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March 2017

Philadelphia Team Secures Dismissal of Breach of Contract Complaint Linked to Hospital’s Claim for Reimbursement of Medical Bills Related to the Amtrak Derailment

On March 15, 2017, Gordon & Rees Philadelphia partner Joseph Arnold and associate Jason Landro secured dismissal of an agency/breach of contract complaint against York Risk Services Group subsidiary companies Russell Reimbursement Advisors (RRA) and MCMC, LCC.  Temple Univ. Hosp., Inc. v. Russell Reimbursement Advisors, Inc., et al., Civ. No. 16-2645, Dkt. 42-43 (E.D. Pa. Mar. 15, 2017).

The complaint arose out of the payment of medical bills incurred by a passenger who was treated at Temple University Hospital (TUH) in the aftermath of the May 12, 2015 derailment of Amtrak Train No. 188, which resulted in eight fatalities and injuries to more than 200 people.  After Amtrak initially offered to pay emergency-related medical bills for its passengers, Amtrak retained MCMC to assist with medical bill review and the negotiation of payment amounts with area hospitals.  MCMC in turn retained RRA to assist with the negotiations.  This particular dispute surrounded a Letter of Agreement that RRA negotiated with TUH, which called for the payment of nearly $4.4 million for treatment rendered to 14 passengers.  RRA included one particular passenger in the Letter of Agreement – the one with the longest acute-care stay of any passenger – despite the fact that Amtrak did not provide authority to include that passenger in the negotiations. When Amtrak subsequently refused to pay a substantial portion of the settlement amount attributable to that one passenger, TUH filed suit against RRA and MCMC, seeking recovery of $1.63 million, plus interest, directly from RRA and MCMC for acting outside the scope of their authority. 

Gordon & Rees's attorneys successfully moved to dismiss the original complaint, without prejudice, based on the insufficiency of the pleading.  After the court denied a motion to dismiss the First Amended Complaint, Arnold and Landro made a critical decision to file a Third-Party Complaint against Amtrak.  Amtrak then moved the case to the MDL that had been established to administer the $295 million statutory damages limit to the injured passengers and their families.  TUH then filed a Second Amended Complaint to assert a direct claim against Amtrak that essentially mirrored the Third-Party Complaint.  This decision opened the door for RRA and MCMC to file another motion to dismiss, this time arguing that the complaint should be dismissed because the Letter of Agreement was not an enforceable contract because it lacked adequate consideration. The Court agreed and dismissed the Second Amended Complaint, with prejudice. 

Jason A. Landro



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