Case 6:12-cv Document 1 Filed 09/14/12 Page 1 of 11 PageID #: 1 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION

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1 Case 6:12-cv Document 1 Filed 09/14/12 Page 1 of 11 PageID #: 1 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION OPELOUSAS GENERAL HOSPITAL AUTHORITY A PUBLIC TRUST, D/B/A OPELOUSAS GENERAL HEALTH SYSTEM; AND ARKLAMISS SURGERY CENTER, L.L.C. Plaintiffs VERSUS FAIRPAY SOLUTIONS, INC. Defendant CIVIL ACTION NO. SECTION JUDGE MAGISTRATE NOTICE OF REMOVAL Defendant Qmedtrix Systems, Inc. ("Qmedtrix"), files this Notice of Removal pursuant to 28 U.S.C. 1332, 1441, 1446, and 1453, and hereby removes this matter from the 27th Judicial District Court for the Parish of St. Landry, State of Louisiana, to the docket of this Honorable Court on the grounds set forth below. 1. On March 28, 2012, Plaintiffs filed this class action lawsuit in the 27th Judicial District Court, bearing Case No. 12-C-1599-C, and entitled Opelousas General Hospital Authority, a Public Trust, d/b/a Opelousas General Health System; and Arklamiss Surgery Center, L.L.C. v. Fairpay Solutions Inc. 2. The Joint Petition for Certification of Settlement Class and Approval of Class Settlement (the "Joint Petition") was filed on behalf of Opelousas General Hospital Authority, a Public Trust, d/b/a Opelousas General Health System ("Opelousas"), ArkLaMiss Surgery Center, L.L.C. ("ArkLaMiss"), and "the class of persons similarly situated," as Plaintiffs, and Defendant FairPay Solutions, Inc. ("FairPay"). Joint Petition at p. 1. For the purposes of the Joint Petition,

2 Case 6:12-cv Document 1 Filed 09/14/12 Page 2 of 11 PageID #: 2 Opelousas and ArkLaMiss represented "all Louisiana hospitals," and "all Louisiana ambulatory surgery centers," respectively. 1 Joint Petition at 3 and Through the Joint Petition, Plaintiffs and FairPay sought only approval of their previously negotiated class action settlement agreement. Joint Petition, p Qmedtrix intervened in the matter, for the purpose of opposing the class action settlement agreement as violative of both state and federal antitrust, competition and other laws. On August 8, 2012, the St. Landry Parish Court granted Qmedtrix leave to intervene. Class Action Demand, Qmedtrix was made a defendant herein on August 17, 2012, when Plaintiffs filed their Incidental Class Action Demand (the "Class Action Demand") against Qmedtrix. 6. Qmedtrix was served with the Class Action Demand on August 17, Joint Petition. 7. In the Class Action Demand, Plaintiffs seek to represent a class of Louisiana citizens, specifically, "[a]ll Louisiana hospitals and ambulatory surgery centers, who are citizens of the State of Louisiana at the time of filing of this Incidental Class Action Demand, and who have had one or more Louisiana workers' compensation outpatient medical bill [sic] reimbursed at a reduced rate as a result of a Qmedtrix recommended reduction." Class Action Demand at The Joint Petition does not define the class. However, the St. Landry Parish court ultimately approved a class of Louisiana citizens, specifically "[a]ll Louisiana medical providers, institutions, and facilities that have provided outpatient services to workers' compensation patients pursuant to the Louisiana Workers' Compensation Act, LSA-R.S. 23:1021 et seq., and whose bills have been discounted adjusted, paid on a reduced basis, or otherwise paid at less than the billed amount after October 21, 2003 as a result of a reduction recommended by FairPay." See Exhibit A, Joint Petition for Certification of Settlement Class and Approval of Class Settlement, at p. 5. 2

3 Case 6:12-cv Document 1 Filed 09/14/12 Page 3 of 11 PageID #: 3 8. The Class Action Demand alleges that "Qmedtrix has engaged in... fraudulent bill review practices with respect to the outpatient hospital bills of each member of the Cross- Claim Plaintiff Class," resulting in Qmedtrix's unjust enrichment, and conversion of funds belonging to the plaintiff class. Class Action Demand, 18. Plaintiffs further allege that "[t]he Cross-Claim Plaintiff Class has since learned that not only do Qmedtrix's recommended payments fall well below the mandatory fee schedule, but that Qmedtrix intentionally misrepresented the existence and use of a database and a propriety methodology." Class Action Demand, Through their Class Action Demand, Plaintiffs now seek "all damages suffered by the plaintiff class as a result of Qmedtrix's bill review practices, as well as all general, equitable, and injunctive relief proper," in addition to the costs of these proceedings. Class Action Petition, pp Pursuant to 28 U.S.C. 1446(a), attached hereto as Exhibit A are all pleadings filed in the record of the State Court proceeding. 11. This Court has subject matter jurisdiction over all claims asserted against all Defendants, regardless of their citizenship, pursuant to the Class Action Fairness Act ("CAFA"), 28 U.S.C and In addition, the Court has diversity jurisdiction over the claims asserted against Qmedtrix, pursuant to 28 U.S.C Complete diversity exists between all defendants and all of the putative class members, and the amount in controversy is satisfied. 13. Further, this Court has supplemental jurisdiction pursuant to 28 U.S.C over any state law claims. 3

4 Case 6:12-cv Document 1 Filed 09/14/12 Page 4 of 11 PageID #: 4 I. Federal Jurisdiction Exists Under CAFA Over Claims Asserted Against All Defendants 14. The Class Action Fairness Act ("CAFA") expressly provides that class actions filed in state court are removable to federal court. 28 U.S.C CAFA expands federal jurisdiction over class actions by vesting district courts with original jurisdiction where the amount in controversy exceeds $5 million in the aggregate for the entire class, exclusive of interest and costs; the putative class contains at least 100 class members; minimal diversity exists (i.e., any member of the putative class is a citizen of a State different from that of any defendant); and the primary defendants are not states, state officials, or other governmental entities against whom the district court may be foreclosed from ordering relief. 28 U.S.C. 1332(d)(2), (5); Hollinger v. Home State Mut. Ins. Co., 654 F.3d 564, 569 (5th Cir. 2011). See also In re Katrina Canal Litig. Breaches, 524 F.3d 700, 711 n. 47 (5th Cir. 2008); Preston v. Tenet Healthsys. Mem'l Med. Ctr., Inc., 485 F.3d 804, 810 (5th Cir. 2007); Robinson v. Cheetah Transp., 2006 WL (W.D. La. Feb. 27, 2006). 16. This suit satisfies all of the requirements under CAFA for federal jurisdiction. 17. First, it is clear that the amount in controversy exceeds $5 million. 18. Louisiana prohibits plaintiffs from petitioning for a specific monetary amount. La. Code Civ. P. art Thus, when determining whether the jurisdictional amount has been satisfied for the purposes of removal in Louisiana -- whether pursuant to CAFA or according to the traditional diversity rules -- the Fifth Circuit employs a unique standard of proof by which the removing defendant may satisfy its burden of establishing that the amount in controversy exceeds the statutory minimum by either: (1) showing that it is facially apparent that the claim is likely to exceed the requisite amount, or (2) adducing summary judgment type evidence of facts in controversy that support a finding of the jurisdictional amount. Berniard v. Dow 4

5 Case 6:12-cv Document 1 Filed 09/14/12 Page 5 of 11 PageID #: 5 Chemical Co., 2010 WL at 2 (5th Cir. August 6, 2010); Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); Joseph v. State Farm Mut. Auto. Co., 2011 WL (E.D. La. July 18, 2011). The removing party may introduce such "summary judgment type evidence" by setting forth the facts in controversy -- in the removal petition or by affidavit -- that support a finding of the requisite amount. Grant v. Chevron Phillips Chem. Co., 309 F.3d 864, 868 (5th Cir. 2002) (citing Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir.1995); Manguno, 276 F.3d at 723; Simon v. Wal-Mart Stores, Inc., 193 F.3d 848, 850 (5th Cir.1999); Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5th Cir.1999)). 19. In determining whether a complaint alleges damages sufficient to satisfy the jurisdictional prerequisites for removal, the total value of all recoverable compensatory damages, costs and fees is considered. See, e.g., Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000); Allen, 63 F.3d at 1335 (5th Cir. 1995); 14A Wright & Miller, Federal Practice and Procedure The amount in controversy here exceeds $5 million with respect to Qmedtrix alone. Qmedtrix's business records from the period January 1, 2007 through December 31, 2011, showing the dollar value of the reductions Qmedtrix recommended for workers' compensation outpatient bills for Louisiana hospitals and ambulatory surgery centers, reflect that the total value of the amount of those recommended reductions exceeds $5 million. Affidavit of Scott Wayne Bennett, attached hereto as Exhibit B, p Moreover, the agreement negotiated between Plaintiffs and FairPay for settlement of the class action claims against FairPay requires FairPay to pay Plaintiffs $6.9 million. See Exhibit A, Settlement Agreement. 5

6 Case 6:12-cv Document 1 Filed 09/14/12 Page 6 of 11 PageID #: Thus, the amount in controversy in this case far exceeds the $5 million threshold. In fact, it is more than double the required amount. Accordingly, the amount in controversy is satisfied. 23. Second, the number of class members here exceeds In fact, there are more than 100 members in the class bringing claims against Qmedtrix alone. Qmedtrix business records from the period of January 1, 2007 through December 31, 2011, showing how many Louisiana hospitals and ambulatory surgery centers had Louisiana workers' compensation outpatient bills reviewed by Qmedtrix, for which Qmedtrix recommended a reduction in the amount billed by the hospital, reflect that Qmedtrix reviewed, and recommended reductions on, Louisiana workers' compensation outpatient bills for more than 100 Louisiana hospitals and ambulatory surgery centers with unique Federal Employer Identification Numbers. Exhibit B, p Third, the requirements for minimal diversity are not just met, but are exceeded, as all of the members of the proposed class have a different citizenship from both the defendants in this action, Fairpay and Qmedtrix 26. As is noted above, both plaintiff classes here consist entirely of Louisiana citizens. Joint Petition, 4; Class Action Demand, Plaintiffs allege that Opelousas General Hospital Authority, a Public Trust, d/b/a Opelousas General Health System, is a political subdivision of the state of Louisiana, organized under the laws of Louisiana, with its principal place of business and domicile in Louisiana. Joint Petition at 3. 6

7 Case 6:12-cv Document 1 Filed 09/14/12 Page 7 of 11 PageID #: Plaintiffs allege that ArkLaMiss Surgery Center, L.L.C., is a Louisiana limited liability company, with its principal place of business and domicile in Louisiana. Joint Petition at Plaintiffs allege that defendant FairPay Solutions, Inc. is a Delaware corporation, with its principal place of business in Texas. Joint Petition, Defendant Qmedtrix is an Oregon corporation, with its principal place of business and domicile in Oregon. Exhibit B, p Accordingly, any member of the putative class is a citizen of a state different from any defendant. Indeed, all of the members of the proposed class have a different citizenship from both of the defendants in this action. Thus, minimal diversity exists. 32. Fourth, the only defendants in this matter -- FairPay and Qmedtrix -- are not states, state officials, or other governmental entities against whom the district court may be foreclosed from ordering relief. 33. Finally, none of the exceptions to CAFA jurisdiction are applicable to this matter. Accordingly, the United States District Court for the Western District of Louisiana has original jurisdiction proper pursuant to 28 U.S.C. 1332, 1441 and 1446, and removal is proper. II. Plaintiffs' Claims Also Satisfy Traditional Diversity Requirements 34. The claims Plaintiffs have asserted against the defendants in this matter also separately satisfy the traditional diversity requirements of 28 U.S.C. 1332(a). Under that statute, United States Federal District Courts have original jurisdiction in cases "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between... citizens of different States." 28 U.S.C As is noted above, the putative class consists entirely of Louisiana citizens. Joint Petition, 4; Class Action Demand, 4, 20. 7

8 Case 6:12-cv Document 1 Filed 09/14/12 Page 8 of 11 PageID #: Also as noted above, Plaintiffs allege that FairPay Solutions is a Delaware corporation with its principal place of business and domicile and Texas, and Qmedtrix is an Oregon corporation, with its principal place of business and domicile in Oregon. Joint Petition, 3; Exhibit B, p Thus, for purposes of the diversity analysis, the plaintiffs and defendants are citizens of different states, and complete diversity exists. 38. Moreover, the $75,000 judicial amount in controversy is satisfied. 39. The Fifth Circuit applies the same test for determining the amount in controversy in the cases of removal under CAFA, as discussed above, when determining the amount in controversy under the traditional diversity rules. 40. As discussed previously, the amount in controversy in the claims against Qmedtrix alone exceeds $5 million. 41. Thus, for purposes of the diversity analysis, complete diversity exists and the amount in controversy exceeds $75,000. Accordingly, the United States District Court for the Western District of Louisiana has original jurisdiction pursuant to 28 U.S.C et seq., and removal is proper. III. The Court May Exercise Supplemental Jurisdiction Over Any State Law Claims 42. To the extent that any of Plaintiffs' claims are not subject to federal jurisdiction under 28 U.S.C. 1332, 1337, 1369, 1441 and 1442, the Court has jurisdiction over such claims under 28 U.S.C. 1367, which provides that "the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. 1367; see generally Exxon Mobil Corp. v. Allapattah Servs., Inc., 125 S. Ct. 2611, (2005). 8

9 Case 6:12-cv Document 1 Filed 09/14/12 Page 9 of 11 PageID #: To find that claims are "so related" and "form part of the same case or controversy" for section 1367 jurisdiction, the Court must determine whether Plaintiffs' claims "derive from a common nucleus of operative fact." City of Chicago v. Int'l College of Surgeons, 522 U.S. 156, 165 (1997). 44. All of Plaintiffs claims against Qmedtrix relate to alleged underpayment -- as calculated by Qmedtrix -- for medical treatment provided to patients with Louisiana workers' compensation claims. Thus, all of Plaintiffs' claims against Qmedtrix "derive from a common nucleus of operative fact." Accordingly, supplemental jurisdiction over any such state law claims would be appropriate, and removal is proper. IV. Qmedtrix has Satisfied the Procedural Requirements for Removal 45. On August 17, 2012, Qmedtrix was served with the Class Action Demand by hand, in open court, before the 27th Judicial District Court, Parish of St. Landry. See Exhibit A, Joint Motion Notice. 46. This Notice of Removal was filed within thirty (30) days after first receipt by Qmedtrix of the Class Action Demand, which is the initial pleading setting forth a claim for relief against Qmedtrix, and is therefore timely pursuant to 28 U.S.C. 1446(b). 47. The 27th Judicial District Court for the Parish of St. Landry, State of Louisiana, is located within the Western District of Louisiana pursuant to 28 U.S.C. 98(c). Therefore, venue is proper in the Western District of Louisiana in accordance with 28 U.S.C. 1441(a), because it is the "district and division embracing the place where such action is pending." 48. No previous application has been made by Qmedtrix for the relief requested herein. 9

10 Case 6:12-cv Document 1 Filed 09/14/12 Page 10 of 11 PageID #: Pursuant to 28 U.S.C. 1446(a), attached hereto as Exhibit A are all pleadings filed in the record of the State Court proceeding. 50. Pursuant to 28 U.S.C. 1446(d), a copy of this Notice of Removal is being served on counsel for Opelousas and ArkLaMiss, and a copy is being filed with the Honorable Charles Jagneaux, Clerk of Court for the 27th Judicial District Court for the Parish of St. Landry, State of Louisiana. 51. This Notice of Removal is signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and Uniform Local Rules of the District Courts. 52. By filing this Notice of Removal, Qmedtrix expressly consents to the removal. Consent by FairPay is not required for removal under CAFA. 28 U.S.C Qmedtrix reserves the right to supplement or amend this Notice of Removal and submit additional evidence in support of removal as appropriate in future circumstances. 54. By virtue of this Notice of Removal, Qmedtrix does not waive its right to assert any claims, defenses, or other motions permitted under the Federal Rules of Civil Procedure, including contesting jurisdiction and service. 55. Accordingly, because the United States District Court for the Western District of Louisiana has original jurisdiction pursuant to 28 U.S.C et. seq., as discussed above, removal is proper. 10

11 Case 6:12-cv Document 1 Filed 09/14/12 Page 11 of 11 PageID #: 11 WHEREFORE, Qmedtrix requests that this Court assume full jurisdiction over the cause herein as provided by law. Respectfully submitted, /s/ Douglas J. Cochran John M. Landis, La. Bar No Douglas J. Cochran, La. Bar No Brooke C. Tigchelaar, La. Bar No Abigayle C. Farris, La. Bar No Of STONE PIGMAN WALTHER WITTMANN L.L.C. 546 Carondelet Street New Orleans, Louisiana Telephone: (504) Attorneys for Qmedtrix Systems, Inc. C E R T I F I C A T E I hereby certify that a copy of the foregoing Notice of Removal has been served on each counsel of record by facsimile transmission and/or U.S. Mail on this 14th day of September, /s/ Douglas J. Cochran 11