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Bearden v. Ballad Health

United States District Court, E.D. Tennessee, Greeneville

December 11, 2019

CHRISTINE BEARDEN, DAVID BEARDEN, TERRI COOK, CAROLYN GIBBONS, ELMER DARRELL GREER, LADONNA F. GREER, MARK HUTCHINS, KEVIN MITCHELL, JAMIE STRANGE PIERSON, and CRYSTAL GAIL REGAN, Plaintiffs,
v.
BALLAD HEALTH, MEDICAL EDUCATION ASSISTANCE CORPORATION, BARBARA ALLEN, JULIE BENNETT, DAVID GOLDEN, DAVID LESTER, ALAN LEVINE, DAVID MAY, SCOTT M. NISWONGER, BRIAN NOLAND, GARY PEACOCK, DOUG SPRINGER, and KEITH WILSON Defendants.

          MEMORANDUM

          CURTIS L. COLLIER UNITED STATES DISTRICT JUDGE.

         Before the Court are four motions: a motion to dismiss by Defendants Ballad Health and the individually named Defendants (the “Ballad Health Directors”) (Doc. 27); a motion to dimsiss by Defendant Medical Education Assistance Corporation (“MEAC”) (Doc. 44); a motion to strike by Defendants Ballad Health and the Ballad Health Directors (Doc. 51); and a motion to amend their complaint by Plaintiffs (Doc. 48). For the reasons outlined below, the Court will GRANT both motions to dismiss, will DENY Defendants Ballad Health and Ballad Health Directors' motion to strike, and will DENY Plaintiffs' motion to amend their complaint.

         I. BACKGROUND [1]

         On or about January 31, 2018, the Tennessee Department of Health permitted a merger of Mountain States Health Alliance and Wellmont Health Systems under the terms of a Certificate of Public Advantage (“COPA”). (Doc. 1 at 3.) The resulting entity, Ballad Health, became the dominant economic entity in the relevant geographic market for health-related services. (Id. at 4.)

         On April 12, 2019, Plaintiffs filed suit against Ballad Health, the Ballad Health Directors, and MEAC. (Id.) Plaintiffs allege that Defendants Brian Noland, Scott Niswonger, and David Golden have conflicts that prohibit them from serving on the Ballad Health Board of Directors. (Id. at 5.) Specifically, Defendants Niswonger and Golden are members of the Board of Trustees of East Tennessee State University (“ETSU”) and Defendant Noland is a member of the Board of Directors of ETSU Physicians and is ETSU's president. (Id.) Plaintiffs allege this creates an unlawful interlocking directorate under 15 U.S.C. § 19. (Id.)

         Defendants Ballad Health and Ballad Health Directors filed a motion to dismiss, contending (1) Plaintiffs have failed to allege Article III standing to bring this suit; (2) Plaintiffs have failed to state a claim for which relief can be granted; and (3) Ballad Health has state-action immunity from liability. (See Doc. 28.) Defendant MEAC also filed a motion to dismiss, raising identical issues with Plaintiffs' complaint. (See Doc. 45.) Plaintiffs responded to both motions, asserting (1) they have sufficiently alleged Article III standing and a claim for relief; and (2) state-action immunity does not apply in this case. (Docs. 49, 59.) Defendants have replied. (Docs. 52, 61.) Defendants Ballad Health and Ballad Health Directors then filed a motion to strike portions of Plaintiffs' response to their motion to dismiss because Plaintiffs attached exhibits and referenced news articles not included in their pleadings. (Doc. 51.) Plaintiffs have not filed a response to the motion to strike and the time to do so has expired.[2]

         Finally, Plaintiffs filed a motion to amend their complaint to “more particularly set forth the grounds for relief and the cause of relief.” (Doc. 48 at 2.) Defendants Ballad Health and Ballad Health Directors filed a response in opposition, arguing the proposed complaint could not survive a motion to dismiss and it fails to comply with Rule 8(a). (Doc. 54.) Defendants also contend that Plaintiffs have engaged in bad faith conduct by delaying their motion to amend, filing briefs “containing objectionable and distasteful language[, ]” and noted that “their lawyer took to social media to start a smear campaign against a director[.]”[3] (Id.) Defendants Golden, Niswonger, and Noland filed a separate response in opposition to Plaintiffs' motion to amend, providing additional background information. (Doc. 55.) Plaintiffs have replied. (Docs. 56, 58.)

         II. STANDARDS OF REVIEW

         A. Motion to Dismiss Under 12(b)(1)

         Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss a claim for lack of subject-matter jurisdiction. A motion to dismiss under 12(b)(1) may raise a facial attack or a factual attack. Golden v. Gorno. Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005). A facial attack “questions merely the sufficiency of the pleading” in alleging subject-matter jurisdiction and thus the court takes the allegations raised in the complaint as true. Gentek Bldg. Prods., Inc. v. Sherwin- Williams Co., 491 F.3d 320, 330 (6th Cir. 2007). In contrast, a factual attack challenges the factual existence of subject-matter jurisdiction, requiring the court to “weigh the conflicting evidence to arrive at the factual predicate that subject-matter does or does not exist.” Id. The plaintiff bears the burden of proving jurisdiction is proper. Cob Clearinghouse Corp. v. Aetna U.S. Healthcare, Inc., 362 F.3d 877, 881 (6th Cir. 2004) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)).

         B. Motion to Dismiss Under 12(b)(6)

         A party may move to dismiss a claim for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). In deciding a 12(b)(6) motion to dismiss, a court must first accept all of the complaint's factual allegations as true and construe the complaint in the light most favorable to the plaintiff. See Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998). All ambiguities must be resolved in the plaintiff's favor. Carter by Carter v. Cornwell, 983 F.2d 52, 54 (6th Cir. 1993) (citing Jackson v. Richards Med. Co., 961 F.2d 575, 577 (6th Cir. 1992)). Bare legal conclusions, however, need not be accepted as true. See Papasan v. Allain, 478 U.S. 265, 286 (1986).

         After assuming the veracity of factual allegations and construing ambiguities in the plaintiff's favor, the Court must then determine whether those allegations “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Sufficient factual allegations are pleaded when a court is able “to draw the reasonable inference that the defendant is liable for the misconduct alleged” and there is “more than a sheer possibility that a defendant has acted unlawfully.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To determine whether the complaint satisfies facial probability, the court must “draw on its judicial experience and common sense.” See Id. at 679.

         If a party presents matters outside the pleadings in connection with a pending motion to dismiss, the court must either exclude those matters from consideration or treat the motion as one for summary judgment. Fed.R.Civ.P. 12(d). Documents attached to the pleadings are considered part of the pleadings, Fed.R.Civ.P. 10(c), and a court's consideration of documents referenced in a complaint that are integral to the claims does not convert a motion to dismiss ...


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