Opinion
Civil No. 1:19-cv-544-HSO-JCG
2020-09-25
Kimberly HENLEY, on behalf of herself and all other similarly situated, Plaintiff v. BILOXI H.M.A., LLC d/b/a Merit Health Biloxi; Community Health Systems, Inc.; and John and Jane Does 1 through 25 Inclusive, Defendants
Christopher C. Van Cleave, Van Cleave Law, PA, Biloxi, MS, Barry Kramer, Pro Hac Vice, Law Office of Barry Kramer, Las Vegas, NV, for Plaintiff. Jeffrey R. Blackwood, Alicia N. Netterville, Christina M. Seanor, Bradley Arant Boult Cummings, LLP, Jackson, MS, for Defendants.
Christopher C. Van Cleave, Van Cleave Law, PA, Biloxi, MS, Barry Kramer, Pro Hac Vice, Law Office of Barry Kramer, Las Vegas, NV, for Plaintiff.
Jeffrey R. Blackwood, Alicia N. Netterville, Christina M. Seanor, Bradley Arant Boult Cummings, LLP, Jackson, MS, for Defendants.
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT BILOXI H.M.A., LLC d/b/a MERIT HEALTH'S MOTION TO DISMISS [12] PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6)
HALIL SULEYMAN OZERDEN, UNITED STATES DISTRICT JUDGE
THIS MATTER IS BEFORE THE COURT on Defendant Biloxi H.M.A., LLC d/b/a Merit Health Biloxi's ("Merit Health" or "Defendant") Motion to Dismiss [12] for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), or in the alternative for failure to state a claim upon which relief can be granted under Rule 12(b)(6). After review of the Motion, the parties' briefs, the record, and relevant legal authority, the Court finds that while it does possess subject-matter jurisdiction over Plaintiff's claims against Merit Health, Plaintiff's claims against Defendant Merit Health should be dismissed for failure to state a claim.
I. BACKGROUND
A. Facts and procedural history
Plaintiff Kimberly Henley ("Plaintiff") filed the Complaint in this case on August 27, 2019, asserting a single claim for declaratory relief. Compl. [1]. Plaintiff's claims arise out of emergency medical treatment and services she received on or about May 19, 2018, at a hospital emergency room operated by Merit Health in Biloxi, Mississippi. Id. at 7. Plaintiff asserts that she was billed a gross amount of $17,752.47 for the visit, which included what she characterizes as a hidden "surcharge" in the amount of $2,201.75. Id. The surcharge was designated on Plaintiff's bill as "ER DEPT EXTENSIV," and Plaintiff asserts the charge was "a result of merely being seen in [Merit Health's] emergency room." Id. at 8. Merit Health allowed Plaintiff a "self-pay discount" which reduced the bill to a total of $6,213.36, including a reduced surcharge of $770.61. Id. at 7. At the time of filing her Complaint, Plaintiff had paid over $1,500.00 towards her bill. Compl. [1] at 8.
The Complaint seeks a declaration that Defendants Merit Health, Community Health Systems, Inc. ("CHS"), and John and Jane Does 1 Through 25 owed a duty to disclose the surcharge, which is billed to emergency care patients in advance of them receiving any treatment or services that would trigger such a charge. Compl. [1] at 11. The Complaint also seeks costs and attorney's fees, but does not seek money damages, reimbursement, or any other form of relief. Id. at 12. On August 28, 2019, Henley filed a Placeholder Motion [2] for Class Certification requesting that the Court certify a class on behalf of herself and all other persons similarly situated. Placeholder Mot. For Class Certification [2] at 1. The Court denied that Motion with leave to refile at a later time specified in the case management order. Order [28] at 9. The Court has previously dismissed Defendant Community Health Systems, Inc. for lack of personal jurisdiction. Order [30].
Defendant Merit Health has filed the present Motion [12] to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6) and a corresponding Memorandum in Support [14]. Merit Health contends that Plaintiff lacks standing to seek declaratory relief and that her claim is moot, depriving this Court of subject-matter jurisdiction. In the alternative, Merit Health asserts that the Complaint fails to state a claim on which relief can be granted because Mississippi law does not impose upon Merit Health a duty to disclose the surcharge. See Def.'s Mem. [14]; Def.'s Reply [26].
1. Merit Health's Rule 12(b)(1) Motion to Dismiss
Merit Health contends that Plaintiff's declaratory judgment claim should be dismissed under Rule 12(b)(1), on grounds that
this Court lacks subject matter jurisdiction of this matter under Article III because Plaintiff seeks an advisory opinion from this Court, which it has no authority to issue, and because—without
an injury in fact—Plaintiff lacks standing to bring this suit.
Mem. [13] at 8 (citing Flast v. Cohen , 392 U.S. 83, 96, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968) ("[T]he oldest and most consistent thread in the federal law of justiciability is that the federal courts will not give advisory opinions.")). According to Defendant, no controversy exists because a declaration in Plaintiff's favor "could not change her responsibility for her hospital bills," and a declaration that Merit Health owed a duty to disclose the surcharge to Plaintiff would not change the fact that she is obligated to pay for the emergency services rendered. Id. at 13. Merit Health maintains that "Plaintiff [is] seek[ing] a ruling that would have a preclusive effect in future proceedings," id. , which would constitute an improper advisory opinion, and that her claim is also moot because federal law currently requires hospitals operating in the United States to publish online standard charges for items and services provided, id. at 15. "Any relief Plaintiff could arguably seek by way of injunctive or declaratory relief requiring disclosure is already provided for by federal laws and regulations, and [Merit Health] is in compliance." Id. at 16 (citing 42 U.S.C. § 300gg-18(e) ).
Plaintiff counters in her Response that the Declaratory Judgment Act, 28 U.S.C. § 2201, confers subject-matter jurisdiction on this Court because she is seeking a declaration of "rights and other legal relations" between the parties involved; namely, that she and members of the putative Class of similarly situated individuals "(1) have a right to be informed [about the surcharge] in advance of treatment ..., and (2) Defendants owed Plaintiff and class members a duty to disclose" the surcharge. Pl.'s Resp. [23] at 6. Plaintiff maintains that an actual controversy exists between her and Merit Health because the parties disagree whether Defendants owed a duty to disclose the existence and amount of the surcharge. For this reason, a declaration, if issued, "would affect the rights of litigants in this case." Id. at 8.
Merit Health replies that, in addition to not asserting an actual case or controversy, Plaintiff's claim is incapable of being redressed by a declaratory judgment in her favor, pointing out that "[b]ecause Plaintiff is not seeking monetary damages, there is nothing to be redresse[d] by a favorable decision from this Court." Def.'s Reply [26] at 10. Defendant reiterates its position that Plaintiff's claim is moot because "[e]ven though the crux of Plaintiff's claim is failure to disclose, she concedes that [Merit Health] discloses the emergency room fees" on its website, and thus her claim "attack[s] the adequacy and method of disclosure," rather than its occurrence. Id. at 11.
2. Alternative Rule 12(b)(6) Motion to Dismiss
In support of its Rule 12(b)(6) Motion [12] to Dismiss, Merit Health argues that Plaintiff has not "state[d] any cognizable tort claim," nor has she "otherwise claim[ed] that Merit Health violated any state or federal law." Def.'s Mem. [13] at 17. Defendant asserts that the Declaratory Judgment Act does not create a separate, substantive cause of action upon which Plaintiff can proceed, and "to the extent that Plaintiff attempts to plead a tort claim" by seeking the declaration of a duty to disclose, she has not stated a claim as matter of law. Id. at 18. This is because while a duty to disclose is an element of a negligent misrepresentation claim under Mississippi law, Plaintiff has no right to relief because she has not shown that she was physically or financially injured by the nondisclosure of the surcharge. Id. at 18-19, 22. Merit Health also argues that Mississippi law does not impose upon it a duty to disclose because "Plaintiff does not and cannot allege the existence of a fiduciary or confidential relationship between Plaintiff and Merit Health[.]" Def.'s Reply [26] at 4. It maintains that "Plaintiff's ability to accept or reject emergency treatment from Merit Health is far from the dependence, dominion, and control necessary to create a fiduciary relationship." Id. at 6. Defendant points out that Plaintiff has not alleged that she placed any special trust or confidence in Merit Health and cannot demonstrate the existence of a fiduciary or confidential relationship. Id. at 7.
Plaintiff responds that a duty to disclose exists "in the circumstances such as those presented by Plaintiff's claims" because the Mississippi Supreme Court has adopted the Restatement (Second) of Torts' approach that
a party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated ... matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading.
Pl.'s Resp. [23] at 9-10 (quoting Restatement (Second) of Torts, § 551(2)(b) ). Although Plaintiff maintains that Merit Health was under a duty to disclose and that it failed to do so, she argues that even if Merit Health did disclose the surcharge on its website, the disclosures consisted of "lengthy price lists ... [which] do not provide useable information to patients." Id. at 11-12.
II. DISCUSSION
A. Merit Health's Rule 12(b)(1) Motion
1. Relevant legal standard
A motion to dismiss pursuant to Rule 12(b)(1) challenges a federal court's subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). "[T]he jurisdictional issue of standing is a legal question," and "[t]he party invoking federal jurisdiction bears the burden of establishing standing." Barrera-Montenegro v. United States , 74 F.3d 657, 659 (5th Cir. 1996) (quotation omitted). In resolving a motion to dismiss for lack of subject-matter jurisdiction,
[i]t is well settled in this circuit that the district court ... has the power to dismiss on any one of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.
Id. Because Defendant's Motion attached no exhibits and appears to make a facial attack upon the Complaint, the Court will utilize the first approach and resolve the jurisdictional issue based upon the Complaint alone.
Under the Declaratory Judgment Act, "in any actual controversy within its jurisdiction," a district court "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The United States Court of Appeals for the Fifth Circuit has articulated a three-step inquiry for evaluating declaratory actions:
First, the court must determine whether the declaratory action is justiciable. Typically, this becomes a question of whether an "actual controversy" exists between the parties to the action .... A court's finding that a controversy exists such that it has subject matter jurisdiction is a question of law .... Second, if it has jurisdiction, then the district court must resolve whether it has the "authority" to grant declaratory relief in the case presented.... Third, the court has
to determine how to exercise its broad discretion to decide or dismiss a declaratory judgment action.
Orix Credit All., Inc. v. Wolfe , 212 F.3d 891, 895 (5th Cir. 2000) (internal citations omitted).
With respect to the first step of the inquiry, "[j]usticiability concerns not only the standing of litigants to assert particular claims, but also the appropriate timing of judicial intervention." Mississippi State Democratic Party v. Barbour , 529 F.3d 538, 544 (5th Cir. 2008) (quoting Renne v. Geary , 501 U.S. 312, 320, 111 S.Ct. 2331, 115 L.Ed.2d 288 (1991) ). " Article III of the United States Constitution limits the jurisdiction of federal courts to actual ‘Cases’ and ‘Controversies.’ " Id. at 251 (citing U.S. Const., art. III, § 2). Article III standing requires that a "plaintiff ... allege such a personal stake in the outcome of the controversy as to justify the exercise of the court's remedial powers." Town of Chester, N.Y. v. Laroe Estates, Inc. , ––– U.S. ––––, 137 S. Ct. 1645, 1650, 198 L.Ed.2d 64 (2017) (quotation omitted). Plaintiff, as the party invoking federal jurisdiction, bears the burden of demonstrating that she has Article III standing to pursue this case. Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). At the pleading stage, the plaintiff must clearly allege facts demonstrating that Article III standing exists. See id.
Article III standing requires that a plaintiff "allege an injury in fact that is fairly traceable to the defendant's conduct and likely to be redressed by a favorable ruling." Harold H. Huggins Realty, Inc. v. FNC, Inc. , 634 F.3d 787, 795 n.2 (5th Cir. 2011) (citing Lujan v. Defs. of Wildlife , 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). To show the existence of an injury in fact a plaintiff must demonstrate that he or she suffered "an invasion of a legally protected interest" that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Spokeo , 136 S. Ct. at 1548 (citing Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ). An injury is particularized only if it affects the plaintiff in a personal and individual way. See id. "A ‘concrete’ injury must be ‘de facto’; that is, it must actually exist." Id.
The focus of the redressability inquiry is not whether the relief is likely to be granted, but whether, if granted, it will likely redress the plaintiff's injuries. Hancock Cty. Bd. of Sup'rs v. Ruhr , 487 F. App'x 189, 197 (5th Cir. 2012). "[T]he very essence of the redressability requirement [is that r]elief that does not remedy the injury suffered cannot bootstrap a plaintiff into federal court." Steel Co. v. Citizens for a Better Env't , 523 U.S. 83, 107, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).
With respect to timing, "[a] case becomes moot ... when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome." Green Valley Special Util. Dist. v. City of Schertz, Texas , 969 F.3d 460, 469 (5th Cir. 2020) (citing Already, LLC v. Nike, Inc. , 568 U.S. 85, 91, 133 S.Ct. 721, 184 L.Ed.2d 553 (2013) ). A controversy becomes moot "when it is impossible for a court to grant any effectual relief whatever to the prevailing party." Id. (quoting Knox v. Serv. Emps. Int'l Union, Local 1000 , 567 U.S. 298, 307, 132 S.Ct. 2277, 183 L.Ed.2d 281 (2012) ).
2. Justiciability: Standing
The Court must determine whether Plaintiff's claim is justiciable under Article III, specifically whether she has standing to pursue this claim and whether this case has been brought at the appropriate time. Orix Credit , 212 F.3d at 895. The Complaint alleges that "[a]n actual controversy exists between Plaintiff and [Merit Health] relating to their respective legal rights and duties," Compl. [1] at 10, and that "Plaintiff contends that she had a right to know about [the surcharges] and that Merit Health owes a duty to disclose the existence of and amounts of its [s]urcharges to emergency room patients," id. At the time of the filing the Complaint, Plaintiff had "made a series of payments to the hospital amounting to over $1,500," id. at 8, and she claimed that "the hospital continues to bill her for the balance of her account," id.
In cases involving similar facts and claims considered by other district courts in this Circuit, two have held that a plaintiff's outstanding debt owed to a hospital, which included an unpaid surcharge the plaintiff alleged to be unconscionable and violative of the Texas Deceptive Trade Practices Act, was sufficient to satisfy the injury-in-fact requirement for standing. See Mock v. St. David's Healthcare P'ship, LP, LLP , No. A-19-CV-611-RP, 2020 WL 4434929, at *4 (W.D. Tex. July 31, 2020), report and recommendation adopted sub nom. Mock v. St. David's Healthcare P'ship, L.P., LLP , No. 1:19-CV-611-RP, 2020 WL 5250641 (W.D. Tex. Sept. 2, 2020) ("The Court has identified Mock's injury as the debt she owes to St. David's for the fees imposed."); Riley v. Houston Nw. Operating Co., L.L.C. , No. CV H-19-2496, 2020 WL 3103899, at *4 (S.D. Tex. June 11, 2020) ("The court concludes that the outstanding balance Plaintiff owes Defendants under the Patient Contract satisfies the injury-in-fact requirement for Article III standing."). Those courts found the existence of an injury-in-fact on the basis of plaintiffs' contractual payment obligations, where the surcharge had not yet been paid. Mock , 2020 WL 5250641 at *4 ; Riley , 2020 WL 3103899 at *4.
This case presents a similar issue. As previously mentioned, at the time of filing the Complaint, Plaintiff had paid "over $1,500" toward her outstanding balance. Compl. [1] at 8. The original surcharge on Plaintiff's itemized billing statement was designated "ER DEPT EXTENSIV," in the amount of $2,201.75. Compl. [1] at 7-8. Plaintiff's bill was subsequently reduced by 65%, resulting in a discounted surcharge of $770.61. Id. at 7. The Complaint alleges that "for those patients whose Surcharge has not yet been paid, ... a legal determination of their obligations with respect to Defendants' Surcharge" is necessary. Id. at 12. Further, in her Response, Plaintiff argues that her "standing is premised on [her] outstanding bills, payments, and existing financial liability," Pl.'s Resp. [23] at 17, and that
a Declaration from this Court that billing of the subject (and similar) Surcharge[s] without affirmative disclosure was improper, or that such non-disclosed Surcharges are not collectable, would directly affect the enforceability of the outstanding balances claimed by Defendants,
id. at 16. Accepting the allegations in the Complaint as true and construing them in the light most favorable to Plaintiff, her alleged injury-in-fact is the outstanding balance she owes with respect to the surcharge. This is sufficient under Article III to establish an injury-in-fact. See Mock , 2020 WL 5250641 at *4 ; Riley , 2020 WL 3103899 at *4.
With respect to the issue of redressability, the courts in Mock and Riley found redressability easily satisfied because "if granted [a declaratory judgment] would remove [plaintiff's] legal obligation to pay the Service Fee, and Defendants could no longer demand that portion of the outstanding balance." Riley , 2020 WL 3103899 at *4 ; see also Mock , 2020 WL 4434929 at *4 (citing Riley for the same proposition). Here, Plaintiff contends that a declaration "would directly affect the enforceability of the outstanding balances claimed by Defendants." Pl.'s Resp, [23] at 17. Accepting as true that Plaintiff, at the time of filing, had paid "over $1,500" and "a legal determination of [her] obligations with respect to Defendants' surcharge" is necessary, this is sufficient to prove redressability under Article III.
3. Justiciability: Mootness
Merit Health asserts that Plaintiff's claims are moot because disclosure of the hospital's standard charges for items and services is already mandated under federal law, with which Merit Health is in compliance. Pursuant to the regulations promulgated under the Affordable Care Act, "[a] hospital must establish, update, and make public a list of all standard charges for all items and services online ... in a single digital file that is in a machine-readable format." 45 C.F.R. § 180.50. Merit Health contends that it is in compliance with federal law because it publishes a CSV, or plain text, file of its chargemaster on its website, which includes the surcharge of "ER DEPT EXTENSIV." Def.'s Mem. [13] at 9.
Merit Health Central, Pricing Information , https://www.merithealthcentral.com/pricing-information.
If Plaintiff was arguing that a duty to disclose the surcharge should exist under federal law, Merit Health would be correct that such a claim would be rendered moot by the federal regulations which already impose such a duty and Merit Health's compliance by disclosing the surcharge in its online chargemaster. Instead, Plaintiff is asserting that such a duty to disclose exists, or should exist, under Mississippi state law. Compl. [1]. Merit Health's compliance with federal law does not have an effect on this claim, and therefore, Plaintiff's claim is not moot.
Despite holding that plaintiffs had standing, the courts in Mock and Riley , as well as other courts in similar cases, granted defendants' motion to dismiss on other grounds, including Rule 12(b)(6). See Mock , 2020 WL 4434929 at *9 (recommending the district court grant defendant's motion to dismiss under Rule 12(b)(6) because plaintiff's claims under the Texas Deceptive Trade Practices Act were time-barred); Riley , 2020 WL 3103899 at *5 (denying dismissal for plaintiff's claims for a declaratory judgment, but dismissing plaintiff's claims for injunctive relief, under Rule 12(b)(1) ); see also Hauser v. Steward Melbourne Hospital, Inc. , No. 6:19-cv-1150-Orl-41EJK, 2020 WL 917259, at *2-3 (M.D. Fla. Feb. 11, 2020) (holding that plaintiff met the requirements of Article III standing, but dismissing plaintiff's claims under the Florida Deceptive and Unfair Trade Practices Act and for a declaratory judgment under Rule 12(b)(6) ); Oleary v. HCA Healthcare, Inc. , No. 19-80647-CIV-ALTMAN/Brannon, 2020 WL 597361, at *4-5 (S.D. Fla. Feb. 4, 2020) (holding that plaintiff's claims against one of three defendants was not moot under 12(b)(1) and Article III, but dismissing those claims under Rule 12(b)(6) ).
B. Merit Health's alternative Rule 12(b)(6) Motion
1. Relevant legal standard
When presented with a motion to dismiss pursuant to Rule 12(b)(6), a court "must assess whether the complaint contains sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face ...." Spitzberg v. Houston Am. Energy Corp. , 758 F.3d 676, 683 (5th Cir. 2014) (citing Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "[T]he court may not look beyond the pleadings in ruling on the motion," Baker v. Putnal , 75 F.3d 190, 197 (5th Cir. 1996), and must accept all well-pleaded facts as true and view those facts in the light most favorable to the plaintiff, Varela v. Gonzales , 773 F.3d 704, 707 (5th Cir. 2014) (citation omitted). A complaint does not need detailed factual allegations, but it must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. Factual allegations must raise a right to relief above the speculative level. See id. Further, "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’ " Id. at 556, 127 S.Ct. 1955 (quoting Scheuer v. Rhodes , 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) (overruled on other grounds)).
2. Analysis
The Complaint alleges that Plaintiff had a "right to know about Hospital's Surcharges and that Merit Health owes a duty to disclose the existence of and amounts of its Surcharges to emergency room patients," Compl. [1] at 10, and requests that this Court state as much in a declaratory judgment, id. at 11. Plaintiff asserts that the
duty to disclose arises because of (1) the substantial nature of Defendants' Surcharge, (2) the relationship between Defendants and emergency room patients, (3) the hidden nature of Defendants' Surcharge, (4) the general lack of knowledge of emergency room patients as to such a Surcharge, (5) the lack of reasonable opportunity for an emergency room patient to find out about such a Surcharge, (6) Defendants' knowledge that emergency room patients are unaware of Defendants' intention to add a Surcharge to their bill, and (7) the fact that knowledge as to such a Surcharge would be a material factor in a patient's decision to remain at one of Defendants' emergency rooms in order to obtain treatment and services.
Id. at 11.
The parties have not directed the Court to any Mississippi authority which conclusively shows the existence of a duty to disclose under the circumstances such as those presented in this case, and the Court has located none. The Mississippi Supreme Court has held that "[t]he duty to disclose is based upon a theory of fraud that recognizes that the failure of a party to a business transaction to speak may amount to the suppression of a material fact which should have been disclosed and is, in effect, fraud." Holman v. Howard Wilson Chrysler Jeep, Inc. , 972 So. 2d 564, 568 (Miss. 2008) (adopting the Restatement (Second) of Torts approach). The Restatement (Second) of Torts § 551(1) states that
One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose, if, but only if, he is under a duty to the other to exercise reasonable care to disclose the matter in question.
Restatement (Second) of Torts § 551(1) (emphasis added).
Subsection (2) provides that a party to a business transaction is "under a duty to exercise reasonable care to disclose" the following: (1) matters the other party is entitled to know because of a fiduciary relationship between the parties; (2) "matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading;" (3) newly acquired information that makes previous statements untrue or misleading; (4) "the falsity of a representation not made with the expectation that [it] would be acted upon" if he later learns the other party intends to act upon it; and (5) "facts basic to the transaction" if the other party is mistaken as to them and if "because of the relationship between them," the other party expects disclosure. Id. § 551(2).
Turning to the first factor under § 551(2), despite her contention that the business relationship between a hospital and an emergency room patient is somehow different than a normal arms-length transaction, Plaintiff has not pleaded sufficient facts to allege that she and Merit Health were in a fiduciary relationship giving rise to a duty to disclose. Compl. [1]. The burden of establishing the existence of a fiduciary duty is upon the party asserting it. Mullins v. Ratcliff , 515 So. 2d 1183, 1192 (Miss. 1987). Under Mississippi law, "a fiduciary relationship need not be created by contract[, but] it may arise from an informal relationship where both parties understand that a special trust and confidence has been reposed." Burgess v. Bankplus , 830 So. 2d 1223, 1227 (Miss. 2002). "A fiduciary relationship may arise in a legal, moral, domestic, or personal context, where there appears on the one side an overmastering influence or, on the other, weakness, dependence, or trust, justifiably reposed." Burgess , 830 So. 2d at 1227. A fiduciary relationship may be found where:
(1) the activities of the parties go beyond their operating on their own behalf, and the activities are for the benefit of both; (2) where the parties have a common interest and profit from the activities of the other; (3) where the parties repose trust in one another; and (4) where one party has dominion or control over the other.
Morgan v. Green-Save, Inc. , 2 So. 3d 648, 654 (Miss. Ct. App. 2008) (quoting Robley v. Blue Cross/Blue Shield of Mississippi , 935 So. 2d 990, 995-96 (Miss. 2006) ).
None of the foregoing factors are present here, and "a fiduciary relationship does not ordinarily arise in an arm's length contractual agreement." Id. While parties in an arms-length transaction may trust or have confidence in each other, "without more, such a transaction amounts merely to a business relationship and not a fiduciary relationship." Id. (quoting Robley , 935 So. 2d at 995-96 ). The Mississippi Supreme Court has been hesitant to find the existence of a fiduciary relationship in circumstances that do not meet this standard. See, e.g., Mabus v. St. James Episcopal Church , 884 So. 2d 747, 757 (Miss. 2004) (holding that a fiduciary relationship did not exist between a priest and a parishioner, even where the priest acted as a marriage counselor); AmSouth v. Gupta , 838 So. 2d 205, 217 (Miss. 2002) (holding that a fiduciary relationship did not exist between a lender-bank and a borrower); Merchants & Planters Bank of Raymond v. Williamson , 691 So. 2d 398, 404 (Miss. 1997) (holding that "the relationship between a mortgagor and a mortgagee is not a fiduciary one as a matter of law"); see also Braidfoot v. William Carey College , 793 So. 2d 642, 650 (Miss. Ct. App. 2000) (holding that no fiduciary relationship existed in the context of employment of a college provost by the college).
Plaintiff has not pleaded any facts to plausibly demonstrate that she placed any special trust or confidence in Merit Health above and beyond what is reasonably anticipated in an arms-length transaction. She alleges only that "the duty to disclose arises because of ... the relationship between Defendants and emergency room patients." Compl. [1] at 11. This allegation on its face is not sufficient to create a fiduciary relationship between Plaintiff, or other emergency room patients, and a hospital. While the Mississippi Supreme Court has held that a fiduciary relationship exists between a doctor and a patient, see In re McRae , 522 So. 2d 731, 737 (Miss. 1988), Plaintiff has pointed the Court to no authority under Mississippi law that suggests that a hospital, as an entity, owes a fiduciary duty to patients who seek medical treatment in its emergency room. A finding that a fiduciary relationship exists under these circumstances, without more, is not warranted.
Furthermore, to the extent Plaintiff argues that this Court should find the existence of a new duty to disclose under Mississippi law within the context of an analysis under Erie R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), such a finding has not been undertaken lightly by the Mississippi Supreme Court. As the Court stated supra , the Mississippi Supreme Court is hesitant to find the existence of a fiduciary duty where the circumstances do not point to "an overmastering influence [exercised by one party, or] ... weakness, dependence, or trust, justifiably reposed" by the other. Burgess , 830 So. 2d at 1227. The facts as alleged in this case involve a mere arms-length transaction between Plaintiff and Merit Health and do not rise to the level of creating a fiduciary duty.
With respect to the second, third, and fourth factors under § 551(2) of the Restatement, even accepting as true Plaintiff's assertion that, had the existence and amount of the surcharge had been disclosed to her in an adequate manner prior to treatment, she would have decided to receive treatment elsewhere, Merit Health was not under a duty to disclose because Plaintiff has not alleged that Merit Health ever made any affirmative false statement or a statement that later turned out to be false, or that it made a partial or ambiguous statement which was false or misleading, based upon information known to it, or that it acquired information that made previous statements misleading. Compl. [1].
Turning to the fifth factor, a duty to disclose facts basic to the transaction, the comments to the Restatement provide guidance on determining whether a particular fact is considered "basic" to the transaction:
A basic fact is a fact that is assumed by the parties as a basis for the transaction itself. It is a fact that goes to the basis, or essence, of the transaction, and is an important part of the substance of what is bargained for or dealt with. Other facts may serve as important and persuasive inducements to enter into the transaction, but not go to its essence. These facts may be material, but they are not basic.
Restatement (Second) of Torts § 551 cmt. (e). In short, not every fact qualifies as "basic" to a transaction. See id. The Mississippi Court of Appeals has interpreted similar language from American Jurisprudence, holding that "a party to a business transaction is under a duty to disclose facts basic to the transaction if the party knows the other is about to enter into it under a mistake as to them, and the other party could reasonably expect a disclosure of those facts." Poe v. Summers , 11 So. 3d 129, 134 (Miss. Ct. App. 2009) (citing 20 Am. Jur. 2d § 206). The court in that case also held that "silence ... is not equivalent to fraud unless it is accompanied by deceptive conduct or the suppression of material facts causing actual deception." Id.
While the Complaint alleges that Merit Health is "well aware that most emergency room patients are unaware of [its] intention to add a Surcharge to their bill," Compl. [1] at 6, Plaintiff has not sufficiently alleged that the existence or amount of the surcharge was a fact basic to the transaction. The basis for the transaction in this case was Plaintiff's need or desire for emergency medical treatment. It appears undisputed that she sought and received such treatment from Merit Health's hospital, and she is not contesting the charges she was billed for the medical services themselves. Id. ; Pl.'s Resp. [23]. Indeed, Plaintiff has made payments on her bill, and does not seek reimbursement. Compl. [1] at 8.
Plaintiff asserts that, had she known about the surcharge, she would have sought medical treatment elsewhere and that the existence and amount of the surcharge "would be a substantial factor in influencing a reasonable patient's decision as to whether to remain and seek treatment at a Merit Health emergency room." Id. at 8. While such a contention may be sufficient to find that the existence or amount of the surcharge was material to Plaintiff, this does not change the fact that, based upon the allegations in the Complaint, the actual basis of the transaction was her need or desire to receive emergency medical care. Under the Restatement's approach, whether a fact is material does not affect whether that fact is basic to the transaction, and an assertion of materiality is not sufficient to impose a duty to disclose on Merit Health in this case. See Restatement (Second) of Torts § 551(2).
In the absence of a confidential or fiduciary relationship, Mississippi law requires "an affirmative act of concealment" for the imposition of a duty to disclose. See Poe , 11 So. 3d at 134.
Stated differently, [w]here one party to a ... transaction has superior knowledge or knowledge which is not within the fair and reasonable reach of the other party and which he or she could not discover by the exercise of reasonable diligence ..., he or she is under a legal obligation to speak[.]
Id. The Complaint does not plausibly allege that Merit Health took any steps to affirmatively conceal the existence of the surcharge, nor does it account for the fact that the existence and amount of the surcharge was accessible to Plaintiff on Merit Health's online chargemaster through the exercise of reasonable diligence.
Because Plaintiff cannot show that a duty to disclose the surcharge exists under Mississippi law, she has not stated a claim upon which relief can be granted. Merit Health's Rule 12(b)(6) Motion [12] should granted for this reason.
III. CONCLUSION
The Court finds that while it has subject-matter jurisdiction over Plaintiff's claims against Defendant Merit Health, Plaintiff has failed to state a claim on which relief can be granted. Defendant Merit Health's Motion to Dismiss [12] pursuant to Federal Rule of Civil Procedure 12(b)(6) should be granted.
IT IS, THEREFORE, ORDERED AND ADJUDGED that, Defendant Biloxi H.M.A., LLC d/b/a Merit Health Biloxi's Motion to Dismiss [12] pursuant to Federal Rule of Civil Procedure 12(b)(6) is GRANTED, and Plaintiff Kimberly Henley's claims against Defendant Biloxi H.M.A., LLC d/b/a Merit Health Biloxi are DISMISSED WITH PREJUDICE for failure to state a claim.
SO ORDERED AND ADJUDGED this the 25th day of September, 2020.