Acadiana Renal Physicians, a Medical Corporation v. Our Lady of Lourdes Regional Medical Center, Inc. and Lafayette General Medical Center,inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

21-289 & 21-290

ACADIANA RENAL PHYSICIANS, A MEDICAL CORPORATION, ET AL.

VERSUS

OUR LADY OF LOURDES REGIONAL MEDICAL CENTER, INC.
AND LAFAYETTE GENERAL MEDICAL CENTER, INC.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 20202289
HONORABLE THOMAS R. DUPLANTIER, DISTRICT JUDGE

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ELIZABETH A. PICKETT
JUDGE

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Court composed of Elizabeth A. Pickett, Shannon J. Gremillion, and John E.
Conery, Judges.

REVERSED AND REMANDED.

Adam G. Young
Jason Alden Meade
Meade Young, LLC
556 Jefferson St., Ste 200
Lafayette, LA 70501
(337) 534-0200
COUNSEL FOR PLAINTIFFS-APPELLANTS:
Acadiana Renal Physicians, A Medical Corporation
Anthony Blalock
Roderick Clark
Akshey Gupta
Melissa Harrington
Maximo Lamarche
Alfonso Lebron
Juan Zeik

Randall Kurt Theunissen
Allen & Gooch
P. O. Box 81129
Lafayette, LA 70598-1129
(337) 291-1310
COUNSEL FOR DEFENDANT-APPELLEE:
Our Lady of Lourdes Regional Medical Center, Inc.

James H. Gibson
Stacy N. Kennedy
Gibson Law Partners, L.L.C.
P. O. Box 52124
Lafayette, LA 70505
(337) 761-6023
COUNSEL FOR DEFENDANT-APPELLEE:
Lafayette General Medical Center, Inc.

PICKETT, Judge.

The plaintiffs, Acadiana Renal Physicians, A.M.C., and its members, Drs.

Anthony Blalock, Roderick Clark, Akshey Gupta, Melissa Harrington, Maximo

Lamarche, Alphonso Lebron, and Juan Zeik, appeal the judgment of the trial court

striking two paragraphs from the amended petition filed by the plaintiffs and

granting an exception of no right action against Acadiana Renal Physicians filed by

Our Lady of Lourdes Regional Medical Center, Inc.1

STATEMENT OF FACTS

Acadiana Renal Physicians (ARP) filed suit against Our Lady of Lourdes

(OLOL) and Lafayette General Medical Center (LGMC) alleging violations of the

Louisiana Monopolies Act, La.R.S. 51:121 et seq., the Louisiana Unfair Trade

Practices Act (LUTPA), La.R.S. 51:1401 et seq., and damages for unjust

enrichment. At issue is the failure of OLOL and LGMC to pay the nephrologists

for on-call services at either hospital. The petition alleges that the hospitals

exercise their monopsony power to deny on-call payments to nephrologists at

either hospital. The petition alleges that other physician specialists receive on-call

pay in Lafayette, and other localities pay nephrologists on-call pay. After the trial

court granted an exception of vagueness, ARP filed an amended petition which

1
Because the claims in this case include allegations of violation of anti-trust
statutes, La.R.S. 51:135, which makes interlocutory judgments immediately
appealable, is applicable. It states:

All interlocutory judgments in the cases affected by this Part,
and not otherwise provided for, shall be appealable within five days
and shall be heard and determined within twenty days after appeal is
lodged, and any interlocutory judgments not appealed, except those
rendered during the progress of the trial, shall be final, and shall not
be reopened on final appeal. Such appeals shall be on the original
papers, on the order of the district judge, if a transcript cannot be
prepared in time.

added the seven doctors who are shareholders in ARP as plaintiffs. OLOL and

LGMC responded by filing various exceptions, including an exception of no right

of action against ARP, an exception of no cause of action, and vagueness. OLOL

also filed a motion to strike two paragraphs of the amended petition. Following a

hearing, the trial court granted the exception of no right of action and the motion to

strike two paragraphs of the amended petition and denied the remaining

exceptions. ARP and the doctor plaintiffs filed an appeal of these interlocutory

orders pursuant to La.R.S. 51:135.

ASSIGNMENTS OF ERROR

ARP asserts two assignments of error:

1. The trial court abused its discretion in granting the Motion to
Strike and striking paragraphs 34 and 37 from the First Amended
Petition when those paragraphs contain entirely substantive statements
regarding the basis for the Plaintiffs’ LUTPA claim.

2. The trial court erred as a matter of law by sustaining the
exception of no right of action as to ARP, when the First Amended
Petition sets forth ample facts showing ARP has an interest in the
subject matter of the litigation, and the Defendants/Appellants did not
introduce any evidence to meet their burden of proof to show
otherwise.

DISCUSSION

The trial court granted OLOL’s motion to strike two paragraphs of the

pleading, paragraphs 34 and 37. Those paragraphs are in the section of the

LUTPA claims brought by the plaintiffs, and state:

34. Plaintiff incorporates the facts set forth in the preceding
paragraphs in extenso. These facts amount to violations of various
laws that prohibit the remuneration of physicians for referrals to
hospitals, including the Anti-Kickback Statute (42 U.S.C. § 1320a-
7b(b)), “Stark Law” (42 U.S.C. 1395, “Limitation on certain physician
referrals”), as well as their Louisiana state law analogues, La. R.S.
§46:438.2, “Illegal remuneration,” La. R.S. § 14:70.5, “Fraudulent
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remuneration,” and La. R.S. § 37:1745, “Prohibition on patient
referrals.”
....
37. The system of call pay employed by the Hospitals, as described
above offends the established public policy against payments to
physicians for referrals to hospitals, and that policy is evidenced by
the various laws criminalizing that conduct. I.e. if certain conduct is
criminal it per se “offends established public policy.”

OLOL claims these paragraphs are immaterial, inflammatory, and defamatory.

The trial court granted the motion in open court, stating:

I’m going to grant your motion. If you can prove to me some day in
the future . . .. that somebody committed a criminal act, I’ll let you put
that back in your petition. But I think it is defamatory and I’m going
to grant the Motion to Strike at this time.

In Hazelwood Farm, Inc. v. Liberty Oil and Gas Corp., 01-345, pp. 6-7

(La.App. 3 Cir. 6/20/01), 790 So.2d 93, 98, writ denied, 01-2115 (La. 7/26/01),

794 So.2d 834, (footnote omitted), this court discussed the standard for granting a

motion to strike allegations in a petition:

A motion to strike is provided for in La.Code Civ.P. art. 964, which
states, “[t]he court on motion of a party or on its own motion may at
any time and after a hearing order stricken from any pleading any
insufficient demand or defense or any redundant, immaterial,
impertinent, or scandalous matter.” Motions to strike are viewed
with disfavor and are infrequently granted. Federal Deposit Ins.
Corp. v. Niblo, 821 F.Supp. 441 (N.D.Tex.1993). It is disfavored
because striking a portion of a pleading is a drastic remedy, and
because it is often sought by the movant simply as a dilatory tactic.
Id. A motion to strike is only proper if it can be shown that the
allegations being challenged are so unrelated to a plaintiff’s claims as
to be unworthy of any consideration and that their presence in the
pleading would be prejudicial to the moving party. Id. “A motion to
strike is not an authorized or proper way to procure the dismissal of a
complaint or a cause of action.” Pitre v. Opelousas Gen. Hosp., 530
So.2d 1151, 1162 (La.1988); see also, Bellah v. State Farm Fire and
Cas. Ins. Co., 546 So.2d 601 (La.App. 3 Cir.1989) and Adams v. New
Orleans Blood Bank, Inc., 343 So.2d 363 (La.App. 4 Cir.1977). A
court must deny a motion to strike if there is any question of fact or
law. Federal Deposit Ins. Co., 821 F.Supp. 441.

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We review a motion to strike pursuant to an abuse of discretion standard. Pitre v.

Opelousas Gen. Hosp., 530 So.2d 1151 (La.1988).

Our supreme court adopted a two-part test in Cheramie Services, Inc. v.

Shell Deepwater Production, Inc., 09-1633 (La. 4/23/10), 35 So.3d 1053, for

establishing a LUTPA cause of action: (1) the person must suffer an ascertainable

loss; and (2) the loss must result from – be caused by – another’s use of unfair

methods of competition and unfair or deceptive acts or practices. LUTPA is

“broadly and subjectively stated and does not specify particular violations.”

Levine v. First Nat’l Bank of Commerce, 06-394, p. 20 (La. 12/15/06), 948 So.2d

1051, 1065. “[W]hat constitutes an unfair trade practice is determined by the

courts on a case-by-case basis.” Id. “[A] practice is unfair when it offends

established public policy and when the practice is unethical, oppressive,

unscrupulous, or substantially injurious.” Id. To prevail on a LUPTA claim a

plaintiff must “prove ‘some element of fraud, misrepresentation, deception or other

unethical conduct.’” Cheramie Serv. Inc., 35 So.3d at 1059 (quoting Dufau v.

Creole Eng’g Inc., 456 So.2d 752, 758, writ denied, 468 So.2d 1207 (La.1985)).

These cases make clear that any alleged violation of LUTPA necessarily

involves allegations of unflattering conduct on the part of the defendants. The

plaintiffs in this case have alleged that certain behavior of OLOL and LGMC

violate public policy because these practices violate federal or state laws. The trial

court found that the plaintiffs did have a cause of action against OLOL and LGMC.

We find the trial court erred in striking allegations which, if proven true by

competent evidence at trial, would prove the breach of LUTPA as set out by the

plaintiffs in their First Amended Petition. Further, the trial court’s reasoning that

he would allow the allegations to be returned to the petition if they were proven

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cannot stand. If the allegations of paragraphs 34 and 37 are removed from the

petition, the plaintiffs will not be able to introduce evidence related to those

paragraphs because they will be deemed irrelevant. We find the trial court applied

the incorrect standard to determine paragraphs 34 and 37 should be stricken from

the petition, and we reverse the judgment of the trial court granting the Motion to

Strike.

The supreme court set forth the standard for review of a trial court’s

judgment granting an exception of no right of action in Rebel Distributors Corp.,

Inc. v. LUBA Workers’ Comp., 13-749, p. 10 (La. 10/15/13), 144 So.3d 825, 833:

An appellate court considering an exception of no right of action
should focus on whether the particular plaintiff has a right to bring the
suit and is a member of the class of persons that has a legal interest in
the subject matter of the litigation, assuming the petition states a valid
cause of action for some person. See Hood v. Cotter, 08-0215, 08-
0237, p. 17 (La.12/2/08), 5 So.3d 819, 829. Where doubt exists
regarding the appropriateness of an objection of no right of action, it
is to be resolved in favor of the plaintiff. Teachers’ Retirement
System of Louisiana v. Louisiana State Employees’ Retirement
System, 456 So.2d 594, 597 (La.1984).

The determination of whether a plaintiff has a legal right to
bring an action raises a question of law, which requires de novo
review. See Holly & Smith Architects, Inc. v. St. Helena Congregate
Facility, Inc., 06-0582, p. 9 (La.11/29/06), 943 So.2d 1037, 1045;
Gibbs v. Delatte, 05-0821, p. 6 (La.App. 1 Cir. 12/22/05), 927 So.2d
1131, 1135, writ denied, 06-0198 (La.4/24/06), 926 So.2d 548.

OLOL and LGMC argue that the doctors, not ARP, have a right of action to

bring the claims alleged in the petition. They claim that only licensed physicians

provide on-call services to the hospitals, not corporations. Further, they claim

there is no privity of contract between ARP and the hospital defendants, and

therefore no right of action. Finally, they argue that if both ARP and the individual

doctors have a right of action, the plaintiffs could receive double recovery for the

same loss.

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Assuming the petition has stated a cause of action, we must determine if

ARP, a corporation whose shareholders are also plaintiffs in this action, has a right

to bring claims under LUTPA, the Monopolies Act, and under a theory of unjust

enrichment. As each of these claims sounds in tort, and not contract law, privity of

contract is not a requirement for ARP to assert a right of action. The defendants

cite no authority for the proposition that the prospect of double recovery is a bar to

a plaintiff having a right of action, and, as ARP’s counsel explained at oral

argument, it is his client’s burden to prove the loss of each party and adequately

explain in instructions to a jury how to quantify damages.

The petition of the plaintiffs states that all “any call pay due to any of the

individual physician-shareholders would have been shared through ARP with all

physician-shareholders.” Thus, ARP has alleged an ascertainable economic loss as

a result of the alleged conduct of the hospitals. Thus, ARP has a right of action,

and the judgment of the trial court is reversed.

CONCLUSION

The judgment of the trial court striking paragraphs 34 and 37 is reversed.

The judgment of the trial court sustaining the exception of no right of action is

reversed, and the exception is overruled. The case is remanded for further

proceedings. Costs of this appeal are assessed equally between Our Lady of

Lourdes and Lafayette General Medical Center.

REVERSED AND REMANDED.

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