Lexx Healthcare, LLC v. E. Me. Healthcare Sys.

LEXX HEALTHCARE, LLC Plaintiff, v. EASTERN MAINE HEALTHCARE SYSTEMS, et al., Defendants.

BUSINESS & COUNSUMER DOCKET DOCKET NO. BCD-CV-18-33

Superior Court of Maine

October 22, 2018

STATE OF MAINE

CUMBERLAND, ss.

ORDER ON COUNTERCLAIM DEFENDANT'S MOTION TO DISMISS COUNT I, COUNT II, COUNT III, COUNT IV, AND COUNT V OF COUNTERCLAIM

Pending before the Court is Counterclaim-Defendant Lexx Healthcare, LLC's ("Lexx") motion to dismiss all counts of Counterclaim-Plaintiffs Eastern Maine Healthcare Systems and Eastern Maine Medical Center's (collectively "EMHS") Counterclaim. Pursuant to its discretionary authority under M.R. Civ. P. 7(b)(7), the Court has opted to decide the motion without holding oral argument.

BACKGROUND

On April 23, 2018, Lexx filed its three-count Complaint against EMHS, alleging that EMHS had breached its contract with Lexx, and seeking damages for that breach, as well as pleading claims in the alternative for recovery pursuant to equitable theories. EMHS denied the material allegations in its answer to the Complaint and filed its five-count Counterclaim against Lexx alleging breach of contract (Count I), negligence (Count II), negligent misrepresentation (Count III), intentional misrepresentation (Count IV), and breach of fiduciary duty (Count V). Lexx has moved to dismiss all five counts on the grounds that they fail to state a claim for which this Court may grant relief. See M.R. Civ. P. 12(b)(6).

STANDARD OF REVIEW

In reviewing a motion to dismiss under Rule 12(b)(6), courts "consider the facts in the complaint as if they were admitted." Bonney v. Stephens Mem. Hosp., 2011 ME 46, ¶ 16, 17 A.3d 123. The complaint is viewed "in the light most favorable to the plaintiff to determine whether it sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to relief pursuant to some legal theory." Id. (quoting Saunders v. Tisher, 2006 ME 94, ¶ 8, 902 A.2d 830). "Dismissal is warranted when it appears beyond a doubt that the plaintiff is not entitled to relief under any set of facts that he might prove in support of his claim." Id. "The legal sufficiency of a complaint challenged pursuant to M.R. Civ. P. 12(b)(6) is a question of law" and thus subject to de novo appellate review. Marshall v. Town of Dexter, 2015 ME 135, ¶ 2, 125 A.3d 1141.

DISCUSSION

Count I: Breach of Contract

EMHS's first counterclaim count alleged against Lexx is for breach of contract. Lexx argues that this count must be dismissed because EMHS has not—and cannot—allege that Lexx breached a material term of any contract between the parties. (Mot. Dismiss 5-7.) Lexx's argument relies on Exhibit A, attached to its motion, which it purports to be a copy of the written agreement between the parties. (See Mot. Dismiss 4.) EMHS responds that the Court cannot consider Exhibit A on a motion to dismiss, and that in any event Exhibit A does not conclusively preclude EMHS's breach of contract claim. (Opp'n Mot. Dismiss 2-8.)

The threshold issue is therefore whether the Court may consider Exhibit A in deciding the instant motion. "The general rule is that only the facts alleged in the complaint may be considered on a motion to dismiss and must be assumed as true." Moody v. State Liquor & Lottery Comm'n, 2004 ME 20, ¶ 8, 843 A.2d 43. If "the court considers appropriate materials outside the pleadings, the motion is treated as one for a summary judgment." Id. (citation omitted); see also M.R. Civ. P. 12(b). However, "official public documents, documents that are central to the plaintiff's claim, anddocuments referred to in the complaint may be properly considered on a motion to dismiss without converting the motion to one for a summary judgment when the authenticity of such documents is not challenged." Id. ¶ 11.

Exhibit A is attached to Lexx's Complaint in this matter, but not to EMHS's Counterclaim. EMHS denies that Exhibit A is an authentic copy of the written agreement between the parties. (Opp'n Mot. Dismiss 3, n.1; Def's Ans. ¶ 7.) However, EMHS nonetheless vigorously argues over the course of five pages in its opposition memorandum that even if considered, Exhibit A does not conclusively preclude EMHS's breach of contract claim. (Opp'n Mot. Dismiss 2-8.)

In Moody, our Law Court adopted the reasoning of Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196-97 (3d Cir. 1993) in announcing the so-called "Moody exception" to general rule. See Moody, 2004 ME 20, ¶¶ 8-11, 843 A.2d 43. As explained by the Law Court:

The Third Circuit explained [in Pension Benefit Guar. Corp., 998 F.2d at 1196] that the reason for the rule regarding converting motions to dismiss to motions for a summary judgment is to afford a plaintiff an opportunity to respond to new facts raised by the defendant. Id. If a document is referenced in the complaint, is central to a plaintiff's claim, or is a public document, the plaintiff should have notice of the contents. See id. at 1196-97.

Moody, 2004 ME 20, ¶ 11, 843 A.2d 43. Applied to this case, there is no concern that EMHS—as counterclaim-plaintiff—lacks "notice of the contents" of Exhibit A, having been put on notice when Lexx attached the exhibit to its Complaint. Thus, Lexx—as counterclaim-defendant—is not raising "new facts " See id. EMHS has a fair "opportunity to respond" to the contents of Exhibit A, as demonstrated by pages three through eight of its opposition memorandum. The Court therefore concludes that Exhibit A, hereafter referred to as the"Agreement," is properly before the Court in considering the instant motion.

The elements of a breach of contract claim include (1) breach of a material contract term, (2) causation, and (3) damages. Me. Energ. Recov. Co. v. US. Steel Structures, Inc., 1999 ME 31, ¶ 7, 724 A.2d 1248. Whether a contract is ambiguous is a question of law. Lee v. Scotia Prince Cruises, Ltd., 2003 ME 78, ¶ 9, 828 A.2d 210. The proper interpretation of an ambiguous contract is a question of fact, whereas the interpretation of an unambiguous contract presents a question of law. Id. Ambiguous contract language is language that is reasonably susceptible to different interpretations. Id.

In their Counterclaim, EMHS alleges that pursuant to their contract with Lexx: (1) Lexx was obligated to furnish physicians who would not abuse patients and were properly enrolled with the Centers for Medicare and Medicaid Services ("CMS"); (2) that Lexx furnished a doctor who abused EMHS's patients and was not properly enrolled with CMS, thereby breaching Lexx's contractual obligation; and (3) that EMHS has suffered economic harm as a result of that breach. (Def's Countercl. ¶¶ 16-21.) Lexx claims that pursuant to sections 6.6, 6.2, and 6.5 of the Agreement, EMHS is responsible for "verifying Physician credentials and for granting staff privileges to Physicians"; "billing, collecting, and retaining all professional fees for Clinical Services rendered by" the physician; and "providing services necessary to the delivery of Clinical Services, including administrative;" respectively. Lexx further points out that pursuant to section 1.2 of the Agreement EMHS "has the exclusive right to reject any Physician presented" by Lexx. (Mot. Dismiss 5-7.) Lexx argues that these provisions unambiguously demonstrate that Lexx had no obligation to furnish physicians who would not abuse patients and were properly enrolled with CMS because pursuant to these provisions EMHS would be responsible for ensuring that the physicians would not abuse patients and were enrolled with CMS.

EMHS counters that these provisions are ambiguous at best as to whether Lexx had a contractual responsibility to supply EMHS with physicians who were registered with CMS and who would not abuse patients. EMHS points out that none of these provisions even reference CMS, requiring an inference in Lexx's favor that EMHS should have or did know that CMS enrollment was part of EMHS's obligations to verify physician credentials, collect professional fees, or provide administrative services. (Opp'n Mot. Dismiss 4-5.) EMHS points out that when read in their entirety, the sections from the Agreement cited by Lexx would not support the inference, even if it were proper for the Court to draw inferences in the defendant's favor on a motion to dismiss. Finally, EMHS points to other sections of the Agreement that could give rise to an obligation on Lexx's part to furnish physicians who would not abuse patients and who were properly enrolled with CMS, specifically sections 1.1 2, 4, and 5.1.

When a motion to dismiss is grounded on a failure to state a claim upon which relief can be granted, all favorable inferences are made in favor of the plaintiff. See Tomer v. Me. Human Rights Comm'n, 2008 ME 190, ¶ 9, 962 A.2d 335. In order to dismiss EMHS's counterclaim count for breach of contract on the grounds urged by Lexx, the Court would need to do exactly the opposite, and draw the inference that the selective quotations from sections 6.6, 6.2, and 6.5 of the Agreement cited by Lexx unambiguously provide that it is EMHS, not Lexx, who is responsible for ensuring that physicians would not abuse patients and were properly enrolled with CMS.

In essence, Lexx's argument depends on the Court concluding that the factual allegations in paragraphs sixteen through twenty-one of EMHS's Counterclaim are inconsistent with the unambiguous terms of the Agreement, thereby abrogating the general rule that when considering a motion to dismiss brought under M.R. Civ. P. 12(b)(6), courts "consider the facts in the complaint as if they were admitted." Bonney, 2011 ME 46, ¶ 16, 17 A.3d 123. However, drawing allreasonable inferences in favor of EMHS, there is no inconsistency between the facts alleged and the parties' responsibilities under the Agreement. In order to recover, EMHS will need to prove by a preponderance of the evidence that the Agreement required Lexx to furnish CMS-enrolled and non-abusive physicians notwithstanding the fact that...