PROGENYHEALTH, INC. v. CARESOURCE MANAGEMENT GROUP, CO. et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE J. CURTIS JOYNER ON 6/15/2017. 6/16/2017 ENTERED AND COPIES E-MAILED.(kp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CARESOURCE MANAGEMENT GROUP,
CO., ET AL.,
June 15, 2017
Before the Court are Defendants’ Motion to Dismiss (Doc. No.
11), Plaintiff’s Response in Opposition thereto (Doc. No. 14),
Defendants’ Reply in Further Support thereof (Doc. No. 15), and
Plaintiff’s Sur Reply in Further Opposition thereto (Doc. No.
16). For the reasons below, Defendants’ Motion is GRANTED.
Defendant CareSource Management Group, Co. (“CareSource”) is
a managed health plan provider that contracts with state agencies
to provide managed healthcare plans to the public, including to
Medicaid and other state-supported healthcare recipients. (Compl.
at ¶¶ 10-14). In order to provide adequate services, CareSource
regularly enters into subcontractor agreements with specialized
The facts are taken from Plaintiff’s Complaint.
1). In line with the standards governing Fed. R.
factual allegations are viewed in the light most
moving party. Phillips v. Cty. Of Allegheny, 515
(“Compl.,” Doc. No.
Civ. P. 12(b)(6), all
favorable to the nonF.3d 224, 233 (3d
vendors. Id. at ¶ 11. For instance, CareSource contracted with
ProgenyHealth, Inc. (“ProgenyHealth”), the plaintiff in this
case, to provide neonatal medical and case management and
utilization management services pursuant to a contract with the
State of Ohio. Id. at ¶¶ 7, 12.
Sometime after contracting with ProgenyHealth to provide
services in Ohio, CareSource responded to requests for proposals
extended by the Georgia Department of Community Health (the
“Georgia RFP”) and the Indiana Family and Social Service
Administration (the “Indiana RFP”). CareSource in turn requested
that ProgenyHealth submit Letters of Intent that would permit it
to use ProgenyHealth’s information in their responses to both
RFPs. Id. at ¶ 17. In both RFPs, Defendants praised ProgenyHealth
for its achievements and depicted ProgenyHealth as its “partner.”
Id. at ¶¶ 21, 26, 45. Ultimately, Defendants were awarded the
Indiana and Georgia contracts but elected not to enter into a
subcontract with ProgenyHealth in either case. Id. at ¶¶ 43, 56.
Plaintiff alleges that Defendants relied on ProgenyHealth’s
success and reputation in order to win both the Indiana and
Georgia contracts. Id. at ¶¶ 39, 53. ProgenyHealth asserts that
by neither retaining it for either contract nor compensating
ProgenyHealth for the use of its name and reputation, Defendants
were unjustly enriched. Id. at ¶¶ 76, 82.
ProgenyHealth further alleges that CareSource made promises
and misrepresentations to it regarding future dealings under the
Indiana and Georgia contracts. Id. at ¶¶ 84, 94. ProgenyHealth
asserts that it had 104 meetings with CareSource, many of which
centered on the implementation of ProgenyHealth’s services under
the Indiana and Georgia contracts. Id. at ¶¶ 58-59. ProgenyHealth
also points to several email exchanges occurring between
September and November 2016, in which CareSource purportedly
promised that ProgenyHealth would be involved in the Indiana
contract. Id. at ¶ 67. ProgenyHealth refers to a similar group of
email exchanges occurring between September 2015 and November
2016, regarding the Georgia contract. Id. at ¶ 64. Then, in March
2016, the parties prepared a draft Delegated Services Agreement,
which provided that ProgenyHealth would furnish services under
the Georgia contract. Id. at ¶ 65. Likewise, in October 2016,
CareSource forwarded a draft Delegated Services Agreement, which
departed from the standard contract, for ProgenyHealth to perform
services in Indiana. Id. at ¶ 68.
ProgenyHealth asserts that the numerous meetings, email
exchanges, and draft Delegated Services Agreements amount to a
promise and representation that Defendants would retain
ProgenyHealth to provide services under both the Indiana and
Georgia contracts. ProgenyHealth further alleges that it was
induced by these promises and representations, at its detriment,
to hire and train additional personnel to accommodate the new
programs in Indiana and Georgia. Id. at ¶ 70. Against this
backdrop, ProgenyHealth brings suit against CareSource,
CareSource Indiana, and CareSource Georgia (“Defendants”),
alleging promissory estoppel, negligent misrepresentation, and
fraudulent misrepresentation claims.
Federal Rule of Civil Procedure 12(b)(6) requires a court to
dismiss a complaint if the plaintiff has failed to “state a claim
on which relief can be granted.” In evaluating a motion to
dismiss, the court must take all well-pleaded factual allegations
as true, but it is not required to blindly accept “a legal
conclusion couched as a factual allegation.” Papasan v. Allain,
478 U.S. 265, 286 (1986). Although a plaintiff is not required to
plead detailed factual allegations, the complaint must include
enough facts to “raise a right to relief above the speculative
level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In
conducting this evaluation, the court is permitted to consider
exhibits attached to the complaint as well as the complaint
itself. Fed. R. Civ. P. 10(c).
In conducting this analysis, the “court must take note of
the elements a plaintiff must plead to state a claim.” Santiago
v. Warminister Twp., 629 F.3d 121, 130 (3d Cir. 2010)(internal
quotations and alterations omitted). The court should then
“identify allegations that, because they are no more than
conclusions, are not entitled to the assumption of truth.” Id.
“Finally, where there are well pleaded-factual allegations, a
court should assume their veracity and then determine whether
they plausibly give rise to an entitlement for relief.” Id.
(A) Unjust Enrichment (Counts I and II)
Under Pennsylvania law, a plaintiff may recover for unjust
enrichment by proving: “ benefits conferred on defendant by
plaintiff,  appreciation of such benefits by defendant, 
and acceptance and retention of such benefits under such
circumstances that it would be inequitable for defendant to
retain the benefit without payment of value.” Discover Bank v.
Stucka, 33 A.3d 82, 88 (Pa. Super. Ct. 2011)(internal quotations
In order for the benefit received to be unjust, a plaintiff
must show that it conferred the benefit with a “reasonable
expectation of compensation.” Masterson v. Fed. Express Corp.,
269 F.R.D. 439, 444 (M.D. Pa. 2010). A benefit need not be
monetary; it can be “‘any form of advantage.’” Zvonik v. Zvonik,
435 A.2d 1236, 1241 (Pa. Super. Ct. 1981)(quoting Restatement
(First) of Restitution § 1, cmt. B (Am. Law Inst. 1937)).
However, “[a] benefit conferred is not unjustly retained if a
party confers the benefit with the hope of obtaining a contract.”
Burton Imaging Group v. Toys “R” Us, Inc., 502 F.Supp.2d 434, 440
(E.D. Pa. 2007).
(i) Indiana Contract
A plaintiff cannot reasonably expect to be compensated for a
benefit conferred in the pursuit of a contract. See id. at 440.
Here, that is precisely the case and Plaintiff fails to suggest
otherwise. ProgenyHealth, in hopes of being retained under the
Indiana contract, permitted Defendants to use its name and prior
achievements in its response to the Indiana RFP. While the
Defendants may have been enriched by ProgenyHealth, the benefit
received was not unjust. See id. at 442.
Additionally, ProgenyHealth explicitly stated that
Defendants had “requested that ProgenyHealth submit Letters of
Intent to ensure that CareSource Indiana and CareSource Georgia
could use ProgenyHealth’s information in conjunction with their
responses to the requests for proposal.” (Compl. at ¶ 17). There
is no allegation that ProgenyHealth was to be compensated for
Defendants’ use of its information, name, or reputation.
ProgenyHealth has also not alleged that the Defendants made any
statements suggesting, either implicitly or explicitly, that it
would compensate ProgenyHealth for its use of ProgenyHealth’s
name and reputation in its response to the Indiana RFP. See
Burton Imaging Group, 502 F.Supp.2d at 442 (finding Plaintiff’s
expectation to be compensated unreasonable when Defendant did not
indicate, by actions or words, that it would pay Plaintiff for
the benefit received).
We hold, therefore, that Plaintiff has failed to state a
claim for unjust enrichment under the Indiana contract.
(ii) Georgia Contract
Plaintiff likewise asserts that the Defendants were unjustly
enriched with regard to the Georgia contract. Plaintiff’s claim
for unjust enrichment under the Georgia contract is nearly
identical to its corresponding claim under the Indiana contract.
It fails for the same reasons discussed above.
(B) Promissory Estoppel (Count III and Count IV)
Under Pennsylvania law, a plaintiff may recover for
promissory estoppel when: “‘(1) the promisor made a promise that
would reasonably be expected to induce action or forbearance on
the part of the promisee; (2) the promisee actually took action
or refrained from taking action in reliance on the promise; and
(3) injustice can be avoided only by enforcing the promise.’”
Pratter v. Penn Treaty Am. Corp., 11 A.3d 550, 562 (Pa. Commw.
Ct. 2010)(quoting Peluso v. Kistner, 970 A.2d 530, 534 (Pa.
Commw. Ct. 2009)). “[A] broad and vague implied promise” is not
sufficient to sustain a promissory estoppel claim. See C & K
Petroleum Prod., Inc. v. Equibank, 839 F.2d 188, 192 (3d Cir.
1988)(affirming district court’s dismissal of promissory estoppel
claim where there was “no express promise”); see also
Ankerstjerne v. Schulmberger, Ltd., 155 F.App’x 48, 51 (3d Cir.
2005)(holding a senior manager’s assurance that an employee would
receive a bonus was “too vague” to support promissory estoppel
Defendants argue that the first element is not satisfied
because (1) Plaintiff has not pointed to an explicit statement by
CareSource that amounts to a promise or misrepresentation and (2)
Plaintiff has not demonstrated a reasonable expectation of action
(i) Existence of a Promise
Plaintiff asserts that it detrimentally relied upon
Defendants’ representations and promises to retain ProgenyHealth
under the Indiana and Georgia contracts when it “hir[ed],
train[ed], and pa[id] the salaries of additional personnel . . .
as well as the loss of other potential opportunities to provide
Defendants also claim that enforcement of their statements is
unnecessary to avoid injustice. Because we find that Plaintiffs have
failed to allege an actionable promise, we decline to consider this
alternative argument for dismissal.
services in other states and/or with other providers.” (Compl. at
¶¶ 91, 101).
Plaintiff alleges that, in addition to numerous email
exchanges, there were 104 meetings between ProgenyHealth and
Defendants, and that throughout them “CareSource executives and
employees repeatedly assured ProgenyHealth that CareSource would
retain ProgenyHealth . . . under the Indiana and Georgia
Contracts.” Id. at ¶¶ 58-60. Plaintiff further alleges that it
reasonably relied on these assurances when it hired and trained
additional personnel to perform under both contracts. Id. at ¶
Even accepting these allegations as true, they do not
entitle Plaintiff to relief on a promissory estoppel claim.
Plaintiff refers to several statements made by Defendants, all of
which suggest that Defendants intended to retain Plaintiff at
some later date. Id. at ¶¶ 64, 67, 69. But assurances that a
contract will be executed at some point in the future are not the
sort of express promise that can support a
claim. See Ankerstjerne, 155 F. App’x at 51; C & K Petroleum, 839
F.2d at 192; Landan v. Wal-Mart Real Estate Bus. Tr., No.
2:12CV926, 2016 WL 5253329, at *9 (W.D. Pa. Sept. 22, 2016). The
alleged statements are, on their face, simply assertions of
Defendant’s intent to execute a contract at a later time;
Plaintiff has not alleged that Defendants ever made any statement
that could constitute a definite promise.
Plaintiff argues that the significant number of alleged remarks
made by Defendants, draft agreements, and unexecuted Letters of
Intent distinguish this case from those like Ankerstjerne, in
which courts have held that a single indefinite statement did not
amount to a promise. (Doc. No. 14, at 11). Yet, even when
considering all the alleged statements and documents together, a
definite promise cannot be discerned from them as a matter of
Plaintiff also points to Defendants’ statements asserting
that ProgenyHealth and Defendants were working as “partners”
throughout negotiations. (Compl. at ¶ 69). But rather than
illustrate the existence of an express promise to contract, these
statements, in reference to both parties’ efforts to come to an
agreement, reinforce that no agreement had yet been made.
Thus, Plaintiff has failed to allege an express or
“contract-like promise” made by Defendants. See Peluso, 970 A.2d
(ii) Reasonable Expectation of Reliance
Because we have already determined that Plaintiff failed to
allege a definite promise by Defendants, it follows that there is
no promise that Defendants could have reasonably expected
Plaintiff to rely upon.
(C) Negligent and Fraudulent Misrepresentation (Counts V-VIII)
Under Pennsylvania law, a party claiming fraudulent
misrepresentation must show:
(1) a representation; (2) which is material to the
transaction at hand; (3) made falsely, with knowledge
of its falsity or recklessness as to whether it is true
or false; (4) with the intent of misleading another
into relying on it; (5) justifiable reliance on the
misrepresentation; and (6) the resulting injury was
proximately caused by the reliance.
Bull Int’l, Inc. v. MTD Consumer Grp., Inc., 654 Fed. App’x 80,
104 (3d Cir. 2016)(quoting Gibbs v. Ernst, 583 Pa. 193, 647 A.2d
882, 889 (1994)). The elements of a negligent misrepresentation
claim are identical to those of a fraudulent misrepresentation
claim, except that the defendant must have made the false
representation negligently. Id. (citing Gibbs, 647 A.2d at 890).
Defendants advance the same two arguments for dismissal of
both the negligent and fraudulent misrepresentation claims. They
assert that Plaintiff neither “alleged a definite
misrepresentation by CareSource” nor “justifiably reli[ed] on
that misrepresentation.” (Doc. No. 11-2, at 8).
For the same reasons delineated under our discussion of the
promissory estoppel claims, we hold that Plaintiff failed to
allege the existence of an express misrepresentation that
Plaintiff could have justifiably relied upon. Thus, the negligent
and fraudulent misrepresentation claims, under both the Indiana
and Georgia contracts, must be dismissed.3
For the foregoing reasons, the instant motion is granted. An
appropriate Order follows.
In accordance with Fed. R. Civ. P. 9(b), a plaintiff alleging
fraudulent misrepresentation must do so “with sufficient particularity
to place the defendant on notice of the precise misconduct with which
it is charged.” Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir.
2007)(internal quotations and alterations omitted). Here, Defendants
have not relied on the stricter standard in Rule 9, but we pause only
to note that Plaintiffs’ claims fail whether judged under Rule 9 or
the more lenient standard embodied by Rule 8.
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