United States District Court, D. Colorado
CATHOLIC HEALTH INITIATIVES PHYSICIAN SERVICES, LLC, Plaintiff/Counter Defendant,
MEDSYNERGIES, LLC, Defendant/Counter Claimant/Third-Party Plaintiff,
CATHOLIC HEALTH INITIATIVES, Third-Party Defendant.
Michael E. Hegarty, United States Magistrate Judge.
Catholic Health Initiatives Physician Services, LLC
(“Plaintiff”) initiated this action in District
Court, County of Denver, Colorado, on August 18, 2017.
MedSynergies, LLC (“Defendant”) removed the
action to this Court on January 19, 2018, pursuant to 28
U.S.C. §§ 1332(a), 1441, and 1446(b)(3). Defendant
now files the present Partial Motion to Dismiss two of the
three claims Plaintiff asserts against it in the operative
Complaint. Following review of the motion and briefing, the
Court finds Plaintiff has plausibly stated a claim for breach
of the implied covenant of good faith and fair dealing but
fails to do so for its unjust enrichment claim. Therefore,
the motion is granted in part and denied in part.
following are factual allegations made by Plaintiff in the
operative Complaint, which are taken as true for analysis
under Fed.R.Civ.P. 12(b)(6) pursuant to Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
Health Initiatives (“CHI”) is a Colorado
faith-based nonprofit corporation that operates 104
healthcare facilities in seventeen states. Compl.
¶¶ 4, 10, ECF No. 5. It has over 90, 000 employees,
of whom approximately 4, 300 are physicians. Id.
¶ 10. Prior to 2012, CHI invested significant resources
seeking to increase efficiency and decrease costs by
standardizing the process CHI's physician groups used to
manage their revenue cycles. Id. ¶¶ 11-12,
17. After some exploratory period, CHI retained Defendant to
conduct financial and operational assessments of five of its
physician groups. Id. ¶ 13. After the
assessment, Defendant reported that it could increase cash
collections by $50 million annually in those five locations.
Id. ¶ 17. Based on this assessment, CHI and
Defendant entered into a joint venture in which those parties
formed Plaintiff,  and Plaintiff and Defendant entered into a
contractual relationship (a Master Service Agreement
(“MSA”) and Statement of Work
(“SOW”)) in which Plaintiff agreed that Defendant
would be the exclusive provider of revenue cycle services to
each of CHI's physician enterprises. Id.
¶¶ 1, 17-19.
the terms of the MSA, Plaintiff would pay Defendant an
implementation fee of up to $8 million as well as 11.94% of
the proceeds Plaintiff received from the physician
enterprises. Id. ¶ 22. For its end, Defendant
agreed to a performance guarantee of a $100 million increase
in revenue after three years, measured against a
pre-agreement baseline, and Defendant's fee could
increase or decrease based on the revenue cycle performance
in relation to that guarantee. Id. ¶¶
24-27; Ex. B at 97, ECF No. 3. While the MSA tied
Defendant's fee to revenue performance in relation to the
guarantee, the MSA did not always specify the “Service
Level” standards to monitor Defendant's
performance. Compl. ¶¶ 26-27, 58.
parties then began implementing Defendant's services at
CHI providers. Defendant's revenue cycle operations began
going “live” in CHI facilities in January 2014
and continued to reach additional markets in 2015.
Id. ¶¶ 29-30. However, the parties
eventually discovered that CHI revenue decreased under
Defendant's services as compared to the baseline.
Id. ¶ 31. Defendant's performance did not
improve in 2015. Id. ¶ 33. In late 2015,
Defendant stopped reporting its collection performance
against the contractual baseline. Id.
early 2016, both parties' management met to discuss
revised performance metrics and updated goals. Id.
¶ 34. Subsequent meetings failed to produce an
agreement. Id. ¶¶ 34-37. On June 8, 2017,
Plaintiff notified Defendant that it was terminating the
agreement on the grounds of Defendant's material breaches
of its duties. Id. ¶ 49. As of April 2017,
Plaintiff had paid Defendant over $325 million in fees and
expected to pay approximately $90 million more by the end of
2017. Id. ¶ 50. This suit followed.
filed its Complaint in Colorado state court on August 18,
2017. Compl. 1, ECF No. 5. Defendant removed the suit to this
Court on January 19, 2017. Notice of Removal, ECF No. 1. In
its Complaint, Plaintiff brought three claims for relief: (1)
breach of contract, (2) breach of the implied covenant of
good faith and fair dealing, and (3) unjust enrichment.
Defendant now asks the court to dismiss Claims Two and Three,
because Plaintiff has failed to plausibly state a claim for
relief for those claims. Mot., ECF No. 23.
survive a motion to dismiss, 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, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Plausibility, in the context of a motion to dismiss,
means that the plaintiff pled facts which allow “the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
Twombly requires a two-prong analysis. First, a court
must identify “the allegations in the complaint that
are not entitled to the assumption of truth, ” that is,
those allegations which are legal conclusions, bare
assertions, or merely conclusory. Id. at 678-80.
Second, the Court must consider the factual allegations
“to determine if they plausibly suggest an entitlement
to relief.” Id. at 681. If the allegations
state a plausible claim for relief, such claim survives the
motion to dismiss. Id. at 680.
refers “to the scope of the allegations in a complaint:
if they are so general that they encompass a wide swath of
conduct, much of it innocent, then the plaintiffs ‘have
not nudged their claims across the line from conceivable to
plausible.'” Khalik v. United Air Lines,
671 F.3d 1188, 1191 (10th Cir. 2012) (quoting Robbins v.
Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008)).
“The nature and specificity of the allegations required
to state a plausible claim will vary based on context.”
Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210,
1215 (10th Cir. 2011). Thus, while the Rule 12(b)(6) standard
does not require that a plaintiff establish ...