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London Doctors Hospital of Augusta, LLC v. Commonwealth

United States District Court, E.D. Kentucky, Southern Division, London

April 11, 2018

LONDON DOCTORS HOSPITAL OF AUGUSTA, LLC, Plaintiff,
v.
COMMONWEALTH OF KENTUCKY, et al., Defendants.

          MEMORANDUM OPINION & ORDER

          Gregory F. Van Tatenhove United States District Judge.

         Kentucky law requires an employer to pay for treatment when an employee sustains an injury while on the job. KRS § 342.020. When a medical provider submits a claim for payment for such treatment, the provider is subject to the fee schedule promulgated by the Department of Workers Claims of the Kentucky Labor Cabinet. Doctors Hospital of Augusta, LLC, believes this structure is unconstitutional and has sued to recover the full payment resulting from treating a Kentucky employee. That employee, Mr. Marcus Hobbs, was also named as a defendant to this suit, and has filed a motion to dismiss. For the reasons below, this motion is DENIED.

         I

         A

         Mr. Marcus Hobbs worked for Mr. Mark Daniels in Bimble, Kentucky at the time of his accident. [R. 1 at ¶¶ 8-10.] Mr. Daniels has a coverage policy through Kentucky Employers' Mutual Insurance (KEMI) that covers Mr. Hobbs's workers' compensation. [R. 18-1 at 3.] On November 21, 2016, while helping Mr. Daniels move a mobile home into position, Mr. Hobbs touched a live electric service line, suffering life-threatening burns. [R. 1 at ¶ 10.] He initially received treatment from the Emergency Department at Holston Valley Medical Center in Kingston, Tennessee, after which he was airlifted to Doctors Hospital in Augusta, Georgia, for continued care. Id. at ¶ 11. At the time of filing the Complaint in this matter, Doctors Hospital claimed Mr. Hobbs continued accepting care from their facility. Id.

         Following treatment of Mr. Hobbs, Doctors Hospital submitted a bill to KEMI requesting $4, 325, 252.10 for services rendered. Id. at ¶ 12. KEMI then applied the cost-to-charge ratio outlined in KRS Chapter 342 of 16.55% and submitted payment in the amount of $708, 878.41. [R. 18-1 at 4.] Doctors Hospital refused this payment. Id. Instead, Doctors Hospital filed a Medical Fee Dispute with the Kentucky Department of Workers' Claims, stating that the laws relating to compensation of medical services were unconstitutional. Id.

         Chief Administrative Law Judge Douglas Gott was assigned to handle the Medical Fee Disputes. Id. Doctors Hospital then filed this action on July 25, 2017, against the Kentucky Labor Cabinet, Derrick Ramsey in his official capacity as Secretary of the Kentucky Labor Cabinet, Robert Swisher in his official capacity as Commissioner of the Department of Workers' Claims, Andy Beshear in his official capacity as Attorney General of the Commonwealth of Kentucky, and Mr. Hobbs. [R. 1.] Accordingly, on August 1, 2017, Administrative Law Judge Gotts placed the Medical Fee Dispute in abeyance pending the outcome of this action. [R. 18-1 at 4.] Doctors Hospital then filed an Amended Complaint on August 31, but only as to Defendants Andy Beshear, Robert Swisher, and the Kentucky Labor Cabinet. [R. 15.] KEMI moved to intervene as a defendant [R. 13] and this Court granted that motion on September 25 [R. 26]. Since then, Defendant Beshear [R. 29] and the Kentucky Labor Cabinet [R. 33] were dismissed upon agreement of the parties from this action. Mr. Hobbs also filed a motion to dismiss, claiming KEMI, not he, is the proper party for this matter. [R. 18.]

         B

         Federal Rule of Civil Procedure 12(b)(1) provides that a defendant may assert lack of subject-matter jurisdiction as a defense. A motion to dismiss under Rule 12(b)(1) is different from a motion to dismiss under Rule 12(b)(6) because it challenges the Court's power to hear the case before it. When jurisdiction is challenged under this rule, the burden is on the plaintiff to prove that jurisdiction exists. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). In answering this question, the Court is “empowered to resolve factual disputes” and need not presume that either parties' factual allegations are true. Id.

         A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of a plaintiff's complaint. In reviewing a Rule 12(b)(6) motion, the Court “construe[s] the complaint in the light most favorable to the plaintiff, accept[s] its allegations as true, and draw[s] all inferences in favor of the plaintiff.” DirecTV, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citation omitted). The Court, however, “need not accept as true legal conclusions or unwarranted factual inferences.” Id. (quoting Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir. 2000)). The Supreme Court explained that in order “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Courier v. Alcoa Wheel & Forged Products, 577 F.3d 625, 629 (6th Cir. 2009).

         II

         Mr. Hobbs filed a motion to dismiss pursuant to both Fed. R. Civ. Pro. 12(b)(1) and 12(b)(6). [R. 18.] First, Mr. Hobbs asserts that he cannot be held responsible for the balance owed to Doctors Hospital, and that only KEMI is responsible for payment. [R. 18-1 at 5-7.] Additionally, Mr. Hobbs claims that this matter is not ripe for review by this Court, as the parties have ongoing matters pending before the Kentucky Department of Workers' Claims administrative law judge. Id. at 8.

         A

         Initially, Mr. Hobbs relies on KRS §§ 342.020 and 342.035 to demonstrate that he would not be the party responsible for paying the balance claimed by Doctors Hospital. [R. 18-1 at 5- 7.] KRS § 342.020 requires an employer to pay for the medical care of an injured employee, but such fees cannot exceed the limitations provided in KRS § 342.035. KRS § 342.035 directs the Commissioner of the Department of Workers' Claims to promulgate regulations adopting a ...


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