Bobo v. Christus Health

227 F.R.D. 479, 95 A.F.T.R.2d (RIA) 2266, 2005 U.S. Dist. LEXIS 7249, 2005 WL 1034133
District Court, E.D. Texas·Decided April 26, 2005·No. No. CIV.A. 1:04CV626·Published·Cited by 7 cases

Opinion

[480]*480Memorandum Opinion and Order Granting Defendant’s Motion for Judgment on the Pleadings and Dismissing Plaintiff’s Claims with Prejudice

COBB, District Judge.

Pending before the court are cross-motions for dismissal: the defendant’s Motion for Judgment on the Pleadings filed on February 24, 2005, and the plaintiffs Motion for Voluntary Dismissal filed the following day. Having carefully considered the motions, the responses and replies thereto, and the wealth of case law addressing the issues presently before the court, the court is of the opinion that the defendant’s motion should be granted in its entirety, and that the plaintiffs case be dismissed.

Background

A. The Latest Epidemic: Class Action Lawsuits against Not-For-Profit Hospitals

This purported class action lawsuit is one of many tagalong actions filed in courts across the United States on behalf of indigent and uninsured patients. The Judicial Panel on Multidistrict Litigation rejected motions to transfer and consolidate the similar cases, leaving the individual eases festering in courts throughout the country. See In re Not-For-Profit Hosps./Uninsured Patients Litig., 341 F.Supp.2d 1354, 1355-56 (Jud.Pan.Mult.Lit.2004). These cases invariably claim that hospitals, in violation of their alleged tax exemption agreements with the United States, have charged unreasonable, excessive, and inflated rates for medical care to their uninsured patients. The backbone of this broad claim is threefold: (1) each of the healthcare provider defendants is a tax-exempt organization under 26 U.S.C. § 501(c)(3); (2) as tax-exempt organizations, each defendant expressly and/or implicitly agreed to operate exclusively for charitable purposes and provide health care to all of its uninsured patients at reasonable or discounted rates; and (3) the defendants’ tax-exemption creates a contract with the government enforceable by the plaintiffs as intended third-party beneficiaries.

Simply put, in return for tax breaks, nonprofit hospitals have a contractual obligation with the government to provide free or discounted treatment to the needy. In addition to this principle claim, the plaintiffs in these cases have advanced a miscellany of other allegations including, inter alia, breach of good faith and fair dealing, breach of charitable trust, unjust enrichment and constructive trust, civil conspiracy and concert of action, and aiding and abetting.

The plaintiffs in these copycat cases have not fared well. The courts have categorically agreed that these claims are “patently untenable” and that no private right of action is created by section 501(c)(3) of the Internal Revenue Code. See Ferguson v. Centura Health Corp., 358 F.Supp.2d 1014 (D.Colo. 2004). The defendants’ motions to dismiss have been granted in the majority of these cases.1 Several other cases have been dis[481]*481missed voluntarily.2 Either way, no court has found for the plaintiffs on any substantive legal issue. Kolari v. New York—Presbyterian Hosp., 2005 WL 710452, at *2 n. 2 (S.D.N.Y. Mar. 29, 2005).

B. The Present Pandemic: Bobo v. Christus Health

As stated above, the present suit is indistinguishable from the many suits filed throughout the nation. The plaintiff, Yalonda Bobo, alleges that her minor child received emergency medical care at St. Elizabeth Hospital on February 15, 2001, following an automobile accident. The plaintiff does not allege that she is indigent, or that she in fact ever paid any money for her child’s treatment. Still, the plaintiff claims that she was charged excessive and unreasonable fees by the defendant, Christus Health, a not-for-profit, charitable institution which receives state, local and, most notably, federal tax exemptions under 26 U.S.C. § 501(c)(3).

On behalf of herself and others similarly situated, Bobo filed suit in Texas state court, alleging a variety of claims,3 many of which explicitly referred to and relied on Christus’s status as a tax-exempt charitable hospital under section 501(c)(3) and the purported duties and obligations arising therefrom. Christus removed the lawsuit to this court pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1340 claiming federal question jurisdiction. Bobo moved to remand the case, but this court denied the plaintiffs motion, finding that the federal tax principles from which the plaintiffs claims derive are a necessary predicate to the disposition of those claims.

On February 24, 2005, the defendants filed them Motion for Judgment on the Pleadings, requesting dismissal of all claims with prejudice. In response to the defendant’s motion, the plaintiff filed her Motion for Voluntary Dismissal on the following day.

Discussion

A. Cross-Motions for Dismissal

Pending before the court are cross-motions for dismissal: the defendant’s Rule 12(c) motion filed on February 24, 2005, and the plaintiffs Rule 41(a) motion filed the following day. Rule 41 of the Federal Rules of Civil Procedure allows plaintiffs to dismiss their lawsuits subject to court approval. FED. R. CIV. P. 41(a); Oxford v. Williams Companies, Inc., 154 F.Supp.2d 942, 951 (E.D.Tex.2001). However, this court has previously held that denial of a voluntary motion to dismiss is appropriate “where (1) dismissal would preclude the court from deciding a pending case or claim-dispositive motion, or (2) there is an objectively reasonable basis for requesting that the merits of the action be resolved in the current forum to avoid legal prejudice.” Oxford, 154 F.Supp.2d at 951; citing Radiant Tech. Corp. v. Electrovert USA Corp., 122 F.R.D. 201, 202 (N.D.Tex.1988). Furthermore, “outright dismissal should be refused when a plaintiff seeks to circumvent an expected adverse result.” Oxford, 154 F.Supp.2d at 951.

Clearly, the plaintiffs Rule 41 motion in the present case is an effort to avoid the expected adverse result that has occurred in not-for-profit hospital cases nationwide. The plaintiffs motion is particularly suspect considering it was filed one day after the defendants moved for judgment on the pleadings. In accordance with this court’s ruling in Oxford, Bobo should not be permitted to unilaterally dismiss her action against Christus Health at this stage of the case. The defendants have answered Bobo’s complaint and have filed their motion for judgment on the pleadings. Granting the plaintiffs motion would preclude the court from deciding this ease on its merits, and it is objectively reasonable for this court to decide this ease on [482]*482its merits — or lack thereof — in uniformity with courts nationwide.

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Bobo v. Christus Health, 227 F.R.D. 479, 95 A.F.T.R.2d (RIA) 2266, 2005 U.S. Dist. LEXIS 7249, 2005 WL 1034133 (E.D. Tex. 2005).

227 F.R.D. 479 (Bobo v. Christus Health) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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