Rosa M. Williams-Hopkins v. Medwell, LLC ( 2024 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0273-21
ROSA M. WILLIAMS-HOPKINS
AND RANDY HOPKINS,
on behalf of themselves and those
similarly situated,
Plaintiffs-Appellants,
v.
MEDWELL, LLC,
Defendant-Respondent.
____________________________
Argued November 8, 2023 – Decided April 5, 2024
Before Judges Haas, Gooden Brown and Natali.
On appeal from the Superior Court of New Jersey, Law
Division, Passaic County, Docket No. DC-007833-19,
and Law Division, Bergen County, Docket No. L-7294-
19.
Philip D. Stern argued the cause for appellants (Kim
Law Firm LLC, attorneys; Philip D. Stern and
Yongmoon Kim, on the briefs).
Vafa Sarmasti argued the cause for respondent
(Sarmasti PLLC, attorneys; Vafa Sarmasti, on the
brief).
PER CURIAM
This appeal arises from a dispute between appellants1 Rosa M. Williams-
Hopkins and Randy Hopkins and respondent MedWell, LLC (MedWell),
regarding fees for healthcare services MedWell provided to appellants in July
and August 2018. MedWell filed a collection action against appellants in the
Passaic County Special Civil Part (the Passaic County action) to recoup
outstanding fees, and in doing so, attached documents which contained
appellants' personal medical information.
Rather than filing a counterclaim in the Passaic County action, appellants
responded by filing a seven-count putative class action complaint in the Bergen
County Law Division (the Bergen County action) on behalf of themselves and
other MedWell patients allegedly aggrieved by its billing, collection, and
disclosure practices. Specifically, appellants alleged MedWell's billing and
collection practices violated the Consumer Fraud Act (CFA), N.J.S.A. 58-1 to -
20, for which they sought a declaratory judgment, injunctive relief, and
1
We refer to the plaintiffs as appellants because they were also defendants in
an action which was consolidated into the instant matter, as we further detail
infra.
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compensatory damages (counts one and two); unjustly enriched MedWell (count
three); and violated the Racketeer Influenced Corrupt Organizations Act
(RICO), N.J.S.A. 2C:41-1(e)(2) (count four). Additionally, appellants claimed
MedWell's practice of improperly disclosing personal medical information in its
collection lawsuits was negligent (count five), breached its contracts with the
putative class members (count six), and invaded their privacy (count seven).
Appellants alerted the court of the pending Passaic County action and moved to
consolidate the two cases, which the court granted.
Appellants challenge four orders: (1) a February 28, 2020 order granting
MedWell's summary judgment motion and awarding it $5,250 in the Passaic
County action; (2) an August 31, 2020 order granting MedWell's motion to
dismiss counts one through four of the Bergen County action; (3) a July 1, 2021
order denying class certification in the Bergen County action; and (4) an August
12, 2021 order granting MedWell's summary judgment motion and dismissing
counts five through seven of the Bergen County action. We affirm in part,
reverse in part, and remand for further proceedings consistent with this opinion.
Specifically, we reverse the February 28, 2020 order in the Passaic County
action as we are satisfied material factual issues with respect to the
reasonableness of the amount claimed precluded summary judgment. Next, we
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reverse the August 31, 2020 order to the extent it dismissed counts one and two
of the Bergen County action because we conclude these claims were not barred
by collateral estoppel, the entire controversy doctrine, or the learned
professional exception to the CFA.
We affirm the July 1, 2021 order as we discern no abuse of discretion in
the court's determination that appellants had not established numerosity or
typicality of the class because unlike appellants' claims, those of the putative
class members would be barred by res judicata and the entire controversy
doctrine. Finally, we affirm the August 12, 2021 order as to counts five and six
of the Bergen County action because appellants failed to demonstrate a material
factual issue as to damages, but we reverse as to count seven because (1)
appellants had a reasonable expectation of privacy in the information disclosed ,
(2) the information disclosed was not subject to the litigation privilege , and (3)
appellants were not required to establish monetary damages to prevail .
I.
A. The Agreements Between the Parties
We begin by reviewing the pertinent facts in the record. MedWell
provides medical, physical therapy, and chiropractic services. In July and
August 2018, appellants were married and covered under the same insurance
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policy. Both appellants sought treatment from MedWell during those months,
although the nature of that treatment is unclear from the record. In connection
with MedWell's services, appellants separately signed identical agreements
entitled "Confidentiality and Payment for Services" (the C&P agreements). Due
to the poor quality of the copy of the C&P agreements in the record, the date
each was signed is illegible. In relevant part, the C&P agreements provide:
I am primarily responsible for, and agree to make
payment of my [1] co-pay, [2] co-insurance, [3]
applicable deductible amounts, and [4] all other
amounts to which my insurance company has not paid
any sums or as to any services by MedWell with respect
to which my insurance company has denied coverage.
[Emphasis added.]
The C&P agreements also required appellants to remit any checks they received
from their insurance provider within five days and held them responsible for "all
attorneys' fees and costs incurred by . . . MedWell for collection of such
amount(s) from [appellants]."
With respect to disclosure of medical information, the C&P agreements
state:
Confidentiality: MedWell, its employees, and staff are
permitted to release my personal, health, or treatment
information or files to my insurance company prior to,
and only for the purposes of processing and receipt of
payment due from my insurance company for services
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provided by MedWell. I strictly prohibit any
subsequent release or disclosure of such information to
my insurance company without my express written
authorization . . . .
Use of Patient's Likeness: I hereby authorize MedWell,
their respective successors and assigns and anyone
authorized by MedWell to copyright and/or use my
name, statements, picture, video, or other likeness, in
whole or in part, relating to the services and care I
receive and to modify, edit and combine the same in
any and all present and future media for purposes of
advertising, publicity, and trade, including the right to
attribute to me any statement deemed to be an
endorsement and in connection with this use.
[Emphasis added.]
Appellants also separately signed identical intake agreements on July 7,
2018, which provide, in part:
I understand that my insurance policy with my
insurance company is an arrangement between me and
my insurance company. I acknowledge that I am the
primary person responsible for payment of services
provided by MedWell. I agree to pay the co-pay, co-
insurance and applicable deductible amounts to
MedWell immediately as and when each is billed or
demanded by MedWell. . . . I agree to forward
MedWell all checks and explanation of benefits that I
receive from any of my insurance companies related to
services I receive at MedWell within five (5) days of
receiving them, and further agree that if I fail to forward
any such payment, I will be responsible for payment of
the amount I receive from my insurance companies for
such services, plus interest of 12% per year calculated
on a daily basis at a rate of .0329%, payable beginning
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five (5) days from the date that I receive such payment
from my insurance companies, plus all attorneys' fees
and costs incurred by MedWell for collection of such
amount(s) from me. . . . I further understand that certain
services and care may not be covered by my insurance
policy and therefore agree to pay for those services
within 30 days of being billed by MedWell. I further
agree to pay for the services I receive at MedWell
within 30 days of being billed for such services in the
event my insurance company denies coverage for any
reason.
[Emphasis added.]
The intake agreements add "I understand and agree that I [am] responsible to
pay for all services not covered by my insurance or healthcare plan and for all
balances that is/are unpaid by insurance carrier or healthcare plan for services
and equipment provided by MedWell." (Emphasis added).
As to disclosure of medical information, the intake agreements state:
MedWell, its employees, and staff are permitted to
release my personal, protected health information and
treatment related information or files to my insurance
company or third-party payor prior to, during, or
subsequent to MedWell's services and treatments for
purposes of obtaining authorizations, processing of
claims and appeals, and receipt of payment due from
my insurance company or third-party payor for services
provided by MedWell. . . .
I hereby authorize MedWell, their respective
successors and assigns and anyone authorized by
MedWell to copyright and/or use my name,
information, including but not limited to healthcare
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information, statements, picture, video, or other
likeness, in whole or in part, relating to the services and
care I receive and to modify, edit, and combine same in
any and all present and future media for purposes of
advertising, publicity and trade including the right to
attribute to me any statement related to MedWell's
services and in connection with this use.
[Emphasis added.]
MedWell billed appellants and their health insurance a total of $8,900 for
services provided in July and August 2018. In response, appellants' insurer sent
checks totaling $4,744 directly to appellants, of which they paid MedWell
$3,650.
B. The Passaic County Action and MedWell's Disclosure of Appellants' Personal
Medical Information
In July 2019, MedWell filed the Passaic County action, alleging appellants
owed it $5,250 for outstanding medical fees and $1,750 for attorneys' fees. It
appended to its complaint appellant Williams-Hopkins' signed intake agreement,
which included, in addition to appellants' shared insurance policy number,
unredacted personal medical information provided by appellant Williams-
Hopkins such as her current medications, surgical history, family medical
conditions, and allergies. In their answer, appellants advised they intended to
file a class action complaint against MedWell and to seek consolidation.
Appellants also moved pursuant to Rule 1:38-7(g) to have the intake agreement
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removed and replaced with a redacted version, which the court granted in
October 2019. The unredacted intake agreement containing appellants' personal
medical information remained publicly available for approximately four months.
MedWell also filed unredacted copies of documents containing appellants'
personal medical information on three additional occasions: (1) two separate
filings in support of its motion for a protective order in October 2019, (2) as part
of its opposition to appellants' motion in limine in January 2020, and (3) in
support of its motion to dismiss in June 2020. Appellants again moved to have
each of these documents removed and replaced with a redacted version. The
court granted appellants' request as to the October 2019 filing in December
2019, and as to the June 2020 filing in February 2021, but did not rule on the
request with respect to the January 2020 filing. Cumulatively, these filings
containing appellants' personal medical information were available in the public
court record for at least ten months. It is unclear from the record whether the
January 2020 filing has ever been replaced with a redacted version.
C. The Bergen County Action
In October 2019, appellants filed the Bergen County action and moved to
consolidate the Passaic County action with it. In the complaint, appellants
defined two classes: an "overcharge" class, consisting of New Jersey individuals
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from whom MedWell "sought to collect amounts for amounts not actually owed
or for which Med[W]ell included interest at more than twice the lawful interest
rate," and a "disclosure" class, consisting of New Jersey individuals whose
"private medical information" was disclosed "to the public" by MedWell.
Within the overcharge class, appellants further identified a subclass of those
"who incurred expenses as a result of Med[W]ell's collection efforts, paid any
money or from whom [MedWell] collected any money on the account."
Counts one through four related to the overcharge class. In count one,
appellants alleged MedWell's billing and collection practices were
"unconscionable commercial practices" in violation of the CFA. They sought a
declaratory judgment that the underlying collection accounts and interest
charges were unlawful, and an injunction barring MedWell from "any attempt
to collect upon, enforce or assign the accounts, or to seek collection remedies
on or assign any outstanding judgments entered in collection actions on the
accounts." In count two, appellants asserted MedWell's "unconscionable
commercial practices" had caused the overcharge class "ascertainable loss" for
which they were entitled to damages under the CFA. Count three claimed
MedWell was unjustly enriched by receipt of funds from the overcharge subclass
based on "illegally obtained accounts and judgments" and sought restitution of
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those funds, while count four alleged MedWell's interest charges were usurious
and its attempts to collect an "unlawful debt" violated RICO.
Counts five through seven pertained to the disclosure class. In count five,
appellants maintained MedWell owed the class "a duty to maintain the
confidentiality of their medical records," which it breached by negligently
disclosing personal medical information in collection actions. Count six
asserted MedWell's disclosure of personal medical information breached the
"HIPPA2 [sic] Privacy Policy" maintained on its website at
http://www.fixlowback.com, upon which the class "materially relied." Finally,
in count seven, appellants alleged MedWell invaded the class's privacy by
publicly disclosing their private medical information in its collection actions.
For each of these claims, appellants stated the disclosure class had "suffered a
compensable loss" and sought damages.
D. Summary Judgment in the Passaic County Action and Consolidation
While the consolidation motion was pending, MedWell moved for
summary judgment in the Passaic County action and, in support, provided the
certification of its account manager, appellants' responses to interrogatories, the
2
We presume this is intended to refer to the federal Health Insurance Portability
and Accountability Act (HIPAA), 42 U.S.C. §§ 1320d to 1320d-9.
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intake and C&P agreements, and the Explanations of Benefits (EOBs) it received
from appellants' insurer. Appellants cross-moved for partial summary
judgment, seeking to limit the amount owed to $1,094 and deny MedWell's
request for attorneys' fees. Appellants' supporting documents included their
certifications, two handwritten notes reflecting cash and money order payments
they allegedly made to MedWell, the complaint and motion to consolidate filed
in the Bergen County action, and MedWell's responses to interrogatories.
On February 28, 2020, the Bergen County Law Division granted
appellants' consolidation motion and ordered the Passaic County action
transferred and consolidated into the Bergen County action. That same morning,
the parties appeared for oral argument on their summary judgment motions in
the Passaic County action. In response to appellants' contention that the motions
could no longer be heard by the Passaic court, the judge contacted the Bergen
County assignment judge for clarification, who advised the Passaic court "ha[d]
the obligation to deal with any motions that [we]re outstanding [t]here before
[the matter] gets transferred." Accordingly, the matter proceeded to oral
argument.
MedWell argued appellants' interrogatory responses confirmed they had
paid only $3,650 of the $4,744 received from their insurer, despite their
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obligation under the agreements to pay for the entire amount billed regardless
of any insurance coverage. It noted there was "no dispute that the services were
provided . . . [regarding] the amount of charges that MedWell has billed . . . [or]
as to the quality of services."
Appellants contended the language of the C&P agreement must be read to
mean that they are responsible for "all other amounts to which [their] insurance
company has not paid any sums" only when the insurer has "denied coverage"
entirely. As it was undisputed the insurance company had not denied coverage,
they argued they were not responsible for any amount beyond the $4,744
approved by their insurance, of which only $1,094 remained outstanding.
Next, appellants asserted MedWell bore the burden of proving the
amounts billed were reasonable because the agreements contained nothing about
pricing. They also raised several arguments they do not reprise before us,
including that the improper disclosure of their medical information negated their
obligation to pay, they were not jointly liable for the debt, and there existed a
factual dispute as to the amount they paid MedWell, demonstrated by their
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certifications and handwritten notes which stated they had paid an additional
$1,094 not reflected in MedWell's records. 3
As to attorney's fees, MedWell asserted it was entitled to fees based on
the language in the agreements. Appellants responded the agreements provided
only for attorneys' fees actually incurred, and since MedWell's interrogatory
responses revealed its counsel was paid one-third of the amount collected on
contingency but MedWell had not yet obtained any funds, no fees had been
incurred.
In an oral ruling and accompanying February 28, 2020 order, the court
granted MedWell summary judgment and denied appellants' cross-motion.
First, it found the record established appellants had paid MedWell only $3,650,
discrediting appellants' claims in their certifications that they had made
additional payments as contrary to their interrogatory responses under the sham
affidavit doctrine. The court next rejected appellants' interpretation of the C&P
agreements, concluding the phrase "all other sums to which [appellants']
insurance company has not paid any sums" meant "an outstanding balance on
3
We consider each of these arguments abandoned. See Green Knight Capital,
LLC v. Calderon, 469 N.J. Super. 390, 396 (App. Div. 2021) (holding "[a]n issue
not briefed on appeal is deemed waived" (quoting Woodlands Cmty. Ass'n. v.
Mitchell, 450 N.J. Super. 310, 319 (App. Div. 2017))).
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the services after insurance payment . . . as opposed to denying coverage, which
is listed as completely separate from this circumstance." Finally, it found
appellants had not presented "substantial evidence with respect to any of [their]
remaining defenses which would warrant denial of summary judgment," noting
"[i]f the facts are of an insubstantial nature, a mere scintilla, 'fanciful, frivolous,
gauzy or merely suspicious,' summary judgment may be entered" under Sokolay
v. Edlin, 65 N.J. Super. 112, 130 (App. Div. 1961). The court therefore entered
judgment in favor of MedWell for $5,250.
As to MedWell's request for attorney's fees, the court found "under the
agreement [MedWell] is only entitled to amounts incurred in pursuing amounts
paid by insurance and not received by [MedWell]," while the balance sought
here "represent[ed] mostly amounts relating to balances not covered by
insurance at all." Further, it concluded "contingency fees are not fees 'incurred'
in . . . pursuit of a debt collection" absent an explicit contractual provision for
contingency fees. The court therefore denied MedWell's claim for attorneys'
fees without prejudice. 4
4
Neither party challenges the denial of attorneys' fees, but we detail the court's
ruling to provide background for appellants' later arguments.
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E. Dismissal of Counts One through Four of the Bergen County Action
Subsequently, MedWell moved to dismiss counts one through four of the
Bergen County action under Rule 4:6-2(e). At oral argument, it contended the
Passaic summary judgment order precluded re-litigation of the amount
appellants owed under principles of collateral estoppel and further, MedWell
was exempt from the CFA as a learned professional because it is "governed by
the Board of Medical Examiners' practices." Appellants responded the
exception did not extend to "billing issues," and its claims were not precluded
because part of the allegedly improper billing by MedWell involved attorneys'
fees, which had been denied without prejudice in the Passaic County action.
In an August 31, 2020 written order and accompanying statement of
reasons, the court granted MedWell's motion and dismissed counts one through
four of the Bergen County action.5 It found each of the claims were "barred by
collateral estoppel because [appellants] ha[d] already litigated these issues in
[the] Passaic Special Civil Part, resulting in a decision for [MedWell]." Relying
upon First Union National Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 352
5
Although the heading of point II of appellants' merits brief states they request
we reverse the dismissal of counts one through four of the Bergen County action,
they specifically note within the body of point II that they do not seek review of
the order as to counts three and four. Accordingly, we limit our analysis to
counts one and two.
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(2007), the court explained collateral estoppel bars re-litigation of an issue
when:
(1) the issue to be precluded is identical to the issue
decided in the prior proceeding; (2) the issue was
actually litigated in the prior proceeding; (3) the court
in the prior proceeding issued a final judgment on the
merits; (4) the determination of the issue was essential
to the prior judgment; and (5) the party against whom
the doctrine is asserted was a party to or in privity with
a party to the earlier proceeding.
[Ibid.]
Here, the court determined "the first element is met because there is a 'high
degree of similarity' between [appellants'] affirmative allegations in this case
and the defenses and arguments raised by the [appellants] in the Passaic case."
Specifically, it noted the "factual and legal arguments underlying [appellants']
CFA causes of action were outlined by [their] opposition to [MedWell's]
summary judgment motion and in support of their cross motion."
The court also found the second and third elements of collateral estoppel
satisfied "because, as outlined by the transcript of oral arguments in the Passaic
[c]ase and the [c]ourt's [o]rders and [j]udgment, the issues were actually
litigated and the [c]ourt issued a final judgment on the merits in [MedWell's]
favor." It concluded the Special Civil Part had jurisdiction to enter the summary
judgment order in the Passaic County action because appellants had consented
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to jurisdiction by cross-moving for summary judgment and the Bergen County
assignment judge had advised the Passaic County judge to resolve the
outstanding motions prior to transfer. It also noted any jurisdictional challenge
"should have been brought to the Appellate Division" rather than raised in the
Bergen County action. Finally, the court concluded the last two elements of
collateral estoppel were satisfied as the amount owed "was the central issue in
the Passaic case as it is in this case" and all three parties were involved in both
cases.
The court also found appellants' claims barred by the entire controversy
doctrine. Relying upon Rule 4:30A, it noted "[n]on-joinder of claims required
to be joined by the entire controversy doctrine shall result in the preclusion of
the omitted claims to the extent required by the entire controversy doctrine" and
reiterated the claims "bear a 'high degree of similarity' to those brought in the
Passaic [c]ase."
Finally, the court concluded MedWell could not be held liable on counts
one and two because of the learned professional exception to the CFA, which it
explained, relying upon Lee v. First Union National Bank, 199 N.J. 251, 263
(2009), is a "judicially crafted rule, whereby 'certain transactions fall outside the
CFA's purview because they involve services provided by learned professionals
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in their professional capacity.'" It noted learned professionals include
"hospitals, attorneys, and nursing homes" and reasoned MedWell qualified for
the exception "because it is overseen by the New Jersey Board of Medical
Examiners, its operations are subject to specific regulatory framework, and . . .
the [appellants'] claims arise out of [MedWell's] actions and operations relating
to [its] professional capacities." As noted, we do not detail the dismissal of
counts three and four. Appellants sought leave to appeal the dismissal order,
which we denied.
F. MedWell's Motion for Summary Judgment in the Bergen County Action
MedWell then moved for summary judgment with respect to the remaining
counts of the complaint, which it supported with excerpts from the depositions
of both appellants. In the deposition of appellant Williams-Hopkins, MedWell's
attorney inquired if she had suffered any damages as a result of the alleged
improper disclosure. She responded she would have to pay filing fees "in the
future" and "had to pay her attorney because of legal fees" but did not know how
much or whether she paid on an hourly or contingency basis. She confirmed she
had not "lost her job," been sued by anyone, "had to pay or will have to pay
anyone else any money," or "lost any assets" as a result of the improper
disclosure. She characterized the loss she had suffered as related to "privacy"
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but admitted she did not know if anyone had seen her medical information.
Appellant Williams-Hopkins conceded she had never been to the website
containing the "HIPPA [sic] Privacy Policy" referenced in the complaint,
fixlowback.com, nor had she ever heard of it. She stated she did not know if
appellant Hopkins had been to that website but he had never talked to her about
it.
MedWell's attorney asked similar questions at appellant Hopkins's
deposition. When asked what dollar amount of damages he incurred, appellant
Hopkins responded "no dollar—I'd have to talk to my attorney on that one." He
further noted he had to pay attorneys' fees, but denied suffering "any other
damages," losing his job, being sued, being "treat[ed] differently," or otherwise
being personally harmed in any way by virtue of the Passaic County action. He
stated he was not sure if anyone had tried to use his personal medical information
and admitted the information disclosed in the Passaic County action pertained
solely to appellant Williams-Hopkins, with the exception of the insurance policy
number they shared. Appellant Hopkins also confirmed he had not "reviewed
MedWell's website prior to going to MedWell" nor had he ever been to
fixlowback.com.
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G. Denial of Class Certification in the Bergen County Action
Appellants moved to certify the classes identified in the complaint,
providing in support the certifications of both appellants and their counsel.
Appellants' counsel provided information pertaining to his qualification to be
class counsel and explained he discovered "at least forty-two putative class
members" who had their "private medical and health information" disclosed in
collection actions brought by MedWell in New Jersey. Both appellants certified
to their ability and willingness to act as class representatives as well as being
"upset" upon discovering their "medical information was filed for anyone to
view."
The court denied class certification pursuant to Rule 4:32-1 in a written
order dated July 1, 2021. It explained appellants were required to "adequately
define a class of plaintiffs" under Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88,
106 (2007), and demonstrate "(1) numerosity, (2) commonality, (3) typicality,
and (4) adequacy of representation" under In re Cadillac V8-6-4 Class Action,
93 N.J. 412, 424-25 (1983), and Rule 4:32-1(a). Additionally, the court noted
appellants had to "satisfy one of the three criteria set forth in [Rule] 4:32-1(b),"
specifically: (1) a risk of inconsistent judgments from separate prosecutions,
(2) the opposing party's action or refusal to act "on grounds generally applicable
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to the class as a whole," or (3) "common questions of law and fact" which
"predominate over individualized questions."
The court found appellants failed to adequately define a class because "the
other [forty-two] individuals that [appellants'] motion identifies as proposed
class members have already been litigants in prior cases, and their cases have
been disposed of—some years earlier—by way of judgment, default judgment,
or settlement" and "[n]one of these proposed individuals raised any of these
alleged issues prior to the disposition of those cases." Relying upon Watkins v.
Resorts International Hotel & Casino, 124 N.J. 398, 412 (1991), it noted the
doctrine of res judicata applies where "(1) the judgment in the prior action [was]
valid, final, and on the merits; (2) the parties in the later action [are] identical to
or in privity with those in the prior action; and (3) the claim in the later action
[grew] out of the same transaction or occurrence as the claim in the earlier one."
The court determined res judicata and the entire controversy doctrine barred the
putative class members' claims because the prior collection actions in which
MedWell allegedly improperly disclosed their medical information "have
undeniably concluded," both MedWell and the proposed class members were
parties to those actions, and "any claims against MedWell for such disclosure
undoubtedly arose out of the same transaction or occurrence."
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The court found appellants failed to establish numerosity, commonality,
or typicality. It reasoned that, unlike appellants, there were no identified
putative class members with "open and ongoing litigation" involving an
improper disclosure, and further, appellants had provided no details as to the
other proposed class members beyond "mere docket numbers." 6 Because the
putative class members' claims were barred by res judicata and the entire
controversy doctrine, the court concluded "there can be no questions of law or
fact common to all of the class members." Additionally, it noted appellants had
not "suffered any damages as a result of alleged disclosure of their health
information by MedWell's attorney," while the complaint alleged the putative
class members had "suffered compensable losses." Finally, because the only
claim seeking declaratory or injunctive relief, count one, had been dismissed,
the court found class certification pursuant to Rule 4:32-1(b)(2) was
inappropriate.
H. Summary Judgment in the Bergen County Action
Subsequently, the court heard oral argument on MedWell's summary
judgment motion. MedWell argued appellants had not established the elements
6
The record before us does not include the document in which these docket
numbers were identified.
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of their remaining claims as they proved no actual damages, but even if they
had, each of the claims were barred by the litigation privilege. With respect to
the breach of contract claim, MedWell contended both appellants' depositions
revealed they had never seen the website containing the "HIPPA [sic] Privacy
Policy" allegedly breached and noted HIPAA provided no private right of action.
As to the invasion of privacy claim, it asserted appellants had no reasonable
expectation of privacy as the C&P and intake agreements "allowed MedWell to
use their information." Finally, MedWell noted appellants could not "proceed
in contract and tort at the same time based on the same underlying facts."
Appellants responded the parties' agreements could not "override"
HIPAA, which was incorporated in MedWell's website and the agreements.
Further, they argued MedWell had breached the standard of care established by
HIPAA "which does not allow for the public disclosure of . . . protected health
information."
The court granted MedWell's summary judgment motion and dismissed
the remaining counts of the Bergen County action in an August 12, 2021 written
order. First, it found counts five and seven were barred by the litigation
privilege. Relying upon Hawkins v. Harris, 141 N.J. 207, 216 (1995), the court
explained the privilege "applies to both invasion of privacy and negligence
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claims" and protects "any communication (1) made in judicial or quasi-judicial
proceedings; (2) by litigants or other participants authorized by law; (3) to
achieve the objects of the litigation; and (4) that have some connection or logical
relation to the action." It concluded the disclosure of medical information in the
Passaic County action was covered by the privilege because it was "(1) made in
a judicial context[,] (2) by a party to the action, as it was contained in a court
filing by MedWell, (3) made to achieve the objects of the litigation, and (4) has
a clear logical connection to the action." The court also found appellants had
not shown "any actual damages as a result of the alleged disclosure of their
health information," mandating dismissal of each of the three claims.
As to negligence, the court noted "a tort remedy does not arise from a
contractual relationship unless the breaching party owes an independent duty
imposed by law" under Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 316
(2002). Additionally, it found the parties' agreements "authorized disclosure of
the [appellants'] health information for the purposes of payment collection ."
With respect to count six, breach of contract, the court concluded
appellants "could never have assented" to the "HIPPA [sic] Privacy Policy"
referenced in the complaint as they denied having seen it prior to litigation .
Even assuming the policy represented a contract between the parties, the court
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25
reasoned it was superseded by the C&P and intake agreements, which authorized
the use of appellants' health information.
Finally, as to invasion of privacy, the court found appellants "had no
reasonable expectation of privacy" with respect to the disclosed information. It
noted their "failure to pay MedWell for services rendered essentially nullifies
any reasonable expectation of privacy because certain information is essential
and must be included when filing a lawsuit to collect the amounts owed ."
Further, the court reasoned "the terms of the agreement between MedWell and
the [appellants] authorized MedWell to use the [appellants'] health information."
The court also stated "[w]hile the invasion of privacy in and of itself can be a
'loss' to be compensated, those damages would merely be nominal." This appeal
followed.
II.
We next detail the various standards governing our review. "We review
decisions granting summary judgment de novo," C.V. v. Waterford Twp. Bd. of
Educ., 255 N.J. 289, 305 (2023), applying the same standard as the trial court,
Townsend v. Pierre, 221 N.J. 36, 59 (2015). Like the motion judge, we "consider
whether the competent evidential materials presented, when viewed in the light
most favorable to the non-moving party, are sufficient to permit a rational
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26
factfinder to resolve the alleged disputed issue in favor of the non-moving
party." C.V., 255 N.J. at 305 (quoting Samolyk v. Berthe, 251 N.J. 73, 78
(2022)). "Summary judgment is appropriate if 'there is no genuine issue as to
any material fact' and the moving party is entitled to judgment 'as a matter of
law.'" Ibid. (quoting R. 4:46-2(c)).
Similarly, we review an order granting a motion to dismiss under Rule
4:6-2(e) "de novo, applying the same standard under [that Rule] that governed
the motion court." Wreden v. Twp. of Lafayette, 436 N.J. Super. 117, 124 (App.
Div. 2014). That standard is whether the pleadings even "suggest[]" a basis for
the requested relief. Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J.
739, 746 (1989). A reviewing court assesses only the "legal sufficiency" of the
claim based on "the facts alleged on the face of the complaint." Green v. Morgan
Props., 215 N.J. 431, 451 (2013) (quoting Printing Mart-Morristown, 116 N.J.
at 746). The court must "search[] the complaint in depth and with liberality to
ascertain whether the fundament of a cause of action may be gleaned even from
an obscure statement of claim, opportunity being given to amend if necessary."
Printing-Mart Morristown, 116 N.J. at 746 (quoting Di Cristofaro v. Laurel
Grove Memorial Park, 43 N.J. Super. 244, 252 (App. Div. 1957)).
Consequently, "[a]t this preliminary stage of the litigation the [c]ourt is not
A-0273-21
27
concerned with the ability of plaintiffs to prove the allegation contained in the
complaint," ibid., rather the facts as pled are considered "true" and accorded "all
legitimate inferences," Banco Popular N. Am. v. Gandi, 184 N.J. 161, 166
(2005).
Questions of law reviewed de novo include the application of
preclusionary doctrines such as res judicata, Walker v. Choudhary, 425 N.J.
Super. 135, 151 (App. Div. 2012), and collateral estoppel, Selective Ins. Co. v.
McAllister, 327 N.J. Super. 168, 173 (App. Div. 2000). Under that standard,
"[a] trial court's interpretation of the law and the legal consequences that flow
from established facts are not entitled to any special deference." Rowe v. Bell
& Gossett Co., 239 N.J. 531, 552 (2019) (quoting Manalapan Realty, L.P. v.
Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).
The application of the entire controversy doctrine "requires a mixed
standard of review." Francavilla v. Absolute Resols. VI, LLC, ___ N.J. Super.
___, ___ (App. Div. 2024) (slip op. at 6). Specifically, "the law guiding the trial
court's determination" is reviewed de novo, while "the decision to apply the
doctrine, as an equitable principle," is subject to review for an abuse of
discretion. Id. at ___ (slip op. at 6-7).
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We also review an order denying class certification for abuse of
discretion. Dugan v. TGI Fridays, Inc., 231 N.J. 24, 50 (2017). Specifically,
we "must ascertain whether the trial court has followed [the standards set forth
in Rule 4:32-1] and properly exercised its discretion in granting or denying class
certification." Lee v. Carter-Reed Co., LLC, 203 N.J. 496, 506 (2010). A trial
court abuses its discretion "when a decision is 'made without a rational
explanation, inexplicably departed from established policies, or rested on an
impermissible basis.'" Est. of Kotsovska by Kotsovska v. Liebman, 221 N.J.
568, 588 (2015) (quoting Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571
(2002)). "When examining a trial court's exercise of discretionary authority, we
reverse only when the exercise of discretion was 'manifestly unjust' under the
circumstances." Newark Morning Ledger Co. v. N.J. Sports & Exposition Auth.,
423 N.J. Super. 140, 174 (App. Div. 2011) (quoting Union Cnty. Improvement
Auth. v. Artaki, LLC, 392 N.J. Super. 141, 149 (App. Div. 2007)).
III.
A. The Parties' Arguments as to Summary Judgment in the Passaic County
Action
We first address the summary judgment order in the Passaic County
action. Before us, appellants reprise their argument that the court improperly
construed the agreements to mean they owe an "outstanding balance on the
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29
services after insurance payment." They contend this interpretation would
render the other delineated obligations in the clause, such as the co-pay, co-
insurance, and deductible, superfluous. Further, in an argument not raised
below, appellants assert MedWell failed to present evidence as to whether the
C&P or intake agreements controlled, or to reconcile the differences between
the agreements. They maintain, viewing the evidence in the light most favorable
to them, the court should have relied upon the intake agreements, which, unlike
the C&P agreements, do not include the phrase "all other amounts to which my
insurance company has not paid any sums" in outlining appellants' obligations.
Appellants contend, under our de novo review, we should consider arguments
concerning "trial court errors as a matter of law" even if not raised below.
Additionally, even assuming they are responsible under the agreements
for more than the amount approved by their insurance, appellants argue
MedWell may bill only a reasonable amount. They note the agreements listed
no price for MedWell's services, and regulations, including N.J.A.C. 13:35-6.11,
13:39A-3.6, and 13:44E-2.11, permit doctors, physical therapists, and
chiropractors to charge only non-excessive fees. They assert MedWell
presented no evidence of the bill's reasonableness and the court should have
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30
determined a reasonable amount was the $4,744 approved by their insurer, as
shown in the EOBs.
In requesting we affirm, MedWell contends the appeal was untimely as
the order was entered February 28, 2020 while appellants' notice of appeal was
not filed until September 27, 2021, so it is barred by Rule 2:4-1(a). Additionally,
it argues appellants' positions as to reasonableness and the alleged conflict
between the agreements were not raised below and should not be considered.
As to the merits of the claims, MedWell asserts "[a]ppellants are judicially
estopped from changing course to make arguments [that the agreements conflict]
that contradict their earlier arguments to the lower court." It notes appellants
acknowledged to the court the language in the C&P agreements controlled and
simply disputed its interpretation. Further, MedWell asserts appellants'
characterization of the agreements omitted certain language which causes both
to arrive at the same result. With respect to reasonableness, it argues appellants'
position is "frivolous" and not supported by the EOBs, which show a "balance
due from the subscriber" or "patient liability." MedWell contends the EOBs are
insufficient to prove the reasonable value of its services was simply the amount
insurance approved.
A-0273-21
31
B. Reasonableness was Raised Below and the Appeal was Timely
As a preliminary matter, we note the transcript of the summary judgment
hearing in the Passaic County action demonstrates appellants did raise the issue
of reasonableness before the court, contrary to MedWell's contention. We also
reject MedWell's argument that the appeal was untimely because we are satisfied
the February 28, 2020 order was not a final judgment. At the time that order
was entered, the Passaic County action had already been consolidated with the
Bergen County action, and appellants' claims against MedWell had not yet been
resolved. Accordingly, appellants were not entitled to appeal as of right until
the August 12, 2021 order resolved all outstanding claims as to all parties. See
Silviera-Francisco v. Bd. of Educ. of Elizabeth, 224 N.J. 126, 136 (2016)
(holding "an order is considered final if it disposes of all issues as to all parties")
and Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 165 n. 2
(App. Div. 1998) (noting appeal from order resolving issues as to only one case
underlying a consolidated matter was interlocutory). As appellants' notice of
appeal was filed within forty-five days of that order, the appeal was timely. See
Silviera-Francisco, 224 N.J. at 141 ("[a]n interlocutory order is preserved for
appeal with the final judgment . . . if it is identified as a subject of the appeal").
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C. Appellants Established a Material Factual Issue Regarding Reasonableness
"Generally, plaintiffs have the burden of proving damages." Caldwell v.
Haynes, 136 N.J. 422, 436 (1994). "Most often, courts award compensatory
damages in a breach of contract action," which are intended to "put the innocent
party into the position [it] would have achieved had the contract been
completed." Totaro, Duffy, Cannova & Co., LLC v. Lane, Middleton & Co.,
LLC, 191 N.J. 1, 12-13 (2007). As our Supreme Court explained in Pacifico v.
Pacifico, 190 N.J. 258, 266 (2007), "[w]hen the parties to a bargain sufficiently
defined to be a contract have not agreed with respect to a term which is essential
to a determination of their rights and duties, a term which is reasonable in the
circumstances is supplied by the court." Ibid. (alteration in original) (quoting
Restatement (Second) of Contracts § 204 (Am. L. Inst. 1981)).
In Hackensack Hospital v. Tiajoloff, 85 N.J. Super. 417 (App. Div. 1964),
we considered a case with facts somewhat similar to those here. In that case,
the plaintiff hospital sought to collect outstanding fees owed for treatment of
defendant's child. Id. at 418-19. In support, plaintiff presented only its book
account and the testimony of its comptroller. Id. at 419. On appeal, we vacated
the judgment in favor of plaintiff and ordered a new trial, reasoning while "a
hospital may prove the services which it rendered to a patient by its books of
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33
account, . . . when the reasonable value of those services is placed in issue, as it
was here, the books of account alone usually cannot supply that proof." Id. at
419-20. Specifically, from the book account alone, we noted "the trial judge
was afforded no means of determining the value of the services" provided by
plaintiff. Id. at 420-21.
We are convinced, based on our de novo review, the record demonstrates
a material factual issue as to whether the amount billed by MedWell was
reasonable. It is undisputed the agreements do not set forth a definite price for
any service and nothing in the record suggests MedWell provided any sort of
price list or estimate to appellants. Nevertheless, the agreements evidence "a
bargain sufficiently defined to be a contract" which lacks "a term which is
essential to a determination of [the parties'] rights and duties"—namely, the
price for services—such that the court should supply a reasonable term.
Pacifico, 190 N.J. at 266 (quoting Restatement (Second) of Contracts § 204).
MedWell presented no evidence to support the reasonableness of its bill
aside from its book account and the certification of its account manager, like the
hospital in Hackensack Hospital, 85 N.J. Super. at 419-20. As in that case, the
proofs here "afforded [the court] no means of determining the value of the
services" provided by MedWell. Id. at 420-21. Indeed, it is unclear how many
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34
and which services were covered by the $8,900 charged, or whether they were
provided by a physician, chiropractor, or physical therapist.
On the other hand, the EOBs relied upon by appellants raised a question
as to reasonableness in the absence of any further evidence or finding by the
court to the contrary. We recognize the EOBs show a remaining amount owed
by appellants, but we note appellants' argument is that the amount approved by
the insurer was approximately half of what MedWell charged, suggesting that
amount was unreasonable. While we do not conclude the discrepancy between
the amounts billed and those approved by the insurer is determinative proof of
unreasonableness, as there may be many reasons why an insurance policy would
cover only part of charges that were nonetheless reasonable, the EOBs, without
more to contradict them, at the very least demonstrated a material factual
question, precluding summary judgment.
D. There is No Inconsistency Between the Agreements as to Appellants'
Financial Obligations to MedWell
In light of our determination, and the fact that appellants did not raise the
issue of a potential conflict between the agreements before the court, we need
not address that argument. Nevertheless, we are satisfied there is no factual
question as to the consistency of the C&P and intake agreements with respect to
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35
the nature of appellants' financial obligations to MedWell set forth therein. As
noted, the C&P agreements provide:
I am primarily responsible for, and agree to make
payment of my [1] co-pay, [2] co-insurance, [3]
applicable deductible amounts, and [4] all other
amounts to which my insurance company has not paid
any sums or as to any services by MedWell with respect
to which my insurance company has denied coverage.
While the intake agreements differ, stating "I agree to pay the co-pay, co-
insurance and applicable deductible amounts to MedWell immediately as and
when each is billed or demanded by MedWell," they also provide:
I further understand that certain services and care may
not be covered by my insurance policy and therefore
agree to pay for those services within 30 days of being
billed by MedWell. I further agree to pay for the
services I receive at MedWell within 30 days of being
billed for such services in the event my insurance
company denies coverage for any reason.
Taken as a whole, each set of agreements clearly indicates appellants were
responsible for payment of not only their co-pay, co-insurance, and deductible,
but any amounts not covered by insurance, subject to a determination those
amounts were reasonable, as detailed above. We find no inconsistency that
would have required MedWell to reconcile the two agreements.
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36
IV.
A. The Parties' Arguments as to Dismissal in the Bergen County Action
We next turn to the order dismissing counts one through four of the Bergen
County action. As noted, we limit our review to the CFA claims, counts one
and two. Appellants argue the court erred in dismissing their claims because (1)
preclusionary doctrines did not apply because the summary judgment order in
the Passaic County action was not final, but interlocutory, and (2) the learned
professional exception to the CFA did not apply to billing and collection
practices because those functions are outside the protected realm of "services
provided by learned professionals in their professional capacity." Appellants
stress the Supreme Court "expressed its 'serious doubts that the billing and
collection function at issue in [Manahawkin Convalescent v. O'Neill, 217 N.J.
99 (2014), regarding collection of nursing home fees] would qualify for the
learned professional exception to the CFA.'" Id. at 124.
In response, MedWell first contends appellants do not make "any
arguments relating to declaratory or injunctive relief" and thus, in reliance on
that fact, it "does not address the [c]ourt's dismissal of [c]ount [one]." MedWell
argues the court properly applied collateral estoppel as each of the elements
were satisfied and "all of the [appellants]' factual and legal arguments
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37
underlying their CFA claims in the [Bergen County action] were argued in their
opposition to MedWell's summary judgment motion—and in support of their
cross-motion for summary judgment—in the Passaic case." It also asserts the
learned professional exception was properly applied here, as "courts have
repeatedly held that billing and collection practices or rates are considered part
of the services rendered and, as such, fall within the exception." In support,
MedWell cites Manahawkin Convalescent v. O'Neill, 426 N.J. Super. 143, 155-
56 (App. Div. 2012); Atlantic Ambulance Corp. v. Cullum, 451 N.J. Super. 247,
254 (App. Div. 2017); DiCarlo v. St. Mary's Hospital, 530 F.3d 255, 260 (3d
Cir. 2008); and an unpublished case from the District of New Jersey. Further,
it contends regulation under the CFA "could conflict" with the regulation of
healthcare professionals' fees and billing practices by the New Jersey Board of
Medical Examiners.
B. Appellants' Claims Were Not Barred by Any Preclusionary Doctrine
Res judicata is a "doctrine barring relitigation of claims or issues that have
already been adjudicated." Walker, 425 N.J. Super. at 150 (quoting Velasquez
v. Franz, 123 N.J. 498, 505 (1991)). Specifically, it requires "substantially
similar or identical causes of action and issues, parties, and relief sought" as
well as a "final judgment by a court or tribunal of competent jurisdiction." Id.A-0273-21
38
at 151 (quoting Charlie Brown of Chatham, Inc. v. Bd. of Adjustment for
Chatham, 202 N.J. Super. 312, 327 (App. Div. 1985)). If applicable, res judicata
precludes relitigation of "matters that were litigated" in the prior action as well
as "all issues that could have been presented." Bondi v. Citigroup, Inc., 423 N.J.
Super. 377, 428 (App. Div. 2011).
Within the broader umbrella of res judicata, collateral estoppel is a distinct
branch, Allesandra v. Gross, 187 N.J. Super. 96, 103 (App. Div. 1982), which
provides "[w]hen an issue of fact or law is actually litigated and determined by
a valid and final judgment, and the determination is essential to the judgment,
the determination is conclusive in a subsequent action between the parties,
whether on the same or a different claim," Winters v. N. Hudson Reg'l. Fire &
Rescue, 212 N.J. 67, 85 (2012) (alteration in original) (quoting Restatement
(Second) of Judgments § 27 (Am. L. Inst. 1982)). The doctrine facilitates
society's interest in "finality and repose; prevention of needless litigation;
avoidance of duplication; reduction of unnecessary burdens of time and
expenses; elimination of conflicts, confusion and uncertainty; and basic
fairness." Ibid. (quoting Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511, 522
(2006)).
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39
To determine whether collateral estoppel should preclude relitigation of
an issue, our Supreme Court has set forth a five-factor test:
[T]he party asserting the [doctrine] must show that: (1)
the issue to be precluded is identical to the issue
decided in the prior proceeding; (2) the issue was
actually litigated in the prior proceeding; (3) the court
in the prior proceeding issued a final judgment on the
merits; (4) the determination of the issue was essential
to the prior judgment; and (5) the party against whom
the doctrine is asserted was a party to or in privity with
a party to the earlier proceeding.
[Ibid. (quoting Olivieri, 186 N.J. at 521)].
Each element must be satisfied for collateral estoppel to apply. Perez v. Rent-
A-Center, Inc., 186 N.J. 188, 199 (2006). Even if all five factors are met,
however, the court must not apply the doctrine if it would be unfair to do so.
Ibid.; see also Allen v. V & A Bros., Inc., 208 N.J. 114, 138 (2011).
The entire controversy doctrine is another similar, but distinct, part of the
broader res judicata umbrella which "generally requires parties to an action to
raise all transactionally related claims in that same action." Largoza v. FKM
Real Est. Holdings, Inc., 474 N.J. Super. 61, 79 (App. Div. 2022) (quoting
Carrington Mortg. Servs., LLC v. Moore, 464 N.J. Super. 59, 67 (App. Div.
2020)). It "encompasses not only matters actually litigated but also other aspects
of a controversy that might have been litigated and thereby decided in an earlier
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40
action." Francavilla, ___ N.J. Super. at ___ (slip op. at 8) (quoting Higgins v.
Thurber, 413 N.J. Super. 1, 12 (App. Div. 2010)). The doctrine is codified at
Rule 4:30A, which provides in relevant part: "non-joinder of claims required to
be joined by the entire controversy doctrine shall result in the preclusion of the
omitted claims to the extent required by the entire controversy doctrine, except
as otherwise provided" in foreclosure and summary actions. Although not
defined in the Rule, our Supreme Court has explained the claims "required to be
joined" are those which "'arise from related facts or the same transaction or
series of transactions' but need not share common legal theories." Bank Leumi
USA v. Kloss, 243 N.J. 218, 226 (2020) (quoting Dimitrakopoulos v. Borrus,
Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 119 (2019)).
The entire controversy doctrine serves "three fundamental purposes: '(1)
the need for complete and final disposition through the avoidance of piecemeal
decisions; (2) fairness to parties to the action and those with a material interest
in the action; and (3) efficiency and the avoidance of waste and the reduction of
delay.'" Id. at 227 (quoting DiTrolio v. Antiles, 142 N.J. 253, 267 (1995)).
"[B]ecause the entire controversy doctrine is an equitable principle, its
applicability is left to judicial discretion based on the particular circumstances
inherent in a given case." Francavilla, ___ N.J. Super. at ___ (slip op. at 8)
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41
(alteration in original) (quoting Mystic Isle Dev. Corp. v. Perskie & Nehmad,
142 N.J. 310, 323 (1995)). It should not be applied "if such a remedy would be
unfair in the totality of the circumstances and would not promote the doctrine's
objectives of conclusive determinations, party fairness, and judicial economy
and efficiency." Bank Leumi, 243 N.J. at 227-28 (quoting Dimitrakopoulos, 220
N.J. at 119).
We first note, contrary to MedWell's contention, appellants clearly
indicated they challenged the court's order as to both CFA counts, and the court's
dismissal was not predicated upon the relief sought. As detailed above in section
III, the summary judgment order in the Passaic County action was not a final
judgment because, as the cases were consolidated, it did not resolve all issues as
to all parties. See Silviera-Francisco, 224 N.J. at 136 and Prudential, 307 N.J.
Super. at 165 n. 2. Nothing in the consolidation order shows the court stayed
consolidation or otherwise conditioned it upon resolution of the Passaic County
action. Indeed, it would make little sense to consolidate the two cases after one
was fully resolved. See R. 4:38-1(a) (providing court may order consolidation
of "actions involving a common question of law or fact arising out of the same
transaction or series of transactions [which] are pending in the Superior Court"
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42
(emphasis added)). Accordingly, the elements of collateral estoppel have not
been satisfied and the doctrine does not apply under these circumstances.
Addressing the entire controversy doctrine, it is undisputed the Passaic
County action and the Bergen County action arise from the same set of facts—
namely, MedWell's treatment of appellants, appellants' alleged failure to pay the
amount billed for that treatment, and MedWell's attempts to collect the
outstanding balance. We are convinced, however, that application of the entire
controversy doctrine here was inappropriate. While appellants initiated the
Bergen County action separately from the collection action, the two matters had
been consolidated by the time MedWell moved to dismiss. Thus, "all
transactionally related claims" were being litigated in a single action. Largoza,
474 N.J. Super. at 79.
Additionally, application of the entire controversy doctrine in these
circumstances would not serve its "fundamental purposes" as set forth in Bank
Leumi, 243 N.J. at 227. By moving for consolidation prior to resolution of any
substantive issues in either case, appellants sought to avoid "piecemeal
decisions" or inconclusive determinations. Ibid. Appellants informed MedWell
as early as their answer in the Passaic County action that they would be filing a
class action complaint and seeking to consolidate the cases. Any unfairness to
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43
MedWell was arguably caused by its choice to move for summary judgment in
the Passaic County action prior to resolution of the then-pending consolidation
motion. While we acknowledge the consolidation resulted in some delay, we
are not convinced that delay was unreasonable, nor that appellants' actions led
to any waste or judicial inefficiency. In the totality of the circumstances, we are
satisfied it would be unfair to preclude appellants from litigating their claims
when their actions did not run afoul of the entire controversy doctrine's aims.
C. The Record was Insufficient to Apply the Learned Professional Exception to
the CFA at the Motion to Dismiss Stage
Next, we discuss the CFA and its learned professional exception. We note
"[g]enerally, Rule 4:6-2(e) dismissals should not be granted based on an
affirmative defense because such defenses typically 'must be pleaded.'" Mac
Prop. Grp. LLC v. Selective Fire & Cas. Ins. Co., 473 N.J. Super. 1, 38 (App.
Div. 2022) (quoting Prickett v. Allard, 126 N.J. Super. 438, 440 (App. Div.
1974)). Where an affirmative defense's applicability "appears on the face of the
complaint," however, "dismissal under Rule 4:6-2(e) may be proper." Ibid.(quoting Prickett, 126 N.J. at 440).
"The CFA was enacted to 'provide[ ] relief to consumers from "fraudulent
practices in the market place."'" Dugan, 231 N.J. at 50 (alteration in original)
(quoting Lee, 203 N.J. at 521). The act is "applied broadly in order to
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44
accomplish its remedial purpose, namely, to root out consumer fraud."
Manahawkin, 217 N.J. at 121 (quoting Gonzalez v. Wilshire Credit Corp., 207
N.J. 557, 576 (2011)).
"N.J.S.A. 56:8-2 prohibits, as an unlawful practice, the 'act, use or
employment by any person of any unconscionable commercial practice,
deception, fraud, false pretense, false promise, [or] misrepresentation . . . in
connection with the sale or advertisement of any merchandise [7] or real estate,
or with the subsequent performance of such person as aforesaid.'" Lee, 199 N.J.
at 257 (first two alterations in original) (quoting N.J.S.A. 56:8-2). To prevail
on a CFA claim, the plaintiff must establish (1) "unlawful conduct by
defendant"; (2) "an ascertainable loss by plaintiff"; and (3) "a causal relationship
between the unlawful conduct and the ascertainable loss." Dugan, 231 N.J. at
52 (quoting D'Agostino v. Maldonado, 216 N.J. 168, 184 (2013)).
The learned professional exception is a judicially-created rule whereby
"certain transactions fall outside the CFA's purview because they involve
services provided by learned professionals in their professional capacity." Lee,
199 N.J. at 263. Our Supreme Court formally recognized the exception in
Macedo v. Dello Russo, 178 N.J. 340 (2004), in which it explained:
[7]
The CFA's definition of "merchandise" includes services. N.J.S.A. 56:8-1(c).
A-0273-21
45
Certainly no one would argue that a member of any of
the learned professions is subject to the provisions of
the [CFA] despite the fact that he [or she] renders
"services" to the public. And although the literal
language may be construed to include professional
services, it would be ludicrous to construe the
legislation with that broad a sweep in view of the fact
that the nature of the services does not fall into the
category of consumerism.
[Id. at 344 (quoting Neveroski v. Blair, 141 N.J. Super.
365, 379 (App. Div. 1976))].
The Court further noted advertising by professionals was not permitted at
the time the CFA was enacted, so the CFA could not have been understood to
encompass it. Id. at 343. It also reasoned the Legislature had never amended
the CFA to include professionals, despite earlier case law suggesting such an
exception existed. Id. at 346. Accordingly, the Court concluded "learned
professionals [are] beyond the reach of the [CFA] so long as they are operating
in their professional capacities." Id. at 345-46.
The types of professionals protected by the exception include doctors, id.
at 346, and attorneys, Vort v. Hollander, 257 N.J. Super. 56, 62 (App. Div.
1992). In Shaw v. Shand, 460 N.J. Super. 592 (App. Div. 2019), we concluded
"'semi-professionals' who are regulated by a separate regulatory scheme," such
as home inspectors, were not covered by the exception. Id. at 599. We explained
the exception "must be narrowly construed to exempt CFA liability only as to
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those professionals who have historically been recognized as 'learned' based on
the requirement of extensive learning or erudition." Ibid. To the extent prior
decisions relied upon regulation of semi-professionals to hold otherwise, as in
Plemmons v. Blue Chip Insurance Services, Inc., 387 N.J. Super. 551, 564 (App.
Div. 2006) and Atlantic Ambulance, 451 N.J. Super. at 257-58, we found such
rationale "inconsistent with the Supreme Court's decision in Lemelledo v.
Beneficial Management Corp. of America, 150 N.J. 255 (1997)." Shaw, 460
N.J. Super. at 599, 616. Rather, we held "the existence of a separate regulatory
scheme will 'overcome the presumption that the CFA applies to a covered
activity' only when 'a direct and unavoidable conflict exists between application
of the CFA and application of the other regulatory scheme or schemes.'" Id. at
616 (quoting Lemelledo, 150 N.J. at 270). In other words, semi-professionals
are not encompassed in the learned professional exemption simply because they
are subject to regulation.
Various functions have been found to be within a learned professional's
professional capacity and thus exempt from CFA liability, including
advertisements, billing, and fees. See Macedo, 178 N.J. at 346 (representations
in advertising within doctor's professional capacity) and Vort, 257 N.J. Super.
at 62-63 (fee arrangements and billing within attorney's professional capacity).
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Conversely, professionals may be held liable under the CFA for services
provided outside their professional capacity. See, e.g., Macedo, 178 N.J. at 346(doctor "engag[ing] in the merchandising of a golf course, a vacation time-share
or a medical office building" subject to CFA) and Finderne Mgmt. Co. v. Barrett,
402 N.J. Super. 546, 568 (App. Div. 2008) (accountant working as financial
planner subject to CFA).
Here, based on the liberal standard under which we review a motion to
dismiss, we are convinced the record was insufficient to permit the court to
conclude the learned professional exception applied at this early stage without
further information. As previously noted, MedWell employs not only doctors,
but also chiropractors and physical therapists, and nothing in the record reveals
which of these services were encompassed in appellants' bill, or to what extent
the doctor, chiropractor, or physical therapist was involved in billing. We are
not persuaded by the authority cited by MedWell, as none of these cases
considered a situation where the nature of the services or professional at issue
was unclear, as here.
Without a better understanding as to which services appellants received
or from which type of provider, we cannot determine, based on the record before
the court on MedWell's Rule 4:6-2 motion, whether the billing for those services
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was within the professional capacity of a learned professional and thus exempt
from CFA liability. Nothing in our decision should be construed as reflecting
our opinion on the outcome of the proceedings on remand, particularly upon
further proofs regarding the services provided and the involvement of any
learned professional in billing for those services.
V.
A. Appellants' Arguments as to Class Certification in the Bergen County Action
We next examine the court's order denying class certification. Appellants
argue the court erred in denying certification because it "failed to explain any
reason the closure of MedWell's collection case[s] [against the putative class
members] matters with regard to the [d]isclosure [c]laims." They contend the
elements of their claims did not require the collection actions to be pending, and
the disclosure of the putative class members' private medical information "is not
conduct arising out of the same transaction as the claim for unpaid services,"
and therefore did not need to be brought as counterclaims. Relying upon
LoBiondo v. Schwartz, 199 N.J. 62, 105 (2009), appellants analogize their
claims to those for "malicious use of process and malicious abuse of process ,"
torts for which no cause of action arises until the initial underlying case is
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concluded. Additionally, they note the court made no findings with respect to
their satisfaction of Rule 4:32-1(b)(3). We are not convinced.
B. Appellants Failed to Establish Numerosity and Typicality of the Class
"A 'class action is "an exception to the usual rule that litigation is
conducted by and on behalf of the individual named parties only."'" Dugan, 231
N.J. at 46 (quoting Iliadis, 191 N.J. at 103). A class action "furthers numerous
practical purposes, including judicial economy, cost-effectiveness, convenience,
consistent treatment of class members, protection of defendants from
inconsistent obligations, and allocation of litigation costs among numerous
similarly-situated litigants." Ibid. (quoting Iliadis, 191 N.J. at 104). To achieve
these objectives, "our courts have 'consistently held that the class action rule
should be liberally construed.'" Ibid. (quoting Lee, 203 N.J. at 518).
The standard for whether a class should be certified is set forth in Rule
4:32-1. Four initial requirements, "frequently termed 'numerosity,
commonality, typicality, and adequacy of representation,'" are set forth in
subsection (a) of that Rule. Dugan, 231 N.J. at 47 (quoting Lee, 203 N.J. at
519). Rule 4:32-1(a) provides:
One or more members of a class may sue or be sued as
representative parties on behalf of all only if (1) the
class is so numerous that joinder of all members is
impracticable, (2) there are questions of law or fact
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common to the class, (3) the claims or defenses of the
representative parties are typical of the claims or
defenses of the class, and (4) the representative parties
will fairly and adequately protect the interests of the
class.
The court then must consider the additional requirements set forth in
subsection (b) of the Rule. Appellants here sought certification pursuant to
subsections (b)(2), which requires a showing "the party opposing the class has
acted or refused to act on grounds generally applicable to the class, thereby
making appropriate final injunctive relief or corresponding declaratory relief
with respect to the class as a whole," and (b)(3), which requires the court find
"[1] the questions of law or fact common to the members of the class
predominate over any questions affecting only individual members, and [2] that
a class action is superior to other available methods for the fair and efficient
adjudication of the controversy." R. 4:32-1(b). In the event the court denies
class certification, the named plaintiffs may continue to pursue their individual
claims. See Myska v. N.J. Mfrs. Ins. Co., 440 N.J. Super. 458, 465 (App. Div.
2015) (noting named plaintiffs' individual breach of contract claims proceeded
despite affirming denial of class certification).
We are satisfied the court did not abuse its discretion in concluding
appellants had not satisfied the numerosity or typicality requirements to certify
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the putative class. Contrary to appellants' contention, the court clearly indicated
the undisputed closure of the putative class members' underlying collection
actions was relevant to class certification because it indicated those actions
could preclude the class members from litigating the issues raised in appellants'
claims under the entire controversy doctrine or res judicata. Based on the record
before the court, the class members did not raise these issues in the underlying
collection cases, even though they could have, and thus they would be precluded
from doing so in this class action. In contrast, appellants consolidated the
Passaic County action into the Bergen County action and thereby avoided
improper fragmentation of the litigation.
As it is undisputed all of the underlying collection actions against the class
members were closed and thus would almost certainly preclude their
participation in the Bergen County action, appellants have failed to meet the
numerosity requirement to certify the class. Additionally, appellants'
circumstances as the representative parties are not "typical of the claims or
defenses of the class," due to the differing procedural posture of their individual
claims against MedWell. R. 4:32-1(a). Because we are satisfied the court did
not abuse its discretion in determining appellants failed to satisfy subsection (a)
of the Rule, we need not reach subsection (b).
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C. Appellants' Disclosure Claims Did Not Require Resolution of the Underlying
Collection Actions
We are not persuaded by appellants' attempts to analogize their claims to
the torts of malicious use and abuse of process. We note such claims are "treated
with great caution." LoBiondo, 199 N.J. at 89. Nothing about any of the claims
asserted here require the resolution of the underlying case, unlike malicious use
and abuse of process, see id. at 90 (malicious use of process claim requires the
underlying action be "terminated favorably to the plaintiff"). Indeed, appellants
brought their claims prior to the termination of the Passaic County action; the
putative class members could have but failed to do the same.
VI.
A. The Parties' Arguments as to Summary Judgment in the Bergen County
Action
Finally, we address the order granting MedWell summary judgment and
dismissing counts five through seven of the Bergen County action. Appellants
contend the court erred in dismissing each count because the disclosures were
not relevant to any object of the litigation, rendering the litigation privilege
inapplicable. Additionally, they maintain they had a reasonable expectation of
privacy in the information disclosed because HIPAA and state regulations
impose a duty to protect such information, they never waived the physician-
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patient privilege, and failure to pay a bill does not constitute a waiver of their
privacy rights.
In response, MedWell reprises its arguments that (1) appellants failed to
establish damages, (2) the litigation privilege applies because the insurance
information disclosed was relevant and necessary to establish the amount it was
owed, and (3) appellants had no reasonable expectation of privacy in the
disclosed information because the agreements permitted MedWell to use their
information. Further, it notes appellants did not challenge the court's
determination with respect to damages, and HIPAA and the physician-patient
privilege have no applicability to appellants' claims.
B. Appellants Failed to Demonstrate a Material Factual Issue as to Damages for
Their Negligence and Breach of Contract Claims
Addressing counts five and six, the negligence and breach of contract
claims, we conclude the court did not err in dismissing either. "The fundamental
elements of a negligence claim are [1] a duty of care owed by the defendant to
the plaintiff, [2] a breach of that duty by the defendant, [3] injury to the plaintiff
proximately caused by the breach, and [4] damages." Coleman v. Martinez, 247
N.J. 319, 337 (2021) (quoting Robinson v. Vivirito, 217 N.J. 199, 208 (2014)).
Plaintiff has the obligation to prove each element. Ibid.A-0273-21
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To establish a breach of contract claim, the plaintiff must prove (1) "the
parties entered into a contract containing certain terms," (2) "plaintiff did what
the contract required [them] to do," (3) "defendant did not do what the contract
required [them] to do," and (4) "defendant's breach . . . caused a loss to the
plaintiff." Woytas v. Greenwood Tree Experts, Inc., 237 N.J. 501, 512 (2019)
(quoting Globe Motor Co. v. Igdalev, 225 N.J. 469, 482 (2016)). The defendant
is "liable for all of the natural and probable consequences of the breach." Totaro,
Duffy, Cannova & Co, 191 N.J. at 13 (quoting Pickett v. Lloyd's, 131 N.J. 457,
474 (1993)). Again, the plaintiff has the burden to prove each element. Globe
Motor, 225 N.J. at 482.
Specifically, with respect to damages in both types of claims, the plaintiff
must "prove damages with such certainty as the nature of the case may permit,
laying a foundation which will enable the trier of the facts to make a fair and
reasonable estimate." Totaro, Duffy, Cannova & Co, 191 N.J. at 14 (quoting
Lane v. Oil Delivery, Inc., 216 N.J. Super. 413, 420 (App. Div. 1987)).
Generally, attorneys' fees may not be recovered as damages "when the fees were
incurred in an action to establish th[e] defendant's liability." In re Est. of Lash,
169 N.J. 20, 30 (2001). "No matter how egregious th[e] wrongful act, in the
direct action between a plaintiff and a defendant, each party bears his or her own
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fees under the American Rule." DiMisa v. Acquaviva, 198 N.J. 547, 554 (2009).
Similarly, court costs are not typically considered damages. Magnet Res., Inc.
v. Summit MRI, Inc., 318 N.J. Super. 275, 292-93 (App. Div. 1998); see also
Restatement (Second) of Torts, § 914 (Am. L. Inst. 1979) ("[t]he damages in a
tort action do not ordinarily include compensation for attorney fees or other
expenses of the litigation").
"[N]ominal damages . . . do not attempt to compensate the plaintiff for an
actual loss" but are rather "a trivial amount" to "'serve[] the purpose of
vindicating the character' of 'a plaintiff who has not proved a compensable loss.'"
Graphnet, Inc. v. Retarus, Inc., 250 N.J. 24, 38 (2022) (ellipses and second
alteration in original) (first quoting Nappe v. Anschelewitz, Barr, Ansell &
Bonello, 97 N.J. 37, 48 (1984) and then quoting Nuwave Inv. Corp. v. Hyman
Beck & Co., Inc., 221 N.J. 495, 499 (2015)). Where "proof of actual damage is
an essential part of the plaintiff's case," as in negligence and breach of contract
claims, nominal damages cannot be recovered "where no actual loss has
occurred." Rosenau v. New Brunswick, 51 N.J. 130, 138 (1968).
Here, the summary judgment record reflects no material factual question
with respect to damages for counts five and six. Neither appellant presented any
evidence, in their deposition or otherwise, of any damages that would satisfy
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their burden. As noted, the attorneys' fees and filing fees appellants identified
do not constitute recoverable damages. We are satisfied the competent
evidential materials presented, even in the light most favorable to appellants, are
insufficient to permit a rational factfinder to conclude appellants established
damages, a necessary element of their claims for negligence and breach of
contract.
C. Appellants Established a Material Factual Issue as to Invasion of Privacy
We next examine count seven, invasion of privacy. "Invasion of privacy
'is not one tort, but a complex of four,'" including (1) "intrusion on plaintiff's
physical solitude or seclusion," (2) "public disclosure of private facts," (3)
"placing plaintiff in a false light in the public eye," and (4) "appropriation, for
the defendant's benefit, of the plaintiff's name or likeness." Smith v. Datla, 451
N.J. Super. 82, 95 (App. Div. 2017) (first quoting William L. Prosser, The Law
of Torts § 112 (3d ed. 1964) and then quoting Rumbauskas v. Cantor, 138 N.J.
173, 180 (1994)).
Here, appellants allege public disclosure of private facts, which requires
them to prove "[1] the matters revealed were actually private, [2] dissemination
of such facts would be offensive to a reasonable person, and [3] there is no
legitimate interest of the public in being apprised of the facts publicized." Id. at
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96 (quoting Romaine v. Kallinger, 109 N.J. 282, 297 (1988)). Additionally, the
information must be revealed "to the public at large, or to so many persons that
the matter must be regarded as substantially certain to become one of public
knowledge," as "it is not an invasion of the right of privacy . . . to communicate
a fact concerning the plaintiff's private life to a single person or even to a small
group of persons." Castro v. NYT Television, 384 N.J. Super. 601, 611 (App.
Div. 2006) (quoting Restatement (Second) of Torts, § 652D cmt. a).
1. Appellants' Reasonable Expectation of Privacy in Their Personal Medical
Information was Not Eroded by The Agreements or Alleged Failure to Pay
Published facts that are "actually private" are those which are not "in the
public domain" nor "a matter of legitimate public concern." Romaine, 109 N.J.
at 299-301. In other words, the plaintiff "must establish that [they] possessed a
reasonable expectation of privacy" in the information disclosed. G.D. v. Kenny,
205 N.J. 275, 309 (2011). "Patients have a privacy right in their medical records
and medical information." Smith, 451 N.J. Super. at 99 (citing United States v.
Westinghouse Elec. Corp., 638 F.2d 570, 577 (3d Cir. 1980)). Additionally,
Rule 1:38-7(a) characterizes insurance policy numbers as "confidential personal
identifier[s]" which are prohibited from inclusion in court documents unless
otherwise required by "statute, rule, or court order," indicating a reasonable
expectation of privacy in that information as well.
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We are not convinced that appellants' right to privacy in their personal
medical information was vitiated by either the agreements or their alleged failure
to pay MedWell. The C&P agreements authorized MedWell to disclose
appellants' "personal, health, or treatment information or files to [their]
insurance company." Here, MedWell disclosed the information not to
appellants' insurer, but to anyone who viewed the publicly available court
records. The C&P agreements further permitted MedWell to use appellants'
"statements . . . relating to the services and care [they] receive" only "for
purposes of advertising, publicity, and trade." The disclosures here were
indisputably not for any of those authorized purposes.
The intake agreements fare no better. Those authorized release of
appellants' "personal, protected health information and treatment related
information or files to [their] insurance company or third-party payor." Again,
the disclosures here were not made to appellants' insurer or a third-party payor.
The intake agreements also allowed MedWell to use appellants' "information,
including but not limited to healthcare information, . . . relating to the services
and care [they] receive" but again, only "for purposes of advertising, publicity
and trade." The disclosures made in the Passaic County action were not
authorized by the plain language of either set of agreements.
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Additionally, we are not persuaded appellants' failure to pay necessitated
the repeated inclusion of this personal medical information in the Passaic
County action, contrary to the court's conclusion. MedWell makes no attempt
to explain how appellant Williams-Hopkins' medications, surgical history,
family medical conditions, and allergies were necessary or even relevant to
MedWell's claim that she breached the agreements by allegedly failing to pay
the amount charged. While appellants' joint insurance policy number was
potentially relevant to show, for example, that they were insured under the same
policy, we are satisfied appellants established a material factual question as to
whether inclusion of the complete policy number was necessary. Indeed,
MedWell could have redacted all but the last four digits of the number, or simply
indicated the name of appellants' insurer. Further, most of what MedWell sought
to collect from appellants were fees for which it claimed appellants were
personally liable, beyond what their insurance approved.
2. A Material Factual Question Exists as to Whether MedWell's Disclosures
Were Protected by the Litigation Privilege
We must also discuss the litigation privilege, which the court relied upon
to grant MedWell summary judgment. The litigation privilege protects "any
communication (1) made in judicial or quasi-judicial proceedings; (2) by
litigants or other participants authorized by law; (3) to achieve the objects of the
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litigation; and (4) that have some connection or logical relation to the action."
Buchanan v. Leonard, 428 N.J. Super. 277, 286 (App. Div. 2012) (quoting
Loigman v. Twp. Comm. of Middletown, 185 N.J. 566, 585 (2006)). As our
Supreme Court explained, "lawyers and litigants must 'be permitted to speak and
write freely without the restraint of fear of an ensuing defamation action.'"
Loigman, 185 N.J. at 580 (quoting Fenning v. S.G. Holding Corp., 47 N.J. Super.
110, 117 (App. Div. 1957)). The privilege applies not only to defamation
claims, however, but to "a host of other tort-related claims." Id. at 583.
We are convinced the summary judgment record before the court
demonstrates a material factual question as to whether the litigation privilege
protects the disclosures here. Although it is undisputed the disclosures were
made in a judicial proceeding, the Passaic County action, by a litigant, MedWell,
it is less clear whether the information was disclosed "to achieve the objects of
the litigation." Buchanan, 428 N.J. Super. at 286 (quoting Loigman, 185 N.J. at
585). As noted, the personal medical information disclosed lacks any
"connection or logical relation to the action," except the insurance policy
number, the inclusion of which was arguably unnecessary to show the amounts
owed to MedWell or that appellants improperly retained checks issued by their
insurer. Ibid. (quoting Loigman, 185 N.J. at 585).
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3. Appellants Were Not Required to Prove Monetary Damages for Their
Invasion of Privacy Claim
Unlike negligence and breach of contract, "[d]amages may be recovered
for invasion of privacy, even if the injury suffered is mental anguish alone."
Faber v. Condecor, Inc., 195 N.J. Super. 81, 90 (App. Div. 1984). In Faber, the
plaintiffs testified defendant's unauthorized use of a photograph of them made
them feel "distressed," "embarrassed," and "very upset." Id. at 85. We
concluded their "testimony concerning their displeasure with the picture's
appearance in defendant's frames and the mental distress they suffered" was
sufficient to award damages. Id. at 90.
Unlike their claims for negligence and breach of contract, damages are not
an element of appellants' public disclosure of private facts claim and thus it
required no showing of actual damages. See Smith, 451 N.J. Super. at 96 and
Rosenau, 51 N.J. at 138. Instead, nominal damages may be awarded. Rosenau,
51 N.J. at 138. Additionally, appellants' certification that the disclosure of their
personal medical information resulted in their feeling "upset" is similar to the
testimony of the plaintiffs in Faber, 195 N.J. Super. at 85, which was sufficient
for an award of damages in that case.
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VII.
To summarize, we reverse the grant of summary judgment to MedWell in
the Passaic County action. We reverse the dismissal of the CFA claims, counts
one and two of the Bergen County action. We affirm the denial of class
certification. We affirm the grant of summary judgment to MedWell as to the
negligence and breach of contract claims, counts five and six of the Bergen
County action. We reverse the grant of summary judgment to MedWell as to
the invasion of privacy claim, count seven of the Bergen County action.
Accordingly, on remand the court should consider (1) MedWell's breach of
contract claim, (2) appellants' individual CFA claims for damages and
declaratory and injunctive relief, and (3) appellants' individual invasion of
privacy claims.
Affirmed in part, reversed in part, and remanded.
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