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Rios v. Partners In Primary Care, P.A.

United States District Court, W.D. Texas, San Antonio Division

February 15, 2019


          The Honorable Fred Biery United States District Judge.



         This report and recommendation concerns the following three motions to dismiss: Defendants Nix Hospitals System, LLC and ScanSTAT, L.P.'s Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6) [#27], Defendants Ciox Health LLC and Partners in Primary Care, P.A.'s Motion to Dismiss First Amended Complaint [#32], and Defendant North Shore Agency, Inc.'s Rule 12(b)(6) Motion to Dismiss for Failure to State a Claim [#38]. This case was referred to the undersigned for all pretrial proceedings, and the undersigned has authority to enter a recommendation on Defendants' motions to dismiss pursuant to 28 U.S.C. § 636(b)(1)(B).

         In resolving Defendants' motions, the undersigned has also considered the following responses, replies, and supplemental filings: Supplemental Exhibits to Nix Hospitals and ScanSTAT's Motion to Dismiss [#29], Response of Plaintiffs to Defendants Nix Hospitals and ScanSTAT's Motion to Dismiss [#33], Response of Plaintiff Amelia Rios to Defendants Ciox Health and Partners in Primary Care's Motion to Dismiss [#34], Defendants' Reply [#35], Defendants' Reply [#36], Response of Plaintiff Amelia Rios to Defendant North Shore Agency's Motion to Dismiss [#41], and Defendants' Reply [#42].

         Also before the Court is Plaintiffs' Motion for Leave to Amend Complaint, which was filed on November 16, 2018 [#40]. According to this Court's Local Rules, Defendants' response to this motion was due within seven days of the motion's filing, on or before November 23, 2018. See Loc. R. CV-7(e) (responses to nondispositive motions due within seven days of motion's filing). To date, no Defendant has filed a response to the motion. Pursuant to Local Rule CV-7(e), if there is no response filed within the time period prescribed by the rules, the court may grant the motion as unopposed. The undersigned has authority to enter an order on Plaintiffs' nondispositive motion pursuant to 28 U.S.C. § 636(b)(1)(A). Accordingly, the Court will grant the motion to amend as unopposed and order the Clerk to docket Plaintiff's Second Amended Complaint, which is attached to Plaintiffs' motion [#40-1].

         Although a motion to dismiss may be rendered moot by a supplemental or amended pleading, no party suggests that is the appropriate course here. Plaintiffs' Second Amended Complaint makes only minor additions to the factual allegations contained in its First Amended Complaint and does not add any additional claims. Moreover, Defendants' primary argument for dismissal focuses on alleged pleading defects related to issues of law not affected by Plaintiffs' amendments. Cf. Maxim Integrated Prods., Inc. v. State Farm Mut. Auto. Ins. Co., No. SA-14- CV-1030-XR, 2015 WL 10990119, at *1 (W.D. Tex. Feb. 12, 2015) (“Especially given the substantive changes in the amended complaint, new causes of action, and more specific facts about the infringement that may go to the heart of the motion to dismiss, the Court finds State Farm's motion to dismiss is moot.”). Accordingly, the undersigned will consider the arguments made in Defendants' motion to dismiss as they apply to the Second Amended Complaint, rather than dismissing as moot Defendants' motions and requiring Defendants to file new motions to dismiss. See Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1476 (3d ed. 2002) (“[D]efendants should not be required to file a new motion to dismiss simply because an amended pleading was introduced while their motion was pending. If some of the defects raised in the original motion remain in the new pleading, the court may simply consider the motion as being addressed to the amended pleading. . . . To hold otherwise would be to exalt form over substance.”).

         Having reviewed Plaintiffs' Second Amended Complaint [#40-1] in light of the arguments raised by Defendants' motion to dismiss, the undersigned is of the opinion the motions to dismiss should be denied without prejudice to rebriefing the issues discussed herein in a motion for summary judgment supported by a more complete evidentiary record.

         I. Procedural Background

         This proposed class action arises under the Texas Debt Collection Act (“TDCA”), Tex. Fin. Code §§ 392, et seq., and the Texas Deceptive Trade Practices Act (“DTPA”), Tex. Bus. & Comm. Code § 17.41, et seq. Plaintiffs Amelia Rios, Robert Green, and Sayra Green filed this action on May 31, 2018 against two healthcare providers-Defendants Nix Hospitals System, LLC (hereinafter “Nix”) and Partners in Primary Care, P.A. (hereinafter “Partners in Primary Care”)-and the companies responsible for their recordkeeping, invoicing, and collection- Defendants Healthport Technologies, LLC (hereinafter “Healthport”), [1] Ciox Health, LLC (hereinafter “Ciox”), ScanSTAT, L.P (hereinafter “ScanSTAT”), and North Shore Agency, Inc. (hereinafter “North Shore”). Plaintiffs allege that Defendants attempted to charge and collect an unauthorized fee for electronic copies of their medical records in violation of the fee restrictions contained in the Health Information Technology for Economic and Clinical Health Act (hereinafter “HITECH Act”), Pub. L. 111-5, Title XIII, 123 Stat. 264 (Feb. 17, 2009), and that these actions by Defendants violate the TDCA and DTPA. (Compl. [#1].)

         Plaintiffs' Second Amended Complaint [#40-1], the live pleading in this case, alleges that Plaintiffs requested electronic copies of their medical records from Defendants Nix and Partners in Primary Care and directed these Defendants to send their records to their attorneys, in connection with personal-injury litigation. (Second Am. Compl. [#40-1] at ¶¶ 13, 17, 26, 31.) Plaintiffs claim that Defendants ScatSTAT and Healthport/Ciox responded to the requests on behalf of Nix and Partners in Primary Care by billing for the requested medical records; that the amount invoiced exceeded the charges allowed under the HITECH Act; and that Plaintiffs disputed the invoices on that basis. (Id. at ¶¶ 14-33.) Plaintiffs allege that their complaints were ignored and Defendants continued to send them invoices for the disputed charges and/or sent the invoices to Defendant North Shore for collection. (Id.) Plaintiffs contend that these acts violate the TDCA and DTPA because Defendants attempted to collect a debt unauthorized by the HITECH Act. (Id. at ¶¶ 36-40.)

         Plaintiffs filed their lawsuit as a class action and propose a class action of (i) all persons (ii) who requested medical records from any Defendant and/or had their request for medical records acted on by any Defendant (iii) and were charged or attempted to be charged a fee for such medical records that exceeds the costs allowed to be charged pursuant to 45 C.F.R. 164.524(c)(4). (Id. at ¶ 47.) Additionally, Plaintiff Amelia Rios brings this action on behalf of a class consisting of (i) all persons (ii) who disputed the amounts sought to be charged by Defendant North Shore (iv) whose complaint was not acknowledged by such Defendant as required by Texas Finance Code § 392.202. (Id. at ¶ 48.) Federal jurisdiction is premised on 28 U.S.C. § 1332(d), which confers jurisdiction over class action lawsuits in which the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interests and costs, and at least one member of the proposed class is a citizen of a state different from any defendant. (See Id. at ¶ 1.)

         Plaintiffs seek actual damages as calculated as the difference between Defendants' actual cost to provide electronic copies of medical records in accordance with the HITECH ACT and the inflated amounts charged by Defendants as set forth in their pleadings, as well as additional damages for intentional conduct and reasonable and necessary attorneys' fees. (Id. at ¶ 60.) Plaintiff Rios also seeks statutory damages under the Texas Finance Code for Defendant North Shore's failure to acknowledge disputes relating to the charged amounts. (Id. at ¶ 61.) Additionally or alternative to monetary damages, Plaintiffs seek injunctive relief. (Id. at ¶ 62.) Plaintiffs also plead their actual damages as recoverable under the doctrine of unjust enrichment. (Id. at ¶ 60.)

         Collectively, Defendants' motions to dismiss seek dismissal of all of Plaintiffs' claims on the following grounds: (1) Plaintiffs cannot bring claims premised upon alleged violations of the HITECH Act even through Texas consumer-protection statutes, as no private right of action exists under the HITECH Act; (2) even if Plaintiffs could sue under the TDCA or the DTPA for violations HITECH Act's fee restrictions, Plaintiffs' claims would fail because Defendants did not violate the HITECH Act in their handling of Plaintiffs' record requests; (3) Plaintiffs lack standing to assert their claims because they did not suffer an injury-in-fact, as their attorneys were the ones invoiced for the electronic records provided; (4) Plaintiffs' TDCA and DTPA claims fail because the debt at issue does not arise from a consumer transaction and Plaintiffs' attorneys are not consumers for purposes of the TDCA or DTPA; (5) Plaintiffs' claim for unjust enrichment fails because there is no allegation of a benefit conferred on Defendants; (6) Plaintiffs cannot satisfy the prerequisites for class certification; and (7) Defendant Partners in Primary Care should be dismissed because there are no allegations that this Defendant engaged in any debt-collection conduct. The motions are now ripe for the Court's review.

         II. Legal Standard

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Although a complaint “does not need detailed factual allegations, ” the “allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. The allegations pleaded must show “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.

         In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court “accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.” Martin K. Eby Const. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (internal quotation omitted). However, a Court need not credit conclusory allegations or allegations that merely restate the legal elements of a claim. Chhim v. Univ. of Tex. at Austin, 836 F.3d 467, 469 (5th Cir. 2016) (citing Iqbal, 556 U.S. at 678). In short, a claim should not be dismissed unless the court determines that it is beyond doubt that the plaintiff cannot prove a plausible set of facts that support the claim and would justify relief. See Twombly, 550 U.S. at 570. When the issue is a statute of limitations defense, the court may only order dismissal under Rule 12(b)(6) “where it is evident from the plaintiff's pleadings that the action is barred and the pleadings fail to raise some basis for tolling or the like.” Jones v. Alcoa, Inc., 339 F.3d 359, 366 (5th Cir. 2003).

         Because Nix and ScanSTAT [#27] and Ciox and Partners in Primary Care [#32] attached evidence to their motions to dismiss, Plaintiffs asks the Court to convert Defendants' motions into motions for summary judgment. The Court should decline to do so. Generally, in considering a motion to dismiss under Rule 12(b)(6), the Court “must limit itself to the contents of the pleadings, including attachments thereto.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). The Fifth Circuit recognizes a limited exception to this general rule where documents attached to a motion to dismiss are considered part of the pleadings and may be considered in reviewing the motion. Id. at 498-99. For the exception to apply, the documents must be (1) attached to a defendant's motion to dismiss, (2) referred to in the plaintiff's complaint, and (3) central to the plaintiff's claims. Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). Otherwise, “the motion must be treated as one for summary judgment [and] . . . [a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d); see In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007).

         The exhibits attached to Defendants' motions to dismiss are copies of the requests for medical records at issue in this lawsuit [#27-2, #27-3, #27-4, #32-1] and supporting affidavits attesting to the authenticity of the documents [#27-1, #29]; copies of invoices to Plaintiffs' attorneys for the cost of the medical records [#27-6, #27-7, #27-8, #32-2]; and a check made payable to Nix from the Law Offices of Charles Riley, PC [#27-5]. All of these exhibits are referenced in Plaintiffs' pleadings and are central to Plaintiffs' claims. See Lone Star Fund, 594 F.3d at 387. Accordingly, the Court declines to convert Defendants' motions into motions for summary judgment, and the Court may consider the attached exhibits in ruling on the motions to dismiss.

         III. Factual Allegations Before the Court

         The allegations in Plaintiffs' Second Amended Complaint state the following: all three Plaintiffs requested that Nix provide them with copies of their medical records in electronic format and that the records be sent to their attorney in connection with personal-injury litigation. (Second Am. Compl. [#40-1] at ¶¶ 13, 26, 31.) Plaintiff Amelia Rios also requested records from Partners in Primary Care and that these records be sent to her attorney. (Id. at ¶ 17.) ScanSTAT responded to the records request on behalf of Nix but indicated that Plaintiffs would be required to pay a charge that exceeded the allowable charge under the HITECH Act. (Id. at ¶¶ 14, 27, 32.) When Plaintiffs disputed the amount claimed, ScanSTAT never responded to the dispute and instead invoiced Plaintiffs repeatedly for the excessive amount. (Id. at ¶¶ 15, 28-29, 32-33.) Plaintiffs allege that Nix also directly sent Plaintiffs Amelia Rios and Sayra Green invoices seeking payment. (Id. at ¶¶ 16, 30.) Rios alleges she disputed the amount requested from Nix, and Nix never responded to the dispute; Ms. Green claims she paid the full amount in order to pursue her pending personal-injury claim. (Id. at ¶¶ 16, 30.)

         The only Plaintiff who allegedly requested records from Partners in Primary Care was Rios. (Id. at ¶ 17.) Rios alleges that she requested records in electronic format from Partners in Primary Care and also asked the provider to send the records to her attorney. (Id.) Healthport allegedly sent Rios multiple invoices for amounts violating the HITECH Act's fee restrictions. (Id. at ¶ 18.) Rios claims she disputed the amounts invoiced, but Healthport never responded to the dispute and instead sent the invoices to Defendant North Shore for collection. (Id. at ¶ 19.) After Healthport changed its name to Ciox Health, Rios claims she continued to receive invoices from Ciox for the disputed amounts. (Id. at ¶ 21.) Rios alleges she also received collection notices from North Shore for these same amounts; she disputed these claims with North Shore; but North Shore never responded, instead sending her a “Medical Records Collection Alert.” (Id. at ¶¶ 22-25.)

         The evidence attached to Defendants' motions to dismiss, however, shows that Plaintiffs' attorneys at Riley & Riley, P.C. initiated the record requests by sending letters to Nix and Partners in Primary Care on behalf of Plaintiffs. (Ltr. re: Rios [#27-2] at 4-5; Ltr. re: S. Green [#27-3] at 4; Ltr. re: R. Green [#27-4] at 4; Ltr. re: Rios [#32-1] at 3.) These letters requested electronic copies of Plaintiffs' medical records “pursuant to the HITECH Act.” (Id.) A HIPAA[2]Authorization for Use and Disclosure of Protected Health Information signed by Plaintiffs was attached to the letter, as well as letters from Plaintiffs addressed to the providers requesting the records and directing that they be sent to their attorneys. (Rios HIPAA Authorization and Ltr. [#27-2] at 9-10; S. Green HIPAA Authorization and Ltr. [#27-3] at 5-6; R. Green HIPAA Authorization and Ltr. [#27-4] at 5-6; Rios HIPAA Authorization and Ltr. [#32-1] at 4-5.) The letters signed by Rios state the following:

Pursuant to the above cited United States Code provisions, I, the subject patient in the above request from my attorney, request that my entire chart and file of medical records, billings, HICFA's, CMS 1500's, be provided to me, through my above identified attorney, at his address, and that I be billed for this service under terms of the applicable law.

(Rios Ltr. [#27-2] at 6; Rios Ltr. [#32-1] at 5.) The letters signed by Sayra Green and Robert Green state the following:

Pursuant to the HITECH Act . . ., I hereby request electronic copies of [patient's first name] complete medical records and billing records on a CD(s) which were generated during and as a result of his/her treatment in your facility, and you are hereby direct [sic] that the CD containing the requested records be mailed to [name and address and telephone number of the attorney]. This request is for records in electronic form only. . . . Please forward the Electronic Copies of my medical and billing records to my attorney, Charles Riley at 320 Lexington Avenue, San Antonio, Texas 782015;

(S. Green Ltr. [#27-3] at 6; R. Green Ltr. [#27-4] at 6.)[3]

         The exhibits also include some of the invoices resulting from the records request. These invoices show that, in at least four instances, ScanSTAT and HealthPort/Ciox billed Plaintiffs' attorneys, not Plaintiffs themselves, for the records requests (see Invoices [#27-6, #27-7, #27-8, #32-2]), and Plaintiffs' attorneys remitted payment for the cost of the records provided for Sayra Green on November 28, 2016 (See Payment [#27-5]). The exhibits, however, do not include all of the invoices or communications from Nix, ScanSTAT and Healthport/Ciox referenced in Plaintiffs' Second Amended Complaint and none of the referenced communications from North Shore. Neither is there any evidence in the record regarding Plaintiffs' arrangements with their attorneys regarding how fees the firm incurred on their behalf would be handled. Accordingly, the evidentiary record is incomplete at this time.

         IV. Analysis

         Based on the current record and briefing before the Court, Defendants' motions to dismiss should be denied. While Defendants are correct that no private right of action exists under HIPAA and the HITECH Act, Plaintiffs have not sued under these Acts; their case instead arises under the TDCA and DTPA. At this stage of the litigation, Defendants have not persuaded the undersigned that Plaintiffs are precluded from asserting claims under these Texas consumer-protection statutes simply because their claims rely on allegations that the charges Defendants imposed and the debts they attempted to collect were unlawful because they violated the HITECH Act's fee restrictions. Furthermore, Plaintiffs have standing to assert their claims because they allege they suffered an injury-in-fact, even if their attorneys were the ones invoiced for the costs associated with the copies of their medical records. And Defendants have not established as a matter of law at this early ...

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