Bellevue Medical LLC v. Total Wound Care of Oklahoma LLC

District Court, W.D. Washington·Decided July 22, 2025·No. 2:24-cv-02149·Unknown

Opinion

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE BELLEVUE MEDICAL, LLC, CASE NO. 2:24-cv-02149-LK Plaintiff, ORDER GRANTING IN PART v. BELLEVUE MEDICAL’S PARTIAL MOTION TO DISMISS OKLAHOMA, LLC, Defendant. This matter comes before the Court on Plaintiff Bellevue Medical LLC’s partial motion to dismiss Defendant Total Wound Care of Oklahoma, LLC’s (“TWC”) counterclaims. Dkt. No. 15.1 The Court grants the motion in part—it dismisses TWC’s negligence counterclaim but denies Bellevue Medical’s request to dismiss it with prejudice and without leave to amend. TWC may amend its counterclaim within 14 days of this Order.

1 The motion also seeks to dismiss Total Wound Care of Texas and Total Wound Care of Kansas’s “third-party complaint,” but Defendant Total Wound Care of Oklahoma subsequently dismissed the Texas and Kansas entities’ claims, mooting this part of the motion to dismiss. Dkt. No. 24. Separately, although styled as a “motion to dismiss” and seeking to dismiss the “counterclaims” (plural), the motion only argues for dismissal of the negligence counterclaim, not the breach of contract counterclaims, making the motion to dismiss a partial one. See generally Dkt. No. 15. A. Bellevue Medical’s Claims Against Total Wound Care Bellevue Medical is a Washington-based medical billing company. Dkt. No. 27 at 2. In early 2022, Bellevue Medical started providing medical billing services for TWC. Id. It entered

into a Billing Services Agreement with TWC, under which Bellevue Medical would submit claims to third-party payors and collect payments on TWC’s behalf. Id. In return, TWC would pay a monthly minimum of $999 or 4.99% of the monthly collections, whichever was higher. Id. The agreement had a term of a one year and would automatically renew unless expressly terminated in advance in writing. Id. According to Bellevue Medical, its services helped TWC grow its collections from $0 in February 2022 to nearly $1 million monthly by December 2023. Id. at 3. In July 2022, the parties renegotiated the terms of their agreement. Id. They entered into a new Billing Services Agreement (the “Operative Service Agreement”), under which TWC would pay either a monthly minimum of $2,999 or 2.99% of monthly collections, whichever was higher. Id. This agreement had a three-year term. Id.

In January 2024, TWC allegedly blocked Bellevue Medical’s access to its systems, preventing Bellevue Medical from performing its obligations under the Operative Service Agreement, which was not set to expire until July 2025. Id. at 3–4. Bellevue Medical followed up several times to understand why its access was terminated, to no avail. Id. at 3. Bellevue Medical believes that TWC has since contracted with another billing services provider. Id. Based on these allegations, Bellevue Medical asserts that TWC breached the contract and the implied covenant of good faith and fair dealing. Id. at 4–8. It seeks $550,734.00 in damages as well as interest, costs, and reasonable attorney’s fees. Id. at 9. B. Bellevue Medical’s Allegations Against Doe Defendants

In addition to naming TWC as a defendant, the original complaint also named Does 1 through 20, who “are responsible in some manner for the acts, omissions, incidents, transactions, and/or events alleged.” Dkt. No. 1 at 2. Bellevue Medical asserted that it would “amend this complaint to state the true names and capacities of said Defendants when they are ascertained.” Id. The Court subsequently ordered Bellevue Medical to show cause why the case should not

be dismissed for lack of subject matter jurisdiction based on the rule that “in an original federal action (as opposed to a removal action) based on diversity jurisdiction under 28 U.S.C. § 1332(a), a plaintiff’s inclusion of fictitious ‘Doe’ defendants destroys diversity jurisdiction and renders the action subject to dismissal.” Dkt. No. 26 at 1 (citation removed). Bellevue Medical then amended its complaint to remove all references to the Doe Defendants, and the Court discharged its order to show cause. Dkt. Nos. 27, 29. C. Total Wound Care’s Counterclaims and “Third-Party Complaint” In February 2025, TWC Oklahoma answered the complaint and filed counterclaims alleging breach of contract and negligence. Dkt. No. 10 at 13–14. It also added two new Total Wound Care entities as “third party plaintiffs”—TWC Kansas and TWC Texas—and purported to

file a “third-party complaint” against Bellevue Medical on their behalf. Id. at 8. The Court subsequently ordered TWC Oklahoma to show cause why TWC Texas’s and TWC Kansas’s claims should not be stricken or dismissed, because those entities were not properly joined and were not proper third-party plaintiffs. Dkt. No. 23. In response, TWC Oklahoma voluntarily dismissed TWC Texas and Kansas from this action, Dkt. No. 24, leaving TWC Oklahoma as the sole defendant in this action and its counterclaims as the only claims against Bellevue Medical. In those counterclaims, TWC Oklahoma (which the Court will resume referring to as just “TWC”) alleges that Bellevue Medical breached the Operative Service Agreement because it submitted several claims incorrectly, which led to denials, and then failed to resubmit those claims.

Dkt. No. 10 at 10. According to TWC, this violated Section 5 of the Agreement, which provided that the parties “will comply with all applicable laws and regulations, including but not limited to, laws and regulations (and government interpretations thereof) relating to billing, coding, and submission of claims to the Medicare and Medicaid programs.” Id. In addition, Bellevue Medical would invoice TWC for claims that had been denied and then refuse to provide detailed invoice

breakdowns. Id. at 10–11. TWC alleges that Bellevue Medical’s improper billing practices led it to suffer financial losses. TWC also alleges that Bellevue Medical breached a separate Credentialing Agreement entered into in September 2021, under which Bellevue Medical agreed to license and credential TWC’s providers to meet state and payor standards. Id. at 11. Bellevue Medical allegedly failed to do so accurately or on time, which led to unbilled work and claims being denied or processed as out-of-network. Id. On August 15, 2023, TWC submitted a written notice to Bellevue Medical terminating the Operative Billing Agreement. Id. at 11. Bellevue Medical acknowledged the termination notice two days later, on August 17. Id. Just over a month later, on September 25, Bellevue Medical’s

Chief Experience Officer stated that it had not, in fact, received a termination notice and demanded a $607,016 termination fee. Id. at 12. TWC maintains that it does not owe a termination fee based on Section 6 of the Agreement, which provides that no fee is due with proper notice. Id. After terminating the agreement with Bellevue Medical, TWC hired Intelligent Health Techs for billing. Id. But Bellevue Medical would not release TWC’s medical records and data from its electronic medical record system unless TWC paid it $28,000. Id. TWC alleges that even after it paid, Bellevue Medical continued to withhold the records, jeopardizing its compliance with potential Medicare audits. Id. TWC alleges that Bellevue Medical’s refusal to release the medical records violated Section 10 of the Operative Services Agreement, which requires that Bellevue

Medical make records available to the federal government. Id. Based on these allegations, TWC seeks damages of at least $6,740,176 for Bellevue Medical’s breach of contract and negligence. Id. at 13–14. A. Jurisdiction

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Bellevue Medical LLC v. Total Wound Care of Oklahoma LLC, (W.D. Wash. 2025).

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