948 F. Supp. 2d 1131
D. Haw.2013Background
- Queen's Medical Center and Kaiser entered a 1996 Services Agreement where Queen's provided hospital services to Kaiser members at discounted rates, expiring December 31, 2011.
- Before expiration, the parties discussed a new contract; Queen's alleged Kaiser acknowledged it would pay 100% of billed charges absent a new agreement.
- Plaintiff alleges Kaiser verbally committed to pay 100% for January–February 2012 and then Kaiser began applying discounts starting March 2012 via Remittance Advice forms and Stratose Payor Repricing Transmittals.
- Kaiser purportedly used Stratose and HMN discounts, with Stratose claiming discounts derive from HMN PPO agreements, which Queen's contends Kaiser/Stratose were not entitled to use.
- Plaintiff sent documents requesting Kaiser to provide contracts; Kaiser refused, asserting proprietary contracts; Plaintiff later learned of Stratose/HMN connections.
- Plaintiff seeks multiple claims including breach of contract (oral/implicit), fraud, negligent misrepresentation, RICO, UDTP, unjust enrichment, tortious interference, and promissory/equitable estoppel; Kaiser moves to dismiss under Rule 12(b)(6) and 12(b)(7).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the oral/implicit contract claim is adequately pled | Queen's pleads offer, acceptance, and consideration. | Kaiser contends lack of certainty/consideration; relies on written contracts to preclude. | Oral/implicit claim survives to extent pled; questions of reasonableness for pricing remain factual. |
| Whether Haw. Rev. Stat. § 432D-8 bars the oral/implicit contract claims | § 432D-8 bars claims against subscribers but not against KAISER for nonwritten contracts. | § 432D-8 precludes enforcement against enrollees/subscribers if contract not in writing. | Statute does not bar enforcement against the health plan; nonwritten contracts may be enforced against Kaiser. |
| Whether written contracts preclude oral/implicit contract claims | Written agreements do not foreclose oral/implicit claims; questions of contract terms fact-bound. | Written contracts foreclose claims under theories relying on discounts. | Court declines to dismiss on this affirmative defense at this stage; resolution requires factual contract terms. |
| Whether remittance/Stratose letters and alleged nondisclosures support fraud/RICO claims | Documents misrepresented discount eligibility and payments; patterns show a scheme. | Some alleged statements lack particularity or bona fides; some claims may be mere opinions. | Fraud claims based on August 30, 2012 letter and remittance forms survive; certain January 2012 statements and June 2012 letter are deficient but may be amended; RICO survives with pattern of mail/wire fraud pled with particularity. |
| Whether Health Management Network (HMN) must be joined as a party under Rule 19 | HMN has a direct interest in PPO Agreement terms and related contracts; joinder is feasible. | HMN’s joinder could disrupt jurisdiction and is not clearly feasible. | Court orders joinder of HMN as a party; feasibility found; third-step analysis not reached. |
Key Cases Cited
- Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777 (9th Cir. 2012) (pleading standards for Rule 12(b)(6) with plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (S. Ct. 2009) (pleading standard of plausibility)
- Twombly, 550 U.S. 544 (S. Ct. 2007) (rejects conclusory pleading; requires plausible facts)
- Davis v. HSBC Bank N.A., 691 F.3d 1152 (9th Cir. 2012) (incorporation by reference doctrine for motions to dismiss)
- Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005) (incorporation by reference when contents are alleged and authentic)
- Parrino v. FHP, Inc., 146 F.3d 699 (9th Cir. 1998) (notice considerations in incorporation by reference)
- Marder v. Lopez, 450 F.3d 445 (9th Cir. 2006) (notice and post-complaint documents in 12(b)(6) context)
- Corinthian Colleges, Inc., 655 F.3d 984 (9th Cir. 2011) (affirms that facts must be evaluated on motion to dismiss)
- Walsh Chiropractic, Ltd. v. StrataCare, 752 F. Supp. 2d 896 (S.D. Ill. 2010) (pattern of racketeering with billing fraud sufficient pleading)
- Odom v. Microsoft Corp., 486 F.3d 541 (9th Cir. 2007) (enterprise requirements for RICO associated-in-fact)