Court Opinion

ID: 8211157
Source: CourtListenerOpinion
Date Created: 2022-10-03 00:00:33.776179+00
Date Added: 2024-06-11T16:42:00.544549
License: Public Domain

Case: 21-30534      Document: 00516491629         Page: 1    Date Filed: 09/30/2022

           United States Court of Appeals
                for the Fifth Circuit                                 United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                                                     September 30, 2022
                                   No. 21-30534                         Lyle W. Cayce
                                                                             Clerk

   Randy Denning,

                                                            Plaintiff—Appellant,

                                       versus

   Bond Pharmacy, Incorporated, doing business as Advanced
   Infusion Care, doing business as Advanced Infusion
   Solutions, doing business as AIS Healthcare,

                                                            Defendant—Appellee.

                  Appeal from the United States District Court
                     for the Eastern District of Louisiana
                            USDC No. 2:21-CV-774

   Before Stewart, Clement, and Elrod, Circuit Judges.
   Carl E. Stewart, Circuit Judge:
          In 2019, Randy Denning began receiving prescription medication
   administered through a pain pump and filled by AIS Healthcare (“AIS”). In
   2021, she discovered that AIS was billing her insurer at a rate of $120 per day
   for allegedly unauthorized services. Denning filed suit in state court, seeking
   damages for contract, tort, and unjust enrichment claims. AIS removed to
   federal court and moved to dismiss the case on grounds that Denning lacked
   standing to sue because she had suffered no injury. Noting that “a breach of
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                                    No. 21-30534

   contract alone is an insufficient injury in fact,” the district court concluded
   that Denning could not satisfy standing’s redressability element for the
   claims asserted and dismissed them with prejudice under Rule 12(b)(1). See
   FED. R. CIV. P. 12(b)(1). For the following reasons, we affirm the district
   court’s judgment dismissing Denning’s claims for lack of standing, however,
   we modify the judgment to make it without prejudice and affirm as modified.
                I. FACTUAL & PROCEDURAL BACKGROUND
          In October 2019, Denning began receiving outpatient care for chronic
   pain with medication administered through an intrathecal pain pump. This
   pump is implanted under the skin and filled with a customized medication
   that it delivers through a catheter directly to the spinal cord. It can deliver
   medication at scheduled intervals for several months before requiring a refill,
   enabling a patient to receive day-to-day pain treatment outside of an in-
   patient healthcare facility.
          According to Denning, her physician prescribed medication to be
   filled by AIS which is a national compounding pharmacy that provides
   specialized home infusion therapy using pain pumps. Denning signed two
   agreements with AIS in October 2019. The first authorized AIS to provide
   services to Denning pursuant to the orders of her physician. The second
   assigned to AIS insurance benefits payable for products or services provided
   by the pharmacy.
          In February 2021, Denning discovered that AIS had billed her insurer
   at a daily rate of $120 for services that she alleges neither she nor her
   physician had authorized. The following month, Denning filed a petition in
   Louisiana state court seeking compensatory and punitive damages, and
   alternatively, restitution. Denning’s petition included state law claims for

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   breach of contract, unjust enrichment, and fraudulent misrepresentation. 1
   She asserted her claims individually and on behalf of a class of hundreds of
   similarly situated Louisiana patients billed by AIS over the last decade.
           AIS removed the suit to federal district court and filed a motion to
   dismiss the petition or strike the class action allegations. In doing so, AIS
   argued that (1) the case should be dismissed under Rule 12(b)(1) for lack of
   standing; (2) the claims for unjust enrichment and fraudulent
   misrepresentation should otherwise be dismissed under 12(b)(6) for failure
   to state a claim; and (3) if claims remain, Denning’s class action allegations
   should be stricken for failure to show a predominance of common issues
   among a proposed class. See FED. R. CIV. P. 12(b)(1), (6). According to
   AIS, Denning lacked standing to assert her claims because she suffered no
   injury. AIS reasoned that Denning had not alleged that she paid any of the
   billed amounts or that AIS had threatened collection proceedings against her.
   Rather, she had alleged only that her insurer wrongfully paid for billed
   services. Thus, AIS argued, Denning had suffered no financial loss and
   allegedly could not show an injury for standing purposes. 2
           In her opposition to AIS’s motion, Denning conceded that she
   suffered no financial loss but averred that the alleged billing practices
   nevertheless resulted in a redressable injury. According to Denning, “[a]
   party to a contract undoubtedly has standing to file a suit for breach of that

           1
             In Denning’s opening brief, she refers to both “intentional misrepresentation”
   and “negligent misrepresentation.” Because Denning did not raise negligent
   misrepresentation in her petition, however, it is “not properly before the court” and we
   decline to address it. Fisher v. Metro. Life Ins. Co., 895 F.2d 1073, 1078 (5th Cir. 1990).
           2
             Although AIS did not file an answer before Denning’s claims were dismissed, it
   stated in its motion and in oral argument before this court that it disputes her allegation
   that the charges were unauthorized.

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   contract,” and several violations of Louisiana law arising from AIS’s billing
   activities could serve as a basis for standing.
          In August 2021, the district court granted AIS’s Rule 12(b)(1) motion
   to dismiss on grounds that Denning had failed to establish standing for her
   claims. In its reasons, the district court observed that “[c]ourts in other
   circuits are wrestling with the question of whether a breach of contract alone,
   without any further harm or injury, constitutes an injury in fact for standing
   purposes.” After noting that the Fifth Circuit has not directly addressed this
   question, the district court concluded that “[i]t appears . . . Article III
   standing requires a concrete injury to plaintiff such that a breach of contract
   alone is an insufficient injury in fact.” In support, the district court cited the
   Supreme Court’s reasoning in Spokeo, Inc. v. Robins that standing requires a
   concrete injury, “even in the context of a statutory violation.” 578 U.S. 330,
   341 (2016). However, the district court did not rest its disposition on an
   injury in fact analysis and ultimately held that Denning could not satisfy
   standing’s redressability element. The district court reasoned that “if
   Plaintiff has not suffered any concrete losses . . . there is nothing to
   compensate.” It explained that the disgorgement of funds paid by Denning’s
   insurer would only redress the insurer’s injury, not hers. The district court
   then dismissed Denning’s claims with prejudice. This appeal followed.
                           II. STANDARD OF REVIEW
          “Standing is a question of law that we review de novo.” Rivera v.
   Wyeth-Ayerst Lab’ys, 283 F.3d 315, 319 (5th Cir. 2002). “We review for clear
   error all facts expressly or impliedly found by the district court.” Id. “[W]hen
   ruling on a defendant’s motion to dismiss, a judge must accept as true all of
   the factual allegations contained in the complaint.” Erickson v. Pardus,
   551 U.S. 89, 94 (2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–
   56 (2007)). “Since they are not mere pleading requirements, but rather an
   indispensable part of the plaintiff[’]s case, each element of standing must be

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   supported in the same way as any other matter on which the plaintiff bears
   the burden of proof[.]” In re Deepwater Horizon, 739 F.3d 790, 799 (5th Cir.
   2014) (quoting Lewis v. Casey, 518 U.S. 343, 358 (1996)). “At the pleading
   stage, general factual allegations of injury resulting from the defendant’s
   conduct may suffice, for on a motion to dismiss we presume that general
   allegations embrace those specific facts that are necessary to support the
   claim.” Id. “[O]ur review is limited to whether the complaint is sufficient to
   allege the jurisdiction.” Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir.
   1981).
                                      III. DISCUSSION
            On appeal, Denning argues that the district court erred in holding that
   she had failed to demonstrate a sufficient injury to support Article III
   standing. 3 She also advances an unjust enrichment claim for the amounts
   improperly collected from her insurer by AIS. 4 Last, she contends that the
   district court erred in dismissing her case with prejudice. We address each
   argument in turn.

            3
             Denning points to other theories of injury for her contract and tort claims in her
   briefing before this court, however, because she did not adequately plead these alternative
   theories to the district court, we cannot consider them on appeal. See Lone Star Fund V
   (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (noting that our review
   “is limited to the complaint, any documents attached to the complaint, and any documents
   attached to the motion to dismiss that are central to the claim and referenced by the
   complaint”).
            4
             Because this is an appeal from a motion to dismiss, the court, as part of its standing
   analysis, investigates all the causes of action raised in the complaint.

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                                        A. Standing
           We first examine whether the breach as alleged in Denning’s contract
   and tort claims is an injury for standing purposes. 5 We conclude that it is.
   Article III of the Constitution extends the judicial power of the United States
   only to “Cases” and “Controversies.” Steel Co. v. Citizens for a Better Env’t,
   523 U.S. 83, 102 (1998) (quoting U.S. Const. art. III, § 2). “Standing to
   sue is part of the common understanding of what it takes to make a justiciable
   case.” Id. (citing Whitmore v. Arkansas, 495 U.S. 149, 155 (1990)). To
   establish standing, “[t]he plaintiff must have (1) suffered an injury in fact, (2)
   that is fairly traceable to the challenged conduct of the defendant, and (3) that
   is likely to be redressed by a favorable judicial decision.” Spokeo, 578 U.S. at
   338; see also Uzuegbunam v. Preczewski, 141 S. Ct. 792, 796 (2021).
           “To establish injury in fact, a plaintiff must show that he or she
   suffered ‘an invasion of a legally protected interest’ that is ‘concrete and
   particularized’ and ‘actual or imminent, not conjectural or hypothetical.’”
   Spokeo, 578 U.S. at 339 (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560
   (1992)). “Central to assessing concreteness is whether the asserted harm has
   a ‘close relationship’ to a harm traditionally recognized as providing a basis
   for a lawsuit in American courts[.]” TransUnion LLC v. Ramirez, 141 S. Ct.
   2190, 2200 (2021) (quoting Spokeo, 578 U.S. at 340–41). “To show
   traceability, a plaintiff must allege that his injury is ‘connect[ed] with the
   conduct about which he complains.’” Glen v. Am. Airlines, Inc., 7 F.4th 331,
   335 (5th Cir. 2021) (alteration in original) (quoting Trump v. Hawaii, 138 S.

           5
             In the context of her breach of contract claim, Denning asserts that AIS
   “breached” by billing for unauthorized services. In the context of her tort claim for
   fraudulent misrepresentation, she contends that AIS “fail[ed] to perform” its obligations
   as set out in the agreements. But both claims as pled are predicated on the same injury:
   contractual breach. Accordingly, we analyze Denning’s fraudulent misrepresentation claim
   under the penumbra of her breach of contract claim.

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   Ct. 2392, 2416 (2018)). Meanwhile, to establish redressability, a plaintiff
   must show a “substantial likelihood” that the requested relief will remedy
   the alleged injury in fact. Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens,
   529 U.S. 765, 771 (2000) (quoting Simon v. E. Ky. Welfare Rts. Org., 426 U.S.
   26, 45 (1976)).
          The Supreme Court has long recognized “that where there is a legal
   right, there is also a legal remedy by suit or action at law, whenever that right
   is invaded.” Marbury v. Madison, 5 U.S. 137, 163 (1803) (quoting 3 WILLIAM
   BLACKSTONE, COMMENTARIES ON THE LAWS OF ENGLAND 23
   (1765)). More recently, the Court reemphasized in Uzuegbunam, that “every
   violation [of a right] imports damage.” 141 S. Ct. at 802 (alteration in
   original) (quoting Webb v. Portland Mfg. Co., 29 F. Cas. 506, 509 (C.C.D. Me.
   1838)). Likewise, this court has held that “it is sufficient for standing
   purposes that the plaintiffs seek recovery for an economic harm that they
   allege they have suffered.” Cole v. Gen. Motors Corp., 484 F.3d 717, 723 (5th
   Cir. 2007). Moreover, in a similar case to this one, we held that both a
   hospital provider and its patients had suffered an injury in fact due to the
   insurance company’s failure to make payments in accordance with the policy
   terms. See N. Cypress Med. Ctr. Operating Co., Ltd. v. Cigna Healthcare, 781
   F.3d 182, 192 (5th Cir. 2015) (“[The insurer] argues that its refusal to pay
   based on the full charges [the hospital provider] reported did not cause
   patients any injury because they were never at imminent risk of out-of-pocket
   expenses . . . We cannot agree.”). In other words, traditional and recent
   precedent arising from both the Fifth Circuit and the Supreme Court reflect
   that a breach of contract is a sufficient injury for standing purposes.

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           In light of this applicable precedent, we hold that Denning has shown
   an injury in fact through her breach of contract claims. 6 But our analysis does
   not end there. Although Denning has established injury in fact, she cannot
   get past the redressability prong required to establish standing. This is
   because her injury, as she alleges it, is not redressable by the compensatory
   and punitive damages that she seeks. See Uzuegbunam, 141 S. Ct. at 796. 7 Put
   another way, rendering an award of damages in favor of Denning does not
   redress her insurer’s injury of being subjected to AIS’s unauthorized billing
   practices. See North Cypress, 781 F.3d at 195 (observing that a favorable
   decision awarding the medical provider, not the patients, “is likely to redress
   the injury.” (emphasis added)).
           For these reasons, we conclude that the district court erred in holding
   that Denning failed to show an injury in fact through her associated breach of
   contract and tort claims. However, because we agree with the district court
   that Denning’s claims are not redressable by the damages she seeks, we
   affirm its dismissal of her claims for lack of standing. See Uzuegbunam, 141 S.
   Ct. at 796 (“To demonstrate standing, the plaintiff must . . . seek a remedy
   that redresses that injury.”).

           6
            AIS relies on Wendt v. 24 Hour Fitness USA, Inc., 821 F.3d 547 (5th Cir. 2016) for
   the proposition that this court has “squarely rejected” the breach of contract argument
   that Denning advances here. But Wendt is distinguishable because the plaintiffs there only
   sought damages for injuries they claimed to have directly suffered. Id. at 550–51. They were
   not, as Denning is here, alleging injuries that a third party has suffered. Id.
           7
             We also note that the Uzuegbunam plaintiffs only sought nominal damages to
   redress their past injury which is distinguishable from the relief that Denning seeks here.
   141 S. Ct. at 796, 801–02 (“[W]e conclude that a request for nominal damages satisfies the
   redressability element of standing where a plaintiff’s claim is based on a completed
   violation of a legal right.”).

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                               B. Loss of Patrimony
          Next, we turn to whether Denning’s loss of patrimony as alleged in
   her unjust enrichment claim is an injury for standing purposes. Denning
   argues that, as a consequence of AIS’s unauthorized billing for services not
   rendered, the amount of insurance coverage available to her for a particular
   term was improperly depleted. In making this argument, she primarily relies
   on Louisiana Civil Code article 2299, which sets out a cause of action for
   obligation to restore payment or a thing not owed.
          For purposes of our analysis here, we assume without deciding that
   Denning has sufficiently pled an injury in fact for standing purposes through
   her unjust enrichment claim. Again, however, she cannot establish
   redressability. The text of Article 2299 provides that “[a] person who has
   received a payment or a thing not owed to him is bound to restore it to the
   person from whom he received it.” La. Civ. Code Ann. art. 2299 (emphasis
   added). Both parties acknowledge that AIS received payment that it was
   allegedly not owed from Denning’s insurer, not from Denning. Thus, even if
   Denning prevailed on this claim and received restitution from AIS, it would
   not restore her depleted insurance coverage. Accordingly, Denning cannot
   show a “substantial likelihood” that the restitution she seeks would remedy
   the injury she alleges. Vermont Agency, 529 U.S. at 771 (quoting Simon,
   426 U.S. at 45).
          Because Denning has failed to satisfy the redressability element of her
   unjust enrichment claim, we affirm the district court’s dismissal of this claim
   for lack of standing.
                                    C. Prejudice
          Finally, Denning argues that the district court erred when it dismissed
   her claims with prejudice instead of without prejudice. Here, we agree.
   “Ordinarily, when a complaint is dismissed for lack of jurisdiction, including
   lack of standing, it should be without prejudice.” Green Valley Special Util.

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   Dist. v. City of Schertz, 969 F.3d 460, 468 (5th Cir. 2020) (quoting Williams
   v. Morris, 614 F. App’x 773, 774 (5th Cir. 2015) (per curiam)). As AIS
   observes, the district court’s dismissal with prejudice appears to be a
   “scrivener’s” error. We thus modify the district court’s judgment
   dismissing Denning’s claims with prejudice to make it without prejudice and
   affirm the judgment as modified. Id. at 468-69. 8
                                    IV. CONCLUSION
           For the foregoing reasons, we MODIFY the district court’s
   judgment dismissing Denning’s claims for lack of standing to make it without
   prejudice and AFFIRM as modified.

           8
              Denning also contends that the district court’s dismissal of her claims was
   premature because her motions for class certification and for leave to amend her complaint
   to add two additional class representative plaintiffs were still pending at the time of
   dismissal. However, as we have held infra, Denning has failed to allege a redressable injury
   and therefore lacks standing to assert her claims. This defect could not have been cured by
   allowing her to certify a class or add additional plaintiffs to her suit. See Ortiz v. Am.
   Airlines, Inc., 5 F.4th 622, 628 (5th Cir. 2021) (“A plaintiff must demonstrate standing for
   himself or herself, not just for others he or she professes to represent.”); TransUnion,
   141 S. Ct. at 2208 (“Every class member must have Article III standing in order to recover
   individual damages. Article III does not give federal courts the power to order relief to any
   uninjured plaintiff, class action or not.”) (internal quotation marks and citation omitted).

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