Mmm Healthcare, Inc. v. MCS Health Mgmt. Options

818 F.Supp.2d 439

MMM HEALTHCARE, INC., Plaintiff,

v.MCS HEALTH MANAGEMENT OPTIONS; and MCS Advantage, Inc., Defendants.

Civil No. 10–1988 (DRD).

United States District Court, D. Puerto Rico.

Oct. 6, 2011.

Lydia M. Ramos–Cruz, Osvaldo Carlo–Linares, Lausell & Carlo, PSC, San Juan, PR, for Plaintiff.

Mauricio O. Muniz–Luciano, Salvador J. Antonetti–Stutts, Hermann D. Bauer–Alvarez, O'Neill & Borges, San Juan, PR, Alaap B. Shah, Lee Calligaro, Epstein Becker & Green, PC, Washington, DC, for Defendants.

SECOND AMENDED OPINION AND ORDER NUNC PRO TUNC

DANIEL R. DOMINGUEZ, District Judge.

I. PROCEDURAL HISTORY

Plaintiff, MMM Healthcare Inc. (hereinafter “MMM”) filed suit on October 12, 2010 against Defendants, MCS Health Management Options; MCS Advantage, Inc. seeking Temporary, Preliminary and Permanent Injunction. See Docket No. 1. The Plaintiff alleges that the defendants MCS Management Options; MCS Advantage, Inc. (hereinafter, jointly referred to as “MCS”) unlawfully contacted MMM's patients, directly or indirectly, so as to misinform them regarding their health coverage, create confusion and/or induce them to join MCS Advantage plan. MMM claimed MCS violations of the Medicare Act, of the Medicaid Act, of the Health Insurance Portability and Accountability Act of 1996 (“HIPPA”), of the Puerto Rico Insurance Code, and of the Puerto Rico law prohibition against tortuous interference with contractual relationships.

On November 17, 2010 Defendants, MCS filed a Motion to Dismiss Complaint Pursuant to Federal Rule Civil Procedure 12(b)(1) and (6). See Docket 13. Defendant's hold that this Court should dismiss the Complaint for lack of subject-matter jurisdiction and for failure to state a claim upon which relief can be granted. Specifically they hold that all the three federal statutes that MMM filed suit failed to provide a private cause of action. Moreover, Defendants hold that the state-law tort claims are either preempted by federal law or fail to state a claim upon which relief can be granted.

On December 8, 2010, Plaintiff MMM filed an Amended Complaint for Permanent Injunction and Damages. See Docket No. 20. MMM dropped the three federal claims and replaced them with a claim under § 43(a) of the Lanham Act (for false advertising and unfair competition), and retains its two Puerto Rico-law claims under supplemental jurisdiction. Subsequently, Defendants filed a Motion to Dismiss the amended complaint pursuant to Fed.R.Civ.P.12(b)(1) and (6) (January 5, 2011). See Docket No. 29. MCS alleges that the Lanham Act claim fails because the communications on which MMM based its complaint were not literally false and any contextual inaccuracies were inadvertent. Additionally, plaintiff alleges that MCS allegation of misrepresentation in marketing communications and state—law claims are preempted by CMS ¹ and the Medicare Act.

On January 28, 2011, MMM Healthcare, Inc. filed an Opposition to motion to Dismiss. See Docket No. 37. MMM Healthcare alleges that it has satisfied both the “plausibility” standard under Twombly and Iqbal and the Lanham Act required elements. It further argues that the Medicare provisions do not prevent the Lanham Act because this particular contractual interference is not within the scope of the Medicare marketing regulations. Finally, MMM avers that it adequately pleaded all the required elements of a tortious interference claim under local law.

On February 18, 2011, MCS filed a Reply to the Opposition to Motion to Dismiss Amended Complaint. See Docket No. 44. The defendant holds that the case should be dismissed just as the Plaintiff has not satisfied the Lanham Act's “in commerce” requirement and does not adequately plead false statements or misrepresentations with in the proscription of the Act. Further defendants argue that the alleged “home visits” do not constitute “commercial advertising or promotion” covered by the Lanham Act. Finally, defendants aver that the Puerto Rico law claims fail to allege the necessary elements, and are preempted by the detailed regulation of Medicare and Medicaid marketing by CMS.

Finally, on March 8, 2011, Plaintiff MMM filed a Surreply to Opposition to Motion to Dismiss, see Docket No. 50, alleging that the Lanham Act's “in commerce” requirement is met. MMM further alleges that: (a) MCS' false and misleading statements to MMM Platino Members in their homes are actionable under the Lanham Act; (b) the Puerto Rico state law claims are not preempted by the Medicare statutory provisions, which are well pleaded in the amended complaint.

II. FACTS

Medicare is a federally administered insurance program that provides health insurance coverage to people who are age 65 or over, or who meet other special criteria. Medicaid is an insurance program that provides health insurance coverage for the indigent, and is partially funded by the federal government, but operated by the individual states (including the Commonwealth of Puerto Rico). In Puerto Rico, Medicaid benefits are offered through the “Mi Salud” program, as of October 1, 2010. MMM contracts with the federal and Puerto Rico governments to provide the Platino program to dual-eligible ² individuals. MMM Platino plan provides benefits and pays claims outside of Puerto Rico. MMM also offers Medicare Advantage plans providing only Medicare benefits.

MCS–HMO was awarded a contract to serve as the exclusive insurance company offering the “Mi Salud” Medicaid program in six out of nine regions Puerto Rico was divided. MCS–HMO's “Mi Salud” contract does not affect or include dual-eligible individuals receiving Medicare and Medicaid benefits through a Platino program. In connection to MCS new contract, the Puerto Rico Health Insurance Administration (hereinafter “ASES”),³ sent MCS–HMO a file with patients' contact information of patients of both Medicaid and non Medicaid enrollees. The non Medicaid patients were part of the MMM's Platino insurance program. ASES asked MCS–HMO to destroy the information that did not pertain to “Mi Salud” members. MCS–HMO failure to comply resulted in a fine of $100,000 by ASES.

MMM alleges in its amended complaint, Docket No. 20, the Defendants unlawfully used the information received by ASES to engage in an unfair, illegal, and tortious marketing scheme designed to promote their own plans over MMM's Platino product, and that MCS used MMM's information to illegally profit from its improper receipt of information.

On or about September 30, 2010, MCS–HMO sent a mailing to numerous individuals who were enrolled in MMM's Platino plan, and not in any of Defendants' plans including “Mi Salud”. The letter informed these MMM Platino members that they would no longer be able to continue receiving care from their current healthcare provider and they should promptly enroll in MCS' health plans. The letter also encouraged the members to direct themselves to one of Defendants' customer service center for matters pertaining to the health providers.

MCS sent to an undisclosed members of MMM's Platino members a “Welcome Aboard A New Stage With MCS, Your Life Experience!” letter. The mailing welcomed the MMM members to their “new coverage” with MCS–HMO including an insurance card with the recipient's name on it. MMM finally alleges that Defendants have improperly contacted numerous individuals enrolled in MMM's Platino program at their homes, contrary to the requirements of the Medicare Advantage program. A representative of MCS contacted at least two MMM Platino members near their home, in an unsolicited visit, calling the patients by name. The representative identified herself as an MMM sales representative, when she actually was a MCS representative. These communications were false and misleading, as the documents the members deceitfully signed consisted of forms to enroll in the MCS Advantage's Medicare Advantage program. MMM alleges that MCS' conduct has been prejudicial to MMM and its members, as it had led to a substantial disenrollment trend from MMM.

III. MOTION TO DISMISS

The motion to dismiss standard under Fed.R.Civ.R. 12(b)(6).

Federal Rule of Civil Procedure 8(a) requires plaintiff to provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. 8(a)(2). Rule 12(b)(6) of the Federal Rules of Civil Procedure (“Fed.R.Civ.P.”) provides that a complaint will be dismissed for “failure to state a claim upon which relief can be granted.” In Bell Atlantic v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) the court decided that for a pleading to be sufficient, a plaintiff is obligated “to provide the grounds of his entitlement to relief with more than labels and conclusions”. The combined allegations, taken as true, must state a plausible case for relief. The plausibility standard requires more than a possibility that the defendant has acted unlawfully. Under Twombly's construction of Rule 8, the plaintiff's complaint has to “nudge” the claims “across the line from conceivable to plausible”. Twombly caution against thinking of “plausibility as a standard of likely success on the merits”; the standard is plausibility assuming the pleaded facts to be true and read in a plaintiff's favor. Sepúlveda–Villarini v. Department of Education of Puerto Rico, 628 F.3d 25 (2010).

Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) the court established that the plausibility standard applies outside its original antitrust context. Additionally, Iqbal provided a two-step process by which courts may analyze motions to dismiss under Fed. R. Civ. 12(b)(6). The court should first identify and set aside all legal conclusions or conclusory statements. Next, a court should decide whether what remains states a plausible claim for relief if accepted as true. The second step established in Iqbal is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. Erickson v. Pardus...