Carter et al v. HealthPort Technologies, LLC et al
Filing
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DECISION AND ORDER GRANTING the Defendants' Motions to Dismiss 9 , 20 , 21 , and this matter is dismissed with prejudice. The Clerk of the Court is directed to close this case. SO ORDERED. Signed by Hon. Frank P. Geraci, Jr. on 3/31/15. -CLERK TO FOLLOW UP- (SCE)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
MARISSA CARTER, EVELYN GRYS,
BRUCE CURRIER, SHARON KONING,
SUE BEEHLER, MARSHA MANCUSO, and
JACLYN CUTHBERTSON,
as individuals and as representatives
of the classes,
Plaintiffs,
Case # 14-CV-6275-FPG
v.
DECISION AND ORDER
HEALTHPORT TECHNOLOGIES, LLC,
THE ROCHESTER GENERAL HOSPITAL,
THE UNITY HOSPITAL OF ROCHESTER, and
F.F. THOMPSON HOSPITAL, INC.,
Defendants.
INTRODUCTION
This case is a putative class action lawsuit filed on behalf of individuals in New York
State who requested copies of their medical records from HealthPort Technologies, LLC
(“HealthPort”), Rochester General Hospital (“RGH”), Unity Hospital of Rochester (“Unity”),
and F.F. Thompson Hospital, Inc. (“FFT”) (collectively, “Defendants”).
Plaintiffs allege that
Defendants overcharged them for making copies of the requested records, and bring claims for
money damages under New York Public Health Law § 18, which sets a ceiling on such fees;
under New York General Business Law § 349, which prohibits deceptive trade practices; and for
unjust enrichment.
On June 19, 2014 and July 21, 2014, Defendants moved, in separate motions, to dismiss
the Complaint (ECF Nos. 9, 20, 21) under Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6), arguing that the Plaintiffs lack standing to bring this action, and further, that the
Complaint fails to state a claim upon which relief may be granted. For the following reasons, the
Motions are granted, and the Complaint is dismissed.
BACKGROUND
The named Plaintiffs in this case – Marissa Carter, Evelyn Grys, Bruce Currier, Sharon
Koning, Sue Beehler, Marsha Mancuso, and Jaclyn Cuthbertson – seek to represent a class of
similarly situated individuals who, according to the Complaint, were overcharged for copies of
medical records from the named Defendants. In short, the Plaintiffs allege that the Defendants
charged a blanket rate of $0.75 per page for copies of their medical records, when New York
Law requires them to only charge their actual expenses, but in no event can those expenses be
more than $0.75 per page. Plaintiffs further allege that certain unauthorized “delivery charges”
were added on top of the copying costs, and allege that all of these excessive costs were devised
and charged as part of a scheme between the Defendants to artificially generate profits.
The requests for medical records by the Plaintiffs from the Defendants and the payment
for these records are at the heart of the Complaint, and the allegations regarding those requests
and payments take the same form for each of the seven Plaintiffs. For example, regarding
Plaintiff Carter, the Complaint alleges that:
Plaintiff Carter was a patient at RGH. ECF No. 1, ¶ 33. On or
about September 5, 2013, Carter requested medical records from
RGH through her counsel. ECF No. 1, ¶ 34. On or about October
1, 2013, HealthPort, acting on behalf of RGH, sent an invoice,
which indicated that Carter would be charged $77.00 for 100 pages
of medical records ($0.75 per page, plus a $2.00 “Electronic Dlvry
Fee”). ECF No. 1, ¶ 35. On or about October 7, 2013, Carter paid
the $77.00 charge through her counsel in order to obtain copies of
the requested medical records. ECF No. 1, ¶ 36.
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Regarding Plaintiff Mancuso, the Complaint similarly alleges that:
Plaintiff Mancuso was a patient at Unity. ECF No. 1, ¶ 77. On or
about January 17. 2013, Mancuso requested medical records from
Unity through her counsel. ECF No. 1, ¶ 78. On or about January
28, 2013, HealthPort, acting on behalf of Unity, sent an invoice,
which indicated that Mancuso would be charged $544.25 for 723
pages of medical records ($0.75 per page, plus a $2.00 “Electronic
Dlvry Fee”). ECF No. 1, ¶ 79. On or about February 5, 2013,
Mancuso paid the $544.25 charge through her counsel in order to
obtain copies of the requested medical records. ECF No. 1, ¶ 80.
The Complaint makes the same allegations for each of the seven named Defendants,
although the dates and overall amounts are unique to each Defendant. Further, while each
Plaintiff makes claims against HealthPort for ultimately providing the records, Plaintiffs Carter,
Grys, and Currier make claims against RGH, whom they made their requests through, Plaintiffs
Koning, Beehler, and Mancuso make claims against Unity, whom they made their requests
through, and Plaintiff Cuthbertson make her claim against FFT, whom she made her request
through. ECF No. 1. Based upon these record requests and the resultant charges, each Plaintiff
alleges that the fees charged “exceeded the cost to produce these medical records, and included a
built-in kickback from HealthPort to [the relevant hospital].” ECF No. 1, ¶¶ 39, 46, 53, 59, 64,
69, 76, 83, 90. As such, they claim to have suffered damages from paying amounts in excess of
the actual cost to produce the requested medical records. ECF No. 1, ¶¶ 107, 109.
In lieu of answering the Complaint, each of the Defendants has filed a Motion to Dismiss.
ECF Nos. 9, 20, 21. The Plaintiffs have responded to each of the Motions (ECF Nos. 26, 27,
28), and the Defendants have filed their replies. ECF Nos. 33, 34, 35. In addition, the Court
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received a letter brief from Plaintiffs’ counsel on September 3, 2014, which I have filed on the
public docket. ECF No. 36. As such, the Motions are fully briefed and ripe for decision.
DISCUSSION
Because it is jurisdictional, I must first consider the Defendants’ argument that the
Plaintiffs lack standing to bring this case. See Rhulen Agency, Inc. v. Ala. Ins. Guar. Ass’n, 896
F.2d 674, 678 (2d Cir.1990) (“[T]he court should consider the Rule 12(b)(1) challenge first since
if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying
defenses and objections become moot and do not need to be determined.”) (citation omitted).
“[A] claim is ‘properly dismissed for lack of subject matter jurisdiction under Rule
12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.’”
Arar v. Ashcroft, 532 F.3d 157, 168 (2d Cir. 2008) (quoting Makarova v. United States, 201 F.3d
110, 113 (2d Cir. 2000)).
“If plaintiffs lack Article III standing, a court has no subject matter
jurisdiction to hear their claim.” Mahon v. Ticor Title Ins. Co., 683 F.3d 59, 62 (2d Cir. 2012)
(citing Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck–Medco Managed Care,
L.L.C., 433 F.3d 181, 198 (2d Cir. 2005)); see also Cacchillo v. Insmed, Inc., 638 F.3d 401, 404
(2d Cir. 2011) (“Generally, ‘[s]tanding is a federal jurisdictional question determining the power
of the court to entertain the suit.’”) (quoting Carver v. City of New York, 621 F.3d 221, 225 (2d
Cir. 2010)).
“[A] plaintiff must demonstrate standing for each claim and form of relief sought.”
Mahon, 683 F.3d at 62 (citation omitted).
“Article III standing consists of three ‘irreducible’ elements: (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
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defendant; and (3) redressability, or a non-speculative likelihood that the injury can be remedied
by the requested relief.”
W.R. Huff Asset Mgmt. Co., LLC v. Deloitte & Touche LLP, 549 F.3d
100, 106–07 (2d Cir. 2008) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992))
(emphasis in original).
“A plaintiff asserting subject matter jurisdiction has the burden of proving by a
preponderance of the evidence that jurisdiction exists.”
Giammatteo v. Newton, 452 F. App’x
24, 27 (2d Cir. 2011) (citing Makarova, 201 F.3d at 113). In resolving a motion to dismiss for
lack of subject matter jurisdiction, “the court must take all facts alleged in the complaint as true
and draw all reasonable inferences in favor of plaintiff,” Natural Res. Def. Council v. Johnson,
461 F.3d 164, 171 (2d Cir. 2006), but “jurisdiction must be shown affirmatively, and that
showing is not made by drawing from the pleadings inferences favorable to the party asserting
it,” Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998); see also APWU v.
Potter, 343 F.3d 619, 623 (2d Cir. 2003); Amidax Trading Group v. S.W.I.F.T. SCRL, 671 F.3d
140, 145 (2d Cir. 2011). On such a motion, a court may consider evidence outside the pleadings,
such as affidavits and exhibits. See Makarova, 201 F.3d at 113.
Here, the Defendants argue that the Plaintiffs lack standing to bring the claims they have
alleged in their Complaint. When standing is put at issue, “[e]ach element [of standing] must be
supported in the same way as any other matter on which the plaintiff bears the burden of proof,
i.e., with the manner and degree of evidence required at the successive stages of the litigation.”
Carver, 621 F.3d at 225 (alterations in original) (citing Lujan, 504 U.S. at 561).
“Because
standing is challenged [here] on the basis of the pleadings, we [therefore] accept as true all
material allegations of the complaint, and must construe the complaint in favor of the
complaining party.” Id. at 225 (alterations in original) (quoting W.R. Huff, 549 F.3d at 106).
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More specifically, the Defendants argue that the Plaintiffs have failed to plead a
cognizable injury-in-fact, because it was their lawyers who ordered, were charged for, and
paid for the copies of the medical records at issue. As such, the Defendants contend that any
overcharging – if there was any – did not cause any injury-in-fact to the individual Plaintiffs.
In response, the Plaintiffs claim that who exactly ordered and paid for their clients
records is irrelevant. Specifically, they argue that “[f]or purposes of the claims at issue, it
makes no difference whether Plaintiffs requested their records themselves or through counsel.
In either case, the client-patient is the real party in interest.” ECF No. 26, at 15.
In my view, the Plaintiffs have failed to establish standing to bring this suit. In making
this determination, I find persuasive Judge Engelmayer’s recent decision in Spiro v. HealthPort
Technologies, LLC, --- F. Supp. 3d ----, No. 14 Civ. 2921(PAE), 2014 WL 4277608 (S.D.N.Y.
Aug, 29, 2014). The basic facts and premise of the claims in Spiro are virtually identical to the
present case. In Spiro, a group of individual plaintiffs brought a potential class action suit
against HealthPort (the same entity named in the present case) and three hospitals in the New
York City area, alleging that the hospitals and HealthPort overcharged them for their medical
records. The Spiro plaintiffs alleged that the defendants charged $0.75 per page for copies of
their medical records, as opposed to charging their actual costs, which was allegedly in violation
of New York Public Health Law Section 18. The Spiro Plaintiffs additionally alleged that the
defendants engaged in deceptive trade practices, and brought a claim for unjust enrichment. The
defendants moved to dismiss the complaint on several bases, including lack of standing. More
specifically, the defendants argued that because the records at issue were requested by and paid
for the plaintiffs’ attorneys, the named plaintiffs had alleged no injury-in-fact, and therefore
lacked standing.
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In granting the defendants’ motion to dismiss, Judge Engelmayer wrote:
On the facts pled in the [Complaint], defendants are correct. The
[Complaint] does not plead that any plaintiff was obligated to
reimburse [their counsel] for the copying costs he incurred.
Instead, on the facts as pled, the decision by plaintiffs to reimburse
[their counsel], after the fact, for the copying costs he had paid was
a volitional act—an act of grace. As pled, plaintiffs never dealt
directly with Healthport. Nor, based on the [Complaint], had they
any obligation to reimburse [their counsel] for his outlay at the
time he ordered the photocopies. On these facts, any legal right to
challenge defendants’ ostensible overcharging would belong
exclusively to [their counsel], as it was [their counsel], and [their
counsel] alone, who suffered an injury caused by defendants’
overcharging. Plaintiffs’ later decision to reimburse their lawyer,
and [counsel’s] decision to accept such reimbursement, must be
taken as independent, volitional, discretionary acts, breaking the
chain of causation necessary to establish Article III standing. See
Lujan, 504 U.S. at 560–61 (“[T]here must be a causal connection
between the injury and the conduct complained of—the injury has
to be fairly traceable to the challenged action of the defendant, and
not the result of the independent action of some third party not
before the court.”) (internal quotation marks and alterations
omitted) (emphasis added).
Indeed, plaintiffs’ theory that a discretionary decision after-the-fact
to reimburse another party for a charge confers standing on the
reimbursing entity would vastly broaden Article III standing.
Imagine, for example, a person who took a taxi home one night,
and was overcharged for the taxi ride in violation of local law. If
the person was later voluntarily reimbursed for that cost—by a
friend, parent, employer, stranger, or Good Samaritan—that
reimbursing entity would then, on plaintiff’s theory, have the legal
right to sue the cab driver for overcharging. There is no authority
for this claim. Absent assignment of a legal right to sue for such
relief, which is not alleged here, the mere act of making a thirdparty whole for an expense incurred and already paid does not
entitle the paying party to the right to challenge that expense.
To be sure, the analysis would be different if plaintiffs had been
obligated at the time that [their counsel] incurred the copying
expenses to reimburse [him] for the expenses he incurred in
connection with representing them. In that circumstance, whether
plaintiffs’ reimbursement duty was absolute or conditioned on a
settlement or verdict in their favor, then Healthport’s charge to
[counsel] for copying and [counsel’s] payment of that charge
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would have given rise to a liability (or a contingent liability) on
plaintiffs’ part. That liability, to repay [counsel] for the copying
expenses, would have given plaintiffs standing to challenge the
copying cost as excessive, because plaintiffs would then have
suffered an injury-in-fact (a legal duty to pay these excessive costs)
traceable to the defendants responsible for the charges. See Roman
Catholic Archdiocese of N.Y. v. Sebelius, 907 F.Supp.2d 310, 329
(E.D.N.Y. 2012) (“[N]umerous cases have also recognized that
uncertain future harms can have present effects that are sufficient
for standing purposes.”) (collecting cases); see also Clinton v. City
of N.Y., 524 U.S. 417, 431 (1998) (New York had standing to
challenge the line item veto, even though a pending administrative
action could waive the contingent liability, because “[t]he revival
of a substantial contingent liability immediately and directly
affects the borrowing power, financial strength, and fiscal planning
of the potential obligor”); Lac Du Flambeau Band of Lake
Superior Chippewa Indians v. Norton, 422 F.3d 490, 498 (7th Cir.
2005) (plaintiff had standing to bring suit because “the present
impact of a future, though uncertain harm may establish injury for
standing purposes”). The [Complaint], however, does not allege
that there was any such agreement in place between plaintiffs and
[their counsel] at the time [counsel] incurred the copying expense
under which plaintiffs would reimburse [counsel] for the costs it
incurred in the course of representing plaintiffs in their lawsuits.
The [Complaint] is silent on that point.
This pleading deficiency should be easily corrected, if the facts so
permit. In New York State, an attorney is required to “provide to
the client a written letter of engagement before commencing the
representation, or within a reasonable time thereafter[.]” See N.Y.
Comp.Codes R. & Regs. tit. 22, § 1215.1. The engagement letter
must explain (1) the scope of the legal services to be provided; and
(2) the “attorney’s fees to be charged, expenses and billing
practices.” Id. It follows that, if plaintiffs were obligated to
reimburse [counsel] for expense outlays, including in obtaining
plaintiffs’ medical records, then [counsel’s] engagement letter with
each plaintiff should reflect such a term.
Each of Counts One, Two, and Three turns on the claim that
defendants overcharged [counsel] for copies of plaintiffs’ medical
records. Because the [Complaint] does not assert facts on which
plaintiffs have standing to pursue such a claim, the Court dismisses
these three damages claims for lack of subject matter jurisdiction.
Spiro, 2014 WL 4277608, at *5-6. (Footnotes omitted).
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For those same reasons, I find that the Complaint in this action fails to establish the
Plaintiffs’ standing to bring this suit. There is no plausible allegation in the Complaint to
establish that it was Plaintiffs – as opposed to their counsel – who requested the copies or paid
the resulting bill and therefore bore the alleged injuries in this case, and without such an
allegation in the Complaint, the Plaintiffs have failed to establish their standing to sue.
Plaintiffs’ letter to the Court of September 2, 2014 correctly stated that the Spiro
litigation was “discussed at length in HealthPort’s motion to dismiss and Plaintiffs’ response to
HealthPort’s motion.” ECF No. 36. Indeed, that letter acknowledged that “[t]he only reason that
the plaintiffs’ claims against HealthPort were dismissed in Spiro… was because the court
concluded that the plaintiffs had not pled that they were ultimately responsible for the charges,
which were paid by their attorneys, at the time such charges were incurred.” Id. (emphasis in
original).
While Plaintiffs’ counsel argues that Spiro was wrongly decided, they also informed this
Court that “there is no reason to dismiss Plaintiffs’ claims for lack of standing, and it would be a
waste of time to require them to plead their claims in further detail.” Id. (emphasis added).
While this Court is not required to offer counseled Plaintiffs the opportunity to amend their
Complaint – indeed, it is counsel’s job to determine whether to seek leave to amend or not, and
to make such a request, if counsel deems it appropriate – in this case, I see even less reason to
offer the Plaintiffs, sua sponte, the opportunity to amend their Complaint, since they have
informed the Court in writing that doing so would “be a waste of time.”
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CONCLUSION
For all of the foregoing reasons, the Plaintiffs have failed to establish their standing to sue
in this case, and the Defendants’ Motions to Dismiss (ECF Nos. 9, 20, 21), are GRANTED. This
matter is dismissed with prejudice, and the Clerk of the Court is directed to close this case.
IT IS SO ORDERED.
Dated: March 31, 2015
Rochester, New York
/s/ Frank P. Geraci, Jr.
HON. FRANK P. GERACI, JR.
Chief Judge
United States District Court
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