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UNITED STATES DISTRICT COURT DISTRICT OF MAINE JAMES MURTAGH, M.D., Plaintiffs, vs. ST. MARY'S REGIONAL MEDICAL CENTER a/k/a ST. MARY'S HOSPITAL, ST. MARYS HEALTH SYSTEM, and IRA SHAPIRO, M.D., Defendants. ) ) ) ) ) ) ) ) ) ) ) )

CASE NO. 2:12-CV-00160-NT

DEFENDANTS' MOTION TO DISMISS AND SUPPORTING MEMORANDUM OF LAW St. Marys Regional Medical Center (St. Marys or Hospital), St. Marys Health System (Health System), and Ira Shapiro, M.D. (Dr. Shapiro) (collectively Defendants) move pursuant to Federal Rule of Civil Procedure 12(b)(6) for dismissal of all claims in the Complaint filed by James Murtagh. M.D. (Dr. Murtagh). I. NATURE OF THE CASE This is an action by a disgruntled physician whose temporary locum tenens clinical privileges 1 were terminated by St. Mary's in strict accordance with its Medical Staff Bylaws, which authorized the termination of temporary privileges of any physician "for any reason" and without entitling the physician to any due process rights. The physician alleges that the Hospital was required to provide notice of the reasons for the termination, and an opportunity to be heard, confront witnesses, present evidence, and advocate his position under several different theories
1

Locum tenens literally means "one practitioner taking the place of another." In general, hospitals use physician services for this purpose when a specialty physician is absent or there is a temporary shortage of specialty physician services. Locum tenens physicians are typically placed by a placement services entity.

JM DSK01 1139258 v1 2900542-000015 10/16/2012

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in support of a declaratory judgment, breach of contract and promissory estoppel cause of action. None of these causes of action states a claim upon which relief can be granted because the Hospital acted pursuant to its Bylaws and none of the other sources upon which the physician relies creates a private right of action. The physician also asserts two third party beneficiary contract claims, a defamation and false light claim, and a tortious interference claim. As pled, none of these causes of action state a claim upon which relief can be granted. II. RELEVANT BACKGROUND FACTS St. Marys is a private, not-for-profit Hospital located in Lewiston, Maine. Dr. Shapiro is its Chief Medical Officer. The Health System is the Hospitals parent company. 2 Dr. Murtagh is a pulmonary medicine physician. (Complaint at 1, 7). In April 2010, he was placed at St. Marys by Vista Staffing Solutions, Inc. (Vista) as a locum tenens physician to provide medical care on a temporary basis. (Id. at 7, 8). In order to provide these services, Dr. Murtagh was granted temporary privileges. (See Medical Staff Bylaws (the Bylaws) at 7.5.1.3, Ex. A). Under the Bylaws, his temporary privileges were terminable at any time . . . and for any reason. (Ex. A at 7.5.3). The Bylaws also provided that practitioners with temporary privileges are not entitled to procedural rights upon termination of those privileges. (See id. at 7.5.4) (No practitioner shall be entitled to the procedural rights afforded by Article 9 because of . . . any termination . . . of temporary privileges.). 3 Dr. Murtagh began his service as a locum tenens physician on April 22, 2010.

Although it is not issue determinative in the context of this Motion, the Health System is not a proper party. It is simply the corporate parent of St. Mary's Hospital and there are no veil piercing allegations in the Complaint, which would be necessary to state a cause of action against it. See Bonnar-Vawter, Inc. v. Johnson, 173 A.2d 141, 388 (Me. 1961) (the corporate entity will only be disregarded when used to cover fraud or illegality, or to justify a wrong). Article 9 of the Bylaws provides for procedures that include a fair hearing, but it does not apply to Dr. Murtagh. See id. at 47.

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(Complaint at 7). St. Marys terminated his placement on May 12, 2010. (Id. at 9). The Hospital contemporaneously terminated his temporary clinical privileges. (Id.). The Hospital then informed him that as a locum tenens physician with temporary privileges he was not entitled to a hearing or any other due process rights under the Bylaws. (Id. at 15). Dr. Murtagh alleges that after St. Marys terminated his privileges, Dr. Shapiro told certain unnamed potential employers and staffing entities that he was fired for unsatisfactory performance. (Id. at 17). III. STANDARD OF REVIEW Federal Rule of Civil Procedure 12(b)(6) provides that a complaint can be dismissed for failure to state a claim upon which relief can be granted. Although Rule 8(a)(2) only requires a short and plain statement of the claim showing that the pleader is entitled to relief[,]" a complaint can survive a motion to dismiss only if it alleges a plausible entitlement to relief. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 559 (2007). This plausibility standard requires more than a sheer possibility that a defendant has acted unlawfully. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Moreover, while a court will accept as true well-pleaded facts, a court will not accept a plaintiffs bald assertions, periphrastic circumlocutions, unsubstantiated conclusions, or outright vituperation, or subjective characterizations, optimistic predictions, or problematic suppositions." Fantini v. Salem State Coll., 557 F.3d 22, 26 (1st Cir. 2009). And, [a] complaint must contain enough facts to raise a reasonable expectation that discovery will reveal evidence supporting the claims. Id. (quoting Twombly, 550 U.S. at 556). Furthermore, a complaint must allege more than labels, conclusions, and a formulaic recitation of the elements of the claims. See Twombly, 550 U.S. at 555. This requirement is not satisfied by naked assertion[s] devoid of further factual enhancement. Id.

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In addition, because several of Dr. Murtaghs claims are dependent on the Bylaws and the Hospital's contract with Vista, the Court may consider these important agreements without converting the Motion to Dismiss into one for summary judgment. See Divas Inc. v. City of Bangor, 411 F.3d 30, 38 (1st Cir. 2005) ([U]nder First Circuit precedent, when a complaints factual allegations are expressly linked to and admittedly dependent upon a document the court may review it upon a motion to dismiss.). IV. ARGUMENT A. Count One: Action for Declaratory Relief 28 U.S.C. 2201, et seq., and 14 M.S.RA. 5951, et seq.

In Count One, Dr. Murtagh asserts a cause of action for Declaratory Relief under 28 U.S.C. 2201, et seq., and 14 M.S.RA. 5951, et seq. The federal statute 4 provides, in relevant part: In a case of actual controversy within its jurisdiction, . . . any court of the United States, upon filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. 28 U.S.C. 2201(a). The right to such a declaration is, however, not unqualified. A declaratory judgment must be founded on a viable cause of action. See Frontier Commns Corp. v. Barrett Paving Materials, Inc., No. 07-cv-113-B-GZS, 2010 WL 2651356, at *16 (D. Me. June 25, 2010) (dismissing a declaratory judgment for failure to articulate a viable legal theory supporting the relief). And, in the absence of a viable legal theory, declaratory relief cannot be granted. Id. Dr. Murtagh contends that the provisions of Health Care Quality Improvement Act, 42
4

In federal court, the federal declaratory judgment statute applies, not the state statute. OneBeacon Am. Ins. Co. v. Elwell, No. 09-342-P-H, 2009 WL 4910056, at *4 (D. Me. Dec. 13, 2009).

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U.S.C. 11110, et seq. (HCQIA); accreditation requirements of the Joint Commission on Accreditation of Healthcare Organizations (the Joint Commission); regulations administered by the Centers for Medicare and Medicaid Services (CMS), and certain state laws and regulations 5 required the Hospital to provide certain due process rights. (Complaint at 20-23). More specifically, he alleges that his privileges could not be terminated under these sources until he had been given the chance to appear at a hearing before a peer review committee operating so as to conduct an impartial hearing upon any charges preferred against a licensed medical practitioner, and the right to present evidence and cross-examine witnesses. (Id. at 14, 22). Based on these purported rights, Dr. Murtagh seeks an adjudication that the Defendants denied him due process when his temporary locum tenens privileges were terminated. Reduced to its essential nature, Dr. Murtagh is seeking to enforce a private right of action to enforce due process rights allegedly arising from the HCQIA; the Joint Commission's accreditation requirements; and regulations administered by CMS. None of these sources can serve as a foundation for this relief because a viable, cognizable underlying cause of action is absent. See Spine Imaging MRI, L.L.C. v. Liberty Mut. Ins. Co., 818 F. Supp. 2d 1133, 1144-45 (D. Minn. 2011) (a successful action for declaratory judgment requires a viable underlying cause of action and analyzing the claims accordingly); Collin Cnty., Tex. v. Homeowners Assn for Values Essential Neighborhoods, 915 F.2d 167, 170 (5th Cir. 1990); Frontier Commns, 2010 WL 2651356, at *16. First, the HCQIA is a qualified immunity statute enacted by Congress to encourage physician peer review activities, and to improve the quality of medical care by encouraging

Dr. Murtagh does not set forth in the Declaratory Judgment Count or any other Count any state laws or related regulations that would afford him the due process rights he asks the Court to recognize.

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physicians to identify and discipline other physicians who are incompetent or who engage in unprofessional behavior. H.R.Rep. No. 903, 99th Cong., 2d Sess. 2, reprinted in 1986

U.S.C.C.A.N. 6287, 6384. Under the Act, immunity from liability for monetary damages is granted to those who participate in professional peer review activities if the activities comported with the due process and fairness requirements in the Act. See, e.g., Poliner v. Tex. Health Sys., 537 F.3d 368 (5th Cir. 2008); Bryan v. James E. Holmes Med. Dir., 33 F.3d 1318 (11th Cir. 1994). It is a qualified immunity statute and nothing more. Furthermore, the HCQIA does not create an express private right of action to enforce the immunity standards in the Act. And, no court has ever held that Congress intended to create an implied private cause of action of any nature under this statute. Indeed, every court that has addressed the issue has held that a private right of action under the HCQIA, express or implied, does not exist. See, e.g., Wayne v. Genesis Med. Ctr., 140 F.3d 1145, 1147-48 (8th Cir. 1998); Bok v. Mutual Assurance, 119 F.3d 927, 928-29 (11th Cir. 1997); Hancock v. Blue Cross-Blue Shield, 21 F.3d 373, 374-75 (10th Cir. 1994); Carter v. BlueCross Blue Shield of Tenn., Inc., No. 1:05-CV-304, 2006 WL 1129390, at *4 (E.D. Tenn. Apr. 24, 2006). Dr. Murtagh's attempt to assert a private cause of action under the HCQIA fails. An identical result follows with regard to Dr. Murtagh's attempt to bring a private cause of action for alleged violations of the accreditation requirements of the Joint Commission. Dr. Murtagh alleges that these standards require the Hospital to set forth expansive medical staff credentialing due process and reporting requirements in its Bylaws. (Complaint at 13). He then seeks a Declaratory Judgment adjudicating his right to enforce these standards and a determination that the Defendants violated the standards. 6
6

(continued on next page)

Dr. Murtagh quotes bits and pieces of these standards and refers specifically to Joint Commission Standard

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The Joint Commission is an independent national organization for the accreditation of medical facilities. It promulgates standards to which hospitals voluntarily subject themselves to obtain Joint Commission accreditation. See Gaspard v. Our Lady of Lourdes Reg. Med. Ctr., Inc., Civil Action No. 08-622, 2009 WL 798818, at *4 (W.D. La. Mar. 25, 2009). There is no mention in the Joint Commission's accreditation requirements of the existence of a private right of action in favor of a physician whose clinical privileges have been in any manner impacted. 7 In addition, federal courts have uniformly held that the Joint

Commission standards do not create an implied private cause of action for alleged violations of these standards. See Badri v. Huron Hosp., 691 F. Supp. 2d 744, 763, n.14 (N.D. Ohio 2010) (the JCAHO does not create a cause of action for physicians based on a health care organizations failure to follow the standards); Gaspard, 2009 WL 798818, at *4 (It is axiomatic that an accrediting organization such as the JCAHO does not provide a cause of action). Nor can the standards serve as the basis for a common law cause of action. See, e.g., Kadlec Med. Ctr. v. Lakeview Anesthesia Assocs., Civil Action No. 04-0997, 2006 WL 1328872, at *2 n.7 (E.D. La. May 9, 2006). The same is true with regard to an alleged private right of action to enforce alleged due process rights arising from regulations adopted by CMS. Dr. Murtagh alleges that the Hospital is required by CMS regulations to maintain medical staff bylaws that permit the Hospital to suspend, terminate or revoke a physicians clinical privileges only for proper reason(s) and then
MS.01.01.0. The content of any and all Joint Commission Standards are irrelevant here because Dr. Murtagh is not entitled to assert a private right of action for any perceived violation of the standards. In addition, although Joint Commission Standard MS 01.01.01 was adopted by the Joint Commission on March 12, 2007, it was not effective until March 12, 2011. It therefore was not in force and effect when Dr. Murtaghs temporary locum tenens clinical privileges were terminated.
7

See Gaspard, 2009 WL 798818, at *4 (reviewing the Joint Commissions standards on a Rule 12(b)(6) Motion to Dismiss and citing to the Joint Commissions website (www.jointcommission.org) for support).

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only upon guaranteeing certain due process rights. (Complaint at 12). Dr. Murtagh relies on 42 C.F.R. 482.1(b), 482.12(a)(3)-(6) and 482.22(c) for this contention. (Id.). 8 These regulations do not contain any such requirement. Instead, 42 C.F.R.

482.22(c)(6), the provision that addresses medical staff privilege criteria, merely requires that bylaws [i]nclude criteria for determining the privileges to be granted to individual practitioners . . . . It does not require bylaws to include the due process rights Dr. Murtagh seeks. Equally as important, Dr. Murtagh does not have a private right of action for violation of these regulations. First, Congress does not give the slightest implication in Medicares statutory scheme or legislative history that it intended to create a private right of action in favor of physicians against hospitals for violations of regulations relating to medical staff credentialing. See Alexander v. Sandoval, 532 U.S. 275, 286 (2001) (private rights of action to enforce federal law must be created by Congress). Second, there is not a whisper in these regulations of the creation of a private right of action. And even if there were, CMS could not overrule Congress. See id. at 291 ("[I]t is . . . incorrect to say that language in a regulation can conjure up a private cause of action . . . . Agencies may play the sorcerer's apprentice but not the sorcerer himself."). Finally, the Defendants have not found any case where such a private right of action has ever been implied. Furthermore, participation in Medicare, like Joint Commission accreditation, is voluntary. Queen City Home Health Care Co. v. Sullivan, 978 F.2d 236, 247 (6th Cir. 1992). Accordingly, Gaspards reasoning that conditions to which a hospital voluntarily subjects itself

These regulations are conditions of participation, the purpose of which is to aid in the determination of whether a hospital qualifies for a provider agreement with Medicare and Medicaid, not to afford rights to physicians. See 42 C.F.R. 482.1 (the conditions of participation for hospitals serve as the basis of survey activities for the purpose of determining whether a hospital qualifies for a provider agreement under Medicare and Medicaid.)

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do not create a cause of action also holds true for the CMS Medicare conditions. See 2009 WL 798818, at *4. For all of these reasons, Dr. Murtaghs Declaratory Judgment claim should be dismissed. B. Count Four: Breach of Contract

In Count Four, Dr. Murtagh sets forth a Breach of Contract claim. In support of this claim, he alleges that the Hospital breached its Medical Staff Bylaws by terminating his temporary, locum tenens clinical privileges without affording him notice of the reasons for his termination and the opportunity to be heard, confront witnesses, and advocate his position. (Complaint at 32, 33). As a threshold matter, Dr. Murtagh did not attach to the Complaint the governing Bylaws. Nor did he set forth the Bylaw provisions that he alleges were breached. Consequently, the breach of contract claim as pled is based on nothing more than speculation and conjecture. For this reason alone, it should be dismissed. See Twombly, 550 U.S. at 555; Iqbal, 556 U.S. at 697. To establish a breach of contract under Maine law, Dr. Murtagh must prove (1) breach of a material contract term; (2) causation; and (3) damages. Godin v. Machiasport Sch. Dept. Bd. of Dtrs., 844 F. Supp. 2d 163, 171 (D. Me. 2012) (quoting Maine. Energy Recovery Co. v. United Steel Structures, 724 A.2d 1248, 1250 (Me. 1999). sufficient facts to establish the first element. The claim is further deficient because Dr. Murtagh fails to articulate a viable theory of recovery. Dr. Murtagh asserts that under the common law of Maine a grant of clinical privileges to a physician creates a contractual relationship between the physician and the hospital governed by the relevant Medical Staff Bylaws. (Complaint at 32). He further asserts that the Dr. Murtagh has not pleaded

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contractual terms are cognizable, and enforceable, by a Court in accordance with principles of contract law. (Id.). This is a correct statement of law, and St. Marys does not dispute it. Nevertheless, his claim still fails as a matter of law to satisfy the first element of a cognizable breach of contract claim. To determine breach, the controlling inquiry is whether St. Marys violated the Bylaws. See Lo v. Provena Covenant Med. Ctr., 796 N.E.2d 607, 612-13 (Ill. App. Ct. 2003) (the controlling inquiry in reviewing a hospitals suspension of a physicians privileges is whether the suspension violated the Bylaws). Again, Dr. Murtagh alleges that the Hospital breached the Bylaws by terminating his temporary clinical privileges without affording him proper notice and the opportunity to be heard, confront witnesses, and advocate his position. (Complaint at 32, 33). He does not, however, identify a contractual right to these procedures because no such right exists. Section 7.5 of the Bylaws addresses Temporary Privileges, which are the type of privileges granted to Dr. Murtagh in his locum tenens capacity. (Complaint at 32); (Ex. A at 7.5.1.3). The termination of temporary privileges is governed by Section 7.5.3, which states in pertinent part that [t]he Chief Executive Officer may at any time . . . and for any reason . . . terminate any and all temporary privileges granted. In addition, Section 7.5.4 unequivocally provides that a physician whose temporary privileges have been terminated is not entitled to any of the procedural due process rights set forth in the Bylaws: Rights: No Practitioner shall be entitled to the procedural rights afforded by Article 9 because of his/her inability to obtain temporary privileges or because of any termination or suspension of temporary privileges. Thus, Dr. Murtaghs factual allegations that St. Marys refused to honor his due process rights do not constitute a breach of any contractual provisions, and Count Four fails as a matter of law. See One & Ken Valley Housing Group v. Maine State Housing Auth., No. 1:09-cv-

10

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00642-DBH, 2012 WL 1458202, at *14-17 (D. Me. Apr. 17, 2012) (finding no breach of express contractual terms while noting that breach determination depends on whether the express terms of the contract were breached). See also Lo, 796 N.E.2d at 612-13. In a final convoluted attempt to escape governing Maine law and rewrite the explicit terms of the contract created by the Bylaws, Dr. Murtagh contends that the Bylaws should be deemed to incorporate due process rights that allegedly arise from the HCQIA, the accreditation requirements of the Joint Commission, and regulations administered by CMS. Again, none of these sources affords Dr. Murtagh these due process rights. See Section IV-A. Finally, there is also no legal basis for even considering these sources because it is wellsettled under Maine law that a contract is construed according to its plain language without resort to extrinsic statutes and regulations. Am. Protection Ins. Co. v. Acadia Ins. Co., 2003 ME 6, 11, 814 A.2d 989, 993. Thus, any rights created by extrinsic sources are irrelevant. See Cucchi v. New York City Off-Track Betting Corp., 818 F. Supp. 647, 650 (S.D.N.Y. 1993) (denying plaintiffs attempt to impose liability for violation of statutes and regulations by incorporation into a breach of contract claim). For all of these reasons, Dr. Murtagh's breach of contract claim should be dismissed. C. Count Five: Promissory Estoppel

In Count Five, Dr. Murtagh asserts a common law promissory estoppel cause of action. (Complaint at 17-18). In support of this claim, he alleges that: In agreeing to retain the services of Murtagh as a locus tenes [sic] physician, the Hospital and the Management Company made a promise, whether de jure or in fact, that as a health care entity qualified to receive Medicare reimbursements, it had adopted and continued to maintain and enforce certain bylaws that provided each physician holding clinical privileges to practice medicine at the Hospital with an array of protections of the sort referenced in Paragraphs 12 through 14 of this complaint.

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(Id. at 35). At the outset, this claim fails because existence of an express contract governing the relationship from which the alleged promise arises is a bar to a promissory estoppel claim. The Complaint correctly reflects that Dr. Murtagh's grant of temporary privileges created a contractual relationship between the parties. (Id. at 32); see also Section IV-B, supra. A promissory estoppel claim is not cognizable if an enforceable contract exists and governs the same topic as the promise upon which the estoppel claim is founded. Bradley v. Kryvicky, 574 F. Supp. 2d 210, 224 (D. Me. 2008). Because Dr. Murtagh's promissory estoppel claim arises out of the contractual relationship created by his grant of temporary privileges, Count Five should be dismissed. The claim is also deficient for independent, equally compelling reasons. In order to establish a promissory estoppel cause of action under Maine law, a plaintiff must allege and establish a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance [but only] if injustice can be avoided only by enforcement of the promise. Struck v. Hackett, 668 A.2d 411, 420 (Me. 1995). The first element of this cause of action is a clear, unambiguous, unconditional promise that is specific enough to enforce. See Norton v. McOsker, 407 F.3d 501, 507 (1st Cir. 2005) (the plaintiff must establish that the defendant made a clear, unambiguous and unconditional promise, the terms of which are certain); Sutton v. Culver, 204 F. Supp. 2d 20, 34 (D. Me. 2002) (denying a promissory estoppel claim because the promise was not specific enough to enforce). The Complaint does not assert that such an express promise was made to Dr. Murtagh by any of the Defendants. Rather, Dr. Murtagh contends that the promise must be implied

12

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because the Hospital was a health care entity qualified to receive Medicare reimbursements. (Complaint at 35). The absence of a specific promise is therefore dispositive of this claim. In addition, this claim is another flawed attempt by Dr. Murtagh to assert an illusory private right of action. The array of protections Dr. Murtagh seeks to enforce, (see Complaint at 35), are the due process rights he claims to have been afforded under the accreditation requirements of the Joint Commission and the CMS regulations. These extrinsic sources do not provide Dr. Murtagh, or any other physician, such rights. See Section IV-A. D. Counts Six and Seven: Third-Party Beneficiary to the Hospital's Contract with Medicare and Vista.

In his sixth and seventh causes of action, Dr. Murtagh claims that he is a third-party beneficiary 9 of the Hospital's agreement with Medicare 10 and the Hospital's agreement with Vista. (See, e.g., Complaint at 41-52). He claims that both agreements required that he be given due process rights he has enumerated, and that the Hospital terminated his privileges without providing this process. (See id.) Dr. Murtagh did not attach the relevant contracts to the Complaint. Nor did he set forth the contractual provisions that were supposedly breached. Consequently, like his breach of contract claim, his third-party beneficiary claims for this reason should be dismissed. See Twombly, 550 U.S. at 555; Iqbal, 556 U.S. at 697. In addition, there are other compelling reasons for dismissal. To plausibly state a thirdparty beneficiary claim, Dr. Murtagh must allege facts sufficient to make plausible "that
As used in this Memorandum, third-party beneficiary refers to intended third-party beneficiaries. Incidental beneficiaries cannot enforce a contract. See DiMillo v. Travelers Prop. Cas. Co. of Am. 789 F. Supp. 2d 194, 208 (D. Me. 2011). Dr. Murtagh actually alleges that the promise was made to "CMS and federal and state administrative agencies, and JCAHO[.]" (Complaint at 41). He does not identify the "federal and state administrative agencies." The Hospital and the Joint Commission do not have a contractual relationship the Hospital has simply voluntarily sought and obtained Joint Commission accreditation.
10 9

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recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promise[e] to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance." Fleet Bank of Me. v. Harriman, 1998 ME 275, 6, 721 A.2d 658, 660. Neither of Dr. Murtagh's third-party

beneficiary claims comes close to alleging plausible facts sufficient to meet this standard. 1. Count Six: Breach of Third-Party Beneficiary Rights Under the Medicare Contract.

In his first attempt at establishing a third-party beneficiary claim, Dr. Murtagh in the sixth Count alleges he is entitled to enforce the Hospital's agreement with Medicare. (See Complaint at 41-46). In evaluating this claim, the relevant inquiry is whether Congress intended for Dr. Murtagh to be a third party beneficiary or, stated differently, whether Congress intended for him to have privately enforceable rights. See Fleet Bank of Me., 721 A.2d at 660. When Congress intends to provide privately enforceable rights, it creates a private cause of action. Here, it did not create one. See Section IV-A, supra. Allowing Dr. Murtagh's third-party beneficiary claim would therefore ignore Congressional intent. See ASTRA USA, Inc. v. Santa Clara Cnty., Cali., 131 S.Ct. 1342, 1348 (2011) ("[W]hen a government contract confirms a statutory obligation, a third-party private contract action to enforce that obligation would be inconsistent with the legislative scheme to the same extent as would a cause of action directly under the statute."); see also Fleet Bank of Me., 721 A.2d at 661 ("[H]ad Congress intended to give borrowers a mechanism to enforce the [contractual] condition it could have given them a cause of action . . .). As a result, Dr. Murtagh has not stated a plausible third-party beneficiary claim under any alleged Medicare contract. 2. Count Seven: Breach of Third Party Beneficiary Rights Under the Vista Contract.

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Dr. Murtagh next claims in the seventh Count of his Complaint that he is a third-party beneficiary of the Hospital's agreement with Vista. (See Complaint at 47-52). More

accurately, he claims he is a third-party beneficiary of the Hospital's "implied promise" that it would provide Vista's placed physicians with due process before a placement could be terminated. (Id. at 47) (emphasis added). By characterizing the promise as an implied one, Dr. Murtagh concedes that the plain language of the Hospital's contract with Vista does not guarantee due process. (See Ex. B). This is dispositive since "[t]he plain language of the contract controls where no ambiguity is present, 11 and courts may not rewrite contracts, particularly commercial agreements arrived at following lengthy negotiations between two corporations of equal bargaining strength." Lincoln Pulp & Paper Co., Inc. v. Dravo Corp., 436 F. Supp. 262, 269 (D. Me. 1997) (footnote added). In summary, the Vista Contract did not contractually obligate St. Mary's to extend any due process rights to any physician whose placement was terminated and Dr. Murtagh's attempt to have the Court (1) rewrite the contract to include such provisions and (2) then recognize his right to enforce the new provisions under a third party beneficiary claim should be rejected out of hand. See Apgar v. Commercial Union Ins. Co., 683 A.2d 497, 500 (Me. 1996) (a court's function is not to enlarge or expand the contracts terms but "to ascertain the meaning and intention of the contract actually made.") (emphasis and marks omitted). E. Count Three: Defamation.

In Count Three, Dr. Murtagh alleges that Dr. Shapiro defamed him, (see Complaint at 27-30), but he identifies only one supposedly defamatory statement. Specifically, he claims Dr. Shapiro said he had been fired for "unsatisfactory performance." (Id. at 17). For Dr. Murtagh's
11

Dr. Murtagh does not allege that the Vista contract is ambiguous.

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defamation claim to survive under Maine law, he must have plausibly alleged "(a) a false and defamatory statement . . . ; (b) an unprivileged publication to a third party; (c) fault amounting at least to negligence on the part of the publisher; and (d) either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication." Carey v. Mt. Desert Island Hosp., 910 F. Supp. 7, 10 (D. Me. 1995). Dr. Murtagh has failed to plausibly allege elements one, two, and three. With respect to the first element, Dr. Murtagh's pleading is non-defamatory as a matter of law because "statements of unsatisfactory job performance do not rise to the level of defamation." Cook, Heyward, Lee, Hopper & Feehan, P.C. v. Trump Va. Acquisitions LLC, No. 3:12CV131HEH, 2012 WL 1898616 at *5 (E.D. Va. May 20, 2012) (emphasis added); see also Reilly v. Natwest Mkt. Groups, Inc., 181 F.3d 253, 271 (2d Cir. 1999) ("[C]riticism of an employee's work performance is opinion and cannot be defamatory."). Dr. Murtagh's failures regarding the second and third elements are interrelated. Under the second, an employer has a conditional privilege to explain the circumstances surrounding "the termination of [an] employment relationship[.]" Cole v. Chandler, 2000 ME 104, 6, 752 A.2d 1189, 1193-94. And, Dr. Murtagh's Complaint makes plain that Dr. Shapiro made the disputed statement when describing the termination of Murtaghs clinical privileges. (See Complaint at 17, 18). His statement is, therefore, analogous to employee termination

statements and under the circumstances of this case was conditionally privileged. 12 Where such a privilege exists, the third element requires more than negligence, and the plaintiff must plausibly plead that the statement was made "outside normal channels or with
In the light of this factual pleading, the Court need not and should accept Dr. Murtagh's conclusory allegation the statement was not privileged. Cordero-Hernandez v. Hernandez-Ballesteros, 449 F.3d 240, 244 n. 3 (1st Cir. 2006) (courts need not accept plaintiff's legal allegations at 12(b)(6) stage).
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malicious intent." See Cole, 752 A.2d at 1194. Dr. Murtagh has not provided sufficient factual detail to make plausible that Dr. Murtagh acted outside normal channels or with malice. Indeed, he has not made even one factual allegation that would allow a fact finder to determine that Dr. Shapiro believed the statements were false or recklessly disregarded whether they were, and he admits the statements were made within normal channels, i.e., to potential employers who specifically asked the Hospital about his performance. For these reasons, the defamation cause of action should be dismissed. F. Count Three: False Light.

In the third Count of his Complaint, Dr. Murtagh also appears to press a false light claim. (See Complaint at 13). 13 To adequately plead false light, Dr. Murtagh must sufficiently allege that the Hospital gave "publicity to a matter concerning [him] that places [him] before the public in a false light" and "(a) the false light . . . would be highly offensive to a reasonable person, and (b) the actor [the Hospital] had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which . . . [he] would be placed." Cole, 752 A.2d at 1197. To meet the publication standard, a false light plaintiff must factually plead that the statement was made either to the general public, or to so many people that "the matter must be regarded as substantially certain to become one of public knowledge." Id. Dr. Murtagh has not sufficiently alleged that Dr. Shapiro's statement was made to so broad an audience. Indeed, he alleges only that the statement was made to potential employers and staffing agencies. See Section IV-G,

supra. This audience is too limited to support a false light cause of action, and that claim should, therefore, be dismissed.

Whether he does so purposefully is unclear, as he styles Count Three as "False Light and Defamation" even though they are separate and independent torts. (See Complaint at 13).

13

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G.

Count Two: Tortious Interference With the Vista Contract.

In the second Count of his Complaint, Dr. Murtagh presents a claim for tortious interference. (See Complaint at 24-26). In support of this claim, he states, inter alia, that the Defendants "have tortiously interfered with Murtagh's contacts or prospective economic advantages through fraud in that such prospective employers and staffing agencies have been informed or advised . . ., falsely, that Murtagh's privileges were suspended, terminated, or revoked on account of such allegedly 'unsatisfactory performance.'" (Id. at 24). To state a viable tortious interference claim, a Plaintiff must allege facts sufficient to make plausible "the existence of a valid contract or prospective economic advantage, interference with that contract or advantage through fraud or intimidation, and damages proximately caused by the interference." Sherbert v. Remmell, 2006 ME 116, 4 n.3, 908 A.2d 622, 623 n.3. Dr. Murtagh identifies only one contact that he supposedly lost his Vista contract. (See Complaint at 19) ("Shapiro's false statements . . . prompted Vista to discontinue its contractual relationship with Murtagh, to refuse to work with Murtagh . . ., and to discontinue all communication with Murtagh."). Importantly, he does not allege that the Hospital intimidated Vista, (see generally id. at 24-26), and instead alleges that the Hospital fraudulently interfered with the contract. (See id. at 24). He has not pled sufficient facts to meet a fraud standard. "The elements of interference by fraud are: (1) making a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act or refrain from acting in reliance on it, and (5) the other person justifiably relies on the representation as true and acts upon it to the damage of the plaintiff." Rutland v. Mullen, 798 A.2d 1104, 1111 (Me. 2002). And, like any other fraud plaintiff, Dr. Murtagh must satisfy Rule 9(b). See Goodman v. President & Trs. of Bowdoin Coll., 135 F.Supp.2d 40, 59 (D. Me. 2001) (tortious interference plaintiff alleging fraud must

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satisfy Rule 9(b)); Whatley v. Diversified Corp. Res., Inc., No. Civ. 99284B, 2000 WL 761797 at *1 (D. Me. Mar. 28, 2000) (same). Dr. Murtagh has failed to satisfy Rule 9(b) in two separate ways. First, he has not sufficiently alleged that the statement at issue was untrue. Indeed, his sole factual allegation is that certain unidentified Hospital personnel expressed their satisfaction with his performance, (Complaint at 8-9), and that he therefore personally believes Dr. Shapiro's statement was false. (Id. at 17) ("To the best of Murtagh's personal knowledge and information, such statement(s) by Shapiro were false[.]") (parentheses in original). Thus, he does not affirmatively allege that the statement was false. And, he assuredly does not allege that Dr. Shapiro deemed his performance satisfactory. Second, Dr. Murtagh does not sufficiently explain for Rule 9(b) purposes the circumstances under which the statement was made. Enercon v. Global Computer Supplies, Inc., 675 F.Supp.2d 188, 199 (D. Me. 2009) ("Rule 9(b) requires that [the plaintiff] specify the time, place, and content of the allegedly false representations); see also DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990) ("[S]tates of mind may be pleaded generally, [but] the circumstances must be pleaded in detail. This means the who, what, when, where, and how . . .). More specifically, he does not explain when the Hospital made the statement to Vista, or to whom at Vista the statement was made to. And, to the extent he alleges he has lost any other contracts or prospective advantages, his pleading regarding those contracts and/or advantages is even more deficient he does not identify them, and does not specify when and where Dr. Shapiro made the statement to them. For these reasons, this cause of action should also be dismissed.

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V.

CONCLUSION Dr. Murtagh's Complaint should be dismissed because each of his claims is non-

cognizable, subject to a legal defense, or inadequately plead. Respectfully submitted this 17th day of October, 2012.

/s/ Ronald W. Schneider, Jr. Ronald W. Schneider, Jr., Bar No. 8402 David A. Soley, Bar No. 6799 Travis M. Brennan, Bar No. 4525 BERNSTEIN SHUR 100 Middle Street, P.O. Box 9729 Portland, ME 04104-5029 Telephone: (207) 774-1200 Email: rschneider@bernsteinshur.com dsoley@bernsteinshur.com tbrennan@bernsteinshur.com

/s/ James L. Jones James L. Jones, Bar No. 3214 (pro hac vice) Sterling Kidd, Bar No. 103670 (pro hac vice) Michael Bernier, Bar No. 103960 (pro hac vice) BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC Meadowbrook Office Park, 4268 I-55 North Jackson, Mississippi 39211 Telephone: (601) 351-2400 Email: jjones@bakerdonelson.com mbernier@bakerdonelson.com skidd@bakerdonelson.com Attorneys for Defendants St. Marys Regional Medical Center, a/k/a St. Marys Hospital; St. Marys Health System; and Ira Shapiro, M.D.

CERTIFICATE OF SERVICE This is to certify that on this 17th day of October, 2012, I have on this day served all parties in this case in accordance with the directives from the Electronic Court Filing (ECF) which was generated as a result of electronic filing to all counsel listed below: Brian Mahaney Joseph Bird Bethany Kroe Mahaney & Ertl, LLC 1442 N. Farwell Avenue, Suite 604 Milwaukee, WI 53202 /s/ Ronald W. Schneider, Jr. Ronald W. Schneider, Jr.

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