Posts tagged "Corporation"

Bay Colony Property Development Company, et al. v. Headlands Realty Corporation, et al. (Lawyers Weekly No. 12-069-17)

Bay Colony Property Development Company and William E. Locke, Jr., claim that Defendants hired them to plan, coordinate, and supervise the development of two different properties in Pennsylvania. They allege that Defendants promised to pay Bay Colony two percent of the development costs (the “Base Fee”) plus ten percent of the profits (the “Incentive Fee”) for its work on one site, and promised to pay the same percentage amounts to Locke for his work on the other site. Plaintiffs allege they have not been paid and are owed part of the Base Fees and all of the Incentive Fees for the two projects. Plaintiffs assert claims for breach of contract, unjust enrichment, and declaratory judgment as to enforceability of the alleged contracts.
Defendants have moved to dismiss on the ground that all claims are time barred. They argue that the statutory limitations period began to run on October 29, 2010, when AMB Property Corporation (“AMB”) sent a letter disputing whether it had any binding contract with Bay Colony. If that were correct, then all claims would be time barred—whether the Massachusetts six-year limitations period or the Pennsylvania four-year limitations period controlled—because this action was not filed in Middlesex Superior Court until November 14, 2016, more than six years later.
The Court concludes that it may consider the October 2010 letter in deciding the motion to dismiss, but that it must DENY the motion because that letter did not put Plaintiffs on notice of any actual or anticipated breach of contract.
1. Considering the 2010 Letter. Plaintiffs ask the Court to strike or at least disregard the October 29, 2010, letter that is attached to Defendants’ motion to dismiss. They argue that the Court may not consider this letter without converting
– 2 –
the motion to dismiss into a motion for summary judgment because Plaintiffs did not attach the letter to, reference the letter in, or rely on the letter in drafting the complaint. The Court disagrees.
The authenticity of this letter and the fact that it was sent to Plaintiffs are not in dispute, as Plaintiffs acknowledged at oral argument.
It is therefore permissible and appropriate for the Court to consider the letter in deciding Defendants’ motion to dismiss. When deciding a motion to dismiss under Rule 12(b)(6), a court may consider “documents the authenticity of which is not disputed by the parties” without converting the motion into one for summary judgment.1 Town of Barnstable v. O’Connor, 786 F.3d 130, 141 n.12 (1st Cir. 2015), quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993); accord, e.g., SFM Holdings, Ltd. v. Banc of America Securities, LLC, 600 F.3d 1334, 1337 (11th Cir. 2010); cf. Smaland Beach Ass’n, Inc. v. Genova, 461 Mass. 214, 228 (2012) (judicial construction of federal rules of civil procedure applies to parallel state rules). No affidavit authenticating the document is needed because the authenticity of the copy provided by Defendants has been conceded. See City of Boston v. Roxbury Action Program, Inc., 68 Mass. App. Ct. 468, 469 n.3, rev. denied, 449 Mass. 1101 (2007) (summary judgment record).
2. No Actual Breach or Unequivocal Repudiation. The October 29, 2010, did not trigger the statute of limitations, however, because it did not constitute a breach of the contractual terms alleged in the complaint, did not put Plaintiffs on notice of an actual breach of contract, and was not an unequivocal repudiation of any future contractual obligations.
This letter put Defendants on notice that “AMB disputes that there is any binding agreement between it and [Bay Colony] with respect to either project. But the letter does not assert that AMB was refusing to pay any amounts that Bay Colony
1 This makes perfect sense. If the rule were otherwise, a defendant could instead attach an undisputed document to their answer and seek judgment on the pleadings based on that document. Since a Rule 12(c) motion for judgment on the pleadings is subject to the same standard as a Rule 12(b)(6) motion to dismiss, see Boston Med. Ctr. Corp. v. Secretary of the Exec. Office of Health and Human Svcs., 463 Mass. 447, 450 (2012), such a motion for judgment on the pleadings would be indistinguishable from Defendants’ motion to dismiss in this case.
– 3 –
claims it was owed for services rendered. Instead, AMB wrote that “[w]e will respond in writing to you shortly detailing AMB’s position.” The letter went on to direct Bay Colony and Locke not to do any further work on either project, and not to have any contact with AMB except through its legal counsel.
Defendants are not entitled to dismissal of this action on the ground that the termination of any contractual arrangement between AMB and Plaintiffs triggered the statute of limitations. The complaint does not allege that AMB had no right to terminate the alleged contract. As a result, nothing in the complaint suggests that contract termination was in and of itself a contract breach that would start the limitations period.
Nor are Defendants entitled to dismissal on the ground that the October 2010 letter constituted a repudiation of AMB’s future contractual obligations and thus gave rise to a claim for breach of contract.
It is not at all clear that Plaintiffs could have brought a claim under Massachusetts law for anticipatory breach of contract, even assuming that this letter was an unequivocal repudiation.2 “With few exceptions, … ‘Massachusetts has not generally recognized the doctrine of anticipatory repudiation, which permits a party to a contract to bring an action for damages prior to the time performance is due if the other party repudiates.’ ” KGM Custom Homes, Inc. v. Prosky, 468 Mass. 247, 253 (2014), quoting Cavanagh v. Cavanagh, 33 Mass. App. Ct. 240, 243 (1992), rev. denied, 413 Mass. 1107 (1992). One of the exceptions applies where there has been “an actual breach accompanied by an anticipatory breach.” Cavanagh, supra, at 243 n.5; accord Parker v. Russell, 133 Mass. 74 (1882) (where defendant promised to support plaintiff for his entire life, and stopped doing so, plaintiff could sue for past and future damages). For example, if a defendant has an alleged obligation to make period payments to the plaintiff, refuses to pay the amounts currently owed, and makes “a clear and unequivocal repudiation” of its obligation to make future payments, “the statute of limitations begins to run from the date of the repudiation”
2 Plaintiffs raise this argument under Massachusetts law. Defendants have not, at those point, asserted or made any showing that the claims asserted in this action are instead governed by Pennsylvania law.
– 4 –
with respect to both past and future damages. Callender v. Suffolk Cty., 57 Mass. App. Ct. 361, 364 (2003). But the complaint does not allege, and the letter proffered by Defendants does not reveal, any actual breach of contract as of October 2010.
On the other hand, if AMB had unequivocally repudiated its alleged future contractual obligations, Defendants could have sued immediately on a quantum meruit or unjust enrichment theory. See Cavanagh, supra, at 243 n.5. Where one party contracts to provide services in exchange for future compensation, and the other party refuses to make any further payments, the party that provided the services and is seeking payment is “entitled to treat the contract as rescinded” and bring an action in quantum meruit without waiting for the time when the compensation was supposed to be paid. Johnson v. Starr, 321 Mass. 566, 569-570 (1947).
In this case, however, none of Plaintiffs claims is time-barred (assuming, as Defendants do, that the Massachusetts six-year statute of limitations applies) because the October 29, 2010, letter was not a “clear and unequivocal repudiation” of Defendants’ alleged obligation to pay the Base Fees and Incentive Fees claimed by Plaintiffs. Cf. Callender, 57 Mass. App. Ct. 364.
AMB did not assert in the 2010 letter that it would not pay any part of the amounts that Plaintiffs claim they are owed. Instead, it merely stated that AMB “disputes that there is any binding agreement” and that AMB would explain its position in more detail later on.
This letter is not a repudiation of the alleged contract because it is not “a definite and unequivocal manifestation of intention [not to render performance]” (bracketed material in original). Coviello v. Richardson, 76 Mass. App. Ct. 603, 609 (2010), quoting Thermo Electron Corp. v. Schiavone Constr. Co., 958 F.2d 1158, 1164 (1st Cir. 1992); see also Nortek, Inc. v. Liberty Mut. Ins. Co., 65 Mass. App. Ct. 764, 766 & 769-770 (2006) (statute of limitations on contract claim did not begin to run when insurer responded to question about retrospective premiums by stating “that it would investigate the situation and get back to insured, because insurer took no “final or definitive position” as to whether insured must pay disputed amount).
– 5 –
Defendants’ motion to dismiss the complaint is DENIED. Plaintiffs’ cross-motion to strike exhibit B to the motion to dismiss is also DENIED.
7 June 2017
Kenneth W. Salinger
Justice of the Superior Court read more

Posted by Stephen Sandberg - June 15, 2017 at 2:03 pm

Categories: News   Tags: , , , , , , , , ,

Massasoit Industrial Corporation v. Massachusetts Commission Against Discrimination, et al. (Lawyers Weekly No. 11-031-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030;

16-P-459                                        Appeals Court


No. 16-P-459.

Plymouth.     December 7, 2016. – March 23, 2017.

Present:  Cypher, Maldonado, & Blake, JJ.

Handicapped PersonsAnti-Discrimination Law, Handicap, Age, Employment, Termination of employment.  Employment, Discrimination, Termination.  Massachusetts Commission Against DiscriminationEmotional DistressDamages, Emotional distress.  Words, “Handicap.” read more

Posted by Stephen Sandberg - March 23, 2017 at 3:45 pm

Categories: News   Tags: , , , , , , , , ,

Barrasso v. New Century Mortgage Corporation, et al. (Lawyers Weekly No. 11-010-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030;

15-P-1458                                       Appeals Court


No. 15-P-1458.

Suffolk.     October 20, 2016. – February 8, 2017.

Present:  Hanlon, Sullivan, & Blake, JJ.

Real Property, Mortgage, Record title.  Mortgage, Foreclosure, Real estate, Assignment.  AssignmentContract, Assignment, Modification.  Negotiable Instruments, Assignment, Note.  Practice, Civil, Summary judgment. Estoppel. read more

Posted by Stephen Sandberg - February 8, 2017 at 5:21 pm

Categories: News   Tags: , , , , , ,

G4S Technology LLC v. Massachusetts Technology Park Corporation (Lawyers Weekly No. 12-007-17)



SUFFOLK, ss                                                                                               SUPERIOR COURT


  1. 2014-02998-BLS2













            This is a contract-based dispute arising from a state and federally-funded project to design and construct a fiber optic network in western Massachusetts.  Plaintiff G4S Technology LLC (G4S), the design-builder on the project, instituted the lawsuit claiming that  the defendant Massachusetts Technology Park Corporation (MTPC) wrongfully denied a $ 10.1 Million “Request for Adjustment” claim and  improperly withheld an additional $ 4.1 Million based on unfounded claims of late delivery and poor quality of work.  MTPC counterclaimed, alleging   fraud and violation of Chapter 93A.[1]  In an earlier decision, this Court allowed MTPC’s motion for summary judgment as to G4S’s claims, relying on appellate case law which held that an intentional breach by one of the parties to a contract prevented it from recovering on its own contract-based claims so long as that breach was not de minimis.  See Memorandum of Decision and Order dated March 29, 2016 (the March 2016 Decision). read more

Posted by Stephen Sandberg - February 2, 2017 at 3:56 am

Categories: News   Tags: , , , , , ,

Murby, et al. v. Children’s Hospital Corporation (Lawyers Weekly No. 12-166-16)

GUSTAVE H. MURBY, and Others1
CHILDREN’S HOSPITAL CORPORATION, doing business as Boston Children’s Hospital, and Others2
Plaintiffs brought suit in an effort to stop Boston Children’s Hospital from erecting a new clinical building on the site of the Prouty Garden, which they and many others value as a quiet sanctuary for Hospital patients and their families. In their amended complaint Plaintiffs allege that the Hospital illegally began site preparation and other construction work required for its proposed Boston Children’s Clinical Building (the “BCCB”) without first obtaining approval from the Department of Public Health (“DPH”) under the determination of need (“DoN”) law, G.L. c. 111, §§ 25B-25G. Plaintiffs also allege that the Hospital’s DoN application for the BCCB project improperly excluded the costs of certain renovation projects that the Hospital has already started or completed at its main campus in the Longwood medical area of Boston, and of a planned expansion of the Hospital’s Waltham campus.
The Court previously ordered that all claims against defendants Suffolk Construction Company, Inc., Turner Construction Company, and the Commissioner of the Massachusetts Department of Public Health be dismissed without prejudice because they are not proper or necessary parties.
The Hospital now moves to dismiss the rest of the case on the grounds that it became moot when DPH approved the Hospital’s DoN application. The Court will ALLOW that motion, and dismiss this case without prejudice, because it agrees that the claims asserted in this action are now moot. It will also declare the rights of the
1 Anne C. Gamble, Walter J. Gamble, M.D., Stephen Gellis, M.D., Loring Conant, Jr., M.D., Louise Conant, Brian Greenberg, Peggy Greenberg, Karen d’Amato, Neil Dinkin, Christine Barensfeld, and John W. Hagerman.
2 Suffolk Construction Company, Inc., Turner Construction Company, and Commissioner of the Massachusetts Department of Public Health.
– 2 –
parties with respect to one of the legal issues raised in the amended complaint. The Court takes judicial notice of the two DPH letter decisions that are attached to the Hospital’s memorandum of law: the October 27, 2016, letter decision in which DPH approved the Hospital’s DoN application, and the June 3, 2016, letter decision in which DPH rejected claims that certain ongoing or now completed renovations at the Longwood campus were part of the BCCB project and thus required DoN approval.3
The amended complaint asserts three general categories of claims, all of which are now either moot, must be pursued as part of the c. 30A appeal from the final decision by DPH, or raise a pure question of law that can be resolved at this time.
First, the main thrust of Plaintiffs’ amended complaint is their claim that it would be unlawful for the Hospital to destroy the Prouty Garden and use that land as part of the footprint for a new clinical building without first obtaining DoN approval for that BCCB project. Now that DPH has granted the very approval that Plaintiffs say was required, that part of the complaint is moot. Cf. Tusino v. Zoning Bd. of Appeals of Douglas, 90 Mass. App. Ct. 89, 92 (2016) (action seeking to compel building commissioner to order that house be removed became moot once local board of appeal ordered removal of house). A group of individuals that includes most of the Plaintiffs in this case recently filed a new lawsuit challenging DPH’s approval of the Hospital’s DoN application under G.L. c. 30A, § 14. Since that second lawsuit is the proper place to litigate any claims that the DoN approval was unlawful for some reason, this action “is properly dismissed as moot.” See Olmstead v. Department of Telecommunications and Cable, 466 Mass. 582, 592-593 (2013).
Second, Plaintiffs seek a declaration that the Hospital acted illegally by spending money to prepare to demolish the Wolbach Building, in order to make way for the planned new clinical building, before the Hospital obtained DoN approval for the project as a whole. Plaintiffs also seek monetary penalties against the Hospital for this alleged violation under G.L. c. 111, § 25G. As explained in prior decisions in
3 The Court may consider these DPH decisions in deciding the pending motion to dismiss because they are matters of public record and their authenticity is not in dispute. See Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000) (“matters of public record”); Simmons v. Galvin, 575 F.3d 24, 30 n.5 (1st Cir. 2009), cert. denied, 131 S.Ct. 412 (2010) (“documents the authenticity of which is not disputed”).
– 3 –
this case, DPH expressly authorized the Hospital to begin working on the demolition of the Wolbach Building before obtaining DoN approval for the larger BCCB project, subject to the condition that the cost of that work must be included in the “maximum capital expenditure” addressed by the Hospital’s DoN application for the larger project. DPH did so because it found that the Hospital would have to take down the Wolbach Building whether or not it used that site for a project subject to DoN approval.
Plaintiffs’ claim that DPH lacked statutory authority to allow the Hospital to incur certain site preparation costs before obtaining DoN approval, subject to the condition that the site could not be used for a new clinical building unless those expenses received retroactive DoN review and approval—and that the Hospital therefore acted illegally when it incurred those costs without prior DoN approval—raises a pure question of law that can be resolved on a motion to dismiss. See, e.g., Massachusetts Federation of Teachers, AFT, AFL-CIO v. Board of Educ., 436 Mass. 763 (2002). Since Plaintiffs have standing and there is an actual controversy between the remaining parties regarding whether the Hospital acted lawfully in spending money to prepare to demolish the Wolbach Building before obtaining DoN approval to build a new clinical facility, the Court is obligated to declare the rights of the parties as to this issue. See, e.g., Attorney General v. Kenco Optics, Inc., 369 Mass. 412, 418 (1976); Gennari v. City of Revere, 23 Mass. App. Ct. 979 (1987) (rescript).
DPH has ample authority and discretion to allow a DoN applicant to proceed in this manner, under circumstances like these, even though the DoN statute does not expressly contemplate that DoN approval may be granted after a limited amount of site preparation work on a construction project has already been completed. “In enacting the determination of need statute, the Legislature intended the department to have a major role in ‘defining the contours of the statute, and in considering its applicability on an ad hoc basis to projects that did not fit traditional norms.’ ” Shoolman v. Health Facilities Appeals Bd., 404 Mass. 33, 37 (1989), quoting Brookline v. Medical Area Serv. Corp., 8 Mass. App. Ct. 243, 254 (1979). The DoN statute only requires DPH review and approval for any “substantial capital expenditure” to construct any health care facility. See G.L. c. 111, § 25C. It is
– 4 –
undisputed that the minimum capital expenditure by hospitals requiring DoN approval from October 1, 2015, through September 30, 2016, was $ 17,826,988. See Amended Complaint ¶¶ 13-14.4 The amended complaint does not allege any facts plausibly suggesting that the Hospital incurred project-related costs in excess of $ 17.8 million before obtaining DoN approval.
As a result, Plaintiffs have not stated a viable claim that the Hospital acted unlawfully in spending some money to prepare to demolish the Wolbach Building without first obtaining DoN approval, subject to retroactive DoN review and approval before using that site to construct a new clinical facility—all as expressly authorized by DPH. Cf. Lopez v. Commonwealth, 463 Mass. 696, 701 (2012) (to survive motion to dismiss under Mass. R. Civ. P. 12(b)(6), complaint must allege facts that, if true, would “plausibly suggest[] … an entitlement to relief.”) (quoting Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)).
“Where, as here, the scope of agency authority is at issue, [a court] must determine whether the agency is acting within ‘the powers and duties expressly conferred upon it by statute and such as are reasonably necessary to carry out its mission.’ ” Entergy Nuclear Generation Co. v. Department of Envtl. Prot., 459 Mass. 319, 331 (2011), quoting Morey v. Martha’s Vineyard Comm’n, 409 Mass. 813, 818 (1991). Powers granted by the Legislature to an administrative agency like DPH “include those necessarily or reasonably implied” by the statute as a whole. Alliance to Protect Nantucket Sound, Inc. v. Department of Pub. Utils., 461 Mass. 166, 187 (2011), quoting Grocery Mfrs. of Am., Inc. v. Department of Pub. Health, 379 Mass.
4 The Court takes judicial notice that this threshold rose to $ 18,065,167 effective September 30, 2016. See Department of Public Health memorandum titled “Annual Adjustments to Determination of Need (DoN) Expenditure Minimums,” dated November 28, 2016, at See also Commonwealth v. Greco, 76 Mass. App. Ct. 296, 301 n.9, rev. denied, 457 Mass. 1106 and 458 Mass. 1105 (2010) (court may take judicial notice of facts “capable of accurate and ready determination by resort to resources whose accuracy cannot reasonably be questioned” (quoting Mass. Guide Evid. § 201(b)(2)); Cohen v. Assessors of Boston, 344 Mass. 268, 269 (1962) (taking notice of Appellate Tax Board rules); Katz v. Katz, 55 Mass. App. Ct. 472, 479 n.9 (2002) (taking notice of poverty guidelines issued by federal Secretary of Health & Human Services).
– 5 –
70, 75 (1979). Thus, the DoN statute, like any statute that expressly authorizes an administrative agency to make particular decisions or take other actions, “carries with it by implication all incidental authority required for the full and efficient exercise of the power conferred. The Legislature need not enumerate nor specify, definitely and precisely, each and every ancillary act that may be involved in the discharge of an official duty.” New England Med. Ctr., Inc. v. Rate Setting Comm’n, 384 Mass. 46, 52–53 (1981), quoting Scannell v. State Ballot Law Comm’n, 324 Mass. 494, 501 (1949). For example, statutory authority for a state agency to take some action implicitly includes the power to issue a nunc pro tunc order that takes effect at an earlier time, to prevent a miscarriage of justice or for other good cause. Almeida Bus Lines, Inc. v. Department of Pub. Utils. 348 Mass. 331, 339 (1965). Similarly, DPH has the implicit statutory authority to allow a hospital to incur initial capital expenditures that do not exceed the “expenditure minimum” that triggers DoN review, and then retroactively review and approve those initial expenditures as part of its review of a larger capital project.
Third, Plaintiffs allege that the Hospital’s DoN application was incomplete because it failed to include all of the costs of demolishing the Wolbach building, costs of renovation projects at the Longwood campus that Plaintiffs allege were undertaken in order to prepare for the BCCB construction, or costs associated with construction planned at the Hospital’s Waltham campus. To the extent that the amended complaint sought injunctive relief requiring the Hospital to amend its DoN application to add those costs, that claim is now moot because DPH has taken final action on that application. To the extent that Plaintiffs instead allege that DPH could not lawfully approve the DoN application without considering additional costs that the Hospital failed to disclose, that claim must be raised in the separate lawsuit brought under c. 30A to challenge DPH’s decision. Plaintiffs are not entitled to seek declaratory relief in this action to assert a claim of error that must be raised in an action brought under c. 30A. Before the DPH issued its final decision, there was not yet any “actual controversy” regarding this claim that was capable of resolution under G.L. c. 231A, the declaratory judgment statute. See Town of Hingham v. Department of Housing and Community Development, 451 Mass. 501, 505-506 (2008). Now that
– 6 –
DPH has taken final action, its decision may only be challenged under c. 30A in the other pending action, not through a claim for declaratory relief under G.L. c. 231A in this case. “[O]ne who is prosecuting in one court an appeal under the administrative procedure act may not of right circumvent that appeal by filing [or pursuing] a separate proceeding for declaratory relief[.]” Cennami v. Department of Pub. Welfare, 5 Mass. App. Ct. 403, 408 (1977).
In sum, since this action is now moot, Plaintiffs’ claims must be dismissed without prejudice, except as to the one issue on which the Court must declare the rights of the parties. See Hadge v. Second Federal Sav. & Loan Ass’n of Boston, 355 Mass. 782 (1968) (rescript).
The motion by Children’s Hospital Corporation to dismiss this action is ALLOWED. Final judgment shall enter: (1) declaring that Children’s Hospital Corporation did not violate G.L. c. 111, §§ 25B-25G, the so-called determination of need statute, by incurring certain expenditures to prepare to demolish the Wolbach Building before obtaining approval from the Department of Public Health to construct a new clinical building at that site; and (2) dismissing all other claims without prejudice.
December 1, 2016
Kenneth W. Salinger
Justice of the Superior Court read more

Posted by Stephen Sandberg - December 9, 2016 at 2:29 pm

Categories: News   Tags: , , , , , ,

OBP Corporation v. Welch Allyn, Inc. (Lawyers Weekly No. 12-156-16)

NO. 2016-01496-BLS1
Defendant, Welch Allyn, Inc., allegedly misappropriated confidential business
information belonging to plaintiff OBP Corporation. The confidential business information was
a list of OBP’s customer names, along with confidential sales information. Welch Allyn obtained
the confidential information from Owens & Minor, Inc., OBP’s primary distributor. Welch
Allyn allegedly used the confidential business information to craft a marketing plan intended to
steal OBP’s customers and to eliminate OBP as a competitor in the market for a selfilluminating,
disposable vaginal speculum. Welch Allyn now moves to dismiss OBP’s First
Amended Complaint (Amended Complaint) pursuant to Mass. Civ. P. 12(b)(6). For the reasons
that follow, the motion is DENIED.
The following comes from the allegations, taken as true, in OBP’s Amended Complaint.
OBP sells a variety of medical examination instruments to hospitals and physician
offices, including a self-illuminating disposable vaginal speculum. It generates its customers
through direct marketing and sales efforts, and sells its products by entering into pricing
agreements directly with individual customers and with group purchasing organizations (GPOs)
acting on behalf of hospital systems and/or physician’s offices. The individual customer
agreements identify OBP’s customers and the prices OBP negotiated directly with them.
Similarly, the GPO agreements identify the prices OBP negotiated with the GPOs and include
provisions indicating that the terms of the agreement are confidential.
Since June 2011, OBP has used Owens & Minor to fulfill orders from OBP’s customers.
In connection with this service, Owens & Minor stocks its distribution centers with OBP
products. Owens & Minor orders products directly from OBP at an agreed upon unit price based
on demand from OBP’s customers. When Owens & Minor fulfills customer orders, it charges
customers according to the terms set forth in OBP’s pricing agreements with the customers.
OBP reimburses Owens & Minor through “rebates” for any difference between that price and the
fixed price Owens & Minor pays to OBP. As part of this process, OBP provides copies of the
relevant pricing agreements to Owens & Minor. In return for its fulfillment services, OBP pays
Owens & Minor an administrative fee.
Owens & Minor operates pursuant to a Code of Honor, made publicly available on its
website, in which it states that the customer and sales information of suppliers like OBP will not
be disclosed to third parties and will only be used for purposes of effectuating the parties’
business relationship. The Code of Honor specifically provides that:
[a]ll Company records and information related to the Company, its customers,
suppliers and teammates is confidential … [and] no teammate or director of the
Company may provide or disclose confidential or proprietary information to anyone
outside the Company (or even within the Company except to teammates who need
to know such information to perform their work) or use such information other than
in conducting the Company’s business.
Code of Honor at 9. The Code defines “confidential information” as “any information that has
not been disclosed to the public” including “customer lists, contracts, pricing and purchase
information,” “supplier lists, contracts, pricing and product information,” and “all written or
verbal agreements between the Company and its teammates, customers, suppliers, strategic
partners, agents and other third parties.” Id. at 9-10.
In November 2014, Welch Allyn, a global manufacturer of medical diagnostic equipment,
introduced a self-illuminating disposable vaginal speculum that competes with OPB’s product.
About a month before it did so, Welch Allyn obtained from Owens & Minor a spreadsheet
referred to as an “opportunity report.” The opportunity report lists OBP’s customer and sales
information associated with OBP’s vaginal speculum. The report specifically identified the
names and addresses of 582 customers who had ordered OBP’s vaginal speculum through Owens
& Minor and the annualized sales totals for each of these customers. OBP alleges that this
information came from the pricing agreements it shared with Owens & Minor on a confidential
After receiving the opportunity report, Welch Allyn employees exchanged several emails
concerning the information. In one email dated November 7, 2014, Welch Allyn’s Director of
Channel Management and Marketing wrote: “When we use this, let’s not be blatant about where
we got the info. I don’t want Owens to have problems with OBP, they may get their feathers
ruffled if they find out that Owens provided the list to us. Let’s just tread carefully here.” In a
second email dated November 18, 2014, Welch Allyn’s Product Manager for Vaginal Speculums
explained: “It’s rare that we are given a list of customers that are buying a known competitor … I
just wan[t] to make sure we try to take advantages in 2014.” In yet another email sent two days
later, Welch Allyn’s Vice President of Acute Care wrote to Sales Managers: “I wanted to reach
out to you on some targeted efforts surrounding the launch of our new LED vag spec. I’ve
attached a list of accounts using the OBP spec and their respective volumes. (This list was
supplied by Owens & Minor and should be treated as highly confidential. This shouldn’t be
emailed out or sent to anyone else.).” (Emphasis in original).
Welch Allyn ultimately used the information from the opportunity report to craft a
marketing plan allegedly intended to steal OBP customers and eliminate OBP as a competitor in
the market for the single-use medical examination instrument. The marketing campaign was
coordinated with a patent infringement lawsuit Welch Allyn filed against OBP in September
2014. In the lawsuit, Welch Allyn claimed that OBP’s vaginal speculum infringed on a Welch
Allyn patent and that OBP unlawfully copied Welch Allyn’s color coded trade dress. In an email
dated December 3, 2014, Welch Allyn’s Product Manager for Vaginal Speculums explained that:
The faster we can move customers over from OBP, the more impact we also have on
the litigation effort with regard to potential settlement. We want to disrupt OBP
business and growth as quickly as possible. I suggested a back pocket offer for initial
discount with larger purchase (end user). While I know we don’t typically want to
discount a new product, in this case business disruption may save us litigation costs.
Two months after this email was sent, in February 2015, Welch Allyn began offering what it
called the “OBP Back Pocket Offer” – an offer to provide OBP customers with a free reusable
light (having a retail value of $ 300) for use with the Welch Allyn vaginal speculum. The offer
significantly reduced the cost of Welch Allyn’s speculum. Around this time, Welch Allyn also
began sending sales representatives to hospital departments where OBP had long sold its
In May 2016, OBP brought this action against Welch Allyn. OBP alleges that the
customer and sales data that Owens & Minor provided in the opportunity report was confidential
and that Welch Allyn wrongfully obtained and used this information in connection with the
launch of its self-illuminating vaginal speculum. OBP’s Amended Complaint asserts claims for
common law misappropriation of confidential business information (Count I), statutory
misappropriation of confidential business information (Count II), conversion (Count III), unjust
enrichment (Count IV), violations of c. 93A (Count V), and interference with business relations
(Count VI). Each claim is based on Welch Allyn’s alleged receipt and use of OBP’s confidential
customer information.
Welch Allyn moves to dismiss the Amended Complaint its in entirety pursuant to Mass.
R. Civ. P. 12(b)(6). To withstand a motion to dismiss under Rule 12(b)(6), a complaint must
contain “allegations plausibly suggesting (not merely consistent with) an entitlement to relief….”
Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555-557 (2007). Although the complaint need not set forth detailed factual
allegations, a plaintiff is required to present more than labels and conclusions and must raise a
right to relief “above the speculative level.” Id.
To prevail on a claim of misappropriation of trade secret or confidential business
information, a plaintiff must show that it: (1) possessed a trade secret or confidential business
information; (2) took reasonable steps to preserve the secrecy of that trade secret or confidential
business information; and (3) the defendant breached a duty not to disclose or use the trade secret
or confidential business information. See Peggy Lawton Kitchens, Inc. v. Hogan, 18 Mass. App.
Ct. 937, 939 (1984). Welch Allyn argues that OBP’s misappropriation claims must be dismissed
because OBP’s Amended Complaint fails to assert facts satisfying any of these elements.
Specifically, it contends that the Amended Complaint does not allege sufficient facts to show
that: (1) the customer and sales information in the opportunity report belonged to OBP rather
than to Owens & Minor; (2) OBP took appropriate steps to ensure the confidentiality of the
customer and sales information; and (3) Welch Allyn had a duty to refrain from using the
customer and sales information. Welch Allyn further argues that these reasons also justify
dismissal of OBP’s other claims for conversion, unjust enrichment, violation of c. 93A, and
interference with business relations.1
A. Ownership of the Customer and Sales Information
Welch Allyn’s first contention fails because the Amended Complaint affirmatively
alleges that OBP owned the information in the opportunity report. Specifically, the Amended
Complaint alleges that the content of the opportunity report came from the customer names and
pricing information in OBP’s pricing agreements and that OBP provided those agreements to
Owens & Minor on a confidential basis for the sole purpose of facilitating Owen & Minor’s
fulfilment services. Taking these allegations as true, OBP adequately pleads ownership of the
confidential customer and sales information found in the opportunity report.
B. Efforts to Preserve Confidentiality
Welch Allyn’s second contention fails because Amended Complaint adequately pleads
1 Because Welch Allyn’s motion to dismiss the misappropriation count is denied, the court
declines to consider at this time the separate grounds for Welch Allyn’s motion to dismiss other
that OBP took reasonable steps to keep its customer and sales information confidential, such as
by not making the information publicly known outside its business and by employing password
protected computers and employee agreements to protect against disclosure. See Optos, Inc. v.
Topcon Med. Sys., 777 F. Supp. 2d 217, 240 (2011). In making its argument, Welch Allyn
stresses that OBP has not alleged that it entered into a nondisclosure or confidentiality agreement
with Owens & Minor restricting the use of the information contained in the opportunity report.
The lack of such an agreement, however, is not fatal to OBP’s misappropriation claims.
In the absence of a confidentiality agreement, a confidential relationship will be implied
where the facts demonstrate that the disclosures were made to facilitate a specific relationship
such as that between employer and employee, purchaser and supplier, or prospective licensee and
licensor. See Burten v. Milton Bradley Co., 763 F.2d 461, 463 (1st Cir. 1985). The Amended
Complaint alleges that Owens & Minor’s role was to fulfill orders from customers that OBP
generated through its direct marketing and sales efforts. It further alleges that in order to
facilitate Owens & Minor’s fulfillment services, OBP was required to provide Owens & Minor
with the identity of its customers and the terms of its customer pricing agreements. These
allegations suggest that the disclosures of OBP’s customer and sales information were made in
order to promote the supplier/distributor relationship between Owens & Minor and OBP, and that
therefore a confidential relationship should be implied.
That such implication is appropriate is bolstered by the fact that Owens & Minor’s Code
of Honor, promoted on its website, specifically provides that it will not disclose customer and
sales information of suppliers like OBP to third parties and will only use such information for
purposes of effectuating the parties’ business relationship. The presence of the Honor Code on
Owen & Minor’s website plausibly suggests that OBP took reasonable steps to preserve the
confidentiality of its customer information.
C. Duty Not to Use the Customer and Sales Information
Welch Allyn’s third argument, that the Amended Complaint fails to demonstrate a breach
of a duty to not use OBP’s customer and sales information, is also without merit. “Under
Massachusetts trade secret law, a third party who knowingly benefits from a trade secret which a
person in a confidential relationship obtained from the plaintiff is liable to the plaintiff for the
misappropriation of that trade secret.” Data Gen. Corp. v. Grumman Sys. Support Corp., 795 F.
Supp. 501, 507 (D. Mass. 1992); see also Optos, Inc., 777 F. Supp. 2d at 240 (“A party who
knowingly benefits from the breacher’s trade secret bounty is also liable.”); Curtiss-Wright Corp.
v. Edel-Brown Tool & Die Co., 381 Mass. 1, 3 n. 2 (1980) (observing that when a purchaser
provides a competitor with a supplier’s confidential plans and specifications, “[r]elief may be had
against [the] competitor despite the lack of any legal relationship between the competitor and the
supplier whose plans were appropriated.”). To recover, a plaintiff need show that the third party
had actual or constructive notice that the information it obtained and used was a trade secret. See
Curtiss-Wright Corp., 381 Mass. at 5-6 & n.4.
In the present case, the Amended Complaint states a claim for misappropriation against
Welch Allyn despite the absence of allegations that Welch Allyn and OBP themselves had a
confidential relationship. The Amended Complaint alleges that it is well known in the medical
instrument industry that customer and sales information is not public information. It also quotes
internal Welch Allyn emails from November 7, 18 and 20, 2014, suggesting that Welch Allyn
knew (1) the information it received from Owens & Minor was highly confidential, (2) receipt of
such information was extremely rare, and (3) Owens & Minor could get in trouble if OBP
discovered the disclosure. Taken together, these allegations plausibly suggest that Welch Allyn
had either constructive or actual notice that it was in possession of OBP’s confidential business
information and therefore had an obligation to refrain from using the information to compete
with OBP. See Curtiss-Wright Corp., 381 Mass. at 5-7 (holding that a defendant supplier who
received plaintiff’s confidential drawings from the Navy and used them to win a Navy bid was
properly held liable because the supplier knew, or should have known, that it had received the
plaintiff’s trade secrets).
For the reason stated above, Welch Allyn, Inc.’s Motion to Dismiss Plaintiff’s First
Amended Complaint is DENIED.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
November 14, 2016
10 read more

Posted by Stephen Sandberg - December 5, 2016 at 9:01 pm

Categories: News   Tags: , , , , , ,

Rass Corporation v. The Travelers Companies, Inc., et al. (Lawyers Weekly No. 11-163-16)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030;

15-P-358                                        Appeals Court


No. 15-P-358.

Suffolk.     February 24, 2016. – November 10, 2016.

Present:  Katzmann, Maldonado, & Blake, JJ.[2]

Insurance, Coverage, Insurer’s obligation to defend, Notice, Settlement of claim, Unfair act or practice.  Notice, Insurance claim.  Commercial DisparagementTrade Secret. Libel and SlanderConsumer Protection Act, Insurance, Unfair act or practice, Offer of settlement, Damages, Attorney’s fees.  Damages, Libel, Wrongful use of trade secret, Consumer protection case, Attorney’s fees. read more

Posted by Stephen Sandberg - November 10, 2016 at 4:23 pm

Categories: News   Tags: , , , , , , ,

Commonwealth v. HealthDrive Corporation, et al. (Lawyers Weekly No. 12-140-16)

The Commonwealth of Massachusetts filed this action against defendants HealthDrive Corporation (HealthDrive) and Alec H. Jaret, D.M.D., P.C. (Jaret) seeking to recover alleged overpayments of approximately $ 1.1 million made by the Massachusetts Medicaid agency MassHealth in connection with dental “house calls” made to certain MassHealth members. The case is now before the Court on cross motions for partial summary judgment as to Count I of the Commonwealth’s Second Amended Complaint. That Count seeks to recover the alleged overpayments under regulations which require a provider to reimburse MassHealth in the event that it is paid more than it is legally entitled to receive. 130 C.M.R. §450.260(A), §450.237. The defendants also move for summary judgment in their favor on Counts X through XIII1 and, if this Court determines that they are entitled to retain the payments at issue, they seek dismissal of the remaining claims asserted against them. After careful review of the summary judgment
1 These Counts are all equitable in nature and are based on the same allegations as Count I. The Commonwealth does not move for summary judgment on these counts, however, because they are not available as equitable remedies if the regulation at issue is valid such that the Commonwealth has a remedy at law.
record, this Court concludes that the Commonwealth’s motion must be Allowed and the defendants’ motion must be Denied.
The summary judgment record reveals the following material facts. MassHealth is the Massachusetts Medicaid program and is administered by the Executive Office of Health and Human Services. It is a cooperative federal and state undertaking that provides payment for medical services to individuals and families unable to pay for their own medical care. Included in the care that MassHealth pays for are dental services for certain low income people.
HealthDrive is a Delaware corporation that, in exchange for a monthly fee, provides business, management, and administrative assistance to health care providers who service geriatric populations living in long-term care facilities. Jaret is one of those providers, furnishing dental services to people covered under MassHealth who live in nursing homes or similar facilities. Pursuant to the agreement that Jaret has with HealthDrive, Health Drive submits claims to MassHealth on behalf of Jaret.
Jaret and others like it enter into contracts with MassHealth in order to be reimbursed for the services they render. 130 C.M.R. §450.101. In those contracts, the providers agree to comply with all federal and state laws, rules and regulations existing at the time of the contract or adopted during its term. 130 C.M.R. §450. 223(C) (1). The regulations require that a provider report and return all overpayments within sixty days of identifying them, 130 C.M.R. §450.235(B), and hold them liable for the full amount of any overpayment. 130 C.M.R. §450.260(A).
Providers submit claims for payment to MassHealth’s electronic claims processing system; they do so by using specific codes that are assigned to each service. For dental services,
MassHealth uses Current Dental Terminology (CDT) codes published by the American Dental Association (ADA). MassHealth dental regulations refer dental providers to Subchapter 6 of the MassHealth Dental Manual, which lists the CDT codes for services that MassHealth covers. The Manual also describes the codes, and where indicated, includes any payment limitations. At issue in the instant case is CDT code D9410. The ADA designed D9410 for use by dental providers who make house calls to patients: it was to compensate them for the extra difficulty associated with delivering dental services outside of a normal dental office setting.
Before 2009, MassHealth did not cover CDT code D9410. Instead, dental providers like Jaret sought private payment from each MassHealth member to whom it made a house call through an adjustment of the “Patient Paid Amount.” The Patient Paid Amount or “PPA” is that portion of monthly income that a member in a nursing facility must contribute to his or her cost of care. Thus, Jaret and other providers were compensated for house/facility calls as a separate charge in addition to the specific dental services that they provided to patients, but this compensation did not come directly from MassHealth. Because the PPA was adjusted downward, however, the amount that MassHealth had to pay the facility for the cost of the member’s care was increased.
Beginning in October 2009, MassHealth began paying its dental providers for house/facility calls to MassHealth members in nursing homes under D9410 on a per-patient basis. From October 2009 to the end of June 2010, the MassHealth billing guidance for CDT code D9410 read: “A visit to a nursing facility. Report separately from any medically necessary services performed. (Code may be billed once per member per day.).” At that time, the payment rate for D9410 was $ 24.00 for MassHealth members who were twenty-one years old and older.
As a result of an economic recession and multiple budgetary crises, there was a move in 2010 to achieve costs savings in the Medicaid program. MassHealth promulgated emergency regulations to achieve these savings; one of the changes was to the MassHealth reimbursement for D9410. Effective July 1, 2010, MassHealth regulations permitted payment under D9410 only once per facility per day, instead of on a per patient basis. 2 130 C.M.R.. § 420.456(G) (“Section 420.456(G)”). In other words, providers like Jaret could no longer use D9410 to bill on a per patient basis for house calls made to a single facility in a single day, but could submit only one bill for a house call, even though the provider treated multiple patients at that facility during that visit.
This change was set forth in Dental Transmitter Letter DEN-84 addressed to dental providers participating in MassHealth (including Jaret). It was also reflected in Subchapter 6 of the MassHealth Dental Manual, which provided the following description for D9410:
A visit to a nursing facility, chronic disease and rehabilitation hospitals, hospice facilities, schools and other residential educational facilities, once per facility per day. Bill in addition to any medically necessary MassHealth covered services provided during the same visit. Code may be billed once per facility per day.”
This description also specifically referenced Section 420.456(G).
In January 2011, the payment rate for D9410 was raised from $ 24 per claim to $ 36 per claim. It continued to be payable only on a once-per-facility-per-day basis, however.
From 2010 to 2013, Jaret provided dental services to MassHealth members living in long-term care facilities in Massachusetts. HealthDrive, pursuant to its contract with Jaret, submitted these claims to MassHealth on behalf of Jaret. With regard to dental patients in long term care where Jaret made house calls, Health Drive submitted tens of thousands of claims on a per patient basis using CDT code D9410. That is, the defendants billed for each patient treated by
2 A similar change was implemented in other states, including Montana, Nebraska, New Jersey, New York, North Carolina and Washington. See fn. 3 of the Commonwealth’s Memorandum in Support of its Motion.
Jaret irrespective of whether two or more such patients were treated at the same long-term care facility on the same day. MassHealth paid these claims through September 2013, despite the change that had been made in July 2010 by Section 420.456(G).
The summary judgment record shows that various government employees were aware that MassHealth was paying more than it should on these D9410 claims, and that the defendants also knew that they were receiving reimbursements under the D9410 code that did not comply with Section 420.456(G). MassHealth representatives discussed the issue among themselves and with representatives of the defendants (who also discussed the issues internally) throughout this time period. Dr. Brent Martin, then director of MassHealth, was one of the officials who was communicating with the defendants about the impact of the change in approach; he also discussed with others within MassHealth what position the agency should take in the face of defendants’ opposition to the change. Of particular note is an email exchange between. Martin and another MassHealth employee in October 2010. In a memo attached to one email, Martin laid out three positions that MassHealth could take. One option was to amend the regulation so as to revert back to the earlier practice of paying on a per patient basis. A second was to enforce the regulation in its revised form and thus refuse to pay the bills as submitted. The third option was to pay the providers who were seeking reimbursement on a per patient basis — thus “knowingly allowing noncompliance with modified regulations” — and seek repayment later. This last option (the option that was taken) would pose a “minimal or no risk to service interruption of patients.” In another briefing memo dated August 22, 2012, Martin reiterated his concern that HealthDrive (and others) were being allowed to bill and be paid under the D9410 code on a per patient basis, “obviously resulting in inappropriate payments/overpayments.” When he had pressed the issue with HealthDrive’s CEO, however, the CEO “shared that this
would almost certainly result in HealthDrive withdrawing form the Massachusetts market,” causing Martin to worry about how that might affect patients’ access to services.
During this same time period, MassHealth’s electronic dental claims processing system was not programmed to deny per-patient-per-day billing of CDT code D9410 claims. MassHealth officials knew about this problem but did not modify the system until July 2013 when MassHealth’s dental claims contractor, DentaQuest, implemented a system edit. Around that same time, MassHealth also made a change to its Office Reference Manual (ORM), a publication that provides guidance to MassHealth providers for the submission of claims. Up until then, the ORM had described the D9410 code as permitting billing on a per patient basis. In June 2013, the ORM was revised to state that D9410 was to be used no more than once per facility, per business day.
The Commonwealth argues that the issue before the Court is a straightforward one that involves the interpretation of a regulation and the application of that regulation to the undisputed facts. In opposing the motion and in bringing their own motion, the defendants argue that the regulation is invalid. It also argues that MassHealth made a deliberate decision not to enforce the regulation for three years and is now equitably barred from seeking to recoup amounts it knowingly paid. This Court is persuaded by the Commonwealth’s position.
A. The Validity of Section 420.456(G)
Because regulations are presumed valid, the burden falls on the defendants to show the opposite, and that is a formidable burden indeed. The Court must apply all rational presumptions in favor of the regulation’s validity. Massachusetts General Hospital v. Comm’r of the Division of Medicaid Assistance, 66 Mass.App.Ct. 485, 493 (2006), quoting Consolidated
Cigar Corp. v. Dep’t of Public Health, 372 Mass. 844, 855 (1977). This Court may not declare a regulation void “unless its provisions cannot, by any reasonable construction, be interpreted in harmony with the legislative mandate.” Id. Where the area of law is a complex one, considerable deference is given to the administrative agency charged with interpreting the governing statute. See e.g. King by King v. Sullivan, 776 F.Supp. 645, 649 (D.R.I. 1991) (where the court described the Medicaid Act as one of the “most intricate of all federal laws,” with a “labyrinthine complexity”). In order to show that Section 420.456(G) is invalid, the defendants must prove that the regulation is illegal, arbitrary or capricious. Massachusetts Hospital Ass’n v. Dep’t of Public Welfare, 419 Mass. 644, 652 (1995). The defendants have not sustained that burden here.
The defendants do not contest the fact that the legislature granted MassHealth the power to issue appropriate regulations to administer a medical assistance program for eligible individuals and families who are unable to pay for their own medical care. See G.L. c. 118E, § 9. The defendants also do not challenge MassHealth’s authority to limit or eliminate coverage for house calls, provided that such limitations comply with federal law. They argue, however, that MassHealth’s redefinition of the services described by D9410 is prohibited by federal law and MassHealth’s license agreement with the ADA. This Court will discuss each of the defendants’ arguments in turn.
As this Court understands it, the defendants’ principal argument regarding the invalidity of Section 420.456(G) is as follows. Before 2009, providers like Jaret were permitted to collect for house calls to MassHealth members by billing the members directly. They did so through an adjustment of the Patient Paid Amount or PPA, which is that portion of monthly income that a member in a nursing facility must contribute to his or her cost of care. Beginning in October
2009, MassHealth began paying its dental providers for such house calls in nursing homes on a per-patient basis under CDT code D9410. When Section 420.456(G) was adopted in its present form and limited reimbursement under D9410 to once per facility per day, MassHealth interpreted that to mean that not only could providers no longer be paid under D9410 for house calls made to other patients at the same facility on the same day, but they also could not bill MassHealth members privately through an adjustment to their PPA. The upshot was that no one was paying for these services. The only possible justification for this interpretation is that this is a payment not for services but for travel to and from the facility. In adopting that interpretation, MassHealth went too far: it meant that D9410 was redefined as a “travel code,” which is directly contrary to the definition given to that Code by the ADA.
Even assuming that MassHealth uses D9410 in a manner different from what the ADA intended, this Court fails to see how this supports the defendants’ position that Section 450.456(G) is invalid. Governmental agencies use code definitions provided by the ADA pursuant to license agreements. As the Commonwealth points out, MassHealth’s relationship to the ADA under this license agreement — and any breach of that agreement — – has nothing to do with MassHealth’s ability to promulgate regulations that all providers are required to follow pursuant to their provider agreements with MassHealth. Moreover, the licensing agreement itself states that it confers no rights to any third party contractor, including any health care provider. See Exhibit 37 of Joint Appendix. Indeed, the ADA has described it as a “copy right license” that “does not dictate how a procurement code is to be reimbursed and cannot be used as a tool to force payers to use the [CDT Codes] in a particular manner.” See Exhibit 170 of Joint Appendix. Accordingly, this Court fails to perceive the fatal flaw in a regulation that reimburses the dental provider for the added expense of traveling to the facility to render dental treatment on a per
facility per day basis, as opposed to one that permits the provider to bill that same charge for each patient he serves at that facility that that same day, regardless of how the ADA views the CDT code.
In asserting that this does indeed violate federal law, the defendants argue that, because MassHealth is using the D9410 code in a manner that is contrary to the definition allocated to it by the ADA, Section 420.456(G) violates the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Among other things, that statute mandated the implementation of standardized codes for all health claims. Federal regulations promulgated thereunder appoint the ADA as the sole source of the meaning and definition of the CDT codes. In the Office Reference Manual, the publication that gives guidance to MassHealth providers for the submission of claims, it is stated that MassHealth Dental Program agrees to conduct its activities “in accordance with the applicable provisions of HIPAA.” The defendants then make a leap in logic and contend that HIPAA prevents MassHealth from making any changes in the CDT codes that deviate from the ADA definitions and that, as a consequence, Section 420.456(G) is invalid. Neither the facts nor the law support this rather extraordinary proposition. Indeed, the ADA has itself rejected any contention that the designation of the CDT as a transaction code set under HIPAA preempts payer limitations on such codes or forces a payer (like MassHealth) to use a code in a particular way; this holds true for D9410 in particular. See Exhibit 12 of Joint Appendix ( where CDT guide published by ADA states that: although “D9410 may be reported for each patient receiving services at the facility on a given day…benefit plan limitations and exclusions may place limits on reimbursement – e.g. once per facility visit, not per patient.”)
In the alternative, the defendants argue that the “once per facility per day” policy results in arbitrary treatment among MassHealth enrollees in violation of 42 U.S.C. §1396a(a) (10(B) –
the so-called “comparability requirement – and in violation of 42 U.S.C. §1396(a)(17) — the so-called “reasonability requirement.” This Court concludes that the defendants have misconstrued both provisions and that neither are applicable to the change in reimbursement that is the subject of this lawsuit. The defendants’ argument rests on the fact that the provider can submit only one D9410 claim even if it treats multiple patients at a single facility. According to the defendants, this means that some Mass Health members receive “greater coverage” than others, in violation of these federal provisions. The reality, however, is that MassHealth continues to pay dental providers for medically necessary dental care rendered to each patient at the facility. That is, the frequency with which the dentist can bill or be reimbursed for a D9410 expense has no bearing on the type of dental services each individual receives when the provider is at the facility. Moreover, MassHealth is not treating any patients as categorically ineligible for services or making any change whatsoever in the eligibility requirements for medically necessary dental services. Every patient at a facility remains eligible to receive a house call together with any additional covered services; MassHealth has simply decided to reimburse the provider for the added inconvenience of delivering dental services in a setting outside of a dental office on a one visit/one facility basis. In short, this Court can discern no violation of the federal requirements.
Finally, the defendants argue that MassHealth was required under federal law to submit a state plan amendment (SPA) related to its revision to Section 420.456(G). Such an amendment would have to be submitted only if there were a material change to the plan. The Commonwealth explains at pages 12-13 of its Opposition why no such material change took place. Even assuming such a material change had occurred, this process failure is not a basis to
strike down an otherwise valid regulation. In any event, it is enforceable only by the federal government.
B. The Equitable Defenses
Even if the regulation is determined to be valid, the defendants argue that the Commonwealth cannot now seek to recoup those amounts it overpaid because of the equitable doctrines of in pari delicto, laches, and equitable estoppel. Acknowledging that equitable defenses are rarely successful against a government entity, they maintain that the undisputed facts of the instant case place it within that small category of cases where the application of these equitable doctrines is warranted. In support of their position, the defendants point out that MassHealth continued to pay HealthDrive on a per patient basis for each of the D9410 claims it submitted for three years after the change in reimbursement was made. MassHealth made these payments knowing full well that they were in excess of the amounts allowed for D9410 claims submitted after Section 420.456(G) took effect.
It is equally apparent from the summary judgment record, however, that the defendants were aware of the change in policy as early as June 2010 and actually discussed the change at several HealthDrive board meetings thereafter; with this knowledge, submitted D9410 claims on a pear patient basis anyway.3 These bills were paid because a software database had not been adjusted to accommodate the change – something that defendants also appeared to be aware of. See Exhibit 148 (where it was noted at a March 2011 HealthDrive board meeting that MassHealth was “in a pickle in that they cannot administer the D9410 in the way required by the July ’10 regulation change”). As they continued to submit bills on a per patient basis,
3 Discovery in this case to date was limited to the question of the validity and interpretation of Section 420.456(G) so that the Commonwealth’s ability to explore the extent of the defendants’ knowledge and their reasons for proceeding as they did even with this knowledge has been quite limited. Even with the limited discovery, however, it is apparent that the defendants were not misled nor were they operating under some misimpression about D9410 during the relevant time period.
defendants tried to persuade MassHealth over the next couple of years that Section 420.456(G) should be amended, or alternatively that they should be able to revert to their earlier practice of billing the Patient Paid Accounts of those patients for whom they were not allowed a separate house call charge. Although there was much discussion, MassHealth ultimately refused to change the regulation and also made it clear to the defendants that they could not bill patients privately as long as they were being paid for the house call expense on a per facility basis under the D9410 code. That MassHealth representatives kept open a dialogue with defendants during this time period does not mean that MassHealth thereby forfeited its right to seek recoupment because it waited too long. Rather the defendants themselves assumed the risk that MassHealth would take action against them if they were not successful in their lobbying efforts to get MassHealth to amend Section 420.456(G).
This Court is also mindful of that well established body of case law holding that equitable estoppel and similar doctrines cannot be used against a governmental entity in the performance of its duties. See Ridgeley Mgmt. Corp. v. Planning Bd. of Gosnold, 82 Mass. App. Ct. 793, 801 (2012). That is because the public interest in the lawful work of the Commonwealth’s governmental offices and agencies overrides the unfairness or injury to a private complainant. Id. See Doris v. Police Commr. Of Boston, 374 Mass. 443, 449 (1978) (inattention or inactivity of government officials does not render a statute unenforceable so as to “deprive the public of the benefits or protections bestowed by the Legislature”). New City Hotel Co. v. Alcoholic Beverages Control Comm’n, 347 Mass. 539, 542 (1964) (public’s right to enforcement of liquor laws cannot be forfeited by the action of agency officials). Even where a governmental agency or officer has acted in bad faith, courts have declined to apply estoppel principles. Ridgeley Mgmt. Corp. v. Planning Bd. of Gosnold, 82 Mass. App. Ct. at 801. “Those who deal with the
Government are expected to know the law and may not rely on the conduct of Government agents contrary to law.” Heckler v. Community Health Svcs. Of Crawford County, Inc. 467 U.S. 51, 67 (1984). This is particularly true where the private entity actually obtains (as here) some benefit that it was not lawfully entitled to receive in the first place.
In the instant case, there is clearly a public interest in recouping millions of dollars in public funds. And there is a striking lack of evidence that the delay in taking action against the defendants was due to any bad faith on the part of MassHealth. At best, the delay in enforcement was because MassHealth representatives feared that the defendants would carry out a threat to withdraw their participation in MassHealth. See Exhibit 148 of Joint Appendix. Because HealthDrive served nearly 70 percent of nursing facilities in Massachusetts, this would have resulted in a serious disruption of services to very vulnerable population.
For all of the foregoing reasons, the Commonwealth’s Motion for Partial Summary Judgment is ALLOWED as to Count I of the Complaint. Although the Commonwealth has attempted to calculate the amount it overpaid to the defendants under D9410 during the relevant time period and those calculations suggest that the amount is $ 1,163,452, the precise amount of damages cannot be determined without a hearing. A Rule 16 conference is scheduled for October 20, 2016 at 2:00 p.m. to discuss a schedule for going forward.
Janet L. Sanders
Justice of the Superior Court
Dated: October 5, 2016 read more

Posted by Stephen Sandberg - November 9, 2016 at 4:36 am

Categories: News   Tags: , , , , ,

Albright v. Boston Scientific Corporation (Lawyers Weekly No. 11-123-16)

Posted by Stephen Sandberg - September 13, 2016 at 4:37 pm

Categories: News   Tags: , , , , , ,

Eresian v. Merrill Lynch Credit Corporation, et al. (Lawyers Weekly No. 10-145-16)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA 02108-1750; (617) 557-1030;



September 12, 2016.

Supreme Judicial Court, Superintendence of inferior courts.

In the early 1990s, the petitioner, Evelyn J. Eresian, was the defendant in a summary process action in the Housing Court.  The Appeals Court affirmed a judgment against Eresian in that action in 1993, and this court subsequently denied Eresian’s application for further appellate review.  See Merrill Lynch Equity Mgt., Inc. v. Eresian, 34 Mass. App. Ct. 1125, .C., 416 Mass. 1104 (1993).  In the years since, Eresian has sought repeatedly, and unsuccessfully, to challenge the foreclosure that led to the summary process action.  This case represents the latest iteration of those efforts.  In 2015, Eresian filed a motion in the Appeals Court seeking to vacate that court’s 1993 decision.  The Appeals Court’s response, as noted on its docket, was that “[t]he case is closed as the rescript has issued to the trial court.  No action will be taken by the court on this or any future filing in this matter.”[4] read more

Posted by Stephen Sandberg - September 12, 2016 at 10:44 pm

Categories: News   Tags: , , , , , , ,

« Previous PageNext Page »