LESLY POMPY INTERVENTIONAL PAIN MANAGEMENT ASSOCIATES v. MARC MOORE BRIAN BISHOP BLUE CROSS BLUE SHIELD OF MICHIGAN (2024)

OPINION AND ORDER DENYING MOTION FOR INDICATIVE RULING

Plaintiff Lesly Pompy is a physician who was indicted for controlled substance and healthcare fraud crimes and acquitted by a jury of all charges. He filed this lawsuit against those who he believed instigated the investigation against him, including defendant Blue Cross and Blue Shield of Michigan. The Court eventually dismissed all claims against the defendants in various motion rulings, and Dr. Pompy appealed. The last claim against Blue Cross was dismissed without prejudice. Blue Cross maintains that the dismissal without prejudice was a mistake, and it has filed a motion while the appeal is pending asking this Court to indicate whether it would correct the perceived mistake on remand by changing the dismissal to one with prejudice. Dr. Pompy opposes the motion. The Court heard oral argument on November 13, 2024 and now concludes that it would not grant a motion in favor of defendant Blue Cross for relief under Federal Rule of Civil Procedure 60(b)(1) if the case were remanded by the court of appeals. The motion for an indicative ruling will be denied.

I.

Dr. Pompy specializes in anesthesiology and pain management. After he was indicted for controlled substance and health care fraud crimes, he filed the present action without the assistance of a lawyer against his antagonists who steered the investigation. The case was stayed while the criminal case was pending. After the jury's favorable verdict, the stay was lifted, Dr. Pompy retained counsel, and a second amended complaint was filed.

The original complaint was lengthy and difficult to decipher. According to that document, Dr. Pompy's troubles began when Blue Cross sent an undercover investigator into his office posing as a patient trying to get pain medication. The meeting was recorded surreptitiously. Government agents got involved thereafter, and the criminal proceedings took their course.

Dr. Pompy was allowed to file an amended complaint, which was shorter but almost as discursive as his first try. Considering the pleading generously, the assigned magistrate judge believed that Dr. Pompy was suing four groups of defendants: the Monroe Bank and Trust defendants for turning over Dr. Pompy's bank records to investigators who subpoenaed them; law enforcement agents for the way they conducted the investigation; a journalist who covered the events; and Blue Cross. Relevant here, the claims against Blue Cross logically fell in two categories. One consisted of a variety of tort claims based on the way Blue Cross conducted its investigation and involved government agencies. The other was “an unrelated claim against Blue Cross for breach of contract, alleging that in 2012 through 2016 Blue Cross improperly attempted to amend a provider agreement that the plaintiff had executed in 1991 by promulgating changes to the agreement without proper notice to the plaintiff.” Opinion and Order Adopting R&R, ECF No. 105, PageID.1613. Dr. Pompy also alleges that Blue Cross “maliciously investigated him” without a proper basis because it combined his income from his three different specialties (anesthesia, pain management, and addiction medicine) and measured it against an anesthesia practice only. ECF No. 66, PageID.916.

The defendants all moved to dismiss the amended complaint, and the assigned magistrate judge issued a report recommending that the motions be granted. He suggested that the claims against the properly served defendants should be dismissed with prejudice except for the breach of contract claim against Blue Cross, which should be dismissed without prejudice. He reasoned that the contract claim was unrelated to the others, so exercising supplemental jurisdiction over it would be improper. R&R, ECF No. 95, PageID.1426-27.

Dr. Pompy also included his professional corporation, Interventional Pain Management Associates, P.C. (IPMA), as a plaintiff. The case by that entity was dismissed without prejudice early on because Dr. Pompy is not an attorney and could not represent a corporate party. Order of Partial Dismissal, ECF No. 32, PageID.517.

After the acquittals, Dr. Pompy obtained an attorney and was allowed to file a second amended complaint. Defendant Blue Cross, which had been dismissed from the case, was added back in the second amended complaint, as was plaintiff IPMA. The plaintiffs repleaded several of the original tort theories, labeling the counts as conspiracy, racketeering, and tortious interference. Second Am Compl., ECF No 146, PageID.2309-43, 2048-53. They also pleaded a remarkably different breach of contract claim, alleging among other things that the activity of the undercover officer amounted to a violation of the audit provisions of the provider contract. Id. PageID.2344-47. The allegations supporting that theory were that Blue Cross conducted an improper investigation of allegedly improper billing by conducting what amounted to an on-site audit by its undercover investigator, which violated the contract's notice and appeal provisions, and which resulted in nonpayment for allegedly valid medical claims and eventual termination of the contract on false grounds. Conspicuously absent from Count 5 was any allegation premised on “improper amendments without notice of a provider agreement” or improper income comparators, which had been alleged by plaintiff Pompy in his first amended pleading.

Blue Cross moved to strike the re-pleaded allegations against it from the second amended complaint. Other defendants Marc Moore and Brian Bishop — investigators in the underlying criminal proceeding — moved to dismiss the case against them. And Dr. Pompy moved for relief from the earlier order dismissing the claims against Blue Cross and sought leave to file a third amended complaint. The proposed third amended complaint named Dr. Pompy individually as a plaintiff in the Racketeering claims in Counts 1 and 2 against Blue Cross and Moore, beefed up the allegations against defendant Moore in Count 2, joined Blue Cross as a defendant in Counts 3 and 4 (alleging civil conspiracy and civil rights violations under federal law), and added a count of common law trespass against Bishop.

The Court addressed all of the parties' motions in an omnibus opinion filed on February 28, 2024. In that ruling, the Court denied the plaintiffs' motion for relief from the order dismissing claims against Blue Cross and for leave to file a third amended complaint, granted the motions by defendants Bishop and Moore to dismiss the claims against them, denied defendant Blue Cross's motion to strike as moot, and dismissed all claims pleaded in the second amended complaint with prejudice “except the claim for breach of contract (Count 5),” which was dismissed without prejudice. The plaintiff subsequently filed a notice of appeal, which remains pending. Pompy v. Moore, No. 19-10334, 2024 WL 845859, at *22 (E.D. Mich. Feb. 28, 2024).

In its opinion on those motions, the Court recited the following reasoning for the dismissal of Count 5 in its entirety without prejudice:

The one claim that was not discussed is the breach of contract claim in Count 5. The Court previously held that it lacked [supplemental subject matter] jurisdiction over that claim and dismissed it without prejudice. ECF No. 105, PageID.1617-18. Blue Cross argued at the time that that the amended complaint did not state a valid breach of contract claim. But to reach that conclusion, the Court must have the authority to address the merits. Because the contract claim was a purely state-law claim between non-diverse parties, and it was not “related” within the meaning of section 1367(a) to a pleaded claim over which this Court has subject matter jurisdiction, the Court dismissed that claim without prejudice. The plaintiffs have not presented any good grounds either to revisit that ruling or to permit the resurrection of the previously dismissed claim in the current posture of the case, where no viable claims for any other causes of action remain.

Id. at *21.

On July 31, 2024, Blue Cross filed the present motion for a ruling under Federal Rule of Civil Procedure 62.1 in which it seeks an indication from the Court suggesting that, if it were granted jurisdiction to do so by remand from the court of appeals, it would correct the February 28, 2024 ruling to indicate that the portion of the plaintiff's contract count that was premised on an allegedly improper investigation — as opposed to a purportedly distinct claim for allegedly improper modification of the contract terms — was dismissed with prejudice, contrary to the nominal dismissal of the entire contract count (Count 5) as having been dismissed without prejudice.

II.

A notice of appeal generally transfers jurisdiction of a case from the district court to the circuit court. Lewis v. Alexander, 987 F.2d 392, 394 (6th Cir. 1993) (“As a general rule, the district court loses jurisdiction over an action once a party files a notice of appeal, and jurisdiction transfers to the appellate court.”) (citing Cochran v. Birkel, 651 F.2d 1219, 1221 (6th Cir.1981)). However, Federal Rule of Civil Procedure 62.1 permits a district court to state that it would reconsider its judgment if the case were remanded for that purpose. That rule states that, upon a timely motion, the Court may “state either that it would grant the motion if the court of appeals remands for that purpose or that the motion raises a substantial issue.” Fed. R. Civ. P. 62.1(a)(3). Otherwise, the court may either defer ruling on the motion or deny it. Ibid.

The underlying motion for relief would be brought under Federal Rule of Civil Procedure 60(b). Under that rule, a court may relieve a party from a final judgment for various reasons, including “mistake, inadvertence, surprise, or excusable neglect.” Fed. R. Civ. P. 60(b)(1). That subsection of the rule “is intended to provide relief in only two situations: (1) when a party has made an excusable mistake or an attorney has acted without authority, or (2) when the judge has made a substantive mistake of law or fact in the final judgment or order.” United States v. Reyes, 307 F.3d 451, 455 (6th Cir. 2002). Rule 60(b) “does not allow a defeated litigant a second chance to convince the court to rule in his or her favor by presenting new explanations, legal theories, or proof.” Jinks v. AlliedSignal, Inc., 250 F.3d 381, 385 (6th Cir. 2001). A decision to grant or deny a Rule 60(b) motion “is a matter of discretion for the district court.” Bank of Montreal v. Olafsson, 648 F.2d 1078, 1079 (6th Cir. 1981).

Blue Cross acknowledges that the Court in its October 27, 2020 order dismissed the contract claim against it without prejudice, but it maintains now that when the plaintiffs attempted to replead the improper investigation claim in their second amended complaint, they incorrectly represented that the entire contract cause of action had been dismissed without prejudice. Blue Cross suggests that due to that mischaracterization, the Court, by mistake, conflated the distinct theories of recovery in its February 28, 2024 ruling and indicated that the entire claim was dismissed without prejudice, rather than dismissing the improper investigation claim with prejudice, as it previously had done in the October 2020 ruling.

The pleadings and arguments in this case, going back to Dr. Pompy's own attempts at stating claims, are not models of precision. The “improper investigation” claims described by the magistrate judge and this Court really are a constellation of tort theories. In his first amended complaint Dr. Pompy alleged that Blue Cross “effectively hired” local and state police and prosecutors to carry out the investigation, and that entailed the enlistment of James Howell, an investigator employed by Blue Cross, who assumed a false identity and surreptitiously recorded his attempts to obtain pain medication from the clinic with a concealed camera and microphone. The plaintiff described his claims against Blue Cross and Howell as “abuse of process,” “recording without a court order,” and “theft of services and property,” and he peppered his pleading with a litany of other purported causes of action against the Blue Cross defendants collectively, identifying the claims summarily as “lack of qualified immunity, gross negligence, malice, conspiracy, forgery,” and “Violation of Antitrust Laws: Clayton Antitrust Act, Sherman Antitrust Act, Federal Trade Commission Act, including, but not limited to, Mergers and Acquisitions, Unfair Competition, Contracts Laws, RICO Act․ etc.” ECF No. 66, PageID.903, 912-13. He also obliquely framed allegations of a “RICO” conspiracy between Blue Cross and state or local investigators and prosecutors. Those were the tort claims that were dismissed with prejudice in the October 27, 2020 order.

The breach of contract claim in the first amended complaint does not appear to be related to any of this. Instead, Dr. Pompy complained that Blue Cross amended its provider agreements with him without advance notice, as it was obliged to give under the contract's terms. The plaintiff also alleged that Blue Cross had violated the terms of a provider agreement between the plaintiff and Blue Cross by improperly classifying his practice when evaluating the propriety of his prescribing patterns.

The breach of contract claim in the second amended complaint does not relate to the like-named claim in the first amended complaint. In fact, it is an entirely different animal. It is based on the investigation and relies on allegations surrounding James Howell's surreptitious activities. It does not purport to allege any tort theory of recovery, but it is based on allegations of improper investigative activity that are similar to the tort causes of action that were dismissed with prejudice.

None of this was brought to the Court's attention when the motions to dismiss and to strike were presented and argued last February. Blue Cross's motion to strike the allegations against it in the second amended complaint did not address the merits of the claims at all. Its principal argument was that the plaintiff added Blue Cross as a defendant in the second amended complaint without permission to revive claims that had been dismissed previously. ECF No. 155, PageID.2595-97. It did not mention that the new breach of contract claim differed substantially from the contract claim found in the first amended complaint. In fact, Blue Cross represented to the Court that “these claims [in the second amended complaint] are for all intents and purposes the same as the claims for ‘intentional tor[t],’ ‘breach of contract,’ ‘conspiracy,’ and ‘RICO’ that Pompy previously asserted and that the Court already dismissed.” Id. at 2593-94. The Court took Blue Cross at its word when it denied the plaintiffs' motion for relief from the previous order of dismissal, reiterated the basis for the dismissal of the breach of contract claim without prejudice, and denied Blue Cross's motion to strike as moot. ECF No. 182, PageID.3141, 3143.

Blue Cross argues that the Court intended to dismiss with prejudice the plaintiffs' breach of contract claims based on an improper investigation when it ordered that all claims were “DISMISSED WITH PREJUDICE, with the sole exception that the claim for breach of contract premised on amendments of a provider agreement in 2012 through 2016, which is DISMISSED WITHOUT PREJUDICE.” Order Adopting R&R, ECF No. 105, PageID.1617-18 (emphasis added). The problem with that argument is that the first amended complaint did not contain a breach of contract claim premised on Blue Cross's investigation of Dr. Pompy. All of Dr. Pompy's claims against Blue Cross in the first amended complaint related to the investigation were tort claims. It is highly unlikely that the Court intended to dismiss with prejudice a breach of contract claim that was not found in that pleading.

In its present motion, Blue Cross, citing Rule 60(b)(1), asks the Court to correct a “mistake” by dismissing the breach of contract claim found in the second amended complaint “with prejudice.” Blue Cross never asked this Court for that relief before the case went to appeal. In fact, its motion to strike was based on Rule 12(f), which is not a vehicle for attacking a claim on the merits as is Rule 12(b)(6) or Rule 56. If the Court were to entertain Blue Cross's request now, it would have to allow a new round of briefing addressing arguments that were not made when the case was in the trial court. It effectively would allow Blue Cross the forbidden “second chance.” Jinks, 250 F.3d at 385. And Blue Cross has not explained why it should be relieved from the general rule that “the failure to present an issue to the district court forfeits the right to have the argument addressed” later in the case. Sheet Metal Workers' Health & Welfare Fund of N.C. v. Law Off. of Michael A. DeMayo, LLP, 21 F.4th 350, 357 (6th Cir. 2021) (quoting Armstrong v. City of Melvindale, 432 F.3d 695, 700 (6th Cir. 2006)).

In the end, Blue Cross won its procedural battle when the Court denied the plaintiffs relief from the earlier order of dismissal and denied the plaintiffs leave to file a third amended complaint. Blue Cross did not then seek a ruling on the merits of the breach of contract count of the second amended complaint, or for that matter on any other claim against it. It has not offered any good reason that it should be granted that relief now.

III.

This Court likely would not grant Blue Cross a motion for relief from the judgment under Rule 60(b)(1) if the case were remanded by the court of appeals. The Court expresses no opinion on how it might rule on a motion under Rule 12(b)(6) to dismiss the breach of contract claim in the second amended complaint if such a motion were presented properly. The prudent course, therefore, is to deny the motion for an indicative ruling as permitted by Rule 62.1(a)(2).

Accordingly, it is ORDERED that the motion by defendant Blue Cross Blue Shield for an indicative ruling (ECF No. 188) is DENIED.

DAVID M. LAWSON United States District Judge