Leon Kuchenmeister v. Healthport Technologiesm, LLC

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-10468
Non-Argument Calendar
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D.C. Docket No. 1:17-cv-01001-RWS
LEON KUCHENMEISTER,
CINDY A. HUGGER-GRAVITT,
BETH A. BRETOI,
individually and on behalf of all those similarly situated,
Plaintiffs - Appellants,
versus
HEALTHPORT TECHNOLOGIES, LLC,
d.b.a. IOD Incorporated,
d.b.a. Healthport Technologies, LLC,
IOD INCORPORATED,
CIOX HEALTH, LLC,
Defendants - Appellees.
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Appeal from the United States District Court
for the Northern District of Georgia
________________________
(October 24, 2018)
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Before WILLIAM PRYOR, ANDERSON, and EDMONDSON, Circuit Judges.
PER CURIAM:
In this diversity action, Plaintiffs Leon Kuchenmeister, Cindy Hugger-
Gravitt, and Beth Bretoi appeal the district court’s dismissal of their complaint
against Defendant Ciox Health, LLC. 1 No reversible error has been shown; we
affirm.
Defendant, a health information management services provider, contracts
with healthcare providers to process patient requests for medical records. Aspects
of Defendant’s business are governed by the Health Insurance Portability and
Accountability Act (“HIPAA”), and by implementing regulations promulgated by
the Department of Health and Human Services (“DHHS”).
Each named Plaintiff requested copies of his or her medical records from a
healthcare provider that had a contract (“Business Associate Agreement”) with
Defendant. Pursuant to the terms of those Business Associate Agreements,
Defendant processed and fulfilled Plaintiffs’ medical records requests. After
providing each Plaintiff with the requested medical records, Defendant sent each
Plaintiff an invoice for the amount owed to Defendant for having processed the
1
In 2015, Defendants HealthPort Technologies, LLC and IOD Incorporated merged, after which
HealthPort Technologies changed its name to Ciox Health, LLC.
2
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request. Briefly stated, Plaintiffs contend that Defendant charged Plaintiffs more
for processing their medical record requests than the amount permitted under
HIPAA and under DHHS regulations.
Plaintiffs filed this putative class action against Defendant, alleging state law
claims for breach of contract, unjust enrichment, and for money had and received. 2
The district court dismissed for lack of standing Plaintiffs’ claim for breach of
contract, pursuant to Fed. R. Civ. P. 12(b)(1). The district court also dismissed for
failure to state a claim -- pursuant to Fed. R. Civ. P. 12(b)(6) -- Plaintiffs’ claims
for unjust enrichment and for money had and received.
I.
Plaintiffs contend that Defendant breached the Business Associate
Agreements between Defendant and Plaintiffs’ healthcare providers by
overcharging Plaintiffs for copies of their medical records, in violation of HIPAA
and DHHS regulations. The district court concluded that, because Plaintiffs were
no third-party beneficiaries to the Business Associate Agreements, they lacked
standing to sue for breach of contract.
2
Plaintiffs also asserted against Defendant claims for fraud, negligent misrepresentation, and for
violation of the Georgia Fair Business Practices Act. Plaintiffs, however, have raised no
challenge to the district court’s dismissal of these claims on appeal.
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When reviewing the district court’s dismissal of claims pursuant to Rule
12(b)(1), we review de novo the district court’s legal conclusions and review for
clear error the district court’s factual findings. Williams v. Poarch Band of Creek
Indians, 839 F.3d 1312, 1314 (11th Cir. 2016). In reviewing a ruling on a motion
to dismiss, we typically consider only “the face of the complaint and documents
attached thereto.” Allen v. USAA Cas. Ins. Co., 790 F.3d 1274, 1278 (11th Cir.
2015). In this case, however, we also consider the pertinent Business Associate
Agreements, because those contracts are central to Plaintiffs’ claim, were attached
to Defendant’s motion to dismiss, and the contents of those contracts are not in
dispute. See id.As an initial matter, the district court made no decision about whether
Plaintiffs’ claims were governed by Georgia or by Minnesota law. Concluding that
the pertinent laws of both states were materially similar, the district court analyzed
Plaintiffs’ claims under both states’ laws. We will do the same.
Under Georgia law, generally speaking, “one not in privity of contract with
another lacks standing to assert any claims arising from violation of the contract.”
Dominic v. Eurocar Classics, 714 S.E.2d 388, 391 (Ga. Ct. App. 2011). A third
party may, however, have standing to enforce a contract “if it clearly appears from
the contract that it was intended for his benefit; the mere fact that he would benefit
from performance of the contract is insufficient.” Id. In other words, “a third-
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party beneficiary may be created only by the express terms of the contract.” Id.When the contract language is “clear and unambiguous, . . . the contract is to be
enforced according to its clear terms . . . .” Atlanta Dev. Auth. v. Clark Atlanta
Univ., Inc., 784 S.E.2d 353, 357 (Ga. 2016).
In a similar manner, under Minnesota law, “one who is not a party to a
contract [generally] has no rights under the contract, but a third party may enforce
a promise made for his benefit” under certain circumstances. Caldas v. Affordable
Granite & Stone, Inc., 820 N.W. 2d 826, 832 (Minn. 2012) (quotations omitted).
Minnesota courts require -- as a “prerequisite” to allowing a third party to sue
under a contract -- “some expression of intent on the part of the contracting parties
that the person asserting such rights is to be a beneficiary of that contract.”
Buchman v. Plumbing Co. v. Regents of Univ. of Minn., 215 N.W. 2d 479, 483
(Minn. 1974) (emphasis in original). Courts look to the contract language in
determining the intent of the parties: “[w]hen the language of the contract is clear
and unambiguous, we enforce the agreement of the parties as expressed in the
contract.” Caldas, 820 N.W. 2d at 832.
The Business Associate Agreements involved in this case each contain a
contract provision establishing unambiguously that the contracting parties intended
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no third party to have a legally enforceable right under the contract.3 Given the
clear and unambiguous contract language, the district court concluded properly that
Plaintiffs had no legally protected rights under the pertinent Business Associate
Agreements. Plaintiffs, thus, lacked standing to pursue a claim based on an alleged
breach of those contracts. The district court committed no error in dismissing
Plaintiffs’ breach of contract claim pursuant to Rule 12(b)(1).4
3
The Business Associate Agreement between Defendant and HealthPartners, under which
Plaintiff Kuchenmeister brings his claim, contains this provision:
No Third Party Beneficiary. This [Business Associate Agreement] confers no
enforceable legal right or remedy on any individual or entity other than the
parties, unless otherwise expressly provided.
The Business Associate Agreement between Defendant and Allina Health System, under which
Plaintiff Bretoi brings her claim, contains this provision:
This Agreement inures to the benefit of the parties hereto and each Allina affiliate
to or on behalf of which [Ciox] provides the Services, but not to the benefit of any
other third party.
The Business Associate Agreement between Defendant and HealthEast, under which Plaintiff
Hagger-Gravitt brings her claim, contains this provision:
Nothing in this Addendum shall be construed to create any third party beneficiary
rights in any person.
4
On appeal, Plaintiffs contend they asserted a second breach of contract claim -- based on
Defendant’s alleged breach of the invoices sent to each Plaintiff -- and that the district court
erred in failing to address that claim. The operative complaint in this case asserts a single count
for breach of contract: based only on Defendant’s alleged breach of the Business Associate
Agreements. According to Plaintiffs, however, they asserted this new breach-of-contract claim
during oral argument on Defendant’s motion to dismiss in the district court. Even if true,
because Plaintiffs failed to seek leave from the district court to file an amended complaint, the
purported second breach-of-contract claim was not raised properly below. Cf. Gilmour v. Gates,
McDonald & Co., 382 F.3d 1312, 1315 (11th Cir. 2004) (in the context of a motion for summary
judgment, “the “proper procedure for plaintiffs to assert a new claim is to amend the complaint
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II.
Plaintiffs next challenge the district court’s dismissal of their claims for
unjust enrichment and for money had and received. The district court concluded
that Plaintiffs’ claims were barred by the voluntary payment doctrine. We agree.
We review de novo a district court’s dismissal for failure to state a claim,
accepting all properly alleged facts as true and construing them in the light most
favorable to the plaintiff. Butler v. Sheriff of Palm Beach Cnty., 685 F.3d 1261,
1265 (11th Cir. 2012). To survive a motion to dismiss for failure to state a claim,
“a complaint must contain sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937,
1949 (2009) (quotation omitted).
Under Georgia’s voluntary payment doctrine, payments made “where all the
facts are known and there is no misplaced confidence and no artifice, deception, or
fraudulent practice used by the other party are deemed voluntary and cannot be
recovered unless made under an urgent and immediate necessity therefor or to
release person or property from detention or to prevent an immediate seizure of
person or property.” O.C.G.A. § 13-1-13. Likewise, Minnesota law provides that
in accordance with Fed. R. Civ. P. 15(a).”). Thus, Plaintiff’s argument will not be considered on
appeal. See Albra v. Advan, Inc., 490 F.3d 826, 828 n.1 (11th Cir. 2007).
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“[o]ne who makes a payment voluntarily cannot recover it back on the ground that
he was under no legal obligation to make it.” Thomas Peebles & Co. v. Sherman,
181 N.W. 715, 716 (Minn. 1921). “The party seeking to recover payment bears the
burden of showing that the voluntary payment doctrine does not apply.”
Telescripps Cable Co. v. Welsh, 542 S.E. 2d 640, 642 (Ga. Ct. App. 2000).
Here, Plaintiffs seek to recover payments already made to Defendant:
payments made after Defendant had already fulfilled Plaintiffs’ medical records
requests. Plaintiffs made payments to Defendant despite knowing that Defendant
had likely charged more for the already provided medical records than was legally
permitted: all three Plaintiffs disputed the amount charged by Defendant.
Moreover, Plaintiffs Hugger-Gravitt and Bretoi responded to Defendant’s invoice
through their lawyer and provided Defendant with a copy of a DHHS publication
addressing patient access to health information under HIPAA.
That Plaintiffs made their payments “under protest” is insufficient to avoid
application of the voluntary payments doctrine. See O.C.G.A. § 13-1-13 (“Filing a
protest at the time of payment does not change the rule prescribed in this Code
section.”); Shane v. St. Paul, 6 N.W. 349, 349 (Minn. 1880) (making a payment
under “protest is of no avail except in the case of a payment made under duress or
coercion, and then only as evidence tending to show that the alleged payment was
the result of the duress.”). Nor have Plaintiffs alleged facts sufficient to show
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plausibly that they made the payments to Defendant under duress or coercion.
Making a payment simply to “avoid collection attempts” does not rise to the level
of duress or coercion necessary to avoid application of the voluntary payments
doctrine. See Pew v. One Buckhead Loop Condo. Ass’n, 700 S.E.2d 831, 835 (Ga.
Ct. App. 2010) (for purposes of Georgia’s voluntary payment doctrine, “a payment
is not made under compulsion or duress . . . unless the party making payment does
so to prevent the immediate seizure of his goods or the arrest of his person.”);
Fargusson v. Winslow, 25 N.W. 942, 943 (Minn. 1885) (“When one, in order to
recover possession of his personal property from another who unjustly detains it, is
compelled to pay money which is demanded as a condition of delivery, such
payment, when made under protest, is deemed to have been made compulsory or
under duress, and may be recovered back.”).
Plaintiffs argue that the voluntary payments doctrine is inapplicable where
the defendant has engaged in fraud or deception. But Plaintiffs have alleged no
facts from which a factfinder could conclude reasonably that Plaintiffs were
deceived by -- or made payments in reliance on -- Defendant’s alleged fraudulent
representations. Instead, Plaintiffs challenged the charges listed in Defendant’s
invoices but then paid the invoices anyway, although “under protest.” See Cotton
v. Med-Cor Health Info. Sols., 472 S.E. 2d 92, 96 (Ga. Ct. App. 1996) (to the
extent defendants’ practice of overcharging patients for medical records “may have
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constituted some sort of artifice,” the voluntary payments doctrine barred
plaintiffs’ recovery because nothing evidenced that the alleged artifice “induced
the plaintiffs into making the payments they seek to recover”).
We also reject Plaintiffs’ contention that the voluntary payments doctrine is
inapplicable here based on equitable concerns: Defendant’s alleged bad faith and
as a matter of public policy. In making this argument, Plaintiffs rely on the
Georgia Supreme Court’s decision in Gulf Life Ins. Co. v. Folsom, 49 S.E.2d 368(Ga. 1986), in which the Court construed Georgia’s voluntary payments doctrine in
conjunction with equitable principles. But Gulf Life Co. addressed only whether a
plaintiff could recover a payment made by mistake, either due to a lack of
diligence or to negligence in failing to discover the true facts. Id. at 370, 373. In
contrast, this case involves no mistaken payment: Plaintiffs, instead, made
payments despite knowing they were likely being overcharged. The circumstances
involved in Gulf Life Co. are, thus, distinguishable from this case.
Plaintiffs have failed to show that the voluntary payments doctrine is
inapplicable to this case. The district court committed no error in concluding that
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Plaintiffs were barred from seeking recovery of payments made voluntarily to
Defendant.
AFFIRMED.
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