ct. at 2212. While the federal courts in this state have
guessed that the Mississippi Supreme Court would apply the intra-corporate
conspiracy doctrine to state tort claims, they have not fleshed out the standard to be
applied. Most of the judges addressing the issue – including the undersigned judge –
12
have simply declared that “a corporation cannot conspire with itself,” with little
consideration of the economic realities underlying the relationship between the parent
and subsidiary. See Frye, 307 F. Supp. 2d at 843; Cooper, 949 F. Supp. at 1285;
Gardner v. Swedish Match N. Am., Inc., No. 2:04-CV-337-KS-JMR, 2006 U.S. Dist.
LEXIS 44680, at *12-*13 (S.D. Miss. Apr. 17, 2006).
The notion, however, that a parent corporation is incapable of conspiring with
its subsidiary assumes that the parent controls the subsidiary. As the Court noted
above, it can not make that assumption based on the allegations of the Amended
Complaint. Furthermore, if the Court is going to apply a federal defense to a state civil
conspiracy claim, it should at least apply the defense in the same manner it is applied
to the federal conspiracy claim – utilizing American Needle’s “economic reality” test.
Therefore, the Court denies this aspect of Forrest General’s motion to dismiss.
D.
Defamation
To adequately plead a defamation claim, a plaintiff must allege the following
elements: “(1) a false and defamatory statement was made concerning the plaintiff; (2)
there was an unprivileged publication to a third party; (3) the publisher was negligent
in publishing the defamatory statement; (4) the plaintiff suffered damages resulting
from publication of the defamatory statement.” Mitchell v. Random House, Inc., 703
F. Supp. 1250, 1255 (S.D. Miss. 1988); see also Armistead v. Minor, 815 So. 2d 1189,
1193 (Miss. 2002). Forrest General argues that Plaintiff failed to allege that it made
or published any defamatory statement.
Although Plaintiff broadly alleged that all three Defendants made defamatory
13
statements about it, Plaintiff failed to allege any specific defamatory statements
published by Forrest General. Rather, Plaintiff alleged that AAA published the
defamatory statements. However, Plaintiff pled alternative theories of liability – that
Forrest General either controlled AAA or conspired with it. If Forrest General
controlled AAA, then it could plausibly be liable for AAA’s publication of defamatory
statements. See Bussen v. S. Cent. Bell Tel. Co., 682 F. Supp. 319, 325 (S.D. Miss. 1987)
(“a master is liable for the acts of a servant when they are done in the furtherance of
his employer’s business, and within the real or apparent scope of his employment.”);
Scott-Burr Stores Corp. v. Edgar, 177 So. 766, 768-69 (Miss. 1938) (where manager of
store acted within the scope of his duties, store could be held liable for his actions,
including allegedly defamatory statements); Hutton v. Am. Gen. Life & Accident Ins.
Co., 909 So. 2d 87, 96 (Miss. Ct. App. 2005). Therefore, the Court finds that Plaintiff
sufficiently alleged a defamation claim against Forrest General.
E.
Tortious Interference
To adequately plead a claim of tortious interference with a business relationship,
Plaintiff must allege: “(1) that 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 and loss resulted.” Nichols v. Tri-State Brick & Tile Co., 608 So. 2d 324, 328
(Miss. 1992). Forrest General argues that Plaintiff failed to allege that it committed
any tortious acts which interfered with Plaintiff’s prospective business relations.
14
Although Plaintiff broadly alleged that all three Defendants committed certain
tortious acts (including kidnapping, making defamatory statements, and making false
representations), Plaintiff failed to allege any specific tortious actions perpetrated by
by Forrest General. However, as noted above, Plaintiff alleged a number of tortious
actions by AAA and pled alternative theories of liability – that Forrest General either
controlled AAA or conspired with it. If Forrest General controlled AAA, then it could
plausibly be liable for AAA’s tortious actions. See Bussen, 682 F. Supp. at 325; Edgar,
177 So. at 768-69; Hutton, 909 So. 2d at 96.
F.
Twombly/Iqbal
Finally, Forrest General argues that all of Plaintiff’s claims against it are based
upon insufficient allegations of fact, citing Twombly7 and Iqbal.8 The Court disagrees.
Although it is a close call and Plaintiff could have pled more specific facts, the
Amended Complaint provides sufficient factual allegations to survive a 12(b)(6) motion.
Plaintiff’s claims against Forrest General can be categorized in two groups: those
premised upon a conspiracy among the Defendants (RICO, Sherman Act), and those
premised upon Forrest General’s control of the other Defendants (state-law torts).
Plaintiff alleged that Forrest General controls AAA, and Plaintiff alleged that
AAA committed specific tortious actions. Therefore, there is no Twombly/Iqbal issue
with respect to the state tort claims.
7
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. ed. 2d
929 (2007).
8
Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009).
15
As for the conspiracy-based claims, Plaintiff alleged specific actions by AAA,
Forrest General’s ownership and/or control of AAA, and the effect of AAA’s actions –
more patients transported to Forrest General. Plaintiff also alleged that agents of AAA
told a patient who wished to be transported to Wesley that they would “get in trouble”
if they did not transport the patient to Forrest General. “Determining whether a
complaint states a plausible claim for relief [is] . . . a context-specific task that requires
the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556
U.S. at 679, 129 S. Ct. 1937. Factual allegations often need “some setting suggesting
the agreement necessary to make out a” claim under Section One of the Sherman Act;
“without that further circumstance pointing toward a meeting of the minds,” the
complaint falls short of plausibility. Twombly, 550 U.S. at 557. The Court believes that
Plaintiff’s allegation that a AAA agent stated he would “get in trouble” if he didn’t
transport a patient to Forrest General is sufficient to suggest a meeting of the minds.
Therefore, Plaintiff has pled enough facts to make out a plausible claim under Section
One of the Sherman Act.
III.SPRUILL’S MOTION TO DISMISS [27]
A.
RICO
Spruill argues that Plaintiff failed to plead sufficient facts to demonstrate that
he participated in any of the alleged predicate acts.
A person cannot be held liable for a RICO conspiracy merely by evidence
that he associated with other . . . conspirators or by evidence that places
the defendant in a climate of activity that reeks of something foul. A
conspirator must intend to further an endeavor which, if completed,
would satisfy all of the elements of a substantive criminal offense, but it
16
suffices that he adopt the goal of further or facilitating the criminal
endeavor. In other words, the conspirator need not expressly agree to
violate the statute, but he must have known and agreed to assist in the
underlying criminal offense.
Marlin v. Moody Nat’l Bank, N.A., 248 F. App’x 534, 538 (5th Cir. 2007) (punctuation
and citations omitted). Therefore, to adequately plead a RICO claim against Spruill,
Plaintiff must allege that Spruill “knew the criminal nature of” the alleged predicate
acts “and intentionally acted to assist in the unlawful activity.” Id.
Plaintiff failed to allege any specific actions by Spruill in assistance of the
alleged predicate acts. Therefore, the Court grants Spruill’s motion to dismiss as to
Plaintiff’s RICO claim against him.
B.
Sherman Act
As stated above, to state a claim under Section 1 of the Sherman Act, “a plaintiff
must show that the defendants (1) engaged in a conspiracy (2) that restrained trade
(3) in a particular market.” Tunica Web Adver., 496 F.3d at 409. However, a “naked
allegation of conspiracy or agreement, without more specific factual allegations, is not
to be accepted as sufficient to state a claim under Section 1 of the Sherman Act.” Norris
v. Hearst Trust, 500 F.3d 454, 464 (5th Cir. 2007). Plaintiff has not alleged any specific
actions, statements, or behavior by Spruill demonstrating that he engaged in a
conspiracy in restraint of trade. The only specific allegation pertaining to Spruill is
that he is AAA’s CEO. That is not sufficient to demonstrate that he violated Section
1 of the Sherman Act. Accordingly, the Court grants Spruill’s motion to dismiss as to
Plaintiff’s Sherman Act claim.
17
C.
State Tort Claims
Spruill failed to address the state tort claims in his initial brief. The Court does
not typically consider arguments raised for the first time in a rebuttal. Johnson v.
Watkins, 803 F. Supp. 2d 561, 575 n. 3 (S.D. Miss. 2011). However, Plaintiff addressed
the sufficiency of its state tort allegations in response to the other Defendants’ motions.
Therefore, it would not prejudice Plaintiff to address Spruill’s arguments with respect
to the state tort claims.
“[W]hen a corporate officer directly participates in or authorizes the commission
of a tort, even on behalf of the corporation, he may be held personally liable.” Miss.
Printing Co. v. Maris, West & Baker, Inc., 492 So. 2d 977, 978 (Miss. 1986). As noted
above, the only specific factual allegation pertaining to Spruill is that he is AAA’s CEO.
That is not sufficient to demonstrate that he directly participated in or authorized the
commission of the torts alleged in this case. Accordingly, the Court grants Spruill’s
motion to dismiss as to Plaintiff’s state tort claims.
IV. AAA’S MOTION TO DISMISS [29]
A.
RICO
AAA adopted Forrest General’s argument in favor of dismissal of Plaintiff’s
RICO claim: that government entities are incapable of forming the malicious intent
necessary to commit the predicate acts alleged by Plaintiff. Assuming that AAA’s
characterization of itself as a “government entity” or “instrumentality of a government
entity” is correct, the Court rejects this argument for the same reasons stated in the
Court’s discussion of Forrest General’s motion to dismiss.
18
B.
Sherman Act
AAA also argues that Plaintiff’s Sherman Act claim should be dismissed because
1) it is incapable of conspiring with Forrest General pursuant to the intra-corporate
conspiracy doctrine; 2) it is immune from antitrust liability pursuant to the state action
doctrine; and 3) it is immune from antitrust damages pursuant to the Local
Government Antitrust Act. The Court presently rejects all of these arguments. As
discussed above, it remains to be seen whether AAA is actually controlled by Forrest
General, and the state action doctrine is inapplicable here.
C.
Twombly/Iqbal
As discussed above, Plaintiff has pled sufficient factual matter to survive a
motion to dismiss. AAA focuses on Plaintiff’s failure to plead the names and dates of
treatment of the unidentified patients referred to in the Amended Complaint. While
Plaintiff could have pled more specific facts, the Amended Complaint, when viewed as
a whole, is sufficient to raise plausible claims for relief.
D.
Burford Abstention
Next, AAA argues that the Court should abstain from exercising jurisdiction
over this matter pursuant to Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87
L. Ed. 1424 (1943). Every abstention discussion begins with the “command that federal
courts have a virtually unflagging obligation to exercise the jurisdiction given them.”
Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 144 (5th Cir.
2010). “Abstention from the exercise of federal jurisdiction is the exception, not the
rule.” Id. “Burford abstention is concerned with protecting complex state
19
administrative processes from undue federal interference.” Ill. Cent. R.R. Co. v. Guy,
682 F.3d 381, 2012 U.S. App. LEXIS 10761, at *22 (5th Cir. 2012). The Court considers
five factors when determining whether Burford applies: “(1) whether the cause of
action arises under federal or state law; (2) whether the case requires inquiry into
unsettled issues of state law or into local facts; (3) the importance of the state interest
involved; (4) the state’s need for a coherent policy in that area; and (5) the presence of
a special state forum for judicial review.” Id. at *23-*24. “[T]he Burford doctrine does
not require abstention whenever there exists a complex state administrative process,
even if there is a potential for conflict with state regulatory law or policy.” Id. at *22.
“It is not appropriate when timely and adequate state-court review is not available,
and Burford does not allow district courts to dismiss or remand actions that seek
damages alone.” Id. at *23.
In the Court’s opinion, the Burford factors are neutral in this case. Plaintiff pled
both federal and state causes of action. AAA has not identified any unsettled issues of
state law, but the case will involve local facts. Mississippi has an important interest
in regulating the provision of emergency medical services, and Mississippi needs a
coherent policy in that area. However, AAA has not identified any administrative
procedure by which Plaintiff may air its grievances.
In summary, this case involves issues related to Mississippi’s regulation of
emergency medical services, and the Court may be required to interpret and apply
certain state regulations. However, while AAA urges that the Mississippi Department
of Health should determine whether AAA and Forrest General have strayed from
20
applicable regulations related to the provision of emergency medical services to trauma
patients, AAA has failed to identify any specific administrative procedure that would
provide a more adequate forum. See Moore v. State Farm Fire & Cas. Co., 556 F.3d 264,
272-73 (5th Cir. 2009). Plaintiff does not challenge the applicable regulations or any
aspect of Mississippi’s governance of emergency medical services. At most, the Court
will have to apply certain state regulations, and AAA has not shown that those
regulations are so complex that this Court will be unable to address them. Id.9
Accordingly, the Court rejects AAA’s Burford abstention argument.
E.
Primary Jurisdiction
AAA also argues that the Court should apply the doctrine of “primary
jurisdiction,” which “attempts to maintain proper relationships between the courts and
administrative agencies by suspending judicial process pending the referral of certain
issues to an administrative agency for its views.” Elam v. Kan. City S. Ry., 635 F.3d
796, 809 (5th Cir. 2011). The doctrine applies where “(1) the court has original
jurisdiction over the claim before it; (2) the adjudication of that claim requires the
resolution of predicate issues or the making of preliminary findings; and (3) the
legislature has established a regulatory scheme whereby it has committed the
resolution of those issues or the making of those findings to an administrative body.”
Northwinds Abatement v. Employers Ins., 69 F.3d 1304, 1311 (5th Cir. 1995).
9
Indeed, the Trauma Plan is not so complex that its application has been
wholly delegated to the Department of Health. As noted below, for the Department
of Health to enjoin an EMS provider from violating the Trauma Plan, it must seek
relief in a chancery court. MISS. CODE ANN. § 41-59-45(4).
21
“[N]o fixed formula exists for applying the doctrine of primary jurisdiction,” but
“agency referral is favored when (a) it will promote even-handed treatment and
uniformity in a highly regulated area, or when sporadic action by federal courts would
disrupt an agency’s delicate regulatory scheme; or (b) the agency possesses expertise
in a specialized area with which the courts are relatively unfamiliar.” Elam, 635 F.3d
at 811. If the Court applies the doctrine, it may either retain jurisdiction of the case
while it is referred to the state agency or dismiss the case without prejudice. Id. The
Court is not required, however, to “resort to an expensive and merely delaying
administrative proceeding when there are no substantial issues for the agency to
decide.” Id. (punctuation omitted).
It is undisputed that the Court has original jurisdiction over this case.
Therefore, the Court must determine whether the adjudication of Plaintiff’s claims will
require the resolution of predicate issues of state law, and whether the Mississippi
legislature has established a regulatory scheme committing such issues to the
judgment of an administrative agency.
1.
Predicate Issues of State Law
Plaintiff argues that adjudication of its claims will not require the resolution of
any predicate issues of state law. The Court disagrees. Mississippi’s legislature
directed the Mississippi Department of Health to “establish and maintain a program
for the improvement and regulation of emergency medical services . . . in the State of
Mississippi.” MISS. CODE ANN. § 41-59-5(1). Among other things, the legislature
required the Department of Health to “develop a uniform nonfragmented inclusive
22
statewide trauma care system that provides excellent patient care,” and that it
“develop and administer trauma regulations that include, but are not limited to, the
Mississippi Trauma Care System Plan, trauma system standards, trauma center
designations, field triage, [and] interfacility trauma transfer . . . .” MISS. CODE ANN. §
41-59-5(5). Accordingly, the Department of Health established EMS and trauma
system regulations. See 15-12 MISS. CODE R. § 31 (LexisNexis 2012); 15-12 MISS. CODE
R. § 32 (LexisNexis 2012).
According to the EMS regulations, a “Mississippi licensed ambulance service
shall comply with the Mississippi State Trauma Plan as approved by the Mississippi
State Department of Health, Bureau of Emergency Medical Services. Licensed service
must follow the respective region’s patient destination criteria and treatment protocols
for the trauma patient as delineated by the State Trauma Plan.” Appendix B to the
Trauma Plan contains the “Consolidated Trauma Activation Criteria and Destination
Guidelines,” which consist of a flow chart of symptoms and appropriate courses of
action. For example, “two or more proximal long bone fractures” dictate transportation
to a “Level I, II, or III Trauma Center as appropriate for injuries,” while pregnancies
further along than twenty weeks dictate transportation “to the closest appropriate
Trauma Center.” The guidelines are far from certain, however, as they appear to allow
significant room for the medical judgment of EMS personnel. Furthermore, the
guidelines refer to region-specific transportation protocols that control in the absence
of any listed trauma symptoms, but the parties have not directed the Court to any such
protocols.
23
Plaintiff’s clams stem from the central premise that Defendants wrongfully
transported patients to Forrest General Hospital when they should have gone to
Wesley Medical Center. To assess that premise, the Court will be required to interpret
and apply the regulations cited above and apply them to medical records. Of course,
this is not the only issue in the case. Plaintiff pled a variety of claims, and Defendants
have asserted a variety of defenses. Among those defenses, however, is Defendants’
claim that they fully complied with the applicable state regulations. Therefore, this
Court will be forced, at some point in the litigation, to address that issue. Accordingly,
the Court finds that Defendants’ compliance with Mississippi’s Trauma Plan and all
other applicable regulations, is a predicate issue that will have to be addressed before
the resolution of Plaintiffs’ tort claims, antitrust claims, or RICO claims.
2.
Administrative Agency
Next, the Court must determine whether the Mississippi legislature established
a regulatory scheme whereby it committed the resolution of these predicate issues to
an administrative body. Any person who violates the Department of Health’s
regulations “shall, after due notice and hearing, be subject to an administrative fine
not to exceed One Thousand Dollars ($1,000.00) per occurrence.” MISS. CODE ANN. § 4159-45(2). The Department of Health may “cause to be instituted a civil action in the
chancery court . . . for injunctive relief to prevent any violation” of the Trauma Plan
and EMS regulations. MISS. CODE ANN. § 41-59-45(4). Therefore, while the Department
of Health may directly impose an administrative fine, it can not grant Plaintiff’s
requested injunctive relief. Rather, the statute grants the Department of Health the
24
authority to seek judicial relief in the chancery court. Furthermore, AAA has failed to
cite – and the Court has been unable to find – any statute or regulation establishing
an administrative procedure through which Plaintiff may seek relief from or initiate
action by the Department of Health.
Accordingly, the Court finds that AAA has failed to demonstrate that the
Mississippi legislature has established a regulatory scheme whereby it has committed
the findings necessary for the resolution of this case to an administrative body. While
the Department of Health may levy administrative fines and initiate a civil action for
injunctive relief,10 there does not appear to be a mechanism or procedure by which
Plaintiff may initiate such action. In short, AAA has failed to cite an administrative
procedure to which this Court may defer. Therefore, the Court will not apply the
“primary jurisdiction” doctrine in this case.
F.
Defamation
Finally, AAA argues that Plaintiff has not pled sufficient facts to support a
defamation claim. Specifically, AAA argues that Plaintiff did not allege enough specific
facts for it to admit, deny, or defend against Plaintiff’s defamation claim. The elements
of a defamation claim are: “(1) a false and defamatory statement was made concerning
the plaintiff; (2) there was an unprivileged publication to a third party; (3) the
publisher was negligent in publishing the defamatory statement; (4) the plaintiff
10
The Court also questions whether it is necessary to refer the case to the
Department of Health when it may merely seek the decision of another court which
is no better equipped to address these matters than this one.
25
suffered damages resulting from publication of the defamatory statement.” Mitchell,
703 F. Supp. at 1255. “Quite consistently, . . . courts have found that Mississippi law
requires that a complaint for defamation must provide allegations of sufficient
particularity so as to give the defendant or defendants notice of the nature of the
complained-of statements.” Chalk v. Bertholf, 980 So. 2d 290, 297 (Miss. Ct. App.
2007).
Plaintiff alleged, in pertinent part, that AAA’s agents made the following false
statements to patients: (1) that Plaintiff “would not want” a patient; (2) that Plaintiff
“did not have trauma care available;” (3) that Plaintiff “was not equipped with the
surgeons and stuff that Forrest General has for a trauma;” (4) that Plaintiff would not
want a patient to deliver her child there; and (5) that Plaintiff was “not an accredited
facility for handling stroke patients.” Plaintiff has alleged sufficient facts to make out
the four elements of a defamation claim, and Plaintiff’s allegations are sufficiently
particular to provide AAA with notice of the defamatory nature of the statements.
Plaintiff could have provided more information, to be sure. However, in the Court’s
opinion, these allegations are sufficient to meet Rule 8's standard.
V. MOTION FOR SANCTIONS [36]
The Court has insufficient evidence to address Spruill’s motion for sanctions.
Therefore, the Court stays consideration of the motion until the parties have had a
chance to conduct discovery. Although the Court dismisses Plaintiff’s claims against
Spruill, he shall remain a party to this litigation solely for the purpose of resolving the
ancillary issue of sanctions. After the parties have conducted discovery, Spruill may
26
re-urge the motion, and Plaintiff may respond accordingly.
VI. CONCLUSION
The Court denies Forrest General’s motion to dismiss [25] in all respects but
one. Pursuant to the Local Government Antitrust Act, Plaintiff may not recover any
damages from Forrest General under the Sherman Act. Plaintiff may, however, seek
injunctive relief against Forrest General, and, if successful, Plaintiff may recover costs
and fees. The Court grants Wade Spruill’s motion to dismiss [27], but it denies AAA
Ambulance Service’s motion to dismiss [29]. Finally, the Court stays consideration of
Spruill’s Motion for Sanctions [36].
SO ORDERED AND ADJUDGED this, the 9th day of October, 2012.
s/Keith Starrett
UNITED STATES DISTRICT JUDGE
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