Hedges v. Bittinger et al

Filing 16

Opinion and Order. Defendants' Motion for Judgment on the Pleadings (Related doc # 9 ) is denied. Judge Christopher A. Boyko on 10/12/2017. (H,CM)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

JEFFREY G. HEDGES, D.C.,
Plaintiff,
Vs.
STEPHEN D. BITTINGER, ESQ., ET.
AL.,
Defendant.

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CASE NO.1:17CV720
JUDGE CHRISTOPHER A. BOYKO

OPINION AND ORDER

CHRISTOPHER A. BOYKO, J:
This matter is before the Court on Defendants’ Motion for Judgment on the Pleadings
(ECF # 9). For the following reasons, the Court denies Defendants’ Motion.
According to the Complaint, Plaintiff Jeffrey G. Hedges (“Hedges”) is a chiropractor
whose practice is located in Asheville, North Carolina. Hedges, through his management
company AIDO, owned a multi-disciplinary medical office called Superior Healthcare
Physical Medicine (“Superior”). Infinite Wellness, an unrelated company, supplied billing
services to Superior relating to its Medicare and Major Medical Insurance billing. In January
2015, Hedges became concerned that Infinite’s billing practices did not conform to
requirements of Medicare and retained Defendants to ensure the billing practices complied

with the law. Defendants hired Accucode Consulting LLC to audit a sample of Superior’s
patient files, and having uncovered some irregular billing, recommended that Superior correct
it practices going forward. Defendants advised Plaintiff that he did not need to do anything to
correct the past billing errors but recommended he purchase audit insurance.
In December 2015, Dr. Venus Pitts (“Pitts”), the physician under whose license
Superior operated, informed Hedges that Medicare had come to the office to audit. Hedges
referred Pitts to Defendants. Pitts retained Defendants, who subsequently contacted Hedges
to provide defense costs. Hedges assumed the costs would be covered by the audit insurance.
Hedges learned through a copy of a coverage opinion letter from Defendants to Pitts
that the audit insurance would not cover Pitts/Superior defense costs and further alleged that
Hedges had been fraudulently billing under Pitts’ name in order to benefit from the higher
billing rate. Hedges has since learned he may be liable for the upcharges and criminal
prosecution is a possibility. Hedges alleges legal malpractice and defamation claims against
Defendants for their alleged improper legal advice, conflict of interest in representing Pitts
while representing Hedges, and using confidential information provided them by Hedges
against Hedges.
Standard of Review
After the pleadings are closed but within such time as not to delay the trial, any party
may move for judgment on the pleadings. Fed. R. Civ. P. 12(c). A motion for judgment on
the pleadings is governed by the same legal standard as a Fed. R. Civ. P. 12(b)(6) motion to
dismiss for failure to state a claim upon which relief may be granted. Almendares v. Palmer,
284 F.Supp. 2d 799, 802 (N.D. Ohio 2003). Therefore, as with a motion to dismiss, the Court

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must test the sufficiency of the complaint and determine whether “accepting the allegations
in the complaint as true and construing them liberally in favor of the plaintiff, the complaint
fails to allege ‘enough facts to state a claim for relief that is plausible on its face.’” Ashmus v.
Bay Vill. Sch. Dist. Bd. of Educ., 2007 U.S. Dist. LEXIS 62208 (N.D. Ohio 2007), quoting
Bell Atlantic Corp. v. Twombly, U.S., 127 S.Ct. 1955, 1974 (2007). Claims alleged in the
complaint must be “plausible,” not merely “conceivable.” Id. Dismissal is warranted if the
complaint lacks an allegation as to a necessary element of the claim raised. Craighead v. E.F.
Hutton & Co., 899 F.2d 485 (6th Cir. 1990). A Rule 12(c) motion “is granted when no
material issue of fact exists and the party making the motion is entitled to judgment as a
matter of law.” Paskvan v. City of Cleveland Civil Serv. Comm’n, 946 F.2d 1233, 1235 (6th
Cir. 1991) (emphasis added). A written instrument attached to a pleading is a part of the
pleading for all purposes. Fed. R. Civ. P. 10(c). “In addition, when a document is referred to
in the pleadings and is integral to the claims, it may be considered without converting a
motion to dismiss into one for summary judgment.” Commercial Money Ctr., Inc. v. Illinois
Union Ins. Co., 508 F.3d 327, 335–36 (6th Cir. 2007).
Defendants’ Motion for Judgment on the Pleadings
According to Defendants, they are entitled to judgment as a matter of law because
Plaintiff’s legal malpractice claims are outside the statute of limitations period. Furthermore,
Defendants claim Plaintiff was not a client of Defendants and therefore, lacks standing to
assert a legal malpractice claim against them. Lastly, Defendants contend Plaintiff’s own
misconduct caused his injuries and under the equitable doctrine of unclean hands he cannot
prevail on his claims against Defendants.

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Plaintiff opposes the motion on the grounds that Defendants rely on evidence outside
the pleadings, rendering their Motion improper under Fed. R. Civ. Pro. 12(c). Furthermore,
Plaintiff contends his status as a client of Defendants is a question of fact. As evidence,
Plaintiff attaches an Engagement Agreement to his Complaint wherein the letter expressly
indicates Plaintiff is a client of Defendants.
Plaintiff further alleges that the statutory limitation period did not begin to run until
Plaintiff became aware that Defendants’ legal advice was improper. He only learned that the
advice was improper when he was investigated by the United States Attorneys office in
January of 2017.
Lastly, Plaintiff argues that the issue of unclean hands is by nature a fact question
improper for determination on a Rule 12(c) motion.
Statute of Limitation
Having reviewed the pleadings, motion, opposition and reply, along with the various
exhibits, the Court finds genuine issues of fact preclude judgment for Defendants.

Under

Ohio law, “a cause of action for legal malpractice accrues, and the one-year statute of
limitations begins to run, on the later of two dates: (1) ‘when there is a cognizable event
whereby the client discovers or should have discovered that his injury was related to his
attorney's act or non-act and the client is put on notice of a need to pursue his possible
remedies against the attorney’; or (2) ‘when the attorney-client relationship for that particular
transaction or undertaking terminates.’” Antioch Litig. Tr. v. McDermott Will & Emery LLP,
738 F. Supp. 2d 758, 775–76 (S.D. Ohio 2010) quoting Zimmie v. Calfee, Halter & Griswold,
43 Ohio St.3d 54, 57–58, 538 N.E.2d 398 (1989). Defendants’ statute of limitation argument

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depends on a determination of when the triggering act occurred. According to Defendants,
the alleged improper legal advice was given in May of 2015 and Defendant Bittinger began
representing Dr. Pitts in December 2015. Thus, both acts occurred more than one year prior
to Plaintiff’s filing of his Complaint in April of 2017.
According to Plaintiff, the cognizable event triggering his limitation period was the
U.S. Attorney investigation in January 2017 wherein Plaintiff discovered he may be liable.
Courts have defined a cognizable event under Ohio law as “an event that is sufficient to alert
a reasonable person that his attorney has committed an improper act in course of legal
representation. ” Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. Wuerth, 540 F. Supp. 2d 900,
906 (S.D. Ohio 2007), quoting Ladanyi v. Crookes & Hanson Ltd., 2007 WL 416926, *3
(Ohio App. 8 Dist.) (See also Spencer v. McGill, 87 Ohio App.3d 267, 278, 622 N.E.2d 7
(1993); and Hickle v. Malone, 110 Ohio App.3d 703, 707, 675 N.E.2d 48 (1996)). The Sixth
Circuit has determined a cognizable event occurs when a client perceives “mistakes in
lawyering.” Omlin v. Kaufman & Cumberland Company, L.P.A., 8 Fed.Appx. 477 (6th Cir.
2001).”
Here, the Court must construe the allegations in the Complaint as true. “For purposes
of a motion for judgment on the pleadings, all well-pleaded material allegations of the
pleadings of the opposing party must be taken as true, and the motion may be granted only if
the moving party is nevertheless clearly entitled to judgment.” JPMorgan Chase Bank, N.A. v.
Winget, 510 F.3d 577, 582 (6th Cir.2007) At paragraph 18 of his Complaint, Plaintiff alleges:
In January, 2017, one of Hedges' colleagues was interviewed by the Office of
the Inspector General concerning the excessive Medicare reimbursements first
identified by Accucode's audits, and for which Bittinger and NB advised
Hedges to "do nothing". This interview resulted in Hedges realizing that he
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might be responsible for past Medicare up-charges about which Bittinger and
NB specifically advised him to "do nothing."
Thus, his Complaint, construed liberally in his favor and taken as true, alleges he
learned in January of 2017 that he may be liable for the Medicare up-charges, contrary to the
advice of counsel. Because the cognizable event is a disputed issue of fact, judgment at this
stage of the proceedings is improper.
Count II of Plaintiff’s Complaint alleges legal malpractice by Defendants for a conflict
of interest and breach of confidential information. According to Plaintiff’s Complaint,
Defendants undertook representing Pitts when they still represented Plaintiff. Defendants
used information, confidentially obtained in their representation of Plaintiff, to accuse
Plaintiff of up-charging Medicare in an attempt to exonerate their client Pitts. In so
representing Pitts, Plaintiff alleges Defendants violated the attorney-client relationship with
Plaintiff and created a clear conflict of interest.
Defendants argue Plaintiff’s legal malpractice claims based on conflict of interest and
breach of confidential information are also time barred under the one-year limitation period.
The Complaint alleges Plaintiff learned of the conflict of interest in December 2015 when
Pitts retained Defendants to defend her in a Medicare audit. Plaintiff contends that while he
knew of the dual representation he did not know of its adverse affect on him until January of
2017 when he discovered he may be civilly and criminally liable. Prior to that time, he did
not have reason to believe he was subject to additional penalties. In fact, the Complaint
alleges Plaintiff referred Pitts to Defendants, believing they “had provided him sound
advice...”. “The Ohio Supreme Court has also held that a “cognizable event” is an event that
imposes upon a plaintiff a duty to determine if his injury was caused by malpractice, and to
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identify the tortfeasors.” Wilkey v. Hull, 598 F. Supp. 2d 823, 835 (S.D. Ohio 2009), aff'd,
366 F. App'x 634 (6th Cir. 2010) Flowers v. Walker, 63 Ohio St.3d 546, 589 N.E.2d 1284
(1992). At this stage of the proceedings, the Court cannot find as a matter of law that
Defendants dual representation of Plaintiff and Pitts should have placed a duty on Plaintiff to
identify tortfeasors, particularly when according to the Complaint, Plaintiff had no reason to
suspect such a relationship was adverse to his interests. Moreover, no injury to Plaintiff had
occurred in December 2015.
Defendants are also not entitled to judgment as a matter of law on Plaintiff’s legal
malpractice claim for breach of confidential information as the Complaint alleges he only
learned of such breach after June of 2016, within the one year limitation period.
Standing
Defendants further contend that Plaintiff lacks standing to assert his legal malpractice
claims because he was never Defendants’ client. However, this is also a disputed issue of
fact. Plaintiff’s Complaint attaches as an exhibit an engagement agreement between Plaintiff
and Defendants wherein it reads in pertinent part: “Under this Agreement we will represent
you individually and not your practice(s)...” It is addressed to Plaintiff and is signed by
Plaintiff and Defendant Stephen Bittinger.

This agreement supports the allegation in the

Complaint which alleges Plaintiff was a client of Defendants. (See Complaint para. 7).
Defendants attach to their Answer an email from Plaintiff in response to an invoice
from Defendants wherein Plaintiff writes: “you must have a mistake. I’m not a client of Steve
Bittinger and I don’t own a (sp) office.” This calls into question not only whether Plaintiff
was a client of Defendants, but also, if he were a client, when the attorney-client relationship

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ended.

“The point at which the attorney-client relationship is terminated is a factual

question to be resolved by the trier of fact.” Nat'l Union Fire Ins. Co., 540 F. Supp. 2d. at
909. Because the evidence conflicts on the central question of Plaintiff’s status as a client of
Defendants, the Court holds this genuine issue of fact precludes judgment for Defendants.
Unclean Hands
Lastly, Defendants assert that Plaintiff’s “unclean hands” render any claim he has
against Defendants inequitable because of Plaintiff’s alleged fraudulent Medicare billing.
“The doctrine of unclean hands is ‘a self-imposed ordinance that closes the doors of a court of
equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks
relief, however improper may have been the behavior of the defendant.’” Scooter Store, Inc.
v. SpinLife.com, LLC, 777 F. Supp. 2d 1102, 1113 (S.D. Ohio 2011) quoting Precision
Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814, 65 S.Ct. 993, 89 L.Ed.
1381 (1945). “Any willful act concerning the cause of action which rightfully can be said to
transgress equitable standards of conduct is sufficient cause for the invocation” of the unclean
hands doctrine. Id. at 815, 65 S.Ct. 993. The Sixth Circuit has stated “(f)raud or unclean
hands are not to be lightly inferred. They must be established by ‘clear, unequivocal and
convincing’ evidence.” Kearney & Trecker Corp. v. Cincinnati Milacron Inc., 562 F.2d 365,
371 (6th Cir.1977).
According to Defendants, Plaintiff’s improper billing practices renders his claims
inequitable under the unclean hands doctrine as Plaintiff’s own acts have subjected him to
potential civil and criminal liability. He cannot cast blame for his predicament now on
Defendants.

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In light of the evidentiary burden placed on the party asserting unclean hands, the
Court, on a Motion for Judgment on the Pleadings, holds Defendants cannot meet such the
high evidentiary burden placed on it at this stage of the proceedings when no discovery has
been conducted and therefore, denies Defendants’ Motion.
Therefore, for the foregoing reasons, Defendants’ Motion for Judgment on the
Pleadings is denied.
IT IS SO ORDERED.

s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge
Dated: October 12, 2017

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