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Capitol Medical Center, LLC v. Amerigroup Maryland

January 4, 2010

CAPITOL MEDICAL CENTER, LLC, PLAINTIFF,
v.
AMERIGROUP MARYLAND, INC., DEFENDANT.



The opinion of the court was delivered by: Henry H. Kennedy, Jr. United States District Judge

MEMORANDUM OPINION

Capitol Medical Center, doing business as United Medical Center ("Capitol"), brings this action against Amerigroup Maryland, Inc. ("Amerigroup"), seeking to recover for alleged breach of contract. The case arises from Amerigroup's payment to the former owner of a hospital for services provided by Capitol, the new owner of the hospital. Before the Court is Amerigroup's motion to dismiss Capitol's First Amended Complaint [#11]. The motion seeks dismissal of the complaint based on Capitol's asserted failure to join a necessary party or, in the alternative, partial dismissal for Capitol's failure to state a claim upon which relief can be granted. Upon consideration of the motion, the opposition thereto, and the record of this case, the Court concludes that the motion should be granted.

I. BACKGROUND

Amerigroup is a managed care organization that contracts with health care providers to offer medical services to patients who are members of Amerigroup's health plans. Compl. ¶ 2.*fn1

In 2001, Amerigroup entered into such a contract ("Amerigroup Agreement") with the Greater Southeast Community Hospital ("Hospital"), a hospital in Washington, D.C. Id. ¶¶ 1, 11. That agreement, amended in 2004, obligated Amerigroup to pay for covered medical services provided to Amerigroup's plan members at the Hospital. Id. ¶ 11-14.

In August 2007, Capitol and other entities purchased the Hospital from Envision Hospital Corporation ("Envision"). Id. ¶ 17.*fn2 Capitol alleges that the Amerigroup Agreement "was among the assets purchased." Id. ¶ 18.

The Amerigroup Agreement states that "[t]his Agreement may be assigned by Hospital," but it requires "the prior written consent" of the Maryland Department of Health and Mental Hygiene ("MDHMH") and of Amerigroup. Def.'s Mot. to Dismiss, Ex. A at 12. Capitol's complaint alleges that "[u]pon information and belief, [MDHMH] consented to and/or ratified the assignment of the Amerigroup Agreement to [Capitol]." Compl. ¶ 18.

In December 2007, Capitol notified Amerigroup in writing that when Amerigroup's plan members received services at the Hospital, Amerigroup should send payments to Capitol. Id. ¶ 19. Amerigroup did not respond to this letter or other communications, including emails, regarding the change in ownership of the Hospital. Id. ¶¶ 20, 22. From December 2007 to July 2008, Amerigroup processed requests for reimbursement for services from Capitol but sent payments to Envision. Id. ¶¶ 21-22. These payments totaled $609,463.55. Id. ¶ 27. From July 2008 until Amerigroup terminated the Amerigroup Agreement effective January 31, 2009, Amerigroup made payments to Capitol. Id. ¶ 26.

Envision filed for bankruptcy in the United States Bankruptcy Court for the District of Arizona in May 2009. Def.'s Mot. to Dismiss, Ex. C, Attach. 1 (PACER docket for Bankruptcy Pet. No. 09-9240).

Capitol alleges that Amerigroup's failure to pay Capitol from December 2007 to July 2008 constitutes a breach of the Amerigroup Agreement as well as a violation of D.C. Code § 31-3132*fn3 (Count I). Compl. ¶¶ 28-33. Capitol also alleges that Amerigroup breached an implied contract by accepting the benefits Capitol provided but not paying for them (Count II). Id. ¶¶ 34-37.

II. ANALYSIS

A. Count I of Capitol's Complaint is Dismissed for Failure to State a Claim Upon Which Relief May Be Granted

Amerigroup moves to dismiss Capitol's complaint based on Capitol's failure to join Envision as a party to this action or, in the alternative, to dismiss Count I under Rule 12(b)(6) of the Federal Rules of Civil Procedure because the Amerigroup Agreement was not assigned to ...


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