United States District Court, W.D. North Carolina, Charlotte Division
THOMAS L. MASON M.D. et al., Plaintiffs,
HEALTH MANAGEMENT ASSOCIATES, LLC et al., Defendants.
Kenneth D. Bell, United States District Judge.
MATTER is before the Court on the HMA
Defendants' Motion to Dismiss (Doc. No. 81), the
EmCare Defendants' Motion to Dismiss (Doc. No. 86), Defendant
Community Health System, Inc.'s Motion to Dismiss (Doc.
No. 95), and the Honorable Magistrate Judge David S.
Cayer's Memorandum and Recommendation
(“M&R”) (Doc. No. 105), recommending that
Defendants' motions be granted in part and denied in
Court has carefully reviewed and considered de novo
the M&R, Plaintiffs' Third Amended Complaint (Doc. No.
67), the HMA Defendants' motion to dismiss (Doc. No. 95),
the EmCare Defendants' motion to dismiss (Doc. No. 86),
the parties' briefs, and all other relevant portions of
the record. For the reasons stated herein, the Court
ADOPTS the Magistrate Judge's
recommendation contained in the M&R as discussed below
and GRANTS IN PART and DENIES IN
PART Defendants' motions to dismiss.
case arises out of the operations of emergency medical
departments at two hospitals in the Charlotte area. Taking
the allegations set forth in the Complaint as true, Plaintiff
Mid-Atlantic Emergency Medical Associates, PPLC
(“MEMA”) is a professional medical corporation
that provides emergency room (“ER”) medical
services under professional services agreements with
hospitals in the Charlotte area. (Complaint, Doc. No. 67, at
¶¶1-2). MEMA physicians provided ER services to two
hospitals then-owned and operated by Defendant Health
Management Associates, LLC (“HMA”). Id.
at ¶ 2. MEMA provided services to Davis Regional Medical
Center beginning in 2000 and Lake Norman Regional Medical
center beginning in 1996. Id. Plaintiffs claim HMA
unlawfully terminated these contracts on May 3, 2010.
Thomas Mason and Steven Folstad are principals of MEMA and
board-certified emergency medicine physicians. Id.
at ¶ 3. Mason served as Lake Norman's Chief of
Staff, a member of the Lake Norman's Medical Executive
Committee for thirteen years, and as the Emergency Medical
Department Medical Director at Lake Norman Hospital from 2007
until MEMA's contract was terminated. Id. at
¶ 3. Folstad worked as the ER Medical Director at Davis
Hospital from 2000 to 2008 before becoming MEMA's CEO.
Id. at ¶ 4.
claim that the HMA Defendants, with the help of the EmCare
Defendants, submitted false claims to Medicare, Medicaid,
other federally-funded healthcare programs, private
healthcare insurers, and patients throughout their time at
the two hospitals. Id. at ¶¶ 16-17.
Plaintiffs allege that HMA terminated their contracts in
retaliation for their refusal to participate in this
fraudulent scheme. Id. at ¶ 18.
originally brought this action as qui tam relators
on their own behalf and on behalf of the United States and
the states of North Carolina, Florida, Georgia, Oklahoma,
Tennessee, and Texas against HMA, its successor in interest
Community Health System, Inc., and EmCare for violations of
the federal False Claims Act, 31 U.S.C. § 3730 et.
seq. Id. at ¶ 19. In December 2017, EmCare paid $33
million to settle government claims. Id. at ¶
20. In September 2018, HMA and Community Health System paid
$262 million to settle government claims. Id.
filed their Third Severed Amended Complaint
(“TAC”) on April 26, 2019 containing their
remaining claims against Defendants. (Doc. No. 67). In it,
Plaintiffs allege retaliation under the federal False Claims
Act, retaliation under the North Carolina False Claims Act,
defamation, and slander per se against the HMA Defendants
only and claims for tortious interference with a contractual
relationship, unfair and deceptive trade practices, and civil
conspiracy against all Defendants. (Doc. No. 67, at
STANDARD OF REVIEW
Federal Rule of Civil Procedure 8(a)(2), a complaint must
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). However, “Rule 8(a)(2) still
requires a ‘showing,' rather than a blanket
assertion, of entitlement to relief.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007).
purpose of a motion to dismiss under Rule 12(b)(6) is to test
the legal sufficiency of the complaint, not to resolve
conflicts of fact or to decide the merits of the action.
Edwards v. City of Goldsboro, 178 F.3d 231, 243-44
(4th Cir. 1999). In considering a motion to dismiss, the
court assumes the truth of all facts alleged in the complaint
and the existence of any fact that can be proved, consistent
with the complaint's allegations. Erickson v.
Pardus, 551 U.S. 89, 94 (2007). “The issue is not
whether a plaintiff will ultimately prevail but whether the
claimant is entitled to offer evidence to support the
claims.” Revene v. Charles County Comm'rs,
882 F.2d 870, 872 (4th Cir. 1989) (quoting Scheuer v.
Rhodes, 416 U.S. 232, 236 (1974)).
the “‘[f]actual allegations must be enough to
raise a right to relief above the speculative level' and
have ‘enough facts to state a claim to relief that is
plausible on its face.'” Wahi v. Charleston
Area Med. Ctr., Inc., 562 F.3d 599, 616 n.26 (4th Cir.
2009) (quoting Twombly, 550 U.S. at 555);
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)
(“While legal conclusions can provide the framework of
a complaint, they must be supported by factual
allegations.”). “[A] plaintiff's obligation
to provide the grounds of his entitle[ment] to relief
requires more than labels and conclusions, and a formulaic
recitation of a cause of action's elements will not
do.” Twombly, 550 U.S. at 555 (citations
omitted). Moreover, a court “need not accept the legal
conclusions drawn from the facts” nor “accept as
true unwarranted inferences, unreasonable conclusions, or
arguments.” Eastern Shore Mkts., Inc. v. J.D.
Assocs. Ltd. Pshp., 213 F.3d 175, 180 (4th Cir. 2000).
Federal Magistrates Act of 1979, as amended,
provides that “a district court shall make a de
novo determination of those portions of the report or
specific proposed findings or recommendations to which
objection is made.” 28 U.S.C. § 636(b)(1);
Camby v. Davis, 718 F.2d 198, 200 (4th Cir. 1983).
However, de novo review is not required by the
statute “when a party makes general or conclusory
objections that do not direct the court to a specific error
in the magistrate judge's proposed findings and
recommendations.” Orpiano v. Johnson, 687 F.2d
44, 47 (4th Cir. 1982). Moreover, the statute does
not on its face require any review at all of issues that are
not the subject of an objection. Thomas v. Arn, 474
U.S. 140, 149 (1985); Camby v. Davis, 718 F.2d at
Defendants and the EmCare Defendants object to the Magistrate
Judge's recommendation to deny their motions to dismiss
Plaintiffs' claims for retaliation under the federal and
North Carolina False Claims Act, unfair and deceptive trade
practices, tortious interference with contractual
relationship, and defamation and slander per se. (Doc. Nos.
110, 111). Defendants also object to the Magistrate
Judge's recommendation to dismiss Plaintiffs civil
conspiracy claim without prejudice to Plaintiffs' right
to argue the remedy of joint and several liability under a
theory of civil conspiracy. (Doc. Nos. 110, 111).
Community Health System, Inc.'s Motion to
voluntarily dismissed Defendant Community Health System on
July 12, 2019. (Doc. No. 99). Accordingly, the Magistrate
Judge recommends Community Health System's Motion to
Dismiss (Doc. No. 95) be denied as moot and no parties have
objected to his recommendation. Having carefully reviewed the
Magistrate Judge's M&R, the relevant portions of the
record, and applicable legal authority, this Court is
satisfied that there is no clear error as to the Magistrate
Judge's recommendation to deny as moot Community Health
System's motion to dismiss, to which no objection was
made. Diamond v. Colonial Life & Acc. Ins. Co.,
416 F.3d 310, 315 (4th Cir. 2005). Accordingly, this Court
finds that it should adopt the findings and recommendations
set forth in the M&R as its own solely for the purpose of
deciding this motion and that Community Health System's
motion to dismiss (Doc. No. 95) be denied as moot.
The HMA Defendants' and the EmCare ...