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Wilson v. MRO Corp.

United States District Court, S.D. West Virginia, Charleston

April 27, 2017

THOMAS M. WILSON SR., and DANIEL HALSEY as ADMINISRATOR of the ESTATE OF TAMARA HALSEY, and JASON GRAZUTIES, and SANDRA SHEPPARD, and ROBERT BRADLEY, and ARVADA MARTIN, Individually and on behalf of all others similarly situated, Plaintiffs,
v.
MRO CORPORATION, a Pennsylvania Corporation, and CIOX HEALTH, LLC, a Georgia Corporation, and MEDI-COPY SERVICES, INC., a Tennessee Corporation, Defendants.

          MEMORANDUM OPINION AND ORDER

          John T. Copenhaver, Jr. United States District Judge.

         I. Introduction

         Pending is a motion to dismiss the amended complaint, filed by defendant Medi-Copy Services, Inc. (“Medi-Copy”) on November 11, 2016.[1]

         Plaintiffs Thomas M. Wilson, Sr., Daniel Halsey as Administrator of the Estate of Tamara Halsey, and Jason Grazuties, individually and on behalf of all others similarly situated, instituted this action against Medi-Copy, MRO and CIOX Health, LLC (“CIOX”) by filing a complaint in the Circuit Court of Kanawha County, West Virginia on April 28, 2016. With the consent of CIOX and MRO, Medi-Copy removed the action on June 10, 2016 on the basis of diversity jurisdiction and the Class Action Fairness Act of 2005.

         Plaintiffs filed a motion to amend the complaint to add Sandra Sheppard, Robert Bradley, and Arvada Martin as additional class representatives on September 23, 2016, which the court granted on October 7, 2016. Medi-Copy thereafter filed the pending motion to dismiss.

         The amended complaint alleges that defendants, who are providers of patient health care records, charge patients more for their heath care records than is permitted under West Virginia law. Amended Compl. at ¶¶ 1-3. Specifically, plaintiffs allege that defendants improperly billed and produced paper copies of their medical records when the records were stored electronically and when plaintiffs requested copies of the records in electronic form and that they charge far in excess of “the actual cost of labor, supplies, and postage involved in providing copies of medical records to patients, including Plaintiffs and others.” Id. at ¶¶ 3, 26.

         This case arises under the Health Care Records Statute, contained in W.Va. Code §§ 16-29-1 and 16-29-2, which prescribes that “[a]ny licensed . . . health care provider . . . shall, upon the written request of a patient, his or her authorized agent or authorized representative, within a reasonable time, furnish a copy . . . of all or a portion of the patient's record to the patient, his or her authorized agent or authorized representative. . . .” W.Va. Code § 16-29-1(a). Section 16-29-1(d) states that [t]he provisions of this article may be enforced by a patient, authorized agent or authorized representative. . . .” W.Va. Code § 16-29-1(d).

         Plaintiffs state that MRO, Medi-Copy and CIOX have entered into contracts with hospitals and other healthcare providers in West Virginia in order to provide medical records to patients and others on behalf of patients. Id. at ¶ 14. Pertaining to Medi-Copy, the amended complaint alleges that on September 30, 2014, Jason Grazuties, “though his representatives, ” requested his medical records in electronic form from the hospital, Logan Regional Medical Center. Id. at ¶ 31. His counsel received an invoice from Medi-Copy dated October 3, 2014, which included charges that exceeded those permitted by law. Id. On November 23, 2015, Arvada Martin, “through her representatives, ” requested her medical records in electronic form from the health care provider, Valley Health.[2]Id. at ¶ 32. Her counsel received an invoice from Medi-Copy dated December 4, 2015, which included charges that exceeded those permitted by law. Id. Plaintiffs allege that Medi-Copy failed to comply with requests for electronic records. Id. at ¶ 33.[3] The amended complaint further alleges that defendant has overcharged other patients as well. Id. at ¶ 35.

         Plaintiffs bring this case as a class action on behalf of those “who are patients of health care providers, or designated representatives of patients of health care providers, who Defendants charged an amount in excess of that allowed by law for copies of medical records when they requested electronic medical records be produced on electronic media, individually or through another person acting on their behalf, from West Virginia hospitals and other health care providers that contract with Defendants to produce medical records.” Id. Plaintiffs allege that the class may consist of thousands of people, making joinder impracticable, and that there are common questions of law and fact applicable to all class members. Id. at ¶ 37. They further allege that their claims are typical and that they are adequate representatives of the class. Id. at ¶¶ 38-39.

         Count one alleges that defendants violated the West Virginia Consumer Credit and Protection Act (“WVCCPA”), W.Va. Code § 46A-6-101 et seq., by charging fees in excess of a reasonable fee for the production of medical records in electronic form. Id. at ¶¶ 42-44. Specifically, it states that defendants' policies and practices of charging “per page rates and other charges for copies of medical records [that] exceed the labor and supply cost of responding to requests for copies violates the WVCCPA as an unfair or deceptive act or practice pursuant to W.Va. Code §§ 46A-6-104 and 46A-6-102.” Id. at ¶ 45. In addition, plaintiffs state that defendants' policy of charging some people higher amounts for copies of medical records than they may charge others is an unfair or deceptive act or practice. Id. at ¶ 46. Plaintiffs also allege that defendants' failure to inform consumers that they are entitled to receive electronic medical records at a lower cost constitutes “a failure to state a material fact that misleads the public.” Id. at ¶ 47. Plaintiffs state that “[t]he charges posed by the Defendants violate the WVCCPA and, further, violate the limitations on charges for medical records as set forth in HIPPA, the HITECH Act, West Virginia statute and related state and federal regulations.”[4] Id. at ¶ 48.

         Count two alleges that defendants violated the Health Care Records Statute, W.Va. Code § 16-29-2, by charging plaintiffs and others in excess of their labor and supply costs for their electronic medical records, resulting in fees that are not reasonable. Id. at ¶¶ 50, 53. In addition, defendants did not inform consumers or their representatives that they are entitled to an electronic copy of their medical records at a lower cost, which plaintiffs allege constitutes “a failure to state a material fact that intends to mislead and violates West Virginia statute.” Id. at ¶ 54.

         Plaintiffs ask for this matter to be certified as a class action, award judgment in their favor, including injunctive relief that prohibits excessive and unlawful charges, equitable relief that includes restitution and disgorgement of moneys obtained from overcharges, recovery of excess charges, civil penalties for violations of the WVCCPA, pre-judgment and post-judgment interest, costs, attorneys fees, statutory interest, punitive damages, and all other relief the court deems appropriate. Id. at p. 12.

         In its motion to dismiss the amended complaint, Medi-Copy concedes that it is “a company that specializes in providing health information management services.” Medi-Copy's Memo. in Supp. of Mot. to Dismiss Amended Compl. at 3. According to Medi-Copy, it “fulfilled request for medical records made to Logan Regional Medical Center at the time Mr. Grazuties records were requested. . . . [and] also fulfilled requests for medical records made to Valley Health at the time Ms. Martin's records were requested.” Id. Despite this, Medi-Copy argues that plaintiffs have failed to plead a cognizable injury in fact and additionally contends that the WVCCPA and Health Care Records Statute do not cover plaintiffs' claims so that they therefore lack standing to bring their claims, pursuant to Fed.R.Civ.P. 12(b)(1). Id. at 4, 7-9. The court will address each of these arguments in turn.

         II. Rule 12(b)(1)

         Federal district courts are courts of limited subject matter jurisdiction, possessing “only the jurisdiction authorized them by the United States Constitution and by federal statute.” United States ex. rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2008). As such, “there is no presumption that the court has jurisdiction.” Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999) (citing Lehigh Mining & Mfg. Co. v. Kelly, 160 U.S. 327, 327 (1895)). Indeed, when the existence of subject matter jurisdiction is challenged under Rule 12(b)(1), “[t]he plaintiff has the burden of proving that subject matter jurisdiction exists.” Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999); see also Richmond, Fredericksburg, & Potomac R .R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). If subject matter jurisdiction is lacking, the claim must be dismissed. See Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006).

         Subject matter jurisdiction may be attacked by a defendant with either a facial or a factual challenge. Kerns v. United States, 585 F.3d 188, 192 (4th Cir. 2009). In a facial challenge, the defendant is asserting that the allegations contained in the complaint fail to sufficiently establish the existence of subject matter jurisdiction. Id. In a facial attack, the plaintiff is “afforded the same procedural protection as she would receive under a Rule 12(b)(6) consideration, ” so that “facts alleged in the complaint are taken as true, ” and the defendant's motion “must be denied if the complaint alleges sufficient facts to invoke subject matter jurisdiction.” Id. In a factual challenge, a defendant may argue “that the jurisdictional allegations of the complaint [are] not true.” Id. This permits a trial court to consider extrinsic evidence or hold an evidentiary hearing to “determine if there are facts to support the jurisdictional allegations.” Id.

         III. Standing

         Medi-Copy argues that plaintiffs lack standing to bring their claims for two reasons. First, it contends that because the law firm Tiano O'Dell PLLC requested and paid for plaintiffs' medical records, it is Tiano O'Dell, not plaintiffs themselves, who suffered an injury from any alleged overbilling by them. Medi-Copy's Memo. in Supp. of Mot. to Dismiss Amended Compl. at 5-6. Second, Medi-Copy states that the West Virginia Consumer Credit and Protection Act (“WVCCPA”) and the Health Care Records Statute do not govern the transactions alleged in the amended complaint. Id. at 7-9. As these are facial and not factual challenges to plaintiffs' standing, the court will ...


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