Jenkins v. Moses H. Cone Mem'l Health Servs. Corp.

CHRISTOPHER JENKINS, Plaintiff, v. THE MOSES H. CONE MEMORIAL HEALTH SERVICES CORP.;THE MOSES H. CONE MEMORIAL HOSPITAL, INC.;THE MOSES H. CONE MEMORIAL HOSPITAL; THE MOSES H. CONE MEMORIAL HOSPITALOPERATING CORP.; and AVECTUS HEALTHCARE SOLUTIONS, LLC, Defendants.

No. 5:15-CV-34-FL

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

October 23, 2015

ORDER

This matter is before the court on motion for attorney fees (DE 48) of defendants The Moses H. Cone Memorial Health Services Corp., The Moses H. Cone Memorial Hospital, Inc., The Moses H. Cone Memorial Hospital, and The Moses H. Cone Memorial Hospital Operating Corp. (collectively, defendant "Moses Cone"), made pursuant to the North Carolina Unfair and Deceptive Practices Act ("UDPA"), N.C. Gen. Stat. § 75-1.1 et seq., specifically § 75-16.1., as well as the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq, specifically ERISA § 502(g)(1), 29 U.S.C. § 1132(g)(1).¹ The issues raised have been briefed fully, and in this posture are ripe for ruling. For the reasons stated more particularly herein, defendant Moses Cone's motion is denied.

BACKGROUND

On November 25, 2014, plaintiff filed this action, styled as a putative class action, against defendant Moses Cone, a hospital system located in Greensboro, Guilford County, North Carolina, in the Wake County, North Carolina, Superior Court. Plaintiff alleged common law claims for breach of contract, breach of fiduciary duty, constructive fraud, conversion, and tortious interference with contract, as well as statutory claims for violation of the UDPA, N.C. Gen. Stat. § 75-1.1 et seq., and North Carolina Debt Collection Act ("NCDCA"), N.C. Gen. Stat. § 75-50 et seq., arising out of defendant Moses Cone's allegedly improper billing practices. Plaintiff sought, on behalf of himself and others similarly situated, damages, imposition of a constructive trust, and an injunction.

The court summarizes the facts pertinent to the instant motion as follows. Plaintiff was injured in a motor vehicle accident on October 17, 2013, and thereafter sought treatment from defendant Moses Cone. (Compl., DE 29-1, ¶¶10-11). The total charge generated for the services rendered to plaintiff by employees of defendant Moses Cone was approximately $1,034.00. (Id. ¶¶13, 39). At the time of his treatment, plaintiff was enrolled in an insurance program (the "Plan") funded by Blue Cross-Blue Shield of North Carolina ("BCBSNC"), and defendant Moses Cone was an "in-network" "Preferred Provider," pursuant to a third-party contract with BCBSNC, which obligated it to accept payments in the fixed amount of $150.00 (the "co-pay") for treatment rendered to plaintiff and other similar persons enrolled in the Plan. (Id. ¶¶17-29). At or near the time of treatment, plaintiff paid the required $150.00 co-pay and never was warned he may be liable for the remaining $884.00, purportedly to be covered by his enrollment in the Plan. (Id. ¶¶32-35).² However, on November 7, 2013, plaintiff was billed by defendant Avectus, acting as debt collector for defendant Moses Cone, for the full amount of services rendered. (Id. ¶38).

On January 6, 2015, defendants were served with summons and complaint. (Notice of Removal, DE 1,¶1). On January 21, 2015, defendant Moses Cone, joined by defendant Avectus, timely removed the matter to this court pursuant to 28 U.S.C. §§ 1441 & 1446, asserting at least one of plaintiff's claims was "completely preempted" by ERISA § 502(a), 29 U.S.C. § 1132(a), and invoking this court's subject matter jurisdiction under 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e)(1). Shortly thereafter, defendant Moses Cone filed a motion to dismiss plaintiff's state-law claims under Federal Rule of Civil Procedure 12(b)(6), arguing they failed to state a claim upon which relief could be granted because they "related to" ERISA's substantive provisions, and thus were preempted by ERISA § 514(a), 29 U.S.C. § 1144(a).³

On February 16, 2015, plaintiff filed with defendants' consent a motion to stay briefing on defendant Moses Cone's pending motion to dismiss. Contemporaneously therewith, plaintiff filed a motion to remand, arguing that the court lacked subject matter jurisdiction under ERISA. All parties participated in briefing the issues raised by plaintiff's motion to remand. That motion came ripe for decision and was submitted to the court on April 9, 2015. On April 22, 2015, plaintiff filed a notice of voluntary dismissal without prejudice, made pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i).

During the pendency of this case, a virtually identical matter was removed from the Wake County, North Carolina, Superior Court under 28 U.S.C. §§ 1441 & 1446 on the same basis. See generally Southern v. WakeMed, 5:15-CV-35-FL, slip op. (E.D.N.C. April 21, 2015). The parties in the Southern case were represented by the same counsel appearing in this litigation. Moreover, the facts alleged in the Southern complaint, as well as the legal theories asserted, were substantially identical to this case. In Southern, defendant WakeMed filed a motion to dismiss plaintiff's state-law claims under ERISA § 514(a). Thereafter the parties filed a consent motion to stay, and the plaintiff filed a motion to remand. In opposition to the Southern plaintiff's motion to remand defendant WakeMed raised arguments identical to those raised herein, principally that one of plaintiff's claims was "completely preempted" under ERISA §§ 502(a) & 514(a), 29 U.S.C. §§ 1132(a) & 1144(a). On April 21, 2015, the day before plaintiff in the instant matter filed his notice of voluntary dismissal, the court denied the Southern plaintiff's motion to remand, holding that ERISA completely preempted plaintiff's breach of contract claim. See Southern, 5:15-CV-35-FL, slip op., at *8-16.

Returning to the instant matter, defendant Moses Cone filed its motion for attorney fees on June 30, 2015. Therein, defendant argues it is entitled to attorney fees on two grounds. First, it argues that it is the "prevailing party" under the UDPA, N.C. Gen. Stat. § 75-16.1, and that plaintiff's UDPA claims were "frivolous and malicious." Defendant contends it "prevailed" in this case in light of the court's determination in Southern that the claims of the plaintiff in that case were preempted by ERISA. Defendant acknowledges there was no order in this case, but contends that plaintiff's voluntary dismissal without prejudice is sufficient success to be considered the "prevailing" party. Second, defendant Moses Cone asserts its entitlement to fees under ERISA § 502(g)(1), 29 U.S.C. § 1132(g)(1), similarly relying on the court's order in Southern. In particular, defendant contends it achieved "some" success on the merits, where the court's order in Southern was a catalyst to plaintiff's voluntary dismissal without prejudice in the instant matter.

COURT'S DISCUSSION

A. Attorney Fees under the UDPA

Defendant Moses Cone first argues for attorney fees under the UDPA. That statute allows the prevailing defendant to recover attorney fees where "[t]he party instituting the action knew, or should have known, the action was frivolous and malicious." N.C. Gen. Stat. § 75-16.1(2). Defendant Moses Cone argues plaintiff's claims were both frivolous and malicious for a number of reasons, including arguably running afoul of well established North Carolina case law exempting hospital billing for medical services from the ambit of the UDPA, as well as established case law exempting the particular types of conduct alleged by plaintiff to be unfair or deceptive from the ambit of that statute. Defendant Moses Cone assumes itself to be the "prevailing party" in this case, in light of the court's order in the Southern case. See No. 5:15-CV-35-FL.

Defendant is not the "prevailing party," as that term is defined by North Carolina law. In reaching this conclusion the court relies on its order in Southern as if it had been entered in this case. Even on that assumption, defendant is not entitled to attorney fees.

Useful interpretation of the UDPA's attorney fees provision is sparse, and the court has found no North Carolina Supreme Court case addressing the phrase "prevailing party" in the context presented here. Where North Carolina's Supreme Court has not ruled on this point, it is this court's obligation to "attempt to divine what that court would do were it faced with this question." Teague v. Bakker, 35 F.3d 978, 991 (4th Cir. 1994). In making that predictive decision, it is appropriate to consider the opinion of the North Carolina Court of Appeals. Ellis v. La.-Pac. Corp., 699 F.3d 778, 783 (4th Cir. 2012). That court has looked to federal jurisprudence for the proper interpretation of "prevailing party." See, e.g., Free Spirit Aviation, Inc. v. Rutherford Airport Auth., 206 N.C. App. 192, 202 (2010) (citing Smith v. Univ. of N.C., 632 F.2d 316, 352 (4th Cir. 1980)); H.B.S. Contractors v. Cumberland Cnty. Bd. of Educ., 122 N.C. App. 49, 57 (1996).

The term prevailing party is a term of art and should be given a uniform interpretation. Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 603 (2001); Griggs v. E.I. DuPont de Nemours & Co., 385 F.3d 440, 454 (4th Cir. 2009). A party "prevails" where the litigation results in a "material alteration in the legal relationship of the parties" accompanied by the "necessary judicial imprimatur." Buckhannon, 532 U.S. at 605. By contrast, a party does not "prevail" if its actions merely serve as the catalyst for the relief sought. For example, there is no "prevailing" party where a lawsuit brings about voluntary change in the opposing party's conduct, even where that change is the relief ultimately sought. See id. Plaintiff's voluntary dismissal without prejudice, while arguably indicative of plaintiff's appraisal of the merits of his claim, does not achieve the necessary "material alteration" in the parties...