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Carter v. Ciox Health, LLC.

United States District Court, W.D. New York

May 26, 2017

MARISSA CARTER, EVELYN GRYS, BRUCE CURRIER, SHARON KONING, SUE BEEHLER, MARSHA MANCUSO, JACLYN CUTHBERTSON, as individuals and as representatives of the classes, Plaintiffs,
v.
CIOX HEALTH, LLC, f/k/a HealthPort Technologies, LLC, ROCHESTER GENERAL HOSPITAL, UNITY HOSPITAL OF ROCHESTER, F.F. THOMPSON HOSPITAL, INC., Defendants.

          DECISION AND ORDER

          HON. FRANK P. GERACI, JR. Chief Judge.

         INTRODUCTION

         Marissa Carter, Evelyn Grys, Bruce Currier, Sharon Koning, Sue Beehler, Marsha Mancuso, and Jaclyn Cuthbertson (“Plaintiffs”) brought this putative class action lawsuit on behalf of individuals in the State of New York who requested copies of their medical records from CIOX Health, LLC, Rochester General Hospital, Unity Hospital of Rochester, and F.F. Thompson Hospital, Inc. (“Defendants”). ECF No. 48. Plaintiffs allege that Defendants overcharged them for copies of medical records in violation of New York Public Health Law (“NYPHL”) § 18 and New York General Business Law (“NYGBL”) § 349. Id. Plaintiffs also allege unjust enrichment. Id. Plaintiffs assert that this Court has jurisdiction over these claims under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d).

         Defendants have moved to dismiss Plaintiffs' Amended Complaint. ECF No. 52. First, Defendants argue that the Court lacks jurisdiction because this case falls into an exception to CAFA jurisdiction. See ECF No. 52-1 at 4-8. Second, Defendants argue that Plaintiffs lack standing to seek injunctive relief. See Id. at 10. Third, Defendants argue that a three-year statute of limitations applies to Plaintiffs' claims and any claim stemming from a transaction that occurred more than three years before Plaintiffs initiated this case must be dismissed. See Id. at 15. Finally, Defendants argue that Plaintiffs' claims should be dismissed under the voluntary payment doctrine. For the reasons discussed below, the Court grants Defendants' Motion to Dismiss in part and denies it in part.

         BACKGROUND

         Defendants Rochester General Hospital, Unity Hospital of Rochester, and F.F. Thompson Hospital are New York healthcare providers. Id. at ¶¶18-20. Defendant CIOX Health[1]contracted with these and other healthcare providers to obtain, copy, and distribute patient medical records. Id. at ¶ 27. New York Public Health Law requires healthcare providers to provide their patients with copies of their medical records in exchange for an amount not exceeding the costs of producing the documents. See N.Y. Pub. Health Law § 18 (McKinney 2010). The law also requires that the costs not exceed $0.75 per page. Id. Plaintiffs allege that Defendants charged them “artificially inflated amounts” that exceeded both the cost of producing the records and $0.75 per page. See ECF No. 48 at ¶ 3.

         Between October 12, 2012 and April 14, 2014, each named Plaintiff requested medical records from one of the Defendant healthcare providers. Id. at ¶¶ 36-93. In doing so, each Plaintiff wrote to their healthcare provider and offered to “promptly reimburse [them] for any copying expense not exceeding 75 cents per page.” ECF No. 20-3. Following each request, Defendant CIOX Health sent each Plaintiff an invoice indicating that each Plaintiff would be charged $0.75 per page plus a $2.00 delivery fee for the production of the records. ECF No. 48 at ¶¶ 36-93. Each Plaintiff paid the amount requested, and Defendant CIOX Health produced the records. Id. Plaintiffs allege that, in each case, the amount charged exceeded the cost to produce the documents and, with the $2.00 delivery fee, exceeded $0.75 per page. Id.

         Plaintiffs allege that Defendants charged these excessive amounts systematically. Although the actual cost of providing the medical records was far below $0.75 per page, Plaintiffs allege, Defendants charged $0.75 per page and an additional $2.00 per request in order to generate revenue for both Defendant CIOX and the Defendant healthcare providers. Id. at ¶¶ 27-32. Plaintiffs allege that Defendant CIOX Health calculated these charges to include an amount to “kick back” to the Defendant healthcare providers. Id. Indeed, Plaintiffs allege that the contracts between the Defendants included a provision that required Defendant CIOX Health to pass a portion of the excess revenue that it received back to the Defendant healthcare providers. Id. On that basis, in addition to asserting violations of NYPHL § 18, Plaintiffs claim Defendants' practices were deceptive in violation of NYGBL § 349 and that Defendants were unjustly enriched by this scheme. Id. at ¶¶ 106-38.

         DISCUSSION

         Defendants have moved to dismiss Plaintiffs' Amended Complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). See ECF No. 52-1 at 1. Where a motion to dismiss is made under Rule 12(b)(1) on the ground that the court lacks subject matter jurisdiction, the court should consider the Rule 12(b)(1) challenge before considering any accompanying objections or defenses. See Rhulen Agency, Inc. v. Alabama Ins. Guar. Ass'n, 896 F.2d 674, 678 (2d Cir. 1990) (quoting Charles Alan Wright et al., Federal Practice and Procedure § 1350 (3d ed. 2013) (“[W]hen the motion [to dismiss] is based on more than one ground, the cases are legion stating that the district court should consider the Rule 12(b)(1) challenge first because if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses and objections become moot and do not need to be determined by the judge.”)).

         To succeed on a motion to dismiss brought under Rule 12(b)(6), the defendant must show that the complaint contains insufficient facts to state a claim for relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). A complaint is plausible when the plaintiff pleads sufficient facts that allow the Court to draw reasonable inferences that the defendant is liable for the alleged conduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Plausibility “is not akin to a probability requirement, ” rather plausibility requires “more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted). “Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. (internal quotation marks and citation omitted). A pleading that consists of “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. Nor does a complaint suffice if it tenders “naked assertion[s]” devoid of “further factual enhancement.” Id. at 557.

         In considering the plausibility of a claim, the Court must accept factual allegations as true and draw all reasonable inferences in the plaintiff's favor. Faber v. Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011). At the same time, the Court is not required to accord “[l]egal conclusions, deductions, or opinions couched as factual allegations . . . a presumption of truthfulness.” In re NYSE Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007) (internal quotation marks omitted).

         I. Local Controversy Exception to Class Action Fairness Act Jurisdiction

         Defendants argue that the Court must dismiss this case because it falls into a mandatory exception to the Class Action Fairness Act (“CAFA”).[2] See ECF No. 52-1 at 5. CAFA provides the federal district courts with original jurisdiction over a class action if “the class has more than 100 members, the parties are minimally diverse, and the matter in controversy exceeds the sum or value of $5, 000, 000.” Standard Fire Ins. Co. v. Knowles, 133 S.Ct. 1345, 1348 (2013) (internal quotation marks omitted). Under certain circumstances, however, CAFA directs district courts to decline to exercise jurisdiction over an otherwise eligible case. See 28 U.S.C.A. § 1332(d)(4). One such set of circumstances is articulated in the local controversy exception. Id. at § 1332(d)(4)(A).

         The local controversy exception is “designed to draw a delicate balance between making a federal forum available to genuinely national litigation and allowing the state courts to retain cases when the controversy is strongly linked to that state.” Hart v. Rick's NY Cabaret Int'l, Inc., 967 F.Supp.2d 955, 962 (S.D.N.Y. 2014) (citation omitted). In other words, the local controversy exception is “intended to keep purely local matters and issues of particular state concern in the state courts.” Id. (citation omitted). To that end, the local controversy exception requires a district court to decline to exercise CAFA jurisdiction

(i) over a class action in which-
(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;
(II) at least 1 defendant is a defendant-
(aa) from whom significant relief is sought by members of the ...

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