The opinion of the court was delivered by: Jackson, District Judge.
Plaintiff Advantage Health Plan, Inc. ("Advantage"), brings
this tortious interference and negligence action against Thomas
Knight, the chief financial officer of Greater Southeast
Community Hospital ("GSECH") in Washington, D.C. from 1995 to
1997, and Dalton Tong, who was President and CEO of Greater
Southeast Health Care System, the parent company of GSECH, at all
relevant times. Advantage (formerly known as "D.C. Health
Cooperative") is a health maintenance organization located in
Washington, D.C. that at all relevant times as well was operating
under a pre-paid, capitated provider agreement with the D.C.
Department of Human Services ("DHS") under D.C.'s Medicaid
Managed Care Program. Advantage arranges for certain
Medicaid-supported services to be provided to Medicaid recipients
enrolled as members of Advantage, and is compensated by monthly
"capitated payments," calculated on the basis of the number of
its Medicaid-eligible members.
GSECH was also a party to an agreement with DHS to provide
medical services to D.C. Medicaid patients. Under its contract
with DHS, GSECH agreed to accept payment from the District of
Columbia as payment in full for the services provided under the
Medicaid program and not to seek additional payments for those
services. In its two-count complaint here, Advantage alleges that
GSECH engaged in a pattern of illegally billing Advantage's
Medicaid-recipient members directly to collect excess cost
balances on their bills, notwithstanding having received payments
from Advantage in the prescribed amounts. Plaintiff alleges that
the individual named defendants, as well as other GSECH officers,
individually and collectively, with knowledge of all applicable
laws and regulations regarding the billing of Advantage's
Medicaid members, caused GSECH to implement the "balance billing"
system described above, as a result of which, the number of
Advantage's enrolled Medicaid members dropped from over 4,000 to
under 2,000, costing it significant revenue each year from D.C.
Plaintiff filed the instant complaint in D.C. Superior Court on
February 15, 2000, and the case was removed to federal court on
March 16, 2000 based on diversity jurisdiction. Presently pending
before the Court are defendants' motion to dismiss the complaint,
and an alternative motion to enforce an automatic stay pursuant
to the Bankruptcy Act.
Defendants filed their motion to dismiss on March 6, 2000,
asserting, inter alia,
defenses of res judicata and the statute of limitations. It is
well-settled that when considering a motion to dismiss, a court
must take the allegations of the complaint as true, and any
ambiguities must be resolved in favor of the plaintiff.
Nevertheless, "[a] court must dismiss a complaint where, even
assuming all the factual allegations are true, the plaintiff has
failed to establish a right to relief based upon those facts."
Gregg v. Barrett, 771 F.2d 539, 547 (D.C.Cir. 1985).
The record before the Court discloses that, in March, 1997,
plaintiff, then trading as D.C. Health Cooperative, filed a
lawsuit in D.C. Superior Court against GSECH and Southeast
Emergency Physicians*fn1 as the only defendants, alleging the
same negligence and tortious interference causes of action
asserted in the present complaint against Messrs. Knight and Tong
individually. On February 12, 1999, a Superior Court jury
returned verdicts of $800,000 in compensatory damages and $1.4
million in punitive damages for D.C. Health Cooperative against
GSECH alone for its tortious interference with D.C. Health
Cooperative's profitable relationship with DHS and its own
members. Judgment was entered accordingly on February 12, 1999.
Shortly thereafter, on May 27, 1999, GSECH filed for bankruptcy.
Under the doctrine of claim preclusion (or res judicata), a
final judgment on the merits of a claim bars relitigation of the
same claim in a subsequent proceeding between the same parties or
their privies. See, e.g., Allen v. McCurry, 449 U.S. 90, 94,
101 S.Ct. 411, 66 L.Ed.2d 308 (1980); I.A.M. National Pension
Fund v. Industrial Gear Mfg. Co., 723 F.2d 944, 946-947
(D.C.Cir. 1983); Faulkner v. Government Employees Ins. Co.,
618 A.2d 181, 183 (D.C. 1992). Claim preclusion bars not only claims
actually raised in the first action but also claims arising out
of the same transaction that could have been raised in the
original action. See Faulkner, 618 A.2d at 183; I.A.M., 723
F.2d. at 947 n. 2 ("Where the final judgment is rendered in favor
of plaintiff, the cause of action merges into the judgment, and
plaintiff may not thereafter maintain another suit on the same
cause of action.") (emphasis in original); see also Semler v.
Psychiatric Inst. of Washington, 575 F.2d 922, 927 (D.C.Cir.
1978) (same). The three elements required for claim preclusion
are: (1) a final judgment on the merits in the first action; (2)
the present claim is the same as a claim that was raised or that
might have been raised in the first proceeding; and (3) the party
against whom res judicata is asserted was a party or in privity
with a party in the previous case. See Allen, 449 U.S. at 94,
101 S.Ct. 411; Washington Med. Ctr., Inc. v. Holle,
573 A.2d 1269, 1280-1281 (D.C. 1990).
The Court concludes that defendants Knight and Tong were agents
of GSECH in all relevant respects in the matter of "balance
billing," and thus were in privity with GSECH. For res judicata
purposes, "[a]gents and principals . . . are not ordinarily in
privity with each other," Usher v. 1015 N St. N.W. Coop. Ass'n,
120 A.2d 921, 922 (D.C. 1956), and a decision on the merits in an
action against the principal "is res judicata in a later action
against the agency only `if the prior action concerned a matter
within the agency.'" Major v. Inner City Prop. Mgmt., Inc.,
653 A.2d 379, 381 (D.C. 1995). The D.C. Court of Appeals in Major
explained that "[t]his limitation on res judicata in the
context of the principal — agent relationship is a corollary of
the rule that a principal is not liable for an agent's tortious
conduct unless that conduct is within the scope of the agency."
Id. at 381 n. 5. The prior action here concerned a matter
within the agency.*fn2 Moreover, "[t]he doctrine of res
judicata is founded on a policy of ending litigation once a
party has had his day in court and as such renders immaterial
whether [the claimant] has chosen to test [its] right against the
principal or the agent, provided the issue to be tried is
identical as against both." Usher, 120 A.2d at 923. In other
words, as it was formerly said, plaintiff "split its cause of
action": the issue presented is identical as to both GSECH and
Knight and Tong. Thus, the claim has already been adjudicated.
Having already won a judgment in Superior Court with which it is
now dissatisfied because the judgment debtor is in bankruptcy,
plaintiff brings essentially the same claims to this Court
against others whom it might have — but didn't — seek to hold
liable as well. The plaintiff has already had its opportunity to
litigate this claim against one and all, and is barred by claim
preclusion from bringing it again against potential defendants it
elected to ignore.
Plaintiff cites several District of Columbia cases for the
proposition that corporate officers may be individually liable
for their own torts, even when the corporation itself is also
liable and even when the acts are committed in the name of the
corporation. See, e.g., Snow v. Capitol Terrace, Inc.,
602 A.2d 121, 127 (D.C. 1992); Camacho v. 1440 Rhode Island Ave. Corp.,
620 A.2d 242, 246-247 (D.C. 1993). And so they may be, but it
does not follow that corporate officers are never in privity with
the corporation for which they work. In Snow and Camacho, the
corporate officers were joined in the same lawsuit as the
corporate principal, and not in a subsequent action ...