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Excellent Home Care Services, LLC v. FGA, Inc.

United States District Court, E.D. New York

February 4, 2015

EXCELLENT HOME CARE SERVICES, LLC, Plaintiff,
v.
FGA, INC., Defendant.

MEMORANDUM AND ORDER

I. LEO GLASSER, Senior District Judge.

Plaintiff Excellent Home Care Services, LLC ("EHCS") brings this action against FGA, Inc. ("FGA" or "Defendant"), alleging claims for breach of contract, negligence, and breach of fiduciary duty. In a Memorandum and Order dated August 27, 2014, ("Prior Order") the Court granted Defendant's motion to dismiss the original Complaint without prejudice, and permitted Plaintiff to re-plead its claims. Dkt. No. 35. Plaintiff filed its Amended Complaint on September 24, 2014. Dkt. No. 36. Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendant now moves to dismiss Plaintiff's Amended Complaint. Dkt. No. 37. For the reasons set forth below, Defendant's renewed motion is GRANTED in part and DENIED in part.

BACKGROUND

The facts and history of this case were set out in detail in the Prior Order, with which familiarity is assumed. The following allegations are taken from the Amended Complaint and, for purposes of this motion, assumed to be true. EHCS is a home healthcare company based in New York, and FGA is a billing management company based in New Jersey. See Am. Compl. ¶¶ 1-4. On May 31, 2007, the parties entered into a written agreement ("Agreement"), pursuant to which FGA agreed to prepare and submit medical insurance claims on behalf of EHCS to Medicare, Medicaid, and private insurance carriers. See id., Ex. A.[1] The Agreement stated that FGA "will be acting solely as agent for [EHCS]" and obligated it to monitor and re-submit denied claims, immediately inform EHCS of any potential billing errors it identified, and "perform all work on behalf of [EHCS] in a lawful and ethical manner and in compliance with statutes, rules and regulations... relative to providing this service." See id. at 1-3.

EHCS alleges that FGA breached the Agreement by failing to properly submit and monitor patient insurance claims, which resulted in the claims being denied. See Am. Compl. ¶ 10. It also alleges that FGA breached a duty independent of the Agreement by failing to properly train its staff, inform and disclose to EHCS the deadlines for appealing denied claims, adopt a compliance program, properly enter billing codes for claims, and correct billing errors. See id. ¶¶ 14-15, 18. It states that "State and Federal law[s]" imposed the additional duties upon FGA as a medical billing service provider, but does not identify these laws.[2] See id. ¶ 14. Furthermore, it alleges that FGA owed a "heightened duty" of care because it "solicited EHCS by claiming to possess special skills or knowledge in medical billing and accounts receivable management services." See id. ¶ 17.

EHCS adds a third claim to the Amended Complaint for breach of fiduciary duty. It alleges that FGA, in its agency capacity, breached its fiduciary duty of care "to act in a manner consistent with the purpose of the agency" and "to disclose all facts which FGA knew or should have known would reasonably affect EHCS' judgment, services, operations... or reputation." See id. ¶¶ 23-24.

FGA filed its renewed motion to dismiss the Amended Complaint ("Renewed Motion to Dismiss") on October 14, 2014. Dkt. No. 37. EHCS filed its Opposition to FGA's motion ("Opposition") on November 24, and on December 15, FGA filed its Reply. Dkt. Nos. 42, 44.

LEGAL STANDARD

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the 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)). Although detailed factual allegations are not necessary, mere legal conclusions, "a formulaic recitation of the elements of a cause of action, " or "naked assertions" by the plaintiff will not suffice. Id. (internal quotations and citations omitted). This Court must accept as true all of the allegations made in the complaint and draw all reasonable inferences in the plaintiff's favor. Matson v. Bd. of Educ. of the City Sch. Dist. of N.Y., 631 F.3d 57, 63 (2d Cir. 2011).[3]

DISCUSSION

FGA argues that the Amended Complaint should be dismissed with prejudice. It asserts that EHCS failed to sufficiently plead a breach of contract claim and that the negligence and breach of fiduciary duty claims should be dismissed because they fail to rest on any duty independent of its contractual obligations. The Court addresses each claim in turn.

1) Breach of Contract

Under New York law, a claim for breach of contract has four elements: (1) the existence of a contract, (2) performance by the plaintiff, (3) non-performance by the defendant, and (4) damages attributable to the breach. Kramer v. N.Y.C. Bd. of Educ., 715 F.Supp.2d 335, 356 (E.D.N.Y. 2010). FGA argues that the Amended Complaint fails to sufficiently allege its non-performance and damages attributable to the breach.

In its Prior Order, the Court found that the original breach of contract claim was not plausible because EHCS failed to allege which contract provisions FGA breached. See Prior Order at 3. The Amended Complaint provides this information: it identifies the terms of the Agreement that required FGA to prepare and submit claims on behalf of EHCS and to monitor and re-submit any denied claims. See Am. Compl. ¶ 8; 10. It further alleges that as a result of FGA's failure to fulfill these contractual ...


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