Ameritox, Ltd. v. Millennium Labs., Inc., Case No. 8:11–cv–775–T–24–TBM.

889 F.Supp.2d 1304

AMERITOX, LTD., Plaintiff,

v.MILLENNIUM LABORATORIES, INC., Defendant.

Case No. 8:11–cv–775–T–24–TBM.

United States District Court,

M.D. Florida,

Tampa Division.

Aug. 23, 2012.

Jonathan B. Morton, Robert C. Leitner, Miami, FL, Margaret Diane Mathews, Richard H. Martin, Akerman Senterfitt, Tampa, FL, Peter B. Bensinger, Bartlit, Beck, Herman, Palenchar & Scott, LLP, Michael R. Osterhoff, Chicago, IL, Paul W. Shaw, Boston, MA, for Plaintiff.

Guy P. McConnell, Michael S. Hooker, Tampa, FL, Robert B. Wolinsky, Steven P. Hollman, Washington, DC, for Defendant.

ORDER

SUSAN C. BUCKLEW, District Judge.

This matter comes before the Court on Defendant Millennium Laboratories, Inc.'s (“Millennium”) Motion to Dismiss Counts I, VI, and VII of Plaintiff Ameritox, Ltd.'s (“Ameritox”) Third Amended Complaint. (Doc. No. 101). Ameritox filed a Response in Opposition (Doc. No. 118) to Millennium's motion.

On August 9, 2012, the Court directed Ameritox to file a supplemental brief that addressed, with citations to authority: “(1) whether a Lanham Act claim based on advertisements implicitly representing that the practices being promoted are legal, when in actuality they are not, is permissible; and (2) whether a court or agency of competent jurisdiction has clearly and unambiguously ruled that the specific billing practices that Millennium has promoted are illegal and that such law existed at the time that Millennium made the representations.” (Doc. No. 129 at 4–5). Ameritox filed its supplemental brief on August 20, 2012. (Doc. No. 130).

Upon review, and for the following reasons, Millennium's motion to dismiss is GRANTED in part and DENIED in part.

I. BackgroundA. Facts

Ameritox is a clinical laboratory that engages in screening urine specimens for the presence of drugs. (Doc. No. 92 ¶ 8). Millennium is one of Ameritox's competitors in the industry. (Doc. No. 101 at 4). Healthcare providers contract with companies like Ameritox and Millennium to determine whether patients are abusing their prescriptions. (Doc. No. 92 ¶ 8). Both companies compete for a share of the market in Arizona, Florida, California, New Hampshire, Tennessee, and Texas. ( Id. at ¶ 9). Ameritox alleges that Millennium distributed a series of false and misleading advertisements to healthcare providers and their patients in an attempt to enter an already crowded market. ( Id. at 4–5, 9). These representations are described in detail below. Ameritox also asserts that Millennium engaged in a host of unfair business practices, including providing illegal inducements to garner business, performing medically unnecessary confirmatory testing, assisting healthcare providers in acquiring an improper ownership interest in purportedly independent businesses, and not collecting legally required co-payments and deductibles. ( Id. at ¶ 200–07).

Ameritox filed suit on April 8, 2011 and submitted an Amended Complaint on June 14, 2011. (Doc. No. 1; Doc. No. 15). This Court dismissed the federal law claims of the Amended Complaint on January 6, 2012 without prejudice, and Ameritox filed its Second Amended Complaint on January 23, 2012. (Doc. No. 62; Doc. No. 66). On March 28, 2012, this Court granted Ameritox's motion to consolidate the initial litigation with a related case transferred to this Court from the Southern District of California. This Court ordered Ameritox to file “one final amended complaint, which includes all counts and allegations it intends to raise in this matter.” (Doc. No. 89 at 4). The Court specifically cautioned Ameritox, “The Court will not permit further amendments without good cause.” ( Id.) (emphasis original). Ameritox submitted the current Third Amended Complaint on April 9, 2012. (Doc. No. 92).

In Count I, Ameritox asserts a claim of false advertising, accusing Millennium of wrongfully claiming that the products and services it promoted were legal and proper for healthcare providers and their patients to use. Count VI raises a claim of tortious interference, alleging that Millennium targeted Ameritox's existing customers with these false representations. Count VII is a claim for unfair competition that contends that Millennium engaged in the actions set forth in its false representations and that these actions were improper. Millennium has not moved for dismissal of Counts II–V, all of which are related state law claims.

B. Millennium's Alleged Representations

The Court notes that Ameritox's Third Amended Complaint does not explicitly delineate the different advertisements it alleges are false. However, in its Motion to Dismiss, Millennium has identified eight distinct representations, and it challenges each.

1. Representation 1—Billing Letter

Ameritox alleges that Millennium made a number of false or misleading claims related to its billing scheme in the form of printed advertisements, which Ameritox labels as “billing letters.” ( Id. at ¶¶ 68–70). Millennium allegedly provided the billing letters to healthcare providers for distribution to their patients. ( Id. at ¶ 68, Ex. F and Ex. G). Ameritox alleges that Millennium informed potential customers that its corporate policy was to not collect from patients the difference between the amount Millennium billed for its services and the amount the patients' insurance companies agreed to pay. ( Id. at ¶ 67, Ex. E). Relatedly, Ameritox states that Millennium advertised that it would not require patients to pay deductibles or co-pays. ( Id. at ¶ 67, Ex. E).

Ameritox alleges that these advertisements were false, deceptive, and misleading to three classes of patients: those enrolled in Medicare who are not required to pay any co-pay or deductible; those enrolled in Florida Medicaid who are required to pay only a $1 co-payment; and those enrolled in private insurance programs that include the services that Millennium provides within a patient's annual deductible. ( Id. at ¶¶ 74–76). Therefore, Ameritox alleges that Millennium advertised an illusory benefit. ( Id. at ¶ 74–76). Furthermore, because waiving these paymentsis apparently illegal, Ameritox also alleges that Millennium garnered business by falsely representing to potential customers that these actions were proper. ( Id. at ¶¶ 77–78). Ameritox asserts that it was harmed by healthcare providers selecting Millennium over Ameritox based upon the illegal financial benefit to patients Millennium advertised. ( Id. at ¶¶ 71–72).

2. Representation 2—Press Release

Ameritox alleges that Millennium distributed a misleading press release to thousands of healthcare providers across the nation. ( Id. at ¶ 98). Ameritox claims that in this press release, Millennium's CEO advocates for Medicare to reimburse healthcare providers at a higher rate for drug screening and that he also represents Millennium has no vested interest in advocating for this change. ( Id. at ¶ 98). Ameritox asserts that presenting the press release from a purportedly neutral standpoint is misleading, because Millennium's business model depends upon generating as much revenue as possible for healthcare providers, so long as they agree to contract with Millennium. ( Id. at ¶ 98). Thus, Ameritox alleges that Millennium is falsely representing its motive as altruistic and that such a misrepresentation would induce healthcare providers to choose Millennium as their laboratory. ( Id. at ¶ 99).

3. Representation 3—Billing Manual

Ameritox alleges that Millennium distributed a billing manual to a substantial number of healthcare providers using its services. ( Id. at ¶ 93–95). The manual allegedly described Millennium's “unnecessary, duplicative, and improperly coded billing methods.” ( Id. at ¶ 95). Ameritox alleges the billing manual deceptively represented that Millennium's billing scheme was proper. Consequently, Ameritox contends, healthcare providers selected Millennium as their testing laboratory, which caused Ameritox to lose potential or existing business. ( Id. at ¶ 95).

4. Representation 4—Gross Revenue Chart

Ameritox alleges that Millennium provided a substantial number of healthcare providers with a chart entitled “Gross Revenue by Insurance Category for Multi–Clin 11 Panel Test Kit,” which Ameritox asserts promotes an improper billing practice. ( Id. at ¶¶ 35–37, Ex. A). Specifically, Ameritox alleges that, under Millennium's billing and coding method, doctors could bill Medicare multiple times for screening a single urine sample for multiple classes of drugs. Ameritox claims this constitutes false advertising because the chart deceptively implied that Millennium's billing and coding method was proper and could be instituted in good faith. ( Id. at ¶ 38). Ameritox claims it was harmed by healthcare providers choosing Millennium based on this allegedly false advertising. ( Id. at ¶ 38).

5. Representation 5—Fractional Ownership

Ameritox alleges that Millennium misled prospective and existing customers regarding the propriety of a fractional ownership relationship. ( Id. at ¶ 61–62). Millennium allegedly encouraged healthcare providers to purchase an ownership share in third-party laboratories that purportedly were independent of Millennium, but in fact are related to Millennium. The healthcare providers would then receive a portion of the third-party laboratories' billings as a return on their investments. ( Id. at ¶ 60). The third-party laboratories would forward the urine samples to Millennium for additional, duplicative testing. Millennium allegedly promoted this illegal scheme through oral representations, in-person visits, emails, and the distribution of the paperwork necessary to establish a fractionalownership. ( Id. at ¶ 61, Ex. D). Ameritox contends that healthcare providers were enticed to choose Millennium as their laboratory by this financial opportunity. ( Id. at ¶ 62).

6. Representation 6—Communications Encouraging Health Care Providers to Utilize Billing Modifiers

Ameritox alleges that, “through e-mail and other media,” Millennium “encouraged...