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Kasher Law Group, LLC v. Ciox Health, LLC

United States District Court, D. New Jersey

September 5, 2018

KASHER LAW GROUP, LLC, on behalf of itself and all others similarly situated, Plaintiff,
CIOX HEALTH, LLC, Defendant.




          NOEL L. HILLMAN, U.S.D.J.

         This putative class action, originally filed in state court and removed by Defendants to this Court, concerns Plaintiff's allegations that Defendant committed fraud and acted in bad faith by overcharging for electronic copies of patients' medical records. Pending before the Court is Plaintiff's motion to remand.

         Ordinarily, one would expect a plaintiff to take an expansive view of a potential claim for money damages, the most common claim for relief in a civil action. Similarly, a defendant would seek, as early as possible, to limit such claims. An interesting dynamic arises when a plaintiff, who originally chose a state forum, has their case removed to federal court based on a claim that jurisdiction exists either under the general diversity statute or the Class Action Fairness Act (“CAFA”).

         For the plaintiff who wishes to stay in state court, the dynamic reverses with the plaintiff arguing the narrowness of the claim for damages and the defendant arguing for the more expansive view. This is one of those cases. Finding that the claims of the putative class do not exceed the statutory minimum for subject matter jurisdiction under CAFA, the Court will grant Plaintiff's motion for remand.


         Plaintiff, Kasher Law Group, LLC, is a law firm that requested hospital medical records for its client from Our Lady of Lourdes Hospital in Camden, New Jersey. Defendant, Ciox Health, LLC, is an information management company that, among other things, contracts with hospitals, including Our Lady of Lourdes Hospital, to provide copies of patients' medical records at their request. According to Plaintiff's complaint, Defendant charged $161.90 for 261 pages of its client's medical records, which were electronically downloaded onto a CD and mailed to Plaintiff. Plaintiff represents that the breakdown of charges was: $10.00 Basic Fee; $100.00 for 100 pages of records at a per copy (paper) price of $1.00; $40.25 for 161 pages of records at per page copy (paper) price of $.25 per page; and a shipping fee of $11.65.

         Plaintiff claims that Defendant's fees for electronic production are not based on its actual costs, and are higher than the limits imposed by N.J.A.C. § 8:43G-15.3(d), which permits only a $10.00 search fee, the actual cost of the portable media (e.g., CD), and the actual cost of postage, as determined by the New Jersey Department of Health.[1] Plaintiff seeks a declaratory judgment that Defendant's violation of this provision constitutes an unconscionable business practice, and violates the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. Plaintiff also claims that Defendant breached the covenant of good faith and fair dealing by overcharging for electronic medical records and adds a claim for unjust enrichment.

         Plaintiff has proposed the following class:

         All patients who are New Jersey citizens, or persons designated by such patients to receive copies of their medical records:

A) who, between December 11, 2011 and the present, received an invoice from Ciox for electronic copies of patient medical records produced on a CD or via internet download, which were created by a New Jersey health care provider; and
B) who paid that Ciox invoice; and
C) excluding from the class Ciox and DeNittis Osefchen Prince, P.C., and any employees, officers or owners of either CIOX or DeNittis Osefchen Prince, P.C.

(Compl. ¶ 52, Docket No. 1-2 at 11). Plaintiff alleges that each class member has incurred less than $210 in out-of-pocket damages.

         Defendant removed Plaintiff's case from New Jersey Superior Court, Camden County, to this Court, contending that this Court has jurisdiction over the matter pursuant CAFA, 28 U.S.C. § 1332(d)(2). CAFA provides, in relevant part, that “district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5, 000, 000, exclusive of interest and costs, and is a class action in which . . . (A) any member of a class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2). Another jurisdictional requirement under CAFA is that the proposed class contains at least 100 members. Id. § 1332(d)(6).

         In its notice of removal, Defendant contends that all three elements for CAFA jurisdiction are met. Specifically with regard to the amount in controversy, Defendant contends that Plaintiff's proposed class encompasses more than 50, 000 potential class members. At $100 in damages per class member ($110 less than proposed by Plaintiff), along with treble and punitive damages and attorney's fees, all of which are available to Plaintiff for its claims and requested in the complaint, the $5 million amount in controversy threshold is easily met.

         Plaintiff has moved to remand its case to state court. In Plaintiff's motion to remand, it does not dispute that this matter meets the citizenship and numerosity requirements of CAFA.[2] Plaintiff argues, however, that Defendant has not demonstrated that the class claims will exceed $5 million and contends its case should be remanded for lack of subject matter jurisdiction.

         Under 28 U.S.C. § 1446(a), a defendant seeking to remove a case to a federal court must file in the federal forum a notice of removal “containing a short and plain statement of the grounds for removal.” “When a defendant seeks federal-court adjudication, the defendant's amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court.” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 553 (2014). Evidence establishing the amount is only required by § 1446(c)(2)(B) when the plaintiff contests, or the court questions, the defendant's allegation. Id. If the plaintiff contests the defendant's allegation, “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Id. at 553-54.

         Here, Plaintiff's complaint specifically states that the total amount in controversy for its claims, including attorney's fees, is less than $5 million. It is a plaintiff's right to limit the value of its claim to prevent its case from being removed from its choice of forum, see Frederico v. Home Depot, 507 F.3d 188, 195 (3d Cir. 2007) (explaining that it is “well-established” that “the plaintiff is the master of her own claim and thus may limit his claims to avoid federal subject matter jurisdiction”), but federal court is a forum available to a defendant despite a plaintiff's choice, as long as the defendant has provided in its notice of removal a “short and plain statement” that the jurisdictional requirements of CAFA are met, and if challenged by the plaintiff, has demonstrated that the CAFA requirements are met by the preponderance of the evidence. See Owens, 135 S.Ct. at 554 (“[N]o antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court.”).

         Defendant's notice of removal invoked CAFA jurisdiction by explaining, based on Plaintiff's description of the class, that over 50, 000 New Jersey citizens or their designees paid for electronic medical records from a New Jersey health care provider between December 11, 2011 to the present. The notice also asserted that with $210 (or even $100) in actual damages per class member, along with the demanded treble and punitive damages and attorney's fees, the amount in controversy exceeds $5 million. This “short and plain statement” is sufficient to establish a prima facie basis for subject matter jurisdiction under CAFA at the time of removal. Plaintiff, however, has challenged Defendant's calculation of the amount in controversy, and the Court must now consider whether the preponderance of the evidence supports Defendant's assertion of jurisdiction.

         Plaintiff argues that its proposed class is much narrower than Defendant's definition: it is only New Jersey patients or their legal representatives, not any person or entity that has made a medical records request; it is only electronic record requests made to hospitals, not any request to all other types of providers; and it is only people who have paid a Ciox invoice, not an invoice issued by Ciox's former corporate form, which limits the class to less than a two-year time period (March 1, 2016 to December 11, 2017).[3] Based on this narrow class, Plaintiff argues that Defendant's estimation of class size and resulting amount in controversy is a self-serving “pie in the sky” estimate.

         In response, Defendant points out that Plaintiff cannot amend its complaint to defeat jurisdiction through its motion to remand. Defendant argues that its estimation of damages is plausible because unlike the class Plaintiff attempts to redefine in its motion to remand, Plaintiff's class definition provides for: New Jersey patients “or persons designated by such patients, ” and not their “legal representatives”; medical records created by a “New Jersey health care provider, ” and not just a hospital; and a time period of December 11, 2011 to present (Plaintiff filed its complaint on December 11, 2017), which encompasses both Ciox and its former entity. Defendant ...

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