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Integra Healthcare, S.C. v. APP of Illinois HM, PLLC

United States District Court, N.D. Illinois, Eastern Division

August 9, 2019

INTEGRA HEALTHCARE, S.C., Plaintiff,
v.
APP of ILLINOIS HM, PLLC, and AMBER SERVATIUS, Defendants.

          MEMORANDUM OPINION AND ORDER

          Rebecca R. Pallmeyer, United States District Judge.

         Dr. Sachin Jain operates Plaintiff Integra Healthcare, S.C., a corporation that "provide[s] healthcare services"-that is, physician staffing-to hospitals and nursing homes. Defendant APP of Illinois HM, PLLC, is engaged in a similar business. Physicians employed by both parties, including Dr. Jain and Defendant Dr. Amber Servatius, who works for APP, perform work as "hospitalists," meaning that they provide primary care to hospitalized patients. In this lawsuit, Integra alleges that Defendant APP, through a medical director, Defendant Dr. Servatius, has interfered with Integra's contractual right to provide physician services at Vista Medical Center East ("VMCE"), a hospital in Waukegan, Illinois, and to receive patient referrals from skilled nursing facilities. This court has diversity jurisdiction under 28 U.S.C. § 1332.[1]

         In its First Amended Complaint, Integra has asserted the following claims: tortious interference with prospective economic advantage against Dr. Servatius (Count I); tortious interference with prospective economic advantage against APP (Count II); negligence against Dr. Servatius (Count III); "respondeat superior" against APP (Count IV); "willful and wanton" against Dr. Servatius (Count V); "willful and wanton" against APP (Count VI); negligent hiring against APP (Count VII); negligent retention against APP (Count VIII); and negligent supervision against APP (Count IX). Defendant APP has moved to dismiss all claims; Defendant Dr. Servatius, represented by the same attorneys, has moved only for partial dismissal of Count I. (See Servatius Mot. to Dismiss [51] ("Servatius Mot."), 1 (moving to dismiss Count I to the extent it is "based on alleged interference with Integra's patients at" VMCE).) She has also moved to dismiss Counts III and V. (See id.)

         For the following reasons, the court dismisses Integra's negligence-based claims. The court denies the motions to dismiss in all other respects.

         BACKGROUND

         A. Dr. Jain's and Dr. Servatius' Employment at VMCE

         VMCE is part of a network called Vista Health System ("VHS"). (See First Am. Compl. ¶¶ 10-11.) VHS contracts with companies like APP to staff physicians at its hospitals, including VMCE. (See Id. ¶ 12.) Between January 2012 and August 2014, VHS contracted with a company called Apogee Physicians to staff physicians at VMCE. (See Id. ¶ 13.) The court infers from Integra's allegations that Dr. Jain began working at VMCE in April 2013, when Apogee placed him there. (See Id. ¶ 14.) In September 2014, EmCare replaced Apogee as VHS's staffing contractor for VMCE, and Dr. Jain continued working at the facility. (Id. ¶¶ 16-17.) Then in November 2016, APP replaced EmCare as VHS's staffing contractor for VMCE. (Id. ¶ 18.) Dr. Jain continued working at VMCE after this change, but "not [as] part of APP's hospitalist team." (Id. ¶¶ 20-21.) Although the First Amended Complaint does not otherwise explain this, the court assumes that Dr. Jain is staffed at VMCE through his own company, Integra.

         "APP's hospitalists have an exclusive agreement with VMCE that they will treat [emergency room] patients that are admitted into the hospital" and do not have primary care physicians (hereinafter "ER patients"). (Id. ¶ 20.) Despite this exclusive agreement, in November 2016, VMCE's Medical Executive Committee "granted [Dr.] Jain the right to see" such patients once every two weeks. (Id. ¶ 21.) Nine months later, the Medical Executive Committee altered the arrangement and "granted [Dr.] Jain the right to see" such patients once every thirty-two days. (Id. ¶ 22.)

         As noted, Dr. Servatius also works as a hospitalist at VMCE. She and Dr. Jain have "worked alongside each other as hospitalists at VMCE" at "all relevant times." (Id. ¶ 19.) Since November 2016, Dr. Servatius has worked as the medical director of APP's hospitalist team at the facility. (Id. ¶¶ 21, 23.)

         B. Alleged Interference with Dr. Jain's Ability to Treat Patients at VMCE

         According to Integra, Dr. Servatius' duties as medical director at some point included creating the call schedule for doctors on APP's hospitalist team. (Id. ¶ 23.) Integra alleges that Dr. Servatius manipulated the schedule to interfere with Dr. Jain's "right" to see ER patients. (Id. ¶¶ 21, 23.) By Integra's account, Dr. Servatius created schedules that permitted Dr. Jain to see only seventy-five percent "of the patients that were supposed to be under his care . . . ." (Id. ¶ 23.) Integra also alleges that on at least one occasion, in September 2017, Dr. Servatius "took [Dr.] Jain off the call completely and deprived him of his right to see any of th[e] patients that were supposed to be under his care." (Id. ¶ 24.) "Subsequently," Integra alleges, "the VMCE Medical Executive Committee permanently stripped [Dr.] Servatius of the right to create the call schedule." (Id. ¶ 25.) Integra further alleges that "[a]t other times," "APP and/or [Dr.] Servatius directed and/or allowed other doctors from the hospitalist group" to treat patients that were "supposed to be under [Dr. Jain's] care." (Id. ¶ 26.) When this occurred, Integra alleges, "APP would receive the revenues instead of Integra." (Id. ¶ 27.)

         C. Alleged Interference with Dr. Jain's Ability to Receive Skilled Nursing Referrals

         According to Integra, it had "formal contracts" with certain entities to "treat their patients," and this "upset" Dr. Servatius. (Id. ¶¶ 28, 30, 31.) Integra provides specific references to only three contracts. The first is a November 11, 2016 letter from Dr. Xavier Parreno stating, "I would like Dr. Sachin Jain, MD to exclusively cover my patients at [VMCE] when they are hospitalized as inpatients." (Ex. A to First Am. Compl. [40-1]; First Am Compl. ¶ 32 (citing same).) The second contract is a November 11, 2016 letter from Orchard Medical Center ("Orchard") stating that it would "be using Dr. Sachin Jain as [its] exclusive hospitalist [at VMCE] effective November 19th at midnight." (Ex. B to First Am. Compl. [40-2]; First Am. Compl. ¶ 34 (citing same).) The third contract is an undated "Physician Coverage Agreement" with Lake County Health Department and Community Health Center ("Lake County"). (Ex. C to First Am. Compl. [40-3]; First Am. Compl. ¶ 36 (citing same).)[2] The agreement authorized Dr. Jain "to provide medical services to [Lake County's] patients admitted for medical care at" VMCE. (Ex. C to First Am. Compl.) According to Integra, Dr. Servatius "interfered" with the Dr. Parreno contract "such that [Dr. Parreno] canceled [it]." (First Am. Compl. ¶ 33.) Integra also alleges that "[Dr.] Servatius and/or APP interfered" with the Orchard and Lake County contracts by "direct[ing] and/or allow[ing]" hospitalists other than Dr. Jain to see Orchard and Lake County patients at VMCE. (Id. ¶¶ 35, 37.)

         In addition, Integra alleges that Dr. Servatius "made several phone calls to physicians in the community, made disparaging and false comments about [Dr.] Jain, and otherwise interfered with his business contracts and relations with [them] in an attempt to get them to stop sending Integra referrals." (Id. ¶ 28; see also Id. ¶ 29 (asserting similar allegation concerning phone calls to skilled nursing facilities).) It is unclear whether the allegations in paragraphs 28 and 29 refer to Dr. Parreno, Orchard, and Lake County; to other physicians or entities; or to all of the above. Integra further alleges that Dr. Servatius "directly threatened various skilled nursing facilities, including but not limited to GlenLake Terrace, the Pavilion of Waukegan, and Rolling Hills, to not refer patients to Integra if they wanted to receive patient referrals from VMCE." (Id. ¶ 38.)

         Integra alleges that Dr. Servatius and/or APP undertook the aforementioned conduct intentionally and with malice. (See Id. ¶ 40.) It also alleges that the conduct caused Integra "financial harm, loss of reputation, and emotional distress." (See, e.g., id. ¶ 42.) Integra seeks compensatory and punitive damages.

         DISCUSSION

         A Rule 12(b)(6) motion challenges the sufficiency of the complaint. See, e.g., Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014); Fed.R.Civ.P. 12(b)(6). "The complaint need only contain a short and plain statement of the claim demonstrating entitlement to relief." Pierce v. Zoetis, Inc., 818 F.3d 274, 277 (7th Cir. 2016); see Fed. R. Civ. P. 8(a)(2). "Although detailed factual allegations are unnecessary, the complaint must have 'enough facts to state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In assessing a Rule 12(b)(6) motion, the court accepts all well-pleaded facts in the complaint as true and draws all reasonable inferences in the plaintiff's favor. Hutchinson v. Fitzgerald Equip. Co., 910 F.3d 1016, 1025 (7th Cir. 2018). The parties agree that Illinois law governs the substantive claims in this diversity action.

         A. Negligence

         Defendants move to dismiss Integra's negligence-based claims on the ground that they are barred by Illinois' economic loss rule. Under that rule, also known as the Moorman doctrine, a plaintiff "cannot recover for solely economic loss under the tort theories of strict liability, negligence, and innocent misrepresentation." Moorman Mfg. Co. v. Nat'l Tank Co., 91 Ill.2d 69, 91, 435 N.E.2d 443, 453, 61 Ill.Dec. 746, 756 (1982). In Moorman, the Illinois Supreme Court defined "economic loss" as "damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits-without any claim of personal injury or damage to other property." 91 Ill.2d at 82, 435 N.E.2d at 449, 61 Ill. Dec at 752. The Moorman doctrine is based on the theory that tort law provides the appropriate remedy for losses stemming from personal injury or damage to property, whereas contract law and the Uniform Commercial Code provide the appropriate remedy for "economic losses occasioned by diminished commercial expectations not coupled with injury to person or property." In re Illinois Bell Switching Station Litig., 161 Ill.2d 233, 241, 641 N.E.2d 440, 444, 204 Ill.Dec. 216, 220 (1994).

         1. Whether Integra Seeks to Recover Purely ...


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