United States District Court, S.D. West Virginia, Charleston
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,
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
T. Copenhaver, Jr. United States District Judge
is a motionto dismiss the amended complaint and compel
arbitration, filedby defendant MRO Corporation
(“MRO”) on November 21, 2016. This opinion and
order addresses the motion only insofar as itrelates to
standing and seeks to compel arbitration.
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 MRO, Medi-Copy Services, Inc.
(“Medi-Copy”) 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.
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. MRO thereafter filed the pending
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.
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).
state that hospitals and other health care providers have
“executed associate business agreements” with
MRO, Medi-Copy and CIOX “to produce patient medical
records” on behalf of the hospitals and health care
providers. Amended Compl. at ¶ 52; see also Amended
Compl. at ¶ 14. Pertaining to MRO, the amended complaint
alleges that on “February 3, 2016, Thomas Wilson, Sr.
through his representatives requested a copy of his medical
records in electronic form from Cabell Huntington
Hospital.” Id. at ¶ 27. His counsel
“received an invoice from MRO dated March 7, 2016,
” which included charges that exceeded those permitted
by law. Id. On April 26, 2016, Sandra Sheppard,
“through her representatives requested her medical
records in electronic form from Cabell Huntington
Hospital.” Id. at ¶ 28. Her counsel
received an invoice from MRO dated May 23, 2016, which
included charges that exceeded those permitted by law.
Id. Plaintiffs allege that MRO failed to comply with
requests for electronic records. Id. at ¶
The amended complaint further alleges that MRO has
overcharged other patients as well. Id. at ¶
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.
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 allege
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 claim 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.” Id. at ¶
48. Notwithstanding the references in the amended complaint
to violations of federal law, plaintiffs' claims are made
only pursuant to West Virginia law.
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.
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.
motion to dismiss the amended complaint, MRO concedes that it
“provides release of information services to health
care providers, which includes providing copies of medical
records upon a proper request to the health care
provider.” MRO's Memo. in Supp. of Mot. to Compel
Arbitration and Dismiss Amended Compl. at 2. Despite this,
MRO 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 in part because their requests were made by their
attorney, so that they therefore lack standing to bring their
claims, pursuant to Fed.R.Civ.P. 12(b)(1). Id. MRO
also argues that there is a valid, binding arbitration
provision that covers the dispute so that the court must
compel arbitration of this matter. Id.
Rule 12(b)(1) Lack of Subject Matter Jurisdiction
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
matter jurisdiction may be attacked by a arguments will be
addressed in a separate memorandum opinion and order.
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.
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. MRO's Memo. in Supp. of Mot. to
Compel Arbitration and Dismiss Amended Compl. at 8-9. Second,
MRO 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 9-11. As these are facial
and not factual challenges to plaintiffs' standing, the
court will accept all allegations in the amended complaint as
true and determine whether plaintiffs have sufficiently
established a basis for subject matter jurisdiction. See
Kerns, 585 F.3d at 192.
is generally addressed at the motion to dismiss stage under
Fed.R.Civ.P. 12(b)(1) because “Article III gives
federal courts jurisdiction only over cases and controversies
and standing is a integral component of the case or
controversy requirement.” CGM, LLC v. BellSouth
Telecommunications, Inc., 664 F.3d 46, 52 (4th Cir. 2011)
(internal citations and quotations omitted). “To
satisfy the constitutional standing requirement, a plaintiff
must provide evidence to support the conclusion that: (1)
‘the plaintiff ... suffered an injury in fact - an
invasion of a legally protected interest which is (a)
concrete and particularized, and (b) actual or imminent, not
conjectural or hypothetical'; (2) ‘there [is] a
causal connection between the injury and the conduct
complained of'; and (3) ‘it [is] likely, as opposed
to merely speculative, that the injury will be redressed by a
favorable decision.'” White Tail Park, Inc. v.
Stroube, 413 F.3d 451, 458 (4th Cir. 2005) (quoting
Lujan v. Defenders of Wildlife, 504 U.S.
555, 560-62 (1992).
motion to dismiss stage, “general factual allegations
of injury resulting from the defendant's conduct may
suffice, for on a motion to dismiss we presume that general
allegations embrace those specific facts that are necessary
to support the claim.” Lujan, 504 U.S. at 561.
The court may accept as true allegations that are supported
by adequate “‘factual matter' to render them
‘plausible on [their] face.'” Beck v.
McDonald, 848 F.3d 262, 270 (4th Cir. 2017) (citing
Ashcroft, 556 U.S. 662, 678 (2009). “The same
presumption of truth” does not apply to
“conclusory statements and legal conclusions”
contained in the complaint. Id.
Injury In Fact
contends that because the amended complaint alleges that
plaintiffs requested their medical records “through
[their] representatives” and because Tiano O'Dell,
not plaintiffs, paid for plaintiffs' medical records,
they have not suffered an injury in fact by their alleged
overbilling. MRO's Memo. in Supp. of Mot. to Compel
Arbitration and Dismiss Amended Compl. at 8-9. In support of
the position that the amended complaint does not adequately
allege an injury in fact, MRO cites to Spiro v.
Healthport Technologies, LLC. 73 F.Supp.3d 259 (S.D.N.Y.
2014). In Spiro, the court found that plaintiffs,
who were individuals alleging that defendants overcharged
them for their medical records under New York law, did not
have standing to pursue their claims because as written, the
complaint did not allege that plaintiffs were obligated to
reimburse their attorney, who originally requested and paid
for the records. Id. at 268. The court dismissed the
case for lack of jurisdiction, expressly permitting
plaintiffs to amend the complaint to state that under the fee
agreement executed by plaintiffs with their attorney, they
were obligated to reimburse the medical record fees charged
by defendants. Id. at 269.
argue that the subsequent Second Circuit case of Carter
v. HealthPort Technologies, LLC, is more relevant to
this case. 822 F.3d 47 (2d Cir. 2016). In Carter,
plaintiffs similarly sued defendants, who they alleged
overbilled them for their medical records in violation of
state law. Id. at 52. The complaint alleged that
each plaintiff, “through [her or his] counsel, . . .
requested medical records from” the treating hospital.
Id. at 52 (internal quotations omitted). The
complaint further alleged that each plaintiff paid the charge
provided by defendants “though [his or her]
Second Circuit determined that the district court erred in
finding that the plaintiffs lacked standing based on the
allegations contained in the complaint. Id. at 58.
The court found that the allegations that the plaintiffs
requested and paid for their medical records through his or
her counsel “are detailed factual allegations that the
plaintiffs were the principals, who acted through their
agents in requesting and paying for the records.”
Id. Combined with the factual allegation that
“the ultimate expense” for the records was borne
by “Plaintiffs and other Class members, ” the
court found that the complaint described the agency
relationships between the plaintiffs and their attorney so
that each plaintiff acted “through [his or her]
counsel” in requesting and paying the fees demanded in
exchange for providing the medical ...