Long v. Quorum Health Resources, L.L.C. et al

Filing 42

OPINION AND ORDER denying 32 Motion Amend First Amended Complaint; granting 17 Motion to Dismiss for Failure to State a Claim and denying as moot 19 Motion for Extension of Time to File Motion To Strike Under 12 V.S.A. 1041 . Signed by Judge William K. Sessions III on 5/5/2014. (law)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
RAYMOND A. LONG, M.D.,

:
:
Plaintiff,
:
:
v.
:
:
QUORUM HEALTH RESOURCES, LLC, :
and NORTHWESTERN MEDICAL
:
CENTER, INC.,
:
:
Defendants.
:

Case No. 2:13-cv-189

OPINION AND ORDER
Plaintiff Raymond A. Long, M.D. alleges that Defendants
Quorum Health Resources, LLC (“QHR”) and Northwestern Medical
Center, Inc. (“NMC”) are liable for statements made to the United
States Department of Health and Human Services (“HHS”) regarding
his professional performance.

Defendants now move to dismiss the

First Amended Complaint (“FAC”) pursuant to Fed. R. Civ. P.
12(b)(6), arguing res judicata and failure to state a claim.1
Defendants also oppose Dr. Long’s motion for leave to file a
Second Amended Complaint.

For the reasons set forth below,

Defendants’ motion to dismiss is GRANTED, Dr. Long’s motion for
leave to amend is DENIED, and this case is DISMISSED.
Factual Background
In September 2001, Dr. Long was granted privileges to
1

Although Defendants filed their motion to dismiss prior to
the docketing of the FAC, they did not oppose the filing of the
FAC and have asked the Court to apply their arguments to the
claims set forth therein. ECF 31 at 1 n.1. The FAC incorporates
by reference documents attached to the original complaint.

practice as a surgeon at NMC.2

He claims that in 2003, someone

at NMC deliberately contaminated several of his surgeries with
bacteria, thereby causing infections in his patients.

NMC

subsequently arranged for a peer review process, in part to
investigate Dr. Long’s allegations.

As a result of this process,

NMC issued an order prohibiting Dr. Long from performing any
further surgeries until he had been evaluated by a psychiatrist.
The order also advised him of his right to a hearing.

Dr. Long

resigned the following day, allegedly to avoid further
“inexcusable danger to his patients.”

ECF 41 at 6, ¶ 38.

On April 30, 2004, NMC submitted an Adverse Action Report
(“AAR”) to the National Practitioner Data Bank (“NPDB”), stating
that Dr. Long had voluntarily surrendered his clinical privileges
at NMC “while under, or to avoid, investigation relating to
professional competence or conduct.”

Id. at 7, ¶ 42.

Pursuant

to federal law, health care entities are required to report to
the NPDB all surrenders of clinical privileges “[w]hile the
physician or dentist is under investigation by the entity
relating to possible incompetence or improper professional
conduct.”

42 U.S.C. § 11133(a)(1)(B)(i).

The NPDB can be

queried when a doctor seeks to obtain employment or privileges at
a hospital or other health care entity.

2

See 42 U.S.C. § 11137.

Dr. Long alleges that NMC is managed by QHR, and that QHR
is vicariously liable for the NMC’s actions or omissions.
2

Dr. Long contends that the report to the NPDB was
unjustified.

He claims that instead of conducting an

investigation for the purpose of furthering quality health care,
NMC undertook the peer review process “to blame Plaintiff for the
deliberately caused infections and to cast him as mentally
unstable.”

ECF 41 at 7, ¶¶ 39-41.

Accordingly, he argues, the

process did not constitute an “investigation” as defined by the
the Health Care Quality Improvement Act, and no report to the
NPDB was required.
On August 29, 2011, Dr. Long wrote to NMC requesting that
the AAR be “removed.”

ECF 1-2 at 2.

When NMC declined, Dr. Long

sought review by the Secretary of HHS (the “Secretary”).

In a

letter dated December 2, 2011, the Secretary acknowledged receipt
of Dr. Long’s request and notified him that it might require
additional information either from him or “the entity that filed
the report under review.”

The Secretary also explained that the

scope of review was limited, as it would only determine “(1) if
the report is legally required or permitted to be filed and (2)
if the report accurately depicts the action taken and the
reporter’s basis for the action as reflected in the written
record.”

The Secretary further informed Dr. Long that if he

claimed “the reporting entity was wrong to take action,” or
“acted unfairly,” those issues were outside the scope of review,
and a statement would be added to the report noting the

3

Secretary’s limited jurisdiction, as well as its findings.
at 10-11.

Id.

The December 2, 2011 letter also notified Dr. Long of

his right to withdraw his request for review.
On December 20, 2011, the Secretary asked NMC to provide
additional information.

Specifically, NMC was asked to “share

with us the sequence of events that led Northwestern to report
Dr. Long to the NPDB, and provide copies of documentation to
support your explanation.”

Id. at 13.

On January 31, 2012, NMC

Chief Executive Officer Jill Berry Bowen replied with a brief
cover letter, a two-page chronology of events that occurred
between March 8 and April 30, 2004, and supporting documentation
from that same time period (the “Bowen Response”).

The cover

letter stated as follows:
The following submission on behalf of Northwestern
Medical Center with respect to the above matter is made
in response to your letter to Kim Charboneau dated
December 20, 2011.
Pursuant to your request, I am submitting the enclosed
document entitled Sequence of Events that Led
Northwestern Medical Center to Report Dr. Long to the
NPBD (With References to Attached Documentation). I
believe that these materials suffice to establish that
Dr. Long resigned during a pending investigation, but
please do not hesitate to contact me if you have
lingering questions or require additional materials.
Id. at 15.

The chronology set forth the date and a brief

description of events and attached documents.

Those documents

included correspondence within NMC, correspondence to Dr. Long,
Dr. Long’s resignation letter, and the AAR.

4

Dr. Long alleges that the Bowen Response “went far beyond
the original submission to the NPDB.”

ECF 41 at 8, ¶ 48.

The

FAC contends that “a reasonable reader would reasonably
understand” statements in the Bowen Report to be asserting: that
the peer group review constituted an “investigation” as defined
by the NPDB Guidebook and federal law; that the peer group itself
was a “peer review committee” as defined by Vermont law and a
“peer review organization” as defined by federal law; that Dr.
Long was emotionally unstable because he contended that there was
a criminal conspiracy against him that in fact did not exist;
that Dr. Long’s conspiracy theory was evidence of psychiatric
problems; and that Dr. Long resigned from the hospital because he
did not want to submit to a psychiatric examination.

Dr. Long

alleges that NMC knew each of those statements to be false and
fraudulent, and intended “to ensure that the Secretary would not
cause the [AAR] to be removed from the NPDB.”

ECF 41 at 11, ¶

57.
By letter dated February 27, 2012, Dr. Long was notified by
the Secretary that as result of its review, it was “denying your
dispute” and the AAR would remain in the NPDB.

ECF 1-2 at 30.

In support of its determination, the Secretary found that Dr.
Long was the subject of an ongoing professional review process at
the time of his resignation, and that the AAR was properly filed.
A notation was thus added to the AAR stating that “the Secretary

5

determined that there is no basis to conclude that the report
should not have been filed or that for agency purposes it is not
accurate, complete, timely or relevant.

Accordingly, the report

shall be maintained as submitted by the reporting entity.”

ECF

1-3 at 3.
The current action centers on the Bowen Report and the
revised AAR, claiming libel per se and tortious interference with
prospective business relationships.

Count One of the FAC asserts

that the statements in the Bowen Response were malicious and
caused the NPDB to maintain the revised AAR containing the
Secretary’s notation.

Count One also claims that the revised AAR

was provided to all potential employers who queried the NPDB,
thus costing Dr. Long over one year’s income.

Count Two contends

that NMC knew, or should have known, that it could decline the
Secretary’s request for additional information, and that this
would have resulted in the original AAR being removed from the
NPDB.

Instead, NMC submitted allegedly-false statements, thereby

interfering with Dr. Long’s ability to secure employment.
Related Litigation
In 2005, Dr. Long filed an action in this Court against QHR,
NMC, and others who were affiliated with NMC and/or involved in
the 2004 peer review process.

See Long v. Quorum Health

Resources, LLC et al., No. 2:05-cv-21 (the “2005 Case”).

The

2005 Case included allegations regarding NMC’s investigation of

6

Dr. Long’s claims and behaviors, the recommendations that arose
out of that investigation, and the adoption of those
recommendations by NMC’s Medical Executive Committee and CEO.
Causes of action asserted in the 2005 Case included libel and
tortious interference.

That litigation concluded with a

settlement and a stipulation of dismissal with prejudice in 2008.
Concurrent with the settlement, Dr. Long signed a general
release of all claims.

The release applied to a host of parties,

including the defendants, their successors and assigns, and
insurer Medical Mutual Insurance Company of Maine.

The terms of

the release covered any claims “that [Dr. Long] made or could
have made,” including those “of which [he was] totally unaware
and unsuspecting,” excepting only claims under Dr. Long’s medical
malpractice insurance policies, “up to and as of the date” the
release was signed.

ECF 37-1 at 1.

The settlement agreement did

not require removal of the AAR from the NPDB.
In 2012, Dr. Long filed suit against Lloyd Parry, Esq. and
his law firm, Davis, Parry & Tyler, P.C.
2:12-cv-81 (the “Parry Case”).
Long in the 2005 Case.

See Long v. Parry, No.

Attorney Parry represented Dr.

Dr. Long claims Parry defied his

instructions and negotiated a settlement that did not require NMC
to void the AAR.

Dr. Long also claims that Parry threatened to

withdraw if Dr. Long did not accept the $4,000,000 settlement.
The Parry Case is currently pending.

7

Discussion
I.

Motion to Dismiss
A.

Legal Standard

To survive a motion to dismiss under Rule 12(b)(6), a
complaint must plead “enough facts to state a claim to relief
that is plausible on its face.”
U.S. 544, 570 (2007).

Bell Atl. Corp. v. Twombly, 550

A claim will only have “facial

plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. 662, 678 (2009).

Ashcroft v.

A complaint is properly

dismissed, where, as a matter of law, “the allegations in a
complaint, however true, could not raise a claim of entitlement
to relief.”

Twombly, 550 U.S. at 558.

Accordingly, a district

court must accept as true all well-pleaded factual allegations in
the complaint, and draw all inferences in the plaintiff's favor.
ATSI Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.
2007).

However, that tenet “is inapplicable to legal

conclusions.”

Iqbal, 556 U.S. at 678.

Furthermore, a pleading

that offers only “labels and conclusions” or “a formulaic
recitation of the elements of a cause of action will not do.”
Twombly, 550 U.S. at 555.
In its review, the Court may consider facts alleged in the
complaint and documents attached to it or incorporated in it by
8

reference, documents “integral” to the complaint and relied upon
in it, and facts of which judicial notice may properly be taken
under Rule 201 of the Federal Rules of Evidence.

See Rothman v.

Gregor, 220 F.3d 81, 88 (2d Cir. 2000) (“[F]or purposes of a
motion to dismiss, we have deemed a complaint to include any
written instrument attached to it as an exhibit or any statements
or documents incorporated in it by reference . . . .”); Brass v.
Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993) (in
determining the adequacy of a claim under Rule 12(b)(6),
consideration is limited to facts stated on the face of the
complaint, in documents appended to the complaint or incorporated
in the complaint by reference, and matters of which judicial
notice may be taken).
B.

Libel Per Se Claim
1.

Res Judicata

Defendants first argue that the doctrine of res judicata
bars Dr. Long’s claims.

Specifically, they contend that the

libel and tortious interference claims brought in the 2005 Case
may not be raised again here, even though they are based upon
communications that occurred after the 2005 Case was settled.
Because this Court exercised diversity jurisdiction over the
state law claims alleged in the 2005 Case, it applies Vermont’s
res judicata jurisprudence.

See Taylor v. Sturgell, 553 U.S.

880, 891 n.4 (2008) (“For judgments in diversity cases, federal
9

law incorporates the rules of preclusion applied by the State in
which the rendering court sits.”); Semtek Int’l Inc. v. Lockheed
Martin Corp., 531 U.S. 497, 508 (2001).
The doctrine of res judicata “bars the litigation of a claim
or defense if there exists a final judgment in former litigation
in which the ‘parties, subject matter and causes of action are
identical or substantially identical.’”

Berlin Convalescent

Ctr., Inc. v. Stoneman, 615 A.2d 141, 143 (Vt. 1992) (quoting
Berisha v. Hardy, 474 A.2d 90, 91 (Vt. 1984)).

Res judicata

precludes parties from litigating claims that were raised in
previous adjudicative proceedings as well as those that should
have been raised.

Lamb v. Geovjian, 683 A.2d 731, 734 (Vt.

1996); see also Iannarone v. Limoggio, 2011 VT 91, ¶ 15, 30 A.3d
655, 660 (explaining that a claim will be barred from being
litigated if “(1) a previous final judgment on the merits exists,
(2) the case was between the same parties or parties in privity,
and (3) the claim has been or could have been fully litigated in
the same proceeding.” (quoting In re St. Mary’s Church Cell
Tower, 2006 VT 103, ¶ 3, 910 A.2d 925, 926 (mem.)).
Here, there is no dispute that the 2005 Case constituted a
final adjudication on the merits involving the same parties.

The

application of res judicata, also known as claim preclusion, thus
hinges upon whether the subject matter and causes of action are
the same or substantially the same.
10

Stoneman, 615 A.2d at 143.

The pleadings in the 2005 Case asserted a libel claim based
upon NMC’s statements and actions.

The Amended Complaint alleged

that “the forced resignation of Dr. Long from NMC and related
matters have been communicated by Defendants to other physicians,
hospitals, patients and individuals.”
28-29, ¶ 583.

2005 Case, ECF 197-2 at

The Amended Complaint also alleged that

“Defendants allowed information regarding Dr. Long’s peer review
to be published to various persons not participating in the peer
review such that Dr. Long has been labeled as emotionally
disturbed and unfit to practice his profession.”

Id. at ¶ 584.

The 2005 Case further claimed that “notification to the [NPDB]
has now and forever falsely and maliciously branded Dr. Long as a
‘problem doctor.’

As such, Dr. Long’s ability to obtain

employment elsewhere in the United States as an orthopedic
surgeon has been virtually eliminated.”

Id. at ¶ 47.

Dr. Long’s current libel claim centers upon the Bowen Report
and the revised AAR.

The Bowen Report consisted primarily of

documentation pertaining to the 2004 peer review investigation
and Dr. Long’s resignation, much of which was the subject of the
2005 Case.

The only new documents generated in the Bowen Report

were the cover letter and the chronology.

As noted above, the

chronology set forth the dates and brief descriptions of events
and supporting documents.

Those descriptions used the term

“investigation,” but did not make any statements about Dr. Long’s

11

emotional stability or the reason for his resignation.

ECF 1-2

at 16-17.
Dr. Long asserts that the submission of peer review
documents to HHS, and republication of the AAR to the NPDB, both
constituted new acts of defamation, and that he has suffered new
damages as a result of NMC’s refusal to withdraw the AAR.

He is

also in possession of a new expert report that allegedly supports
his contamination claim.
Defendants respond that pursuant to a “transactional test,”
the support for both this case and the 2005 Case is fundamentally
the same and res judicata applies.

See Faulkner v. Caledonia

Cnty. Fair Ass’n, 2004 VT 123, ¶¶ 12-13, 869 A.2d 103, 108-09
(discussing “transactional test”); see also State v. Dann, 702
A.2d 105, 109 (Vt. 1997) (holding that for purposes of res
judicata, “two causes of action are the same if they can be
supported by the same evidence”).

In Faulkner, the Vermont

Supreme Court explained and endorsed the “transactional test,”
noting a trend toward a “broader approach” to preclusion claims.
2004 VT 123, ¶ 12, 869 A.2d at 108.3
In determining whether two causes of action are
sufficiently similar for claim preclusion purposes,

3

Faulkner involved a plaintiff who suffered a head injury
while on an amusement park ride. Plaintiff filed suit and
collected damages, but years later filed suit again after
suffering epileptic seizures as a result of the same head injury.
The lower court dismissed the case on the basis of claim
preclusion, and the Vermont Supreme Court affirmed the judgment.
12

this Court has focused on whether the same evidence
will support both of them . . . .
As the U.S. Supreme Court has noted, however,
“[d]efinitions of what constitutes the ‘same cause of
action’ have not remained static over time.” 2004 VT
123, ¶ 12, 869 A.2d 108. Indeed, the trend has been
toward a broader approach, embodied in the Restatement
(Second) of Judgments, requiring a plaintiff to address
in one lawsuit all injuries emanating from “all or any
part of the transaction, or series of connected
transactions, out of which the action arose.”
Restatement (Second) of Judgments § 24(1)(1982)
[hereinafter Restatement (Second)]; . . .
Under the second Restatement, the scope of a
“transaction” is determined by “giving weight to such
considerations as whether the facts are related in
time, space, origin, or motivation, whether they form a
convenient trial unit, and whether their treatment as a
unit conforms to the parties’ expectations or business
understanding or usage.” Restatement (Second) § 24(2).
In making this assessment, “no single factor is
determinative.” Id. § 24 cmt. b. Additionally, “even
when there is not a substantial overlap [between proofs
relevant to two actions], the second action may be
precluded if it stems from the same transaction.” Id.
Thus, it follows from this flexible definition that
“where one act causes a number of harms to, or invades
a number of different interests of the same person,
there is still but one transaction.” Id. § 24 cmt. c.
Id. at ¶¶ 12-13, 869 A.2d at 108-09; see also Woods v. Dunlop
Tire Corp., 972 F.2d 36, 38 (2d Cir. 1992) (applying
transactional analysis under federal res judicata doctrine).
With respect to allegations of new damages, Faulkner again
cited “the Restatement approach [which] recognizes, ‘even when
the injury caused by an actionable wrong extends into the future
and will be felt beyond the date of judgment, the damages awarded
by the judgment are nevertheless supposed to embody the money

13

equivalent of the entire injury.’”

Id. at ¶ 16, 869 A.2d at 110

(quoting Restatement (Second) of Judgments § 25 cmt. c).

Whether

the plaintiff was “‘in possession of enough information about the
damages, past or prospective’” is “‘immaterial’ to the claim
preclusion analysis.”

Id.

Dr. Long alleges that he has suffered new damages because
the AAR was “maintained” in the NPDB.

The resolution of the 2005

Case, however, pertained to both past and prospective damages
claims arising out of the AAR as it existed in 2008.
Accordingly, any damages arising out of its “maintenance” are
barred.

See id.

Dr. Long also submits that he has new, “far stronger
evidence that NMC was negligent in defaming Dr. Long.”
18.

ECF 24 at

This evidence consists of an expert report allegedly

demonstrating “that someone was deliberately infecting Dr. Long’s
patients.”

Id.

Dr. Long does not explain why such a report was

not generated for use in the 2005 Case.

“Relitigation of an

issue with additional evidence that was previously available, as
occurred here, is precisely what res judicata and collateral
estoppel are intended to prevent.”
13, 974 A.2d 619, 624.

In re McGrew, 2009 VT 44, ¶

Dr. Long’s new evidence thus does not

prevent the application of res judicata to his current libel
claim.
Some of Dr. Long’s claims are based upon facts and

14

statements that did not exist at the time of the 2008 settlement;
specifically, the Bowen cover letter and chronology, and the
Secretary’s notation on the AAR.

Dr. Long also appears to allege

that each query to the NPDB constitutes a republication.
Several courts have “applied res judicata to claims
extending over time or involving seriatim transactions and events
so long as they are sufficiently related . . . .

[T]he pleading

of subsequent acts will not defeat res judicata when these
additional facts arise from the same core of operative facts.”
Waldman v. Village of Kiryas Joel, 39 F. Supp. 2d 370, 379
(S.D.N.Y. 1999) (citing Norman v. Niagara Mohawk Power Corp., 873
F.2d 634, 638 (2d Cir. 1989)), aff’d, 207 F.3d 105 (2d Cir.
2000).

Here, any injuries arising out of post-2008 queries to

the NPDB by, for example, Dr. Long’s potential employers, clearly
arose out of the same core of operative facts as the settled
claims and are not actionable.

As to any injuries caused by the

Secretary’s notation on the AAR, or by the Bowen Report, those
events also arose out of the same core of facts as the 2005 Case.
Indeed, applying the “transactional test” criteria of “time,
space, origin, or motivation,” the documents provided in the
Bowen Report originated during the 2004 peer review process and
pertained to the same “time” and “space” as the facts underlying
the 2005 case.

Faulkner, 2004 VT 123, ¶ 13, 869 A.2d at 109

(noting “flexible definition” of claim preclusion).

15

With respect

to motivation, the alleged publications to the NPDB, and
subsequently HHS, arose out of NMC’s perceived obligation to
provide information about pre-2005 conduct.

And as to the

parties’ expectations, see id., there would have been no
expectation that the 2004 documents or related information would
be submitted to HHS if not for the Secretarial review that Dr.
Long himself initiated.

Dr. Long’s libel claim is therefore

DISMISSED as barred by res judicata.
2.

Invited Harm

Defendants submit, in the alternative, that any harm
suffered as a result of the Secretary’s review was brought on by
Dr. Long himself.

The Restatement (Second) of Torts posits that

“the consent of another to the publication of defamatory matter
concerning him is a complete defense to his action for
defamation.”

Restatement (Second) of Torts § 583 (1977).

Indeed, “[i]t is axiomatic that ‘invited defamation,’ or the
issuance of a defamatory statement wherein the injured party
precipitated the statement’s release, is not actionable.”

Litman

v. Massachusetts Mut. Life Ins. Co., 739 F.2d 1549, 1560 (11th
Cir. 1984); see also Georgia Power Co. v. Busbin, 289 S.E.2d 514,
515 (Ga. 1982) (holding that there can be no recovery for invited
libel); Pressley v. Continental Can Company, 250 S.E.2d 676, 678,
disc. review denied, 254 S.E.2d 37, 37-38 (N.C. 1979) (“A
publication of a libel, procured or invited by the plaintiff, is

16

not sufficient to support an action for defamation.”); Williams
v. School Dist. of Springfield, 447 S.W.2d 256, 269 (Mo. 1969)
(“One who has invited or instigated the publication of defamatory
words can not be heard to complain of the resulting damage to his
reputation.”), overruled on other grounds by Bass v. Nooney Co.,
646 S.W.2d 765 (Mo. 1983).4
In Dr. Long’s opposition to the motion to dismiss, counsel
submits that Dr. Long did not compel either the Bowen Report or
the Secretary’s notation, as he expected NMC to either withdraw
the AAR or to remain silent when the Secretary requested
supporting documentation.

ECF 24 at 5.

This assertion is belied

by the exhibits submitted with his pleadings.
Dr. Long’s exhibits show that on August 29, 2011, he wrote
to NMC’s Bowen and informed her that “[t]he National Practitioner
Data Bank requires that a practitioner attempt to resolve [the
AAR issue] with the reporting entity prior to elevating the
matter to review by the Secretary of [HHS].
[NMC] will voluntarily void this report.”

Please advise if

ECF 1-2 at 2.

Bowen

responded in writing on September 9, 2011, stating that “the
Medical Center declines to void the report.”

Id. at 3.

Dr. Long

then submitted his formal request to the Secretary, asserting

4

While consent is an affirmative defense, it may be raised
in a Rule 12(b)(6) motion if the factual bases for the defense
appear on the face of the complaint. See Staehr v. Hartford Fin.
Servs. Grp., Inc., 547 F.3d 406, 425–26 (2d Cir. 2008).
17

that NMC “should be required to produce acceptable evidence
supporting the referenced AAR.”

Id. at 6.

As discussed above, the Secretary confirmed receipt of Dr.
Long’s request, and notified him that it might contact “the
entity that filed the report under review” and request
“additional information.”

Id. at 10.

The Secretary also warned

Dr. Long that its findings would be set forth in a statement
“added to the [AAR].”

Id. at 11.

Accordingly, Dr. Long was on

notice that his request for review could precipitate both the
Bowen Report and the Secretary’s subsequent statement on the AAR.
Indeed, in light of NMC’s refusal to void the AAR, and even if
the Court draws all reasonable inferences in Dr. Long’s favor,
see LaFaro v. New York Cardiothoracic Grp., PLLC, 570 F.3d 471,
475 (2d Cir. 2009), the complaint and its attachments show that
both the Bowen Report and a revised AAR were likely outcomes.
See, e.g., Busbin, 289 S.E.2d at 515 (“It is enough that the
complainant requests or consents to the presence of a third party
and solicits the publication of matter which he knows or has
reasonable cause to suspect will be unfavorable to him.”).
This case would not exist but for Dr. Long’s request for
review by the Secretary.

In the course of that process, Dr. Long

urged the Secretary to require documentation from NMC, the
Secretary did so, and NMC complied.

That compliance, resulting

from Dr. Long’s own actions, cannot now result in liability and a

18

second payment of damages.

Accordingly, for this reason as well,

the libel per se claim against Defendants is DISMISSED.
C.

Tortious Interference Claim

Dr. Long’s tortious interference claim is similarly barred.
The 2005 Case alleged that as a result of the AAR, Dr. Long was
unable to obtain employment as a surgeon.

He now claims that the

revised AAR again prevents him from obtaining employment, and
that when the 2005 Case was settled, he did not have the benefit
of the expert report regarding contamination.

Dr. Long further

contends that Defendants’ failure to remain silent when asked by
the Secretary for documentation caused him new harm.
Again applying the “transactional test” for res judicata,
the Court finds that most of the facts supporting Dr. Long’s 2005
tortious interference claim are fundamentally the same as those
offered here.

A tortious interference claim requires a plaintiff

to show, among other things, “that the interferer acted with the
purpose to harm the plaintiff or by means that are dishonest,
unfair, or improper.”

J.A. Morrissey, Inc. v. Smejkal, 2010 VT

66, ¶ 21, 6 A.3d 701, 709.

The Bowen Report and the updated AAR

were based upon documents from 2004, and to the extent the 2004
documents might have satisfied the tortious interference
standard, that issue was put to rest in the 2008 settlement.
Insofar as the tortious interference claim is based upon a
core of operative facts beyond the 2004 documents, the actions

19

complained of were again the product of Dr. Long’s own request to
the Secretary.

His claim that NMC should have remained silent is

misplaced, as NMC was entitled, and arguably compelled, to
respond to the Secretary’s request.

Indeed, the Secretary’s

letter to Kim Charboneau at NMC stated that “[a] response is
required in accordance with the reporting requirements of the
Health Care Quality Improvement Act of 1986, as amended, 42
U.S.C. §§ 11101 et seq.”

ECF 1-2 at 14.

Those reporting

requirements may have included sanctions for failure to report.
See, e.g., 42 U.S.C. § 11133©.

Furthermore, Dr. Long knew that

NMC stood behind both its investigation and its AAR report, and
had no reason to expect that NMC would remain silent when
questioned about those events.
With respect to the updated AAR, the Secretary added a
comment as the result of the review process initiated by Dr.
Long.

Dr. Long cannot now benefit from the outcome of his own

actions.

Nor does the existence of a new expert report

revitalize his claim since, as discussed above, the facts
underlying that report were available prior to the conclusion of
the 2005 Case.

Dr. Long’s tortious interference claim is

therefore DISMISSED.
III. Motion to Amend
Dr. Long has moved to amend the FAC to add two new causes of
action: violation of Vermont’s consumer fraud statute (Count III)

20

and deceit (Count IV).

He also seeks to add Medical Mutual

Insurance Co. of Maine (“MMIC”) as a defendant.

MMIC allegedly

provided counsel for Defendants in the 2005 Case, as well as the
funds to settle that case.

Dr. Long claims that MMIC

fraudulently induced him to settle by failing (through its hired
attorneys) to provide certain discovery in the course of the 2005
Case.
In general, courts should freely give leave to amend “when
justice so requires.”

Fed. R. Civ. P. 15(a)(2); see Foman v.

Davis, 371 U.S. 178, 182 (1962).

“Leave to amend, though

liberally granted, may properly be denied for: ‘undue delay, bad
faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of
the amendment, futility of amendment, etc.’”

Ruotolo v. City of

New York, 514 F.3d 184, 191 (2d Cir. 2008) (quoting Foman, 371
U.S. at 182).

If the amended claims could not withstand a motion

to dismiss pursuant to Rule 12(b)(6), leave to amend may be
denied.

See Lucente v. Int’l Bus. Mach. Corp., 310 F.3d 243, 258

(2d Cir. 2002); Dougherty v. Town of N. Hempstead Bd. of Zoning
Appeals, 282 F.3d 83, 88 (2d Cir. 2002).

As with a Rule 12(b)(6)

motion, the Court accepts all factual allegations in the proposed
amendments as true and draws all reasonable inferences in favor
of the plaintiff.

See Aetna Cas. & Sur. Co. v. Aniero Concrete

21

Co., Inc., 404 F.3d 566, 604 (2d Cir. 2005).
In support of his amended claims, Dr. Long alleges that on
December 23, 2003, a patient upon whom he had operated came to
his office suffering from a post-surgical infection.

Before

commencing antibiotic treatment, Dr. Long obtained a bacterial
culture from the patient.

He now contends that the December 23

culture result was not produced during discovery in the 2005
Case, and if produced, would have helped him prove that NMC was
contaminating his surgeries.
Specifically, Dr. Long discovered in July 2013 that the
December 23 culture “demonstrated an infection with
Staphylococcus aureus that was sensitive to all antibiotics.”
ECF 32-1 at 17, ¶ 115.

He asserts that such an infection “is

rarely if ever seen in the clinical practice of medicine,”
because bacteria within a hospital environment rapidly develops
antibiotic resistance.

Id. at 16-17, ¶¶ 103, 116.

Bacteria from

a biological supply house, however, “is not exposed to factors
that result in antibiotic resistance.”

Id. at 16, ¶ 102.

Dr.

Long alleges that the December 23 culture matched bacteria
purchased by NMC, presumably from a supply house, shortly prior
to the patient’s surgery.

Id. at 17, ¶ 118.

A culture taken from the same patient the next day (December
24, 2003), after the bacteria had begun to develop antibiotic
resistance, did not match the purchased bacteria.

22

Dr. Long

alleges that while the defendants produced the December 24
culture, they intentionally withheld the December 23 culture, and
access to the latter culture would have helped him prove
contamination.

Such proof, he claims, would have resulted in

either a settlement amount or a jury verdict in excess of the
$4,000,000 settlement he achieved in 2008.
Based upon these factual allegations, Dr. Long first seeks
to add a cause of action under the Vermont Consumer Fraud Act
(“VCFA”).

The VCFA prohibits “unfair or deceptive acts or

practices in commerce.”

Vt. Stat. Ann. tit. 9, § 2453(a).

To

bring a claim under the VCFA, a plaintiff must be a consumer who
“contracts for goods or services.”
2461(b).

Vt. Stat. Ann. tit. 9, §

The defendant must be a “seller, solicitor, or other

violator.”

Id.

The “‘in commerce’ requirement narrows the CFA’s application
to prohibit only unfair or deceptive acts or practices that occur
in the consumer marketplace.

To be considered ‘in commerce,’ the

transaction must take place in the context of an ongoing business
in which the defendant holds himself out to the public.”

Foti

Fuels, Inc. v. Kurrle Corp., 2013 VT 111, ¶ 21, 59 A.3d 744
(internal quotation marks and citation omitted).

In Foti Fuels,

the Vermont Supreme Court further explained that to be considered
“in commerce”:
the practice must have a potential harmful effect on
the consuming public, and thus constitute a breach of a
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duty owed to consumers in general. By contrast,
transactions resulting not from the conduct of any
trade or business but rather from private negotiations
between two individual parties who have countervailing
rights and liabilities established under common law
principles of contract, tort and property law remain
beyond the purview of the statute.
Id. (internal quotation marks and citations omitted).
Here, the underlying facts do not fall within the purview of
the VCFA.

Dr. Long was not a consumer as defined by the statute,

as he did not contract for either a good or a service from MMIC.
Furthermore, the settlement of the 2005 Case was not a
transaction that took place “in commerce,” but instead involved
private parties with “countervailing rights and liabilities
established under common law.”

Id.; see also Bennet v. Ford

Motor Co., 2008 WL 4000558, at *3 (W.D. Ky. Aug. 25, 2008)
(denying claim under Kentucky Consumer Fraud Act where
defendant’s allegedly wrongful acts “took place in the conduct of
litigation, not in the conduct of trade or commerce”).

Dr.

Long’s proposed claim under the VCFA is therefore futile.
His second proposed cause of action is for “deceit.”
Under Vermont law, “‘[a]n action for fraud and deceit will lie
upon an intentional misrepresentation of existing fact, affecting
the essence of the transaction, so long as the misrepresentation
was false when made and known to be false by the maker, was not
open to the defrauded party’s knowledge, and was relied on by the
defrauded party to his damage.’”

24

Silva v. Stevens, 589 A.2d 852,

857 (Vt. 1991) (quoting Union Bank v. Jones, 411 A.2d 1338, 1342
(Vt. 1980)).

The deceit claim is again based upon the alleged

failure to produce the December 23 culture.
The fundamental flaw in this proposed claim is that Dr. Long
allegedly obtained the December 23 culture himself.

Accordingly,

he knew that the culture had been analyzed, and its omission from
discovery production was “open to the defrauded party’s
knowledge.”

Union Bank, 411 A.2d at 1342.

He cannot come

forward now, years after the case was settled, and ask the Court
to re-open the litigation on the basis of such allegedly-omitted
evidence.

Cf. NMD Interactive, Inc. v. Chertok, 2013 WL 1385213,

at *10 (S.D.N.Y. Mar. 18, 2013) (“Defendant took no steps to
compel disclosure of documents that he knew existed, and then he
waived any objections to Plaintiff’s production by settling.”)
(citing United States v. Bank of New York, 14 F.3d 756, 759 (2d
Cir. 1994)).5

The motion for leave to amend is therefore DENIED.

5

Moreover, the remedy Dr. Long seeks in his amended claims
– damages beyond what he received in the 2008 settlement –
appears to be inconsistent with Vermont law. In Caledonia Sand
and Gravel Co. v. Joseph A. Bass Co., 151 A.2d 312, 314-15 (Vt.
1959), the Vermont Supreme Court held that “[i]n this State it
may be regarded as a general rule that when one has received
anything of value in settlement of a right of action, the
contract of settlement, although obtained by duress and fraud, is
a bar to a recovery at law so long as it is not rescinded by an
offer to return the consideration in so far as it lies within his
power to do so.” Under Caledonia Sand and Gravel Co., Dr. Long
may not retain the benefit of the 2008 settlement and bring
litigation for additional amounts that he might (or might not)
have received.
25

Conclusion
For the reasons set forth above, Defendants’ motion to
dismiss (ECF 17) is GRANTED and Dr. Long’s motion to amend (ECF
32) is DENIED.

Defendants’ motion for an extension of time in

which to move to strike (ECF 19) is DENIED as moot.

This case is

DISMISSED.
Dated at Burlington, in the District of Vermont, this 5th
day of May, 2014.

/s/ William K. Sessions III
William K. Sessions III
District Court Judge

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