Ortiz v. IOD Inc. et al
Filing
33
OPINION & ORDER....The August 3 and 4, 2017 motions to dismiss are granted as to Counts 2, 3, 4, and 5 of the FAC. The motions to dismiss are denied as to Count 1 of the FAC. CIOXs motion to strike is denied as moot in light of the dismissal of Count 3 of the FAC. The Clerk of Court is directed to replace Columbia Presbyterian Medical Center as a defendant in this matter with the New York and Presbyterian Hospital. (Signed by Judge Denise L. Cote on 2/22/2018) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
VICKY ORTIZ, individually and on
:
behalf of all others similarly
:
situated,
:
:
Plaintiffs,:
:
-v:
:
CIOX HEALTH LLC, as successor in
:
interest of IOD INC., and THE NEW
:
YORK AND PRESBYTERIAN HOSPITAL,
:
:
Defendants.:
:
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17cv4039(DLC)
OPINION & ORDER
APPEARANCES
For the Plaintiff:
Lowell J. Sidney
244 5th Avenue, Suite Q278
New York, NY 10001
For Defendant CIOX Health LLC:
Kathryn A. Tiskus
Hodgson Russ LLP
604 Third Avenue, 23rd Floor
New York, NY 10158
Jodyann Galvin
Aaron M. Saykin
Hodgson Russ LLP
140 Pearl Street, Suite 100
Buffalo, NY 14202-4040
For Defendant The New York and Presbyterian Hospital:
John Houston Pope
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
DENISE COTE, District Judge:
Plaintiff Vicky Ortiz brings this action against CIOX
Health LLC (“CIOX”) as successor in interest to IOD Inc.
(“IOD”), and against the New York and Presbyterian Hospital
(“NYPH”), named in the complaint as Columbia Presbyterian
Medical Center (“CPMC”). 1
Ortiz alleges that defendants violated
a provision of New York Public Health Law § 18, which limits
charges for copies of medical records to $0.75 per page, when
they charged $1.50 per page for copies of Ortiz’s medical
records.
Ortiz seeks money damages and injunctive relief, for
herself and on behalf of a proposed statewide class.
Defendants
have moved to dismiss the First Amended Complaint (“FAC”).
has also moved to strike several allegations in the FAC.
CIOX
For
the following reasons, the motions to dismiss are granted as to
Counts 2, 3, 4, and 5 of the FAC and denied as to Count 1 of the
FAC.
CIOX’s motion to strike is denied as moot.
Background
The following facts are drawn from the FAC.
In October
In its motion to dismiss, NYPH explains that CPMC is a division
of NYPH. NYPH does not challenge its inclusion in this lawsuit
as a defendant. As a result, the Court construes NYPH’s
explanation that it is the proper party as a motion to replace
CPMC with NYPH as a defendant. Pursuant to the Court’s power
under Rule 21, Fed. R. Civ. P., to “add or drop a party” on
“just terms” and “at any time,” NYPH is added and CPMC dropped
as a defendant in this case.
1
2
2016, Ortiz, through her counsel Lowell J. Sidney, made a
written request to NYPH for medical records.
Sidney informed
NYPH that under New York Public Health Law § 18(2)(e), it could
not charge more than $0.75 per page for copies of medical
records.
At that time, NYPH contracted with IOD, a predecessor
in interest to CIOX, to provide copies of NYPH medical records
and to bill NYPH’s patients for those copies.
Ortiz and Sidney
were charged $1.50 per page for Ortiz’s medical records.
Ortiz,
through Sidney, paid the bill even though it was in excess of
the $0.75-per-page statutory maximum.
From 2011 through 2017, CIOX and NYPH have processed over
1,000 authorizations for medical records pursuant to Public
Health Law § 18.
The defendants continue to charge individuals
similarly situated to Ortiz more than $0.75 per page for copies
of their medical records.
Ortiz filed her original complaint in New York state court
on February 24, 2017.
CIOX was served May 1 and on May 30
removed the action to federal court, asserting federal
jurisdiction under the Class Action Fairness Act.
On June 22,
both defendants filed motions to dismiss the original complaint.
In response, Ortiz filed the FAC on July 14.
On August 3, CIOX
filed a motion to dismiss and also moved to strike allegations
in the FAC that name CIOX employees.
dismiss on August 4.
NYPH filed a motion to
These motions became fully submitted on
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August 25.
On November 7, 2017, the matter was reassigned to
this Court.
Discussion
“[A] complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible
on its face to survive a motion to dismiss.”
Nielsen v. AECOM
Tech. Corp., 762 F.3d 214, 218 (2d Cir. 2014) (citation
omitted).
“[W]hile a court must accept all of the allegations
contained in a complaint as true, that tenet is inapplicable to
legal conclusions, and threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not
suffice.”
Balintulo v. Ford Motor Co., 796 F.3d 160, 165 (2d
Cir. 2015) (citation omitted).
I. Jurisdiction over Ortiz’s Individual Claims
NYPH argues that Ortiz lacks standing to pursue her claims
because the FAC fails to allege that she, rather than Sidney,
was injured.
CIOX moves additionally to dismiss the claim for
injunctive relief for lack of standing.
To establish Article III standing, Ortiz must demonstrate
“(1) injury-in-fact, which is a concrete and particularized harm
to a legally protected interest; (2) causation in the form of a
fairly traceable connection between the asserted injury-in-fact
and the alleged actions of the defendant; and (3)
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redressability, or a non-speculative likelihood that the injury
can be remedied by the requested relief.”
Allco Fin. Ltd. v.
Klee, 861 F.3d 82, 95 (2d Cir. 2017) (citation omitted)
(emphasis in original).
“[A] plaintiff must demonstrate
standing separately for each form of relief sought.”
Friends of
the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.
167, 185 (2000).
“Although past injuries may provide a basis
for standing to seek money damages, they do not confer standing
to seek injunctive relief unless the plaintiff can demonstrate
that she is likely to be harmed again in the future in a similar
way.”
Nicosia v. Amazon.com, Inc., 834 F.3d 220, 239 (2d Cir.
2016).
When moving to dismiss for lack of jurisdiction, a
defendant may either challenge the pleading as facially
deficient, “based solely on the allegations of the complaint,”
or may “make a fact-based Rule 12(b)(1) motion, proffering
evidence beyond the Pleading.”
Carter v. HealthPort Tech., LLC,
822 F.3d 47, 56-57 (2d Cir. 2016).
On a facial challenge to
jurisdiction, a plaintiff has “no evidentiary burden” and a
court must “presume that general allegations embrace those
specific facts that are necessary to support the claim.”
56 (citation omitted) (emphasis omitted).
Id. at
To oppose a fact-
based Rule 12(b)(1) motion, a plaintiff may either “come forward
with evidence of their own to controvert that presented by the
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defendant” or “rely on the allegations in the Pleading.”
Id. at
57.
In Carter, the Court of Appeals held that allegations that
plaintiffs paid a charge “through” their counsel are “detailed
factual allegations that the plaintiffs were the principals, who
acted through their agents in requesting and paying for the
records.”
Id. at 58.
Such allegations sufficiently
demonstrated injury in fact at the motion to dismiss stage.
Id.
at 59.
NYPH facially challenges the complaint on the ground that
the FAC alleges that Ortiz’s attorney, Sidney, paid for the
copies of medical records, rather than Ortiz herself.
The FAC
alleges that “Plaintiff, through her attorneys The Law Office of
Lowell J. Sidney, paid the bill which charged in excess of
seventy-five cents ($0.75) per page for her medical records.”
The FAC further alleges that “[a]s a direct and proximate result
of the foregoing, Plaintiff suffered damages by, amongst other
things, being caused to pay fees for the medical records in
excess of the legally permissible rate.”
These allegations of
an agency relationship and damages are sufficient to establish
standing for a damages claim at the pleading stage.
The FAC also alleges a likelihood of future injury
sufficient to confer standing to pursue individual injunctive
relief.
The plaintiff has medical records at NYPH and the FAC
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alleges that “Defendants have engaged and continue to engage in
an ongoing practice of overcharging persons such as Plaintiff
for copies of their medical records.”
It is plausible that
Ortiz will need to obtain her NYPH medical records in the
future, and she accordingly has standing to pursue individual
injunctive relief.
II. Jurisdiction over Claims for Class Relief
After Ortiz filed this action, 2 CIOX unilaterally refunded
the overcharge Ortiz alleges she paid by refunding the amount to
her attorney’s credit card.
Based on this refund, NYPH moves to
dismiss the FAC on the grounds that there is no longer a live
controversy between the parties.
Ortiz brings a claim for injunctive relief as well as a
claim for damages, so the satisfaction of her damages claim
would not moot Ortiz’s claim.
Moreover, since Ortiz has brought
this action as a putative class action, the issue of mootness
would not be straightforward even if she were only pursuing a
damages claim.
“[U]nder the appropriate circumstances, class
certification may relate back to the filing of the complaint,”
even if a named plaintiff’s claims for damages have been
resolved.
Comer v. Cisneros, 37 F.3d 775, 799 (2d Cir. 1994).
Relation back most frequently applies “where the claims are so
The FAC asserts that “filing fees” were expended on Ortiz’s
behalf prior to the refund.
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inherently transitory that the trial court will not have even
enough time to rule on a motion for class certification before
the proposed representative’s individual interest expires.”
Salazar v. King, 822 F.3d 61, 74 (2d Cir. 2016) (citation
omitted).
In Radha Geismann, M.D., P.C. v. ZocDoc, Inc., 850 F.3d
507, 514-15 (2d Cir. 2017), the Second Circuit recently
discussed a “hypothetical” scenario where a defendant deposits
the full amount of a plaintiff’s individual claim into the
plaintiff’s bank account and a court enters judgment on that
amount.
It observed as follows:
“We note, without deciding
because the situation is not before us, that an attempt by the
defendant to use the tactic described in the . . . hypothetical
. . . might not work.”
Id. at 515 n.8.
As the Circuit
described,
[t]he Supreme Court has also acknowledged that
requiring multiple plaintiffs to bring separate
actions, which effectively could be ‘picked off’ by a
defendant's tender of judgment before an affirmative
ruling on class certification could be obtained
obviously would frustrate the objectives of class
actions, and would invite waste of judicial resources
by stimulating successive suits brought by others
claiming aggrievement.
Id. (citation omitted).
In a situation such as this, it is the
plaintiff’s choice, “not the defendant’s or the court’s, whether
the satisfaction of her individual claim, without redress of her
viable classwide allegations, is sufficient to bring the lawsuit
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to an end.”
Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66,
86 (2013) (Kagan, J., dissenting).
These reservations apply with full force here.
Individual
plaintiffs bringing claims under Public Health Law § 18 are
unlikely to be entitled to more than a few hundred dollars in
damages, making such claims easy targets to be “picked off”
individually.
Accordingly, NYPH’s motion to dismiss on mootness
grounds is denied.
III. Public Health Law § 18
Ortiz claims in Count 1 that defendants violated § 18 of
the New York Public Health Law when they charged her $1.50 per
page for copies of her medical records.
Defendants move to
dismiss this claim because, they assert, Ortiz voluntarily paid
these charges.
Ortiz counters that she paid the charges under
protest.
New York Public Health Law § 18 provides, inter alia, that
a health care provider “may impose a reasonable charge for all
inspections and copies” of medical records, “not exceeding the
costs incurred by such provider,” and “not exceed[ing] seventyfive cents per page.”
N.Y. Pub. Health L. § 18(2)(e).
Under
the voluntary payment doctrine, a plaintiff may not sue for an
overcharge if they voluntarily paid the overcharge and “do[] not
allege that payment was made as a result of fraud, mistake of
fact or law, or with protest.”
Morales v. Copy Right, Inc., 28
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A.D.3d 440, 441 (2d Dep’t 2006); see also DRMAK Realty LLC v.
Progressive Credit Union, 133 A.D.3d 401, 405 (1st Dep’t 2015).
The FAC alleges that Ortiz, through Sidney, informed NYPH
that it could not charge more than $0.75 per page before paying
the greater amount.
This is plausibly construed as a “protest”
such that New York courts would not apply the voluntary payment
doctrine as a bar to recovery.
405.
See DRMAK Realty, 133 A.D.3d at
As a result, the motion to dismiss Count 1 on this ground
is denied.
IV. Covenant of Good Faith and Fair Dealing
Ortiz claims that defendants violated their duty of good
faith and fair dealing to her when they charged her $1.50 per
page for copies of her medical records.
Defendants move to
dismiss this claim on the ground that Ortiz has not alleged that
they prevented or interfered with Ortiz’s performance of a
contract, as required to state a claim of breach of the duty of
good faith and fair dealing under New York law.
“New York law implies [the] covenant [of good faith and
fair dealing] in all contracts.”
Sec. Plans, Inc. v. CUNA Mut.
Ins. Soc., 769 F.3d 807, 817 (2d Cir. 2014).
“The implied
covenant of good faith and fair dealing between parties to a
contract embraces a pledge that neither party shall do anything
which will have the effect of destroying or injuring the right
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of the other party to receive the fruits of the contract.”
Moran v. Erk, 11 N.Y.3d 452, 456 (2008) (citation omitted).
The FAC fails to state a claim for breach of the implied
covenant of good faith and fair dealing.
Through this claim,
the FAC does not assert that the defendants deprived Ortiz of
the benefit of her contract with NYPH, that is her agreement to
pay NYPH in order to obtain copies of her medical records.
Instead, the FAC asserts that the contract itself violated
public policy as embodied in § 18 of the Public Health Law.
That theory is duplicative of Count 1 and does not state a claim
of breach of the duty of good faith and fair dealing.
As such,
Count 2 is dismissed.
V. Fraud
Ortiz claims that defendants defrauded her when NYPH sent
her records to IOD, and when IOD sent her a bill that listed
charges in excess of the statutory maximum of $0.75 per page.
Defendants move to dismiss Ortiz’s fraud claim because she has
not alleged fraud with particularity, plausibly alleged
fraudulent intent on the part of defendants, or stated a claim
of reasonable reliance.
Under New York law, a fraud claim must allege five
elements:
(1) a material misrepresentation or omission of a fact, (2)
knowledge of that fact's falsity, (3) an intent to induce
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reliance, (4) justifiable reliance by the plaintiff, and
(5) damages.
Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 797
F.3d 160, 170 (2d Cir. 2015).
Where a complaint alleges fraud,
Rule 9(b), Fed. R. Civ. P., requires that the plaintiff “state
with particularity the circumstances constituting fraud.”
To
satisfy this rule, a plaintiff must identify the allegedly
fraudulent statements, the speaker, state where and when the
statements were made, and specify why the statements are
fraudulent.
See id. at 171.
Rule 9(b) also states that
“[m]alice, intent, knowledge, and other conditions of a person's
mind may be alleged generally,” but plaintiffs “must nonetheless
allege facts that give rise to a strong inference of fraudulent
intent.”
Id. (citation omitted).
The FAC fails to state a claim of fraud.
The FAC alleges
that the defendants issued Ortiz “fraudulent bills which
materially misrepresented what was owed by Plaintiff and members
of her class” in order “to induce Plaintiff into payment of more
money than she was required to pay by law,” and that “Plaintiff
did rely on the fraudulently induced [sic] charges and paid the
inflated bill.”
Among other things, this conclusory statement
fails to plead reasonable reliance on a false statement of the
defendants.
As the FAC explains, the request made by Ortiz’s
attorney instructed the hospital that it was not legally
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permitted to charge more than $0.75 per page.
Count 3 is
accordingly dismissed.
VI. Unjust Enrichment
Ortiz claims that defendants were unjustly enriched when
they charged her more than $0.75 per page for copies of her
medical records.
Defendants move to dismiss Ortiz’s claim on
the grounds that she has not sufficiently alleged inequitable
conduct on their part and that she alleges the existence of a
contract, which precludes a claim of unjust enrichment.
“Under New York law, an unjust enrichment claim requires a
plaintiff to prove that (1) defendant was enriched, (2) at
plaintiff’s expense, and (3) equity and good conscience militate
against permitting defendant to retain what plaintiff is seeking
to recover.”
Ashland Inc. v. Morgan Stanley & Co., 652 F.3d
333, 339 (2d Cir. 2011) (citation omitted).
“A party may not
recover in unjust enrichment where the parties have entered into
a contract that governs the subject matter.”
Wilson v. Dantas,
29 N.Y.3d 1051, 1063 (2017) (citation omitted).
The FAC is premised on the existence of an agreement
between Ortiz and defendants to pay $1.50 per page for copies of
medical records.
The existence of a contract precludes a claim
of unjust enrichment under New York law.
Count 4 is dismissed.
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For these reasons,
VII. CIOX’s Motion to Strike
CIOX moves to strike several allegations in the FAC that
name CIOX employees and allege that those employees were
involved in a conspiracy to defraud Ortiz and other similarly
situated individuals. 3
Rule 12(f), Fed. R. Civ. P., permits a
court to “strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter.”
“The
function of a 12(f) motion to strike has been seen as avoiding
the expenditure of time and money that must arise from
litigating spurious issues [b]y dispensing with those issues
prior to trial.”
VNB Realty, Inc. v. Bank of Am. Corp., No. 11
Civ. 6805(DLC), 2013 WL 5179197, at *2 (S.D.N.Y. Sept. 16, 2013)
(citation omitted).
Thus, there is “general judicial agreement
. . . that [12(f) motions to strike] should be denied unless the
challenged allegations have no possible relation or logical
connection to the subject matter of the controversy and may
cause some form of significant prejudice to one or more of the
parties to the action.”
Id., 2013 WL 5179197, at *3 (citation
omitted).
The inclusion of the names of CIOX’s managers is
gratuitous.
The FAC does not allege any specific conduct to
To the extent CIOX also moves to dismiss the allegations in
paragraphs 58 and 84 of the FAC for failure to state a claim of
liability on an alter ego theory, the motion is denied because
the FAC does not assert such a claim.
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connect the named individuals to Ortiz’s fraud claim.
Since,
however, Ortiz’s fraud claim is now dismissed, the motion to
strike is denied as moot.
VIII. Statute of Limitations
New York law applies a three-year statute of limitations to
actions “to recover upon a liability, penalty or forfeiture
created or imposed by statute.”
N.Y. C.P.L.R. § 214(2).
New
York courts have interpreted this provision to apply “where
liability would not exist but for a statute,” but not to
“liabilities existing at common law which have been recognized
or implemented by statute.”
Gaidon v. Guardian Life Ins. Co. of
Am., 96 N.Y.2d 201, 208 (2001) (citation omitted).
“In general,
a cause of action accrues, triggering commencement of the
limitations period, when all of the factual circumstances
necessary to establish a right of action have occurred, so that
the plaintiff would be entitled to relief.”
Id. at 210.
C.P.L.R. § 214(2) applies to Ortiz’s Public Health Law § 18
claim.
There is no common law antecedent for a maximum
reproduction charge for copies of medical records.
Accord Spiro
v. Healthport Tech., LLC, 73 F. Supp. 3d 259, 276 (S.D.N.Y.
2014) (identifying New York Public Health Law § 18 as imposing a
liability subject to C.P.L.R. § 214(2)).
Ortiz’s claim accrued when she was charged more than $0.75
per page for copies of her medical records, sometime after
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October 26, 2016.
Ortiz’s original complaint was filed in state
court on February 24, 2017.
timely.
Therefore, her § 18 claim is
The FAC, however, seeks class relief going back to
2011, in part based on Ortiz’s claim for equitable relief on her
unjust enrichment claim.
But, as discussed above, the FAC fails
to state a claim of unjust enrichment.
As a result, Ortiz may
only obtain relief for overcharges after February 24, 2014,
three years before her original complaint was filed.
Conclusion
The August 3 and 4, 2017 motions to dismiss are granted as
to Counts 2, 3, 4, and 5 of the FAC.
denied as to Count 1 of the FAC.
The motions to dismiss are
CIOX’s motion to strike is
denied as moot in light of the dismissal of Count 3 of the FAC.
The Clerk of Court is directed to replace Columbia Presbyterian
Medical Center as a defendant in this matter with the New York
and Presbyterian Hospital.
Dated:
New York, New York
February 22, 2018
__________________________________
DENISE COTE
United States District Judge
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