Sampson v. Blue Cross Blue Shield Michigan

997 F.Supp.2d 777

John Gilmore SAMPSON, et al., Plaintiffs,

v.BLUE CROSS BLUE SHIELD OF MICHIGAN, et al., Defendants.

Case No. 13–10113.

United States District Court,

E.D. Michigan,

Southern Division.

Feb. 18, 2014.

Robert K. Gaecke, Jr., Robert K. Gaecke Jr., Martin G. Lozier, Aymond, Lozier, Jackson, MI, for Plaintiffs.

Gary D. Reeves, Bodman, G. Gus Morris, McGraw Morris PC, Troy, MI, Matthew T. Jane, Bodman, Ann Arbor, MI, Trevor M. Salaski, Bodman PLC, Detroit, MI, John G. Fedynsky, State of Michigan Attorney General's Office, Lisa M. Geminick, State of Michigan, Patrick A. Aseltyne, Johnson, Rosati, Shaina R. Reed, Johnson, Rosati, Labarge, Aseltyne & Field, Lansing, MI, for Defendants.

OPINION & ORDER DENYING BCBS DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS

SEAN F. COX, District Judge.

Plaintiff John Sampson is a physician who had contracts with Blue Cross Blue Shield of Michigan (“BCBS”) under which he provided medical services for patients, in exchange for reimbursement. Dr. Sampson, his wife, and business entities that they have interests in, filed this § 1983 suit against multiple Defendants, including BCBS and several of its employees, after those employees aided law enforcement officers in executing search warrants at Dr. Sampson's home and office.

This case, which has a long and complex history, is currently before the Court on the BCBS Defendants' Motion for Judgment on the Pleadings. In this motion, the BCBS Defendants assert that: 1) although they are private citizens, they should be allowed to invoke the defense of qualified immunity in this action; and 2) they are entitled to qualified immunity as to the claims asserted against them. The motion has been fully briefed and the Court heard oral argument on February 13, 2014. The threshold inquiry, whether the BCBS Defendants can assert the defense of qualified immunity, is an interesting and unusual issue. For the reasons set forth below, the Court shall DENY this motion because the Court concludes that the BCBS Defendants may not invoke the defense of qualified immunity in this action.

BACKGROUND

A. Procedural Background

Plaintiffs John Gilmore Sampson, M.D. and Cecelia Sampson, Argyle Plastic and Reconstructive Surgery, P.C. (“Argyle”), Fourth Street Properties, LLC (“Fourth Street Properties”), and John Sampson, M.D., Trustee/Fiduciary of the Argyle Plastic and Reconstructive Surgery, P.C. 401(k) Profit Sharing Plan and Trust (“the Trust”) filed this action in federal court on January 11, 2013, based on federal-question jurisdiction.

Plaintiffs' original Complaint named numerous Defendants and asserted the following claims: “42 U.S.C. § 1983 Deprivation of Rights Under Fourth, Fifth And Fourteenth Amendments Due To Seizure Of Monies Without Probable Cause” (Count I); “Deprivation Of Rights Under Fourth, Fifth And Fourteenth Amendment Due To Seizure Of LLC Funds” (Count II); “42 U.S.C. § 1983 Conspiracy To Deprive Of Rights Guaranteed By Fourth, Fifth And Fourteenth Amendments” (Count III); “42 U.S.C. § 1985 Conspiracy To Deprive Of Equal Protection, Privileges And Immunities” (Count IV); “42 U.S.C. § 1983 Deprivation Of Rights Under Fourth Amendment Due To BCBS Participation In Execution Of Warrant” (Count V); “42 U.S.C. Failure To Train/Supervisory Liability” (Count VI); “42 U.S.C. Abuse of Process (BCBSM)” (Count VII); “Abuse Of Process (Common Law)” (Count VIII); “Attorney Fees And Costs Under M.C.L. 750.159a” (Count IX); “Invasion Of Privacy” (Count X); “Intentional Infliction Of Emotional Distress Dr. And Mrs. Sampson” (Count XI); “Breach Of Contract” (Count XII); “Interference With Business Relations And Contract” (Count XIII); “Promissory Estoppel” (Count XIV); “Concert Of Action” (Count XV); “Common Law Conspiracy” (Count XVI); and “Respondeat Superior” (Count XVII).

On January 22, 2013, this Court issued an “Order Declining To Exercise Supplemental Jurisdiction Over State–Law Claims” (Docket Entry No. 3) and dismissed the following counts without prejudice: Counts VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, and XVII. That left Counts I through VII remaining.

This Court issued the Scheduling Order on July 25, 2013. (Docket Entry No. 18). That order provides, among other things, that discovery is to close on March 31, 2014, and the deadline for filing motions is May 2, 2014.

On September 20, 2013, Plaintiff filed an Amended Complaint (Docket Entry No. 19). Plaintiffs' Amended Complaint names the following Defendants: 1) BCBS; 2) Detective Sergeant Lisa Gee–Cram (“Cram”); 3) Detective Robert Schrock (“Schrock”); 4) Detective Timothy Schlundt; 5) Detective Lee Rose (“Rose”); 6) Detective Sergeant Brian Russell (“Russell”); 7) Trooper Gina Gettel (“Gettel”); 8) Blackman Township Public Safety Department; 9) Jackson County Sheriff Department; 10) the Jackson County Prosecutor's Office; 11) David Castelein (“Castelein”); 12) John Southworth (“Southworth”); 13) Nina Burnette (“Burnette”); 14) Patricia Hammerle (“Hammerle”); 15) Thomas Clickner (“Clickner”); 16) Susan Post (“Post”); 17) Roger Ramirez (“Ramirez”), and 18) Larry Harrison (“Harrison”). The Amended Complaint asserts the following claims:

1) “42 U.S.C. § 1983 Deprivation of Rights Under Fourth, Fifth And Fourteenth Amendments Due To Seizure Of Monies Without Probable Cause” (Count I): which appears to be asserted against Defendants Cram and Rose;

2) “Deprivation Of Rights Under Fourth, Fifth And Fourteenth Amendment Due To Seizure Of LLC Funds” (Count II), which appears to be asserted against Defendants Cram and Rose;

3) “42 U.S.C. § 1983 Conspiracy To Deprive Of Rights Guaranteed By Fourth, Fifth And Fourteenth Amendments” (Count III), which appears to be asserted against Defendants Cram, Castelein, Southworth, and BCBS;

4) “42 U.S.C. § 1985 Conspiracy To Deprive Of Equal Protection, Privileges And Immunities” (Count IV), which appears to be asserted against Defendants Cram, Castelein, Southworth, and BCBS;

5) “42 U.S.C. § 1983 Deprivation Of Rights Under Fourth Amendment Due To BCBS Participation In Execution Of Warrant” (Count V), which appears to be asserted against Defendants Cram, Schrock, Schlundt, Russell, Gettel, Castelein, Southworth, Clickner, Burnette, Hammerle, Post, Ramirez, Harrison, and BCBS;

6) “42 U.S.C. Failure To Train/Supervisory Liability” (Count VI), which appears to be asserted against “Jackson County,” and the Township of Blackman ( see Am. Compl. at 29), even though Plaintiffs named the “Jackson County Sheriff Department” and the “Blackman Township Public Safety Department” ( see caption of Am. Compl. and ¶¶ 117–18);

7) “42 U.S.C. Abuse of Process (BCBSM)” (Count VII), asserted against BCBS; and

8) “42 U.S.C. Malicious Prosecution (Castelein & BCBSM),” (Count VIII), asserted against Castelein and BCBS.

(Am. Compl.)

On December 26, 2013, the BCBS Defendants filed the instant Motion for Judgment on the Pleadings. (Docket Entry No. 28).

B. Factual Background Set Forth By Plaintiffs' Allegations And Orders Issued In Related State–Court Civil And Criminal Actions.

BCBS's Motion for Judgment on the Pleadings was brought pursuant to Fed.R.Civ.P. 12(c). The standard that applies to this motion is the same standard that applies to a motion to dismiss brought pursuant to Fed.R.Civ.P. 12(b)(6). For purposes of a Rule 12(c) motion, all well-pleaded material allegations “must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.” Tucker v. Middleburg–Legacy Place, 539 F.3d 545, 549 (6th Cir.2008). A Rule 12(c) motion is appropriately granted “when no material issue of fact exists and the party making the motion is entitled to judgment as a matter of law.” Id.

For purposes of this motion, the Court may consider: 1) documents referenced in, or attached to, the complaint and central to the plaintiff's claims; 2) matters of which a court may properly take notice; and 3) public documents and records. Costell v. Bank of New York Mellon, 2013 WL 317746 (E.D.Mich.2013); Meyer v. Citimortgage, Inc., 2012 WL 511995 (E.D.Mich.2012); Devlin v. Kalm, 531 Fed.Appx. 697 (6th Cir.2013). Thus, this Court can consider opinions and orders issued in related state-court civil and criminal actions.

The pending motion filed by the BCBS Defendants does not provide a full account of all that has transpired in the state courts that is related to this action. As shown below, Plaintiffs' statement that this “matter has an exceptionally complicated factual and procedural history, involving multiple civil and criminal” actions, is accurate.

1. Relationship Between Sampson and BCBS

Plaintiff Dr. John Sampson is a physician, licensed to practice medicine in Michigan. (Am. Compl. at ¶ 5). Dr. Sampson and his wife, Plaintiff Cecilia Sampson, own or have an interest in two business entities, Argyle and Fourth Street Properties. Mrs. Sampson is employed by Argyle (the medical practice).

Dr. Sampson entered into contracts with BCBS, under which he agreed to provide medical services to BCBS members in exchange for payment. In 1995, he entered into a Traditional Agreement with BCBS and in 2004 he entered into a Participating Physician Agreement. (Am. Compl. at ¶ 28). Those contracts contain provisions for audit, dispute and appeal processes, and recovery of overpayments. (Am. Compl. at ¶ 29).

Following an audit that began in August of 2009, BCBS advised Dr. Sampson in December of 2009 that preliminary audit results identified a minimum overpayment of $527,585.12 but that the audit was not complete. (Am. Compl. at ¶¶ 30–32). On January 4, 2010, Castelein, a BCBS investigator, spoke with Dr. Sampson on the telephone about the audit but “upon Dr. Sampson's expression of dismay and outrage regarding the audit and intent to have his attorney involved, Castelein terminated the conversation.” (Am. Compl. at ¶ 33).

Plaintiffs allege that neither Castelein nor any other representative of BCBS made a complaint to “the Attorney...