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Law Office of Brent Gaines v. Healthport Technologies LLC

United States District Court, S.D. Illinois

May 2, 2018

LAW OFFICE OF BRENT GAINES, individually and on behalf of all others similarly situated, Plaintiff,



         This matter is before the Court on Defendant Healthport Technologies, LLC's (“Healthport”) motion to dismiss Plaintiff's Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) (Doc. 8). Healthport argues that Plaintiff lacks standing, that its settlement offer renders Plaintiff's claims moot, and that because the conduct complained of is not unlawful, it cannot support a claim under the statutes asserted by Plaintiff. Plaintiff opposes the motion (Doc. 16). For the following reasons, the motion is GRANTED.


         Defendant Healthport manages medical record requests for healthcare providers. It is an LLC with its principal place of business of Georgia and its sole member is a Delaware corporation. Plaintiff is a law firm that represents clients seeking Social Security benefits. It is located in Belleville, Illinois.

         The nature of Plaintiff's work requires that it obtain its clients' medical records. Occasionally, a client believes, but is not certain, that he/she was treated by a particular provider. In the interest of due diligence, Plaintiff sends medical records requests to these facilities in order to determine whether they treated the client. Plaintiff sent such requests to two of Healthport's clients, one in Illinois and one in Missouri. In both instances, Healthport informed Plaintiff that it had found no record of treatment and presented a bill for what it called a “Basic Fee.” (1-1 at 5-6).

         Plaintiff filed a four Count class action lawsuit in the Circuit Court of St. Clair County, Illinois, alleging that Healthport's Basic Fees violated Illinois and Missouri's medical records release statutes and consumer protection statutes in those states and Georgia. The putative class is comprised of Missouri and Illinois attorneys and law firms who were charged Healthport's Basic Fee when no records were provided. Healthport removed the case to this Court under 28 U.S.C. § 1332(d).


         F.R.C.P. 12(b)(1) - Subject Matter Jurisdiction

         After Plaintiff filed its Complaint in this matter, Healthport made an offer to settle Plaintiff's claims. Plaintiff did not accept the offer (Doc. 8 at 4-5). Healthport now argues that subject matter jurisdiction is lacking because the settlement offer mooted Plaintiff's case in regards to any previously assessed charges and because Plaintiff lacks standing to seek injunctive relief or to recover money damages (Doc. 8). “When evaluating a facial challenge to subject matter jurisdiction under Rule 12(b)(1), a court should use Twombly-Iqbal's ‘plausibility' requirement, which is the same standard used to evaluate facial challenges to claims under Rule 12(b)(6).” Id. at 174.

         The Seventh Circuit has explained the requirements for Article III standing as follows:

To establish Article III standing, ‘a plaintiff must show (1) it has suffered an ‘injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015).

         Here, Plaintiff claims that it has been charged an illegal fee and that it is entitled to monetary damages and injunctive relief to ensure that the problem does not continue.

         Standing to seek injunctive relief requires only “a reasonable probability of imminent, tangible harm.” Taylor v. Stewart, 479 Fed.Appx. 10, 13 (7th Cir. 2012) (internal citations and quotations omitted); accord Slapper v. Amnesty Int'l, USA, 133 S.Ct. 1138, 1160-1161 (2013) (collecting cases with varying articulations of standard, including “reasonable probability”). On the one hand, Healthport argues there is an insufficient likelihood of a subsequent, similar injury. At the same time however, it complains of Plaintiff frequently engaging in a practice not uncommon within the plaintiff bar, has offered a settlement and release that applies only to previous, but not prospective charges, and admits no wrongdoing. Under these facts, coupled with Plaintiff's allegations, it is plausible, if not likely that this situation will present itself again. Therefore, Plaintiff has standing to seek injunctive relief.

         Regarding money damages, the fact that Plaintiff has not paid the disputed fees does not foreclose a finding that it has suffered an injury that may justify the award of money damages. While Healthport might well be correct that none of the statutes under which Plaintiff makes its claims allow for damages, that is not a challenge to subject-matter jurisdiction, but rather the basis for a Rule 12(b)(6) dismissal.[1] Under Rule 12(b)(1), the question is whether an allegedly invalid, uncollected debt can serve as the basis for standing to sue for damages. Several courts have answered this question in the affirmative. See, e.g., Huyer v. Wells Fargo & Co., 295 F.R.D. 332, 341 (S.D. Iowa 2013) (“Being subject to an invalid debt satisfies Article III standing requirements.”) (quoting Aho v. AmeriCredit Fin. Servs., Inc., 277 ...

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