Ohio Valley Health Services & Education Corporation Health Plan et al v. Riley et al

Filing 59

MEMORANDUM OPINION AND ORDER DENYING AS MOOT PLAINTIFFS' FIRST MOTION TO DISMISS THE COUNTERCLAIM AND GRANTING PLAINTIFFS' SECOND MOTION TO DISMISS THE COUNTERCLAIM: Granting 25 Second Motion to Dismiss the amended counterclaim for failure to State a Claim; and Denying as moot 16 First Motion to Dismiss counterclaim for failure to State a Claim. Signed by Senior Judge Frederick P. Stamp, Jr on 12/10/15. (soa)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
OHIO VALLEY HEALTH SERVICES &
EDUCATION CORPORATION HEALTH PLAN,
OHIO VALLEY HEALTH SERVICES &
EDUCATION CORPORATION DENTAL PLAN,
OHIO VALLEY HEALTH SERVICES &
EDUCATION CORPORATION,
OHIO VALLEY MEDICAL CENTER and
EAST OHIO REGIONAL HOSPITAL,
Plaintiffs,
v.

Civil Action No. 5:15CV65
(STAMP)

MICHAEL D. RILEY, West Virginia
Insurance Commissioner,
WEST VIRGINIA OFFICES OF
THE INSURANCE COMMISSIONER
and HEALTH PLAN OF THE
UPPER OHIO VALLEY, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
DENYING AS MOOT PLAINTIFFS’ FIRST
MOTION TO DISMISS THE COUNTERCLAIM
AND GRANTING PLAINTIFFS’ SECOND
MOTION TO DISMISS THE COUNTERCLAIM
I.

Background1

Plaintiff Ohio Valley Health Services & Education Corporation
(“OVHS&E”) maintains two employee benefit plans, the Ohio Valley
Health Services & Education Corporation Health Plan and the Ohio
Valley

Health

Services

&

Education

Corporation

(collectively, “OVHS&E Health and Dental Plans”).
1

Dental

Plan

OVHS&E is the

For a more thorough recitation of the facts, see this Court’s
memorandum opinion and order denying defendants Michael D. Riley
and West Virginia Offices of the Insurance Commissioner’s motion to
dismiss. ECF No. 58.

parent corporation of the Ohio Valley Medical Center (“OVMC”) and
the East Ohio Regional Hospital (“EORH”). OVHS&E Health and Dental
Plans entered into an Administrative Services Agreement (“ASO”)
with defendant The Health Plan of the Upper Ohio Valley, Inc.
(“Upper

Ohio

Valley

Health

administrative services.

Plan”)

to

provide

third-party

Those services include paying claims

approved and paid for by the OVHS&E Health and Dental Plans.

The

Upper Ohio Valley Health Plan has served as such an administrator
since 1999.
Between January 2005 and April 2013, OVHS&E Health and Dental
Plans ran short of funding.

Because of the lack of funds, the

OVHS&E Health and Dental Plans waited to approve claims for payment
by the Upper Ohio Valley Health Plan until sufficient funds became
available. Although approval for claims remained pending, Wheeling
Hospital (and other service providers) nonetheless entered into
Hospital Service Agreements with the Upper Ohio Valley Health Plan.
Wheeling Hospital then filed an action under Civil Action 5:10CV67
(“Wheeling Hospital litigation”), wherein it sued OVHS&E, OVMC,
EORH, and the Upper Ohio Valley Health Plan for attorney’s fees and
prejudgment interest concerning the pending and delayed payments.
This Court ultimately dismissed Wheeling Hospital’s claims against
OVHS&E, OVMC, and EORH.

The remaining defendant in the Wheeling

Hospital litigation, Upper Ohio Valley Health Plan, entered into

2

arbitration with Wheeling Hospital.

Ultimately, Wheeling Hospital

and Upper Ohio Valley Health Plan reached a settlement.
The plaintiffs have now filed this civil action, wherein they
seek

declaratory

relief

and

injunctive

relief.

ECF

No.

1.

Defendant Upper Ohio Valley Health Plan also filed a counterclaim,
which is currently at issue and has been amended.
21, respectively.

ECF Nos. 9 and

In that amended counterclaim, Upper Ohio Valley

Health Plan asserts five counterclaims.

In Count I, it asserts a

breach of contract claim against OVHS&E and OVHS&E Health and
Dental Plans regarding the ASOs.

Count II is a breach of contract

and express indemnification claim against OVHS&E and OVHS&E Health
and Dental Plans for failure to indemnify Upper Ohio Valley Health
Plan for the settlement and costs of past litigation.2

Under Count

III, Upper Ohio Valley Health Plan alternatively pleads a claim of
implied indemnification against OVHS&E and OVHS&E Health and Dental
Plans.

Count IV is a claim of unjust enrichment against OVMC and

EORH regarding the ASOs and the settlement of past litigation.
Under Count V, Upper Ohio Valley Health Plan alternatively asserts
a claim of unjust enrichment against OVHS&E.

2

The Upper Ohio Valley Health Plan seeks indemnification for
its settlement and costs it paid in not only the Wheeling Hospital
litigation, but also in a separate state court action (referred to
by the parties as the “Wack litigation”).
3

A.

First Motion to Dismiss by Plaintiffs
The plaintiffs OVHS&E, OVMC, and EORH filed a motion to

dismiss Upper Ohio Valley Health Plan’s counterclaim (“first motion
to dismiss”).

ECF No. 16.

It appears, however, that those

plaintiffs filed their first motion to dismiss as to Upper Ohio
Valley Health Plan’s initial counterclaim.
Ohio

Valley

Health

Plan

has

since

ECF No. 9.

amended

its

The Upper

counterclaim.

Nonetheless, in their first motion to dismiss, OVHS&E, OVMC, and
EORH assert that they are not parties to the ASOs at issue.
Because of that, they argue that the Upper Ohio Valley Health
Plan’s breach of contract counterclaim cannot prevail. No response
or reply was filed to the first motion to dismiss.
B.

Second Motion to Dismiss by Plaintiffs
The plaintiffs later filed a second motion to dismiss the

amended counterclaim (“second motion to dismiss”). ECF No. 25. In
their motion, the plaintiffs argue that the breach of contract
claim against OVHS&E and OVHS&E Health and Dental Plans (Count I)
should be dismissed because OVHS&E was not a party to the ASOs.
Even if the ASOs bound OVHS&E, they believe that the Upper Ohio
Valley Health Plan has inadequately pleaded its breach of contract
claim. Next, the plaintiffs contend that the indemnification claim
against OVHS&E and the OVHS&E Health and Dental Plans (Count II)
should

be

dismissed

because

indemnification in this case.

the

ASOs

expressly

preclude

The plaintiffs further assert that

4

those express provisions of the ASOs defeat the Upper Ohio Valley
Health

Plan’s

claims

for

implied

indemnification

(Count

III)

against OVHS&E and the OVHS&E Health and Dental Plans. As to Count
III, OVHS&E and OVHS&E Health and Dental Plans believe that not
only is implied indemnification inapplicable if the underlying
claim is contractual, but that Upper Ohio Valley Health Plan also
inadequately pleaded that claim.

Finally, the plaintiffs argue

that Counts IV and V, which are unjust enrichment against OVMC and
EORH and unjust enrichment against OVHS&E (respectively), cannot
proceed because (1) an express contract exists and (2) Upper Ohio
Valley Health Plan has inadequately pleaded those claims.
The

Upper

opposition.

Ohio

Valley

ECF No. 51.

Health

Plan

filed

a

response

in

It first argues that OVHS&E is bound by

the ASOs because it is a “Plan Sponsor.”

Upper Ohio Valley Health

Plan also believes that OVHS&E is a “real party in interest”
regarding the rights and obligations of the OVHS&E Health and
Dental Plans.

Therefore, the ASOs should legally bind OVHS&E.

Regarding the indemnification provision, the Upper Ohio Valley
Health Plan believes that such an interpretation is inconsistent
with the ASOs.

The Upper Ohio Valley Health Plan further argues

that it has adequately pleaded all of its claims.

The plaintiffs

filed a reply, wherein they essentially reassert their previous
arguments.

5

For the reasons set forth below, the plaintiffs’ second motion
to dismiss the amended counterclaim (ECF No. 25) is GRANTED and the
first motion to dismiss the counterclaim (ECF No. 16) is DENIED AS
MOOT.
II.

Applicable Law

In assessing a motion to dismiss for failure to state a claim
under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
court must accept all well-pled facts contained in the complaint as
true.

Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc, 591 F.3d

250, 255 (4th Cir. 2009). However, “legal conclusions, elements of
a cause of action, and bare assertions devoid of further factual
enhancement fail to constitute well-pled facts for Rule 12(b)(6)
purposes.”
(2009)).

Id. (citing Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
This

Court

also

declines

to

consider

“unwarranted

inferences, unreasonable conclusions, or arguments.”

Wahi v.

Charleston Area Med. Ctr., Inc., 562 F.3d 599, 615 n.26 (4th Cir.
2009).
It has often been said that the purpose of a motion under Rule
12(b)(6) is to test the formal sufficiency of the statement of the
claim for relief; it is not a procedure for resolving a contest
about the facts or the merits of the case.

5B Charles Alan Wright

& Arthur R. Miller, Federal Practice and Procedure § 1356 (3d ed.
1998).

The Rule 12(b)(6) motion also must be distinguished from a

motion for summary judgment under Federal Rule of Civil Procedure

6

56, which goes to the merits of the claim and is designed to test
whether there is a genuine issue of material fact.

Id.

For

purposes of the motion to dismiss, the complaint is construed in
the

light

essentially

most
the

favorable
court’s

to

the

inquiry

party
is

making

directed

the
to

claim

and

whether

the

allegations constitute a statement of a claim under Federal Rule of
Civil Procedure 8(a).

Id. § 1357.

A complaint should be dismissed “if it does not allege ‘enough
facts to state a claim to relief that is plausible on is face.’”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Facial
plausibility is established once the factual content of a complaint
‘allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Nemet Chevrolet,
591 F.3d at 256 (quoting Iqbal, 129 S. Ct. at 1949).

Detailed

factual allegations are not required, but the facts alleged must be
sufficient “to raise a right to relief above the speculative
level.”

Twombly, 550 U.S. at 555.
III.

Discussion

As discussed earlier, plaintiffs OVHS&E, OVMC, and EORH filed
the first motion to dismiss regarding the Upper Ohio Valley Health
Plan’s initial counterclaim.

Following that first motion, the

Upper Ohio Valley Health Plan filed an amended counterclaim, to
which

the

plaintiffs

filed

a

second

7

motion

to

dismiss.

In

analyzing the parties’ arguments, this Court will, when relevant,
view them through the lens of assuming without deciding that ERISA
does not preempt the Prompt Pay Act and indemnification claims.3
This Court will address the first and second motions to dismiss in
the order presented.
A.

First Motion to Dismiss
The first motion to dismiss pertained to the Upper Ohio Valley

Health Plan’s initial counterclaim.

Since that first motion to

dismiss, however, the Upper Ohio Valley Health Plan has filed an
amended counterclaim.

Moreover, the parties have filed neither a

response nor reply to that first motion.

Because the initial

counterclaim has been amended, and because the plaintiffs filed a
second motion to dismiss, the first motion to dismiss (ECF No. 16)
is DENIED AS MOOT.

3

In their complaint, the plaintiffs seek a declaratory
judgment that ERISA preempts the Prompt Pay Act and the Upper Ohio
Valley Health Plan’s request for indemnification.
ECF No. 1.
Those claims, however, are not sought against the defendants to the
counterclaim. Therefore, the motions to dismiss the counterclaim
are not the appropriate vehicle for this Court to rule upon the
issue of preemption as such a ruling will affect the plaintiffs’
requests for relief. Thus, at this time, this Court will assume
without deciding that ERISA does not preempt the Prompt Pay Act or
indemnification, and accordingly, defer formally ruling on that
issue at this time.
8

B.

Second Motion to Dismiss
1.

Count I: Breach of Contract Against OVHS&E and OVHS&E
Health and Dental Plans

Under Count I of the amended counterclaim, the Upper Ohio
Valley Health Plan asserts that OVHS&E and OVHS&E Health and Dental
Plans breached the ASOs.

ECF No. 21.

That breach of contract

counterclaim, however, must be dismissed for the reasons discussed
below.
a.

OVHS&E Is Not a Party to the ASOs

As to OVHS&E, the Upper Ohio Valley Health Plan believes that
OVHS&E is bound by the ASOs, which OVHS&E allegedly breached. That
claim is somewhat suspect, however, because OVHS&E is not a party
to the ASOs between the Upper Ohio Valley Health Plan and OVHS&E
Health and Dental Plans. It is well-settled that “[a] non-party to
a contract cannot be sued for breach of that contract.”

A. Hak

Indus. Services BV v. TechCorr USA, LLC, 2014 WL 7243191 at *12
(N.D. W. Va. Dec. 19, 2014); see also Herbal Care Sys. Inc. v.
Plaza, 2009 WL 692338, at *2 (D. Ariz. Mar. 17, 2009); Brown v.
Kinross Gold U.S.A., Inc., 531 F. Supp. 2d 1234, 1240 (D. Nev.
2008); Kelly v. TillotsonPearson, Inc., 840 F. Supp. 935, 944
(D.R.I. 1994); Hotel Aquarius, B.V. v. PRT Corp., 1992 WL 391264,
at *6 (S.D.N.Y. Dec. 22, 1992).
Here, the ASOs are between Upper Ohio Valley Health Plan and
OVHS&E Health and Dental Plans.

9

ECF No. 21 Exs. 1 and 2.

In

particular,

the

signature

lines

of

each

ASO

ends

with

the

following:
IN WITNESS WHEREOF, the parties have executed this
Agreement by signature of their duly authorized officers.
OHIO VALLEY HEALTH SERVICES AND EDUCATION HEALTH PLAN
BY:
TITLE:
DATE:
THE OHIO HEALTH PLAN OF THE UPPER OHIO VALLEY, INC.
BY:
TITLE:
DATE:
Id. at Ex. 1.

The representatives of each party then signed and

dated under their respective signature line.

Id.

The other ASO

maintains identical language, but replaces the “Ohio Valley Health
Services and Education Health Plan” with the “Ohio Valley Health
Services and Education Dental Plan.”

Id. at Ex. 2.

OVHS&E is not listed under the signature lines.
ASO

begins

with

the

following:

“THIS

In both ASOs,

Furthermore, each

ADMINISTRATIVE

SERVICES

AGREEMENT . . . effective January 1, 2005 by and between Ohio
Valley Health Services & Education Corporation Health Plan . . .
and The Health Plan of the Upper Ohio Valley, Inc.”

Id. at Ex. 1.

The second ASO uses identical language, but replaces “Ohio Valley
Health Services & Education Corporation Health Plan” with “Ohio
Valley Health Services & Education Corporation Dental Plan.”
at Ex. 2.

Id.

Therefore, at first glance, OVHS&E is not a party or

signatory to the ASOs, and thus, is not bound by the ASOs.

10

The Upper Ohio Valley Health Plan, however, believes that
OVHS&E must be bound for three primary reasons.

First, the Upper

Ohio Valley Health Plan states that the OVHS&E Health and Dental
Plans are each a “mere stack of paper--everything they do, they do
by and through” OVHS&E. This is allegedly further supported by the
fact that OVHS&E operates as the “Plan Sponsor” for the OVHS&E
Health and Dental Plans.

Second, the signatory of the ASOs, James

R. Stultz, also served as the Senior Vice President of Human
Resources at OVHS&E.

Third, OVHS&E is a “real party in interest,”

and as such, OVHS&E holds a significant pecuniary interest in this
litigation.

For those reasons, the Upper Ohio Valley Health Plan

believes that OVHS&E must be considered a party to the ASOs. Those
arguments, however, are slightly misplaced.
When reading and interpreting contract provisions, the court’s
purpose is to give full force and effect to the expressed or
implied intentions of the contracting parties, if such can be
discerned.

Truong Xuan Truc v. United States, 212 Ct. Cl. 51, 66,

1976 WL 905 (1976) (quoting Massachusetts Port Auth. v. United
States, 456 F.2d 782, 784, 197 Ct. Cl. 721, 726 (1972)); see also
SCM Corp. v. United States, 675 F.2d 280, 283, 230 Ct. Cl. 199, 203
(1982); Honeywell Inc. v. United States, 661 F.2d 182, 186, 228 Ct.
Cl. 591, 596 (1981); Dynamics Corp. of America v. United States,
389 F.2d 424, 429, 182 Ct. Cl. 62, 72 (1968).

Moreover, West

Virginia law provides that “a valid written agreement using plain

11

and unambiguous language is to be enforced according to its plain
intent and should not be construed.”

Toppings v. Rainbow Homes,

Inc., 490 S.E.2d 817, 822 (W. Va. 1997); see also Syl. Pt. 2,
Orteza v. Monongalia County General Hospital, 318 S.E.2d 40 (1984);
Syl. Pt. 1, Cotiga Development Co. v. United Fuel Gas Co., 128
S.E.2d 626 (W. Va. 1962).

In determining that intent, a court

“must view the instrument as a whole, attributing to each word its
normal or customary meaning, unless some indication exists that the
parties intended to use words in a special technical sense.” Nat’l
Cas. Co. v. Lockheed Martin Corp., 415 F. Supp. 2d 596, 601 (4th
Cir. 2006); see Dan Ryan Builders, Inc. v. Nelson, 737 S.E.2d 550
(W. Va. 2012).
Although the Upper Ohio Valley Health Plan may think that the
OVHS&E Health and Dental Plans are “mere stack[s]” of paper, the
clear and unambiguous language of the ASOs does not support such an
intent between the parties. Each ASO states that the OVHS&E Health
and Dental Plans and the Upper Ohio Valley Health Plan “intend[] to
be legally bound” under the terms of the ASOs.
and 2.

ECF No. 21 Exs. 1

The ASOs treat the OVHS&E Health and Dental Plans as

separate entities to which the Upper Ohio Valley Health Plan agreed
to contract, not as “mere stack[s]” of paper.

West Virginia law

provides

using

that

“a

valid

written

agreement

plain

and

unambiguous language is to be enforced according to its plain
intent and should not be construed.”

12

Toppings, 490 at 822.

In

this case, the Court finds no reason to depart from such legal
standard, and thus the ASOs must be enforced by their plain intent.
The same conclusion can be made as to the Upper Ohio Valley
Health Plan’s remaining arguments.

Although OVHS&E is a Plan

Sponsor of the OVHS&E Health and Dental Plans, the Upper Ohio
Valley Health Plan’s counterclaim is a breach of contract claim
regarding the ASOs, to which OVHS&E is not a party.

The argument

as to Mr. Stultz’s authority to bind OVHS&E is also slightly
misguided. To the extent that Mr. Stultz could bind OVHS&E and the
OVHS&E Health and Dental Plans, the ASOs clearly show that his
signature was only on behalf of OVHS&E Health and Dental Plans.
The Upper Ohio Valley Health Plan has not demonstrated how the
signing of the ASOs on behalf OVHS&E Health and Dental Plans, which
are legally distinct entities, is treated as also binding OVHS&E.
See Carte Blanche (Singapore) Pte., Ltd. v. Diners Club Intern.,
Inc., 2 F.3d 24, 26 (2d Cir. 1993) (“Generally speaking, a parent
corporation and its subsidiary are regarded as legally distinct
entities and a contract under the corporate name of one is not
treated as that of both.”).

Therefore, OVHS&E is treated as a

legally distinct entity, and cannot be considered a party to the
ASOs.
As to the claim that OVHS&E is a “real party in interest,”
such a claim is equally inapplicable.

The “concept of a ‘real

party in interest’ addresses a litigant’s right to pursue an action

13

as a claimant.”

Keesecker v. Bird, 490 S.E.2d 754 (W. Va. 1997).

Phrased another way, the term “real party in interest” means that
the “action must be brought by the person who, according to the
governing substantive law, is entitled to enforce the right.”
Wright & Miller, 6A Fed. Prac. & Proc. Civ. § 1543 (3d ed) (citing
Curtis Lumber Co., Inc. v. Louisiana Pacific Corp., 618 F.3d 762,
771 (8th Cir. 2010) (“The function of this rule ‘is simply to
protect the defendant against a subsequent action by the party
actually entitled to recover, and to insure generally that the
judgment

will

have

its

proper

effect

as

res

judicata.’”).

Accordingly, it is clear that the Upper Ohio Valley Health Plan’s
argument does not apply.

The plaintiffs are correct in pointing

out that the concept of real party in interest creates no “basis
for re-writing contracts to make them apply to parties that did not
sign the agreements.”

ECF No. 57.

Based on the law and record

before this Court, the Upper Ohio Valley Health Plan’s counterclaim
against OVHS&E for breach of contract must be dismissed.
b.

Count I Is Inadequately Pleaded

Notwithstanding that OVHS&E is a non-party to the ASOs, the
plaintiffs argue that the breach of contract claim (Count I) should
be dismissed because the Upper Ohio Valley Health Plan inadequately
pleaded such claim.

In particular, the plaintiffs assert that the

breach of contract claim fails to plead damages resulting from the
alleged breach.

The plaintiffs point out that Count I addresses a

14

failure to properly fund provider claims, but the Upper Ohio Valley
Health Plan ultimately seeks reimbursement for settlement costs
associated with the Wheeling Hospital and Wack litigation.
Upper

Ohio

Health

“subsidized”

the

Valley
delay

in

adequately pleaded damages.

Plan

believes

funding

that

claims,

it

and

The

essentially
thus

it

has

ECF No. 51.

In order to state a claim for breach of contract, West
Virginia requires that the party allege the following elements:
“the existence of a valid, enforceable contract, that the plaintiff
has performed under the contract, that the defendant has breached
or violated its duties or obligations under the contract, and that
the plaintiff has been injured as a result.” Wince v. Easterbrooke
Cellular Corp., 681 F. Supp. 2d 688, 693 (N.D. W. Va.) (emphasis in
original).

The “rule for damages as a result of a breach of

contract is that recovery may be obtained for those damages which
either arise naturally from the breach or may reasonably have been
within the contemplation of the parties at the time they made the
contract.”

Desco Corp. v. Harry W. Trushel Const. Co., 413 S.E.2d

85, 89 (W. Va. 1991); Syl. Pt. 2, Kentucky Friend Chicken of
Morgantown, Inc. v. Sellaro, 214 S.E.2d 823 (W. Va. 1975).
In Count I, the Upper Ohio Valley Health Plan asserts that
OVHS&E and OVHS&E Health and Dental Plans breached the ASOs because
they failed to properly fund the claims sought by providers.

As a

result, the Upper Ohio Valley Health Plan contends that it incurred

15

damages, and seeks the full value of “all settlements, damages,
losses, expenses, attorney’s fees, and all other expenditures”
incurred.

Based on the Upper Ohio Valley Health Plan’s pleadings,

the damages relate to the failure to fund the claims sought by
providers.

Upper Ohio Valley Health Plan later admits, however,

that OVHS&E and OVHS&E Health and Dental Plans “ultimately did fund
those claims.”

ECF No. 51.

The plaintiffs correctly point out

that the breach of contract claim in Count I seeks damages that
“are not damages contractually recoverable from a failure to fund.”
ECF No. 57.

The Upper Ohio Valley Health Plan is not claiming that

the provider claims are still unfunded, and seeking funding for
such claims.

Rather, the Upper Ohio Valley Health Plan appears to

seek damages related to indemnification for its prior settlement
with Wheeling Hospital and the Wack litigation.

Those damages do

not arise from breaching the ASOs. As the Upper Ohio Valley Health
Plan admitted, OVHS&E and OVHS&E Health and Dental Plans funded
those claims.

That means Count I of the counterclaim, which

concerns an alleged failure to fund claims, is inadequately pleaded
as to damages.

Therefore, the Upper Ohio Valley Health Plan

inadequately pleaded its breach of contract claim, and thus it must
be dismissed.
2.

Count II: Breach of Contract/Express Indemnification
Against OVHS&E and OVHS&E Health and Dental Plans

Under Count II of its counterclaim, Upper Ohio Valley Health
Plan claims that OVHS&E and OVHS&E Health and Dental Plans breached
16

the ASOs by failing to indemnify Upper Ohio Valley Health Plan for
damages incurred in connection with the Wheeling Hospital and Wack
litigation.

The Upper Ohio Valley Health Plan, OVHS&E, and the

OVHS&E Health and Dental Plans rely on different provisions within
the ASOs in support for and against Count II.

As will be discussed

below, the ASOs clearly and unambiguously preclude the Upper Ohio
Valley Health Plan’s claim for express indemnification.
a.

OVHS&E Is Not Party to the ASOs

This Court has ruled that OVHS&E is a non-party to the ASOs,
and thus is not liable for the claims arising under the ASOs.
Indeed, it is well-settled that “[a] non-party to a contract cannot
be sued for breach of that contract.”
7243191 at * 12.

TechCorr USA, LLC, 2014 WL

This Court finds no reason to depart from that

ruling as to Count II of the counterclaim.

Notwithstanding that

ruling, this Court will turn to the parties remaining arguments
regarding Count II.
b.

Plain Language of ASOs Precludes Indemnification

The parties rely on specific sections of the ASOs that address
indemnification.

Part

V.A.

and

V.B.

of

the

ASOs,

titled

“Indemnification/Liability,” state the following:
A.
To the extent not prohibited by applicable law,
[Upper Ohio Valley Health Plan] agrees to indemnify,
defend, and hold harmless [OVHS&E and OVHS&E Health and
Dental Plans] from and against any and all actual and
direct settlements, liabilities, judgments, obligations,
losses, or fines, known or unknown, existing now or in
the future which may be imposed by reason of any action,
suit, or claim . . . resulting from or arising directly
17

as a result of a breach by [Upper Ohio Valley Health
Plan] of its obligations under [the ASOs]. The foregoing
indemnification shall apply whether [OVHS&E and OVHS&E
Health and Dental Plans] or [Upper Ohio Valley Health
Plan] defends such suit, claim or loss. The foregoing
indemnification shall also apply whether the suit, claim
or loss is caused solely by [Upper Ohio Valley Health
Plan] or concurrently by [Upper Ohio Valley Health Plan]
and others. This indemnity shall survive the termination
of [the ASOs].
In performing its obligations under [the ASOs], [Upper
Ohio Valley Health Plan] neither insures nor underwrites
liability for health benefits, but acts only as the
provider of the services described in [the ASOs].
Accordingly, [Upper Ohio Valley Health Plan] shall have
no duty to indemnify [OVHS&E and OVHS&E Health and Dental
Plans] for any benefits properly and legally payable by
[Upper Ohio Valley Health Plan].
To the extent not prohibited by applicable law, [OVHS&E]
agrees to indemnify, defend, and hold harmless [Upper
Ohio Valley Health Plan] from and against any and all
actual and direct settlements, liabilities, judgments,
obligations, losses, or fines, known or unknown, existing
now or in the future which may be imposed by reason of
any action, suit or claim . . . resulting from or arising
directly as a result of a breach by [OVHS&E and OVHS&E
Health and Dental Plans] of [their] obligations under
[the ASOs]. The foregoing indemnification shall apply
whether [OVHS&E Health and Dental Plans] or [Upper Ohio
Valley Health Plan] defends such suit, claim or loss.
The foregoing indemnification shall also apply whether
the suit, claim or loss is caused solely by [OVHS&E and
OVHS&E Health and Dental Plans] or concurrently by
[OVHS&E and OVHS&E Health and Dental Plans] and others.
This indemnity shall survive the termination of [the
ASOs].
B.
Network Provider Claims. [OVHS&E and OVHS&E Health
and Dental Plans] and Participants shall have no
liability for claims or legal actions by network
providers against [Upper Ohio Valley Health Plan] arising
from and/or involving those parties’ contractual
arrangements.

18

ECF No. 1 Exs. B and C (emphasis added).4

The Upper Ohio Valley

Health Plan claims that ambiguity exists within the above-quoted
provisions of the ASOs.

It believes that Part A and Part B

contradict each other, or in the alternative that the past claims
by the providers should be considered “disputes arising from and/or
involving

those

parties’

contractual

agreements.”

Whichever

reasoning may apply, the Upper Ohio Valley Health Plan contends
that the ASOs require OVHS&E and OVHS&E Health and Dental Plans to
indemnify it for the settlements reached in the Wheeling Hospital
and Wack litigation.
Based on the language of the ASOs, this Court finds neither
ambiguity

nor

contradiction.

The

language

of

the

ASOs

is

unambiguous, and its meaning is clear: Upper Ohio Valley Health
Plan’s indemnification claim is precluded by the express language
of the ASOs as to OVHS&E Health and Dental Plans.

As stated

earlier, when reading and interpreting contract provisions, the
court’s purpose is to give full force and effect to the expressed
or implied intentions of the contracting parties, if such can be
discerned.

Truong

Xuan

Truc,

212

Ct.

Cl.

Massachusetts Port Auth., 456 F.2d at 784).

4

at

66

(quoting

West Virginia law

Although the ASOs refer to OVHS&E in Parts V.A. and V.B., the
express language throughout the ASOs consistently states that the
ASOS are between Upper Ohio Valley Health Plan and OVHS&E Health
and Dental Plans. Further, the closing signature lines reaffirm
that the ASOs are between those parties.
Despite the few
references to OVHS&E, it is still not a party to the ASOs so as to
be legally bound by their terms.
19

states that “a valid written agreement using plain and unambiguous
language is to be enforced according to its plain intent and should
not be construed.”

Toppings, 490 S.E.2d at 822.

Here, the Upper

Ohio Valley Health Plan seeks indemnification related to its
previous settlements, which involved claims by network providers.
Those provider claims pertained to contracts between the providers
and Upper Ohio Valley Health Plan.

The plain and express language

of the ASOs states that OVHS&E Health and Dental Plans “shall have
no liability for claims or legal actions by network providers”
against the Upper Ohio Valley Health Plan that arise from the
contractual arrangements between the Upper Ohio Valley Health Plan
and network providers.

The Wheeling Hospital and Wack litigation

pertained to network provider claims involving arrangements between
those providers and the Upper Ohio Valley Health Plan.

Therefore,

Part V.B. of the ASOs comes into effect by disclaiming OVHS&E
Health and Dental Plans from liability related to those past cases.
Based on the clear and express language of the agreements, the ASOs
clearly preclude the Upper Ohio Valley Health Plan’s express
indemnification

claim

as

to

OVHS&E

Health

and

Dental

Plans.

Further, Upper Ohio Valley Health Plan cannot rely on the ASOs to
justify an express indemnification claim against OVHS&E because
OVHS&E is a non-party to the ASOs.
dismissed.

20

Accordingly, Count II must be

3.

Count III: Implied Indemnification Against OVHS&E and
OVHS&E Health and Dental Plans

Count III asserts a claim for implied indemnification against
OVHS&E and the OVHS&E Health and Dental Plans.

OVHS&E and OVHS&E

Health and Dental Plans contend that because an express agreement,
here the ASOs, addresses the indemnification issue, no implied
contract

or

quasi-contract

claims

can

proceed.

As

will

be

discussed below, not only does West Virginia law preclude such
claim against OVHS&E Health and Dental Plans, but the Upper Ohio
Valley Health Plan has also inadequately pleaded its claim against
OVHS&E and OVHS&E Health and Dental Plans.
a.

The ASOs Preclude Implied Indemnification Against
OVHS&E Health and Dental Plans

“An express contract and an implied contract, relating to the
same subject matter, cannot co-exist.” Case v. Shepherd, 84 S.E.2d
140, 144 (W. Va. 1954); see Rosenbaum v. Price Const. Co., 184 S.E.
261, 263-64 (W. Va. 1936).

Phrased another way, quasi-contract

claims, like unjust enrichment or quantum meruit, are unavailable
when an express agreement exists because such claims only exist in
the absence of an agreement.

Wilson v. Stratosphere Corp., 371 F.

App’x 810, 811-12 (9th Cir. 2010); Sea Byte, Inc. v. Hudson Marine
Mgmt. Servs., Inc., 565 F.3d 1293, 1301 (11th Cir. 2009); Beth
Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of New Jersey,
Inc., 448 F.3d 573, 586 (2d Cir. 2006) (“The existence of a valid
and enforceable written contract governing a particular subject

21

matter ordinarily precludes recovery in quasi contract for events
arising out of the same subject matter.

A “quasi contract” only

applies in the absence of an express agreement, and is not really
a contract at all, but rather a legal obligation imposed in order
to prevent a party’s unjust enrichment . . . .

Briefly stated, a

quasi-contractual obligation is one imposed by law where there has
been no agreement or expression of assent, by word or act, on the
part of either party involved . . .”) (emphasis in original); Karna
v. BP Corp. N. Am., 11 F. Supp. 3d 809, 820 (S.D. Tex. 2014) (“[A]
plaintiff cannot recover in quantum meruit when there is an express
contract governing the goods or services at issue.”); Plesha v.
Ferguson, 725 F. Supp. 2d 106, 112 (D.D.C. 2010) (“Because both
promissory

estoppel

and

unjust

enrichment

presuppose

that

an

express, enforceable contract is absent, District of Columbia
courts generally prohibit litigants from asserting these claims
when there is an express contract that governs the parties’
conduct.”); Crockett & Myers, Ltd. v. Napier, Fitzgerald & Kirby,
LLP, 440 F. Supp. 2d 1184, 1197 (D. Nev. 2006) (“An unjust
enrichment claim is ‘not available when there is an express,
written contract, because no agreement can be implied when there is
an express agreement.’”); Integral Control Sys. Corp. v. Consol.
Edison Co. of New York, 990 F. Supp. 295, 303 (S.D.N.Y. 1998).
The equitable claim of implied indemnification is rooted in
tort law and principles of restitution.
22

See Sydenstricker v.

Unipunch Products, Inc., 288 S.E.2d 511, 515 (W. Va. 1982) (quoting
Restatement of Rest. § 96) (“A person who, without personal fault,
has become subject to tort liability for the unauthorized and
wrongful conduct of another, is entitled to indemnity from the
other

for

liability.”)

expenditures
(emphasis

properly
added).

made

in

It

may,

discharge
depending

circumstances, serve as an independent cause of action.

of
on

such
the

Hill v.

Joseph T. Ryerson & Son, Inc., 268 S.E.2d 296, 302 (W. Va. 1980).
The Supreme Court of Appeals of West Virginia has defined implied
indemnification as follows:
Implied indemnification is an equitable remedy developed
by the courts to address the unfairness which results
when one defendant, who has committed no independent
wrong, is held liable for the entire loss of a plaintiff
while another entity, which may or may not be named as a
defendant in the plaintiff’s suit to establish liability,
would be allowed to escape liability even though it
actually caused or was responsible for causing the
wrongdoing.
Harvest Capital v. W. Va. Dep’t of Energy, 560 S.E.2d 509, 512 (W.
Va. 2002).

The United States Court of Appeals for the Fourth

Circuit has also noted that “[a]lthough an implied right to
indemnity may be read into some contracts, only unique factors or
a special relationship between the parties gives rise to such a
right.”

TransDulles Center, Inc. v. USX Corp., 976 F.2d 219, 228

(4th Cir. 1992).

Such factors or relationship, however, apply to

more

recognized

generally

shipbuilders and carriers.

special

relationships,

such

as

See, e.g., Maritime Overseas Corp. v.
23

Northeast Petroleum Industries, Inc., 706 F.2d 349, 353 (1st Cir.
1983); accord USX Corp., 976 F.2d at 228 (finding no special
relationship or unique factors between a current and a former
subdivision lessee).
With the above legal standard in mind, it is clear that the
Upper Ohio Valley Health Plan may not proceed with its implied
indemnity claim against OVHS&E Health and Dental Plans.

In this

case, the equitable claim of implied indemnity is traditionally
rooted in tort law claims.

More importantly, however, an express

contract addresses the issue of indemnification.

Here, the ASOs

specifically state under Part V.B. that “[OVHS&E Health and Dental
Plans] and Participants shall have no liability for claims or legal
actions by network providers against [Upper Ohio Valley Health
Plan] arising from and/or involving those parties’ contractual
arrangements.” Further, no special relationship exists between the
Upper Ohio Valley Health Plan and the plaintiffs such that the
parties “intended that the would-be indemnitor bear the ultimate
responsibility
recognized
carrier.

for

special

the

plaintiff’s

relationship,”

safety,”
such

as

a

or

a

“generally

shipbuilder

and

USX Corp., 976 F.2d at 228.

To the extent that the Upper Ohio Valley Health Plan asserts
its claim against OVHS&E Health and Dental Plans under a theory of
quasi-contract, such a claim cannot proceed. West Virginia law has
made it explicitly clear that “[a]n express contract and an implied

24

contract, relating to the same subject matter, cannot co-exist.”
Shepherd, 84 S.E.2d at 144.

The ASOs, as express contracts,

specifically address indemnification, and preclude the Upper Ohio
Valley Health Plan’s recovery under Count III.

For that reason

alone, the Upper Ohio Valley Health Plan’s claim must be dismissed
as to OVHS&E Health and Dental Plans.
b.

Count III Is Inadequately Pleaded

Even if West Virginia law allowed the Upper Ohio Valley Health
Plan’s claim for implied indemnification to proceed, its claim is
inadequately pleaded against OVHS&E and OVHS&E Health and Dental
Plans.

To state a claim for implied indemnification, a party must

allege the following:
(1) an injury was sustained by a third party; (2) for
which a putative indemnitee has become subject to
liability because of a positive duty created by statute
or common law, but whose independent actions did not
contribute to the injury; and (3) for which a putative
indemnitor should bear fault for causing because of the
relationship the indemnitor and indemnitee share.
Harvest Capital, 560 S.E.2d at syl. pt. 4.

Moreover, a “putative

indemnitee is not entitled to reimbursement of attorneys’ fees and
expenses under the theory of implied indemnification when it has
not been established that an injury has been sustained by a third
party

for

which

responsibility.”

a

putative

indemnitor

bears

fault

or

Id. at syl. pt. 5.

Comparing the above legal standard to the amended counterclaim
shows that Upper Ohio Valley Health Plan has inadequately pleaded

25

its claim.

The Upper Ohio Valley Health Plan reached a settlement

in its Wheeling Hospital and Wack litigation.

The Upper Ohio

Valley Health Plan has not shown that anyone was subject to
liability for the claims in those cases.

Without a finding or

plausible allegation of liability, the implied indemnity claim is
not adequately pleaded.

The inadequate pleading of its claim,

coupled with the express terms of the ASO and West Virginia law,
justify the dismissal of Upper Ohio Valley Health Plan’s claim for
implied indemnification.
4.

Therefore, Count III must be dismissed.

Count IV: Unjust Enrichment Against OVMC and EORH

In Count IV, Upper Ohio Valley Health Plan asserts a claim of
unjust enrichment against OVMC and EORH.

More specifically, Upper

Ohio Valley Health Plan contends that it “provided OVMC and EORH
and their employees with administrative services related to” the
OVHS&E Health and Dental Plans.

By providing those services under

the ASOs, Upper Ohio Valley Health Plan believes that OVMC and EORH
were unjustly enriched.
“Unjust enrichment of a person occurs when he has and retains
money or benefits which in justice and equity belong to another.”
Bright v. QSP, Inc., 20 F.3d 1300, 1306 (4th Cir. 1994) (quoting
Dunlap v. Hinkle, 317 S.E.2d 508, 512 n.2 (W. Va. 1984)). Further,
the “benefit may be an interest in money, land, chattels, or
chooses in action; beneficial services conferred; satisfaction of
debt or duty owed by him; or anything which adds to his security or

26

advantage.”

Hinkle, 317 S.E.3d at 512 n.2 (quoting Commercial

Fixtures & Furnishings, Inc. v. Adams, 564 P.2d 773, 776 (Utah
1977)).

Upper Ohio Valley Health Plan’s argument falls short for

two primary reasons.

First, to the extent that it contends it

provided services to OVMC and EORH pursuant to the ASOs, such
contention is without merit. OVMC and EORH were not parties to the
ASOs.

As the law makes clear, a non-party generally cannot be

bound to an agreement, and this rule applies to OVMC and EORH in
this case. Second, Upper Ohio Valley Health Plan also inadequately
pleaded its claim.

As stated above, “[u]njust enrichment of a

person occurs when he has and retains money or benefits which in
justice and equity belong to another.”
n.2.

Dunlap, 317 S.E.2d at 512

Upper Ohio Valley Health Plan’s unjust enrichment claim

pertains to services rendered under the ASOs. However, it does not
set forth what benefits OVMC and EORH unjustly received.

For

example, no allegations are made that Upper Ohio Valley Health Plan
did not receive money for services rendered under the ASOs.
Moreover, Upper Ohio Valley Health Plan admits that the claims by
providers were funded.

The only benefit that it claims OVMC and

EORH unjustly received was avoiding the fees and costs associated
with the settlement reached in the Wheeling Hospital and Wack
litigation. That argument is without merit because that settlement
concerned claims ultimately filed against Upper Ohio Valley Health
Plan by providers.

Upper Ohio Valley Health Plan has not pleaded

27

what benefit, if any, OVMC and EORH received.
EORH were not parties to the ASOs.

Moreover, OVMC and

In accord with past rulings by

the United States Court of Appeals for the Fourth Circuit, Upper
Ohio Valley Health Plan “cannot recover on a theory of unjust
enrichment for services it rendered under a valid contract with”
the OVHS&E Health and Dental Plans, “even though the services
provided a benefit to a third party,” here OVMC and EORH, “with
whom [Upper Ohio Valley Health Plan] had no contract.”

Federal

Sav. and Loan Ins. Corp. v. Quality Hotels and Resorts, Inc., 1991
WL 30211, at *4 (4th Cir. 1991).

Therefore, Count IV must be

dismissed.
5.

Count V: Unjust Enrichment Against OVHS&E

Under Count V of its amended counterclaim, Upper Ohio Valley
Health Plan believes that OVHS&E was unjustly enriched.

More

specifically, Upper Ohio Valley Health Plan appears to argue that
it conferred a benefit on OVHS&E by settling the claims in the
Wheeling Hospital and Wack litigation.

Upper Ohio Valley Health

Plan also points to services rendered under the ASOs that allegedly
resulted in the unjust enrichment of OVHS&E.
Count V, however, must be dismissed for two primary reasons.
First, OVHS&E was not a party to the ASOs.

It is well-settled that

“[a] non-party to a contract cannot be sued for breach of that
contract.

TechCorr USA, LLC, 2014 WL 7243191 at *12.

Here, the

ASOs specifically address the services to be rendered and how the

28

parties, OVHS&E Health and Dental Plans and Upper Ohio Valley
Health Plan, were bound by the ASOs.
OVHS&E, which is a non-party.

Those ASOs do not bind

Second, Upper Ohio Valley Health

Plan has inadequately pleaded its claim against OVHS&E.

More

specifically, Upper Ohio Valley Health Plan baldly asserts that
OVHS&E was unjustly enriched by the benefit of not paying the fees
and costs associated with Upper Ohio Valley Health Plan’s previous
settlements.

That

assertion,

and

nothing

demonstrate how OVHS&E was unjustly enriched.

more,

does

not

That settlement

related to claims between Upper Ohio Valley Health Plan and network
providers.

Further, as to any arguments about unfunded claims,

Upper Ohio Valley Health Plan already admitted that those claims
were funded.

For those reasons, Count V cannot proceed, and

therefore, the plaintiffs’ second motion to dismiss the amended
counterclaim is GRANTED.
IV.

Conclusion

For the reasons set forth above, the plaintiffs’ first motion
to dismiss the counterclaim (ECF No. 16) is DENIED AS MOOT.

The

plaintiffs’ second motion to dismiss the amended counterclaim (ECF
No. 25) is GRANTED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.

29

DATED:

December 10, 2015

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

30