`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 1 of 11 PageID 342Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 1 of 11 PageID 342
`
`IN THE UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF TEXAS
`DALLAS DIVISION
`
`
`UNITED HEALTHCARE SEVICES, INC.,
`UNITED HEALTHCARE INSURANCE
`COMPANY,
`
`
`
`Plaintiffs,
`
`
`v.
`
`
`
`
`SYNERGEN HEALTH, LLC,
`
`
`
`Defendant.
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`MEMORANDUM OPINION AND ORDER
`
`NO. 3:20-CV-00301-E
`
`Before the Court is the Motion to Dismiss filed by defendant Synergen Health, LLC
`
`BACKGROUND
`
`(Synergen) (Doc. 12). Having carefully considered the motion, the parties’ briefing, and
`applicable law, the Court finds the motion should be granted in part and denied in part.
`The following is from the First Amended Complaint filed by plaintiffs United
`Healthcare Services, Inc. and UnitedHealthcare Insurance Company (collectively, UHC) (Doc.
`1). UHC provides health insurance and administers health plan benefits to insureds or plan
`participants (members), pursuant to a variety of health care benefit plans. Providers submit
`claims for payment to UHC, and information, including the servicing provider’s billing
`credentials, included on the claim forms is material to UHC.
`
`Providers often employ companies to oversee their billing processes and act as their billing
`
`agents. Providers and their billing agents know that UHC relies on the accuracy of information in
`
`claim forms. By submitting a claim to UHC, a provider and its billing agent are affirming that the
`
`information in that claim is accurate and should be relied on by UHC.
`
`
`
`1
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 2 of 11 PageID 343Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 2 of 11 PageID 343
`
`Synergen is a revenue cycle management and billing company. It verifies demographics in
`
`claim submissions, submits (and resubmits) claims to payers (including UHC), provides software
`
`that integrates with practice management systems, creates reports, runs analytics, monitors
`
`payments and denials, and follows up with payers regarding the same. Synergen performed a
`
`variety of billing and revenue cycle management tasks for Next Health, LLC (Next Health), an
`
`entity created in 2014 to act as the parent company to a wide array of ancillary health care service
`
`businesses. Synergen kept a certain percentage of what Next Health collected from the claims that
`
`Synergen submitted to payers on Next Health’s behalf.
`
`In addition to the entities that were used to actually submit claims, Next Health owned and
`
`controlled dozens of other subsidiaries and affiliates, which it used to funnel kickbacks, disguised
`
`in various forms, to physicians who referred patients to Next Health for grossly-overpriced
`
`ancillary services. Synergen, which dealt with Next Health and its web of subsidiary entities as a
`
`single unit, created detailed daily, weekly, and monthly reports that analyzed all of Next Health’s
`
`lab operations. Synergen identified when and how payers were implementing fraud, waste, and
`
`abuse prevention measures and helped Next Health formulate plans to circumvent those measures.
`
`Synergen then executed those plans by altering claims (or causing claims to be altered) and
`
`submitting the claims to UHC.
`
`In 2015, Synergen submitted claims to UHC using the billing credentials of three Next
`
`Health subsidiary labs: United Toxicology, US Toxicology, and Medicus Laboratories. In 2016,
`
`Synergen submitted claims to UHC using billing credentials for two more Next Health entities:
`
`American Laboratories Group (“ALG”) and True Labs.
`
` In early September 2015, UHC began denying claims submitted to it by United Toxicology
`
`unless or until United Toxicology provided UHC with medical records supporting the claims.
`
`
`
`2
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 3 of 11 PageID 344Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 3 of 11 PageID 344
`
`Synergen alerted Next Health to the claim denials. Knowing it would not be able to provide
`
`supporting medical records, Next Health worked with Synergen to figure out a way around the
`
`denials. They agreed to stop submitting claims to UHC that used United Toxicology’s billing
`
`credentials, and, from December 2015 to February 2016, Synergen knowingly submitted claims
`
`for United Toxicology lab services using US Toxicology’s billing information. Synergen also
`
`fraudulently used Medicus’s billing information to submit claims for lab services performed by
`
`United Toxicology.
`
`By June 2016, UHC was denying claims submitted by United Toxicology, U.S.
`
`Toxicology, and Medicus due to member complaints and Next Health’s inability to substantiate
`
`its services by providing medical records. Synergen worked with Next Health to create new billing
`
`profiles for two Next Health subsidiaries, ALG and True Labs. Thereafter, and through December
`
`2016, Synergen knowingly submitted claims to UHC that falsely listed the billing information for
`
`ALG and True Labs when other labs had performed the testing.
`
`Synergen also shared ways to circumvent payer investigations and denials with other client
`
`providers that sought payment from UHC. And, Synergen knowingly submitted claims to UHC
`
`for other providers that contained false information about the true costs of the services reflected,
`
`the provider who performed the services, the provider from whom the services were ordered, and
`
`the provider to whom UHC would be making payment.
`
`In its complaint, UHC asserts claims for fraud and negligent misrepresentation against
`
`Synergen arising from Synergen’s submission of claims to UHC. Synergen seeks dismissal of the
`
`claims under Federal Rule of Civil Procedure 12(b)(7) because UHC failed to sue Next Health and
`
`Next Health entities, which were “active participants” in the alleged scheme and, thus,
`
`indispensable parties in this action. Alternatively, Synergen moves for dismissal under Rule
`
`
`
`3
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 4 of 11 PageID 345Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 4 of 11 PageID 345
`
`12(b)(6) because (1) UHC failed to satisfy Rule 9(b)’s heightened pleading standard with regard
`
`to its allegations about “other providers,” and (2) UHC’s own allegations establish that its
`
`negligent misrepresentation claim is time barred.
`
`FAILURE TO JOIN NEXT HEALTH PARTIES
`
`Rule 12(b)(7) authorizes dismissal of an action for “failure to join a party under Rule 19.”
`
`FED. R. CIV. P. 12(b)(7). Under Rule 19, “[a] person who is subject to service of process and
`
`whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if
`
`… in that person’s absence, the court cannot accord complete relief among existing parties.” FED.
`
`R. CIV. P. 19(a)(1)(A).1 If a necessary party cannot be joined, “the court must determine whether,
`
`in equity and good conscience, the action should proceed among the existing parties or should be
`
`dismissed.” Id. 19(b). A party seeking dismissal must prove that an absent party is both necessary
`
`under Rule 19(a) and indispensable under Rule 19(b). See Payan v. Continental Tire North
`
`America, Inc., 232 F.R.D. 587, 589 (S.D. Tex. 2005).
`
`According to Synergen, the Next Health parties are necessary parties to this action, in
`
`which UHC seeks “to hold Synergen—a third party billing entity—solely responsible for Next
`
`Health’s alleged scheme.” UHC, however, has already sued Next Health and a number of other
`
`parties for the fraudulent scheme in a lawsuit currently pending in this Court. See
`
`UnitedHealthcare Insurance Company, et al. v. Next Health, et al., No. 3:17-cv-00234-E-BT (Next
`
`Health case). Thus, Synergen contends UHC is attempting to “hedge its bets and get a separate
`
`bite at the same apple … and present[] the same alleged harm and damages to different juries.”
`
`
`1 Rule 19 also provides that a person must be joined if the “person claims an interest relating to the subject of the
`action and is so situated that disposing of the action in the person's absence may: (i) as a practical matter impair or
`impede the person's ability to protect the interest; or (ii) leave an existing party subject to a substantial risk of incurring
`double, multiple, or otherwise inconsistent obligations because of the interest.” FED. R. CIV. P. 19(a)(1)(B). Synergen,
`however, relies on section (a)(1)(A), asserting the Court “cannot accord complete relief” in the absence of the Next
`Health parties.
`
`
`4
`
`
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 5 of 11 PageID 346Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 5 of 11 PageID 346
`
`“It has long been the rule that it is not necessary for all joint tortfeasors to be named as
`
`defendants in a single lawsuit.” Temple v. Synthes Corp., 498 U.S. 5, 7 (1990); see FED. R. CIV.
`
`P. 19(a) Advisory Committee Notes (“a tortfeasor with the usual ‘joint-and-several’ liability is
`
`merely a permissive party to an action against another with like liability”). In Haas v. Jefferson
`
`Nat’l Bank of Miami Beach, 442 F.2d 394 (5th Cir. 1971), the Fifth Circuit found an exception in
`
`the case of an “active participant” in an alleged conversion of the plaintiff’s stock by the defendant
`
`bank. Specifically, the Fifth Circuit held that Glueck, who allegedly owned a one-half interest in
`
`the stock, was a necessary party to the action, which involved the bank’s alleged conversion of the
`
`stock after it delivered it to a second bank as collateral for Glueck’s loan. Id. at 398; see Bates v.
`
`Laminack, 938 F. Supp.2d 649, 660 (S.D. Tex. 2013) (noting Haas was decided on “‘the
`
`adjudication of rights to a res’ concept rather than creating an exception to the joint tortfeasor rule
`
`of dispensability”). The Fifth Circuit also concluded a subsidiary was a necessary party when the
`
`plaintiffs were seeking to impose liability on the parent company for the acts of the subsidiary,
`
`which was the “primary participant” in an alleged conversion of gravel. Freeman v. Nw.
`
`Acceptance Corp., 754 F.2d 553, 559 (5th Cir. 1985).
`
`Despite Synergen’s assertion otherwise, UHC does not seek to hold Synergen “solely
`
`responsible” for the conduct of the Next Health parties in this action. And, the Court finds
`
`Synergen has not established exceptional circumstances, like those present in Haas and Freeman,
`
`to support deviating from the rule that joint tortfeasors need not be named as defendants in a single
`
`action. Instead, the Court finds that it can accord complete relief as to UHC and Synergen in this
`
`action absent the Next Health parties. See FED. R. CIV. P. 19(a).
`
`Further, Synergen fails to show that the Next Health parties could not be joined without
`
`destroying subject matter jurisdiction. See Allstate Ins. Co. v. Plambeck, No. 3-08-CV-0388-M,
`
`
`
`5
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 6 of 11 PageID 347Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 6 of 11 PageID 347
`
`2009 WL 347423, at *4–5 (N.D. Tex. Feb. 11, 2009) (“A prerequisite to a proper dismissal for
`
`failure to join an indispensable party is that the absent party, if added, would divest the court of
`
`subject-matter jurisdiction.”) (citing August v. Boyd Gaming Corp., 135 F. App’x, 731, 732 (5th
`
`Cir. 2005). Although UHC filed this action against Synergen after the deadline for amending its
`
`complaint in the Next Health case had passed, that does not divest this Court of subject matter
`
`jurisdiction over the Next Health parties. Indeed, the Court could, and perhaps should, consolidate
`
`the two actions.
`
`Synergen also asserts that this action should be dismissed under the Fifth Circuit’s “first to
`
`file” rule because it significantly overlaps with the issues currently being litigated in the Next
`
`Health case and, therefore, constitutes a waste of judicial resources and creates the danger of
`
`inconsistent judgments. Under the “first to file” rule, when “related cases are pending before two
`
`federal courts, the court in which the case was last filed may refuse to hear it if the issues raised
`
`by the cases substantially overlap.” Cadle Co v. Whataburger of Alice, Inc., 174 F.3d 599, 603
`
`(5th Cir. 1999); see also Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148,
`
`1161 n.28 (5th Cir. 1992) (“The same concern with avoiding duplicative litigation is present where
`
`similar suits have been filed in two courts within the same district”). However, the concerns
`
`addressed by the “first to file” rule are not present when the related cases are filed in the same
`
`court. See, e.g., Safety Nat’l Cas. Corp. v. Certain Underwriters at Lloyd’s, London, Nos. 02-
`
`1146-JVP-SCR & 05-262-JVP-SCR, 2006 WL 8432375, at *2 (M.D. La. Mar. 9, 2006); Jones v.
`
`Singing River Health Servs. Found., No. 1:14-cv-447-LG-RHW, 2015 WL 12672726, at *3 (S.D.
`
`Miss. June 5, 2015) (“the concern of inconsistent, duplicative, or piecemeal rulings is removed
`
`when both cases are pending before the same judge”). Accordingly, the Court also declines to
`
`dismiss this action under the “first to file” rule.
`
`
`
`6
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 7 of 11 PageID 348Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 7 of 11 PageID 348
`
`FAILURE TO STATE A CLAIM
`
`Rule 12(b)(6) authorizes a court to dismiss a plaintiff’s complaint for “failure to state a
`
`claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6); see FED. R. CIV. P. 8(a)(2) (a
`
`complaint must contain “a short and plain statement of the claim showing that the pleader is
`
`entitled to relief”). In considering a Rule 12(b)(6) motion to dismiss, “[t]he court accepts all
`
`well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.” In re
`
`Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (citations omitted). The court’s
`
`review is limited to the pleadings, including attachments to the complaint, attachments to the
`
`motion if they are referred to in the complaint and central to the plaintiff’s claims, and “matters
`
`of which judicial notice may be taken under Federal Rule of Evidence 201.” Id.; Inclusive
`
`Communities Project, Inc. v. Lincoln Prop. Co., 920 F.3d 890, 900 (5th Cir. 2019).
`
`To survive a motion to dismiss, a plaintiff must plead “enough facts to state a claim to
`
`relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
`
`“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
`
`statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility
`
`standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.
`
`Thus, a claim “is implausible on its face when ‘the well-pleaded facts do not permit the court to
`
`infer more than the mere possibility of misconduct.’” Harold H. Huggins Realty, Inc. v. FNC,
`
`Inc., 634 F.3d 787, 796 (5th Cir. 2011) (quoting Iqbal, 556 U.S. at 679); see also Inclusive
`
`Communities Project, 920 F.3d at 899.
`
`A complaint alleging fraud also must satisfy the heightened pleading standard of Federal
`
`Rule of Civil Procedure 9(b). FED. R. CIV. P. 9(b). Rule 9(b) “by its terms does not apply to
`
`negligent misrepresentation claims,” but a court will apply its “heightened pleading requirements
`
`
`
`7
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 8 of 11 PageID 349Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 8 of 11 PageID 349
`
`when the parties have not urged a separate focus on the negligent misrepresentation claims.”
`
`Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 2003). Generally, Rule
`
`9(b)’s “particularity” standard requires “specificity as to the statements (or omissions) considered
`
`to be fraudulent, the speaker, when and why the statements were made, and an explanation of why
`
`they are fraudulent.” Plotkin v. IF Axess, Inc., 407 F.3d 690, 696 (5th Cir. 2005); Benchmark
`
`Elecs., 343 F.3d at 724. Accordingly, a plaintiff must plead the “who, what, when, where, and
`
`how” of the fraud. See United States ex rel. Williams v. Bell Helicopter Textron, Inc., 417 F.3d
`
`450, 453 (5th Cir. 2005).
`
`1.
`
`Rule 9(b)
`
`Synergen first asserts that UHC’s claims, to the extent they relate to submissions on behalf
`
`of “other providers,” must be dismissed for failing to comply with Rule 9(b)’s particularity
`
`requirements. The Court agrees.
`
` In addition to specific allegations regarding Synergen’s fraudulent and/or negligent
`
`submission to UHC of claims with US Toxicology, Medicus, ALG, and True Labs billing
`
`credentials, the complaint alleges that, “[u]pon information and belief, Synergen knowingly
`
`submitted many claims to UHC for other providers, which contained false information about “the
`
`provider who performed the services, the provider to whom the services were ordered from, and/or
`
`the provider to whom UHC would be making payment to … [and] the true cost of the services
`
`reflected in the claims” (Doc. 1, pp. 15-16). The complaint, however, alleges no facts to show the
`
`“who, what, when, where, and how” of any fraud or negligent misrepresentation related to any
`
`“other provider” as required under Rule 9(b)’s heightened pleading standard.
`
`From the Court’s review of the complaint’s fraud and negligent misrepresentation counts,
`
`it is not clear that UHC intends to seek recovery based on claims Synergen submitted to UHC
`
`
`
`8
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 9 of 11 PageID 350Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 9 of 11 PageID 350
`
`using billing credentials for “other providers.” However, if UHC intends otherwise, Synergen is
`
`entitled to dismissal of the fraud and negligent misrepresentation claims to the extent they are
`
`based on submissions to UHC using billing credentials for providers other than US Toxicology,
`
`Medicus, ALG, or True Labs. See FED. R. CIV. P. 9(b).
`
`2.
`
`Statute of Limitations
`
`Synergen next contends that UHC’s negligent misrepresentation claim must be dismissed
`
`because it is barred by the statute of limitations. A negligent misrepresentation claim is governed
`
`by a two-year statute of limitations. See HECI Exploration Co v. Neel, 982 S.W.2d 881, 885 (Tex.
`
`1998); TEX. CIV. PRAC. & REM. CODE ANN. § 16.003(a). If the discovery rule applies, “it tolls
`
`accrual of a cause of action ‘until a claimant discovers or in the exercise of reasonable diligence
`
`should have discovered the injury and that it was likely caused by the wrongful acts of another.’”
`
`Glassdoor, Inc. v. Andra Grp., LP, 575 S.W.3d 523, 530 (Tex. 2019) (quoting Childs v. Haussecker,
`
`974 S.W.2d 31, 40 (Tex. 1998)).
`
`UHC pleaded the discovery rule in its complaint:
`
`Synergen submitted fraudulent claims to UHC for several years, but the nature of
`the misrepresentations made discovery of the fraud, and the resulting harm, very
`difficult. Despite its diligence, UHC did not discover the harm caused by its
`reasonable reliance on the false information included in the claims Synergen
`submitted to UHC until at least June 2016 for United Toxicology, US Toxicology,
`and Medicus claims and at least December 2016 for ALG and True Labs claims.
`The discovery rule applies to delay the accrual of UHC’s causes of action
`accordingly.
`
`(Doc. 1, p. 16). Thus, assuming the discovery rule applies to UHC’s negligent misrepresentation
`
`claim, the statute of limitations expired in December 2018 at the latest, well before UHC brought
`
`this action.
`
`In its response, UHC asserts the application of the discovery rule necessarily raises
`
`questions of fact, including primarily when UHC reasonably should have learned of Synergen’s
`
`
`
`9
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 10 of 11 PageID 351Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 10 of 11 PageID 351
`
`involvement and how that involvement harmed UHC. According to UHC, it only learned of
`
`“Synergen’s tortious conduct” and “the very existence of Synergen” in December 2018, when Next
`
`Health produced long-delayed discovery responses in the Next Health case under threat of
`
`sanctions. But limitations commences when a plaintiff learns of a wrongful injury, even if the
`
`plaintiff “does not yet know ‘the specific cause of the injury; the party responsible for it; the full
`
`extent of it; or the chances of avoiding it.’” Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348
`
`S.W.3d 194, 207 (Tex. 2011) (quoting PPG Indus., Inc. v. JMB/Houston Ctrs. Partners, Ltd.
`
`P’ship, 146 S.W.3d 79, 93–94 (Tex. 2004)). “After being put on notice of the alleged harm or
`
`injury-causing actions, the claimant must exercise reasonable diligence to investigate the suspected
`
`harm and file suit, if at all, within the limitations period.” Id.
`
`If the allegations in a complaint “affirmatively demonstrate that the plaintiff’s claims are
`
`barred by the statute of limitations and fail to raise some basis for tolling,” the complaint may be
`
`dismissed for failure to state a cause of action. Frame v. City of Arlington, 657 F.3d 215, 240 (5th
`
`Cir. 2011); Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045,
`
`1050 (5th Cir. 1982). Here, UHC’s complaint demonstrates that it learned of the harm caused by
`
`its reasonable reliance on the false information included in the claims by June 2016 for United
`
`Toxicology, US Toxicology, and Medicus claims and December 2016 for ALG and True Labs
`
`claims. Although it complains of Next Health’s failure to timely respond to discovery, UHC does
`
`not allege in its complaint any facts to show Synergen took steps to conceal its identity such that
`
`the statute of limitations should be tolled. Accordingly, the Court finds UHC’s negligent
`
`misrepresentation claim is barred by the statute of limitations and must be dismissed.
`
`
`
`
`
`
`
`10
`
`
`
`
`
`Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 11 of 11 PageID 352Case 3:20-cv-00301-E Document 24 Filed 02/11/21 Page 11 of 11 PageID 352
`
`CONCLUSION
`
`For the reasons stated above, Synergen’s Motion to Dismiss (Doc. 12) is GRANTED in
`
`part and DENIED in part. The Rule 12(b)(7) motion to dismiss for failure to join the Next Health
`
`parties is DENIED. The Rule 12(b)(6) motion to dismiss is GRANTED.
`
`UHC’s fraud claim is DISMISSED to the extent it is based on claims submitted to UHC
`
`using provider billing credentials other than those of US Toxicology, Medicus, ALG, or True Labs.
`
`UHC’s negligent misrepresentation claim is DISMISSED in its entirety.
`
` UHC did not alternatively request leave to amend in its response to Synergen’s motion to
`
`dismiss, but the Court ordinarily permits a plaintiff one opportunity to replead following a first
`
`motion to dismiss. See Great Plains Trust, Co. v. Morgan Stanley Dean Witter and Co., 313 F.3d
`
`305, 329 (5th Cir. 2002). Accordingly, if UHC can, in good faith, replead its negligent
`
`misrepresentation claim to state a claim upon which relief can be granted, it may do so on or before
`
`March 4, 2021. Otherwise, disposition of the claim will be converted into dismissal with prejudice.
`
`SO ORDERED; signed February 11, 2021.
`
`
`
`________________________________
`ADA BROWN
`UNITED STATES DISTRICT JUDGE
`
`
`
`11
`
`