Bellevue Medical Llc V Total Wound Care Of Oklahoma Llc
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UNITED STATES DISTRICT COURT
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WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
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BELLEVUE MEDICAL, LLC, CASE NO. 2:24-cv-02149-LK
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Plaintiff, ORDER GRANTING IN PART
12 v. BELLEVUE MEDICAL’S
PARTIAL MOTION TO DISMISS
13 TOTAL WOUND CARE OF
OKLAHOMA, LLC,
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Defendant.
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This matter comes before the Court on Plaintiff Bellevue Medical LLC’s partial motion to
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dismiss Defendant Total Wound Care of Oklahoma, LLC’s (“TWC”) counterclaims. Dkt. No. 15.1
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The Court grants the motion in part—it dismisses TWC’s negligence counterclaim but denies
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Bellevue Medical’s request to dismiss it with prejudice and without leave to amend. TWC may
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amend its counterclaim within 14 days of this Order.
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22 1 The motion also seeks to dismiss Total Wound Care of Texas and Total Wound Care of Kansas’s “third-party
complaint,” but Defendant Total Wound Care of Oklahoma subsequently dismissed the Texas and Kansas entities’
23 claims, mooting this part of the motion to dismiss. Dkt. No. 24. Separately, although styled as a “motion to dismiss”
and seeking to dismiss the “counterclaims” (plural), the motion only argues for dismissal of the negligence
counterclaim, not the breach of contract counterclaims, making the motion to dismiss a partial one. See generally Dkt.
24 No. 15.
1 I. BACKGROUND
2 A. Bellevue Medical’s Claims Against Total Wound Care
3 Bellevue Medical is a Washington-based medical billing company. Dkt. No. 27 at 2. In
4 early 2022, Bellevue Medical started providing medical billing services for TWC. Id. It entered
5 into a Billing Services Agreement with TWC, under which Bellevue Medical would submit claims
6 to third-party payors and collect payments on TWC’s behalf. Id. In return, TWC would pay a
7 monthly minimum of $999 or 4.99% of the monthly collections, whichever was higher. Id. The
8 agreement had a term of a one year and would automatically renew unless expressly terminated in
9 advance in writing. Id. According to Bellevue Medical, its services helped TWC grow its
10 collections from $0 in February 2022 to nearly $1 million monthly by December 2023. Id. at 3.
11 In July 2022, the parties renegotiated the terms of their agreement. Id. They entered into a
12 new Billing Services Agreement (the “Operative Service Agreement”), under which TWC would
13 pay either a monthly minimum of $2,999 or 2.99% of monthly collections, whichever was higher.
14 Id. This agreement had a three-year term. Id.
15 In January 2024, TWC allegedly blocked Bellevue Medical’s access to its systems,
16 preventing Bellevue Medical from performing its obligations under the Operative Service
17 Agreement, which was not set to expire until July 2025. Id. at 3–4. Bellevue Medical followed up
18 several times to understand why its access was terminated, to no avail. Id. at 3. Bellevue Medical
19 believes that TWC has since contracted with another billing services provider. Id.
20 Based on these allegations, Bellevue Medical asserts that TWC breached the contract and
21 the implied covenant of good faith and fair dealing. Id. at 4–8. It seeks $550,734.00 in damages as
22 well as interest, costs, and reasonable attorney’s fees. Id. at 9.
23 B. Bellevue Medical’s Allegations Against Doe Defendants
24 In addition to naming TWC as a defendant, the original complaint also named Does 1
1 through 20, who “are responsible in some manner for the acts, omissions, incidents, transactions,
2 and/or events alleged.” Dkt. No. 1 at 2. Bellevue Medical asserted that it would “amend this
3 complaint to state the true names and capacities of said Defendants when they are ascertained.” Id.
4 The Court subsequently ordered Bellevue Medical to show cause why the case should not
5 be dismissed for lack of subject matter jurisdiction based on the rule that “in an original federal
6 action (as opposed to a removal action) based on diversity jurisdiction under 28 U.S.C. § 1332(a),
7 a plaintiff’s inclusion of fictitious ‘Doe’ defendants destroys diversity jurisdiction and renders the
8 action subject to dismissal.” Dkt. No. 26 at 1 (citation removed). Bellevue Medical then amended
9 its complaint to remove all references to the Doe Defendants, and the Court discharged its order
10 to show cause. Dkt. Nos. 27, 29.
11 C. Total Wound Care’s Counterclaims and “Third-Party Complaint”
12 In February 2025, TWC Oklahoma answered the complaint and filed counterclaims
13 alleging breach of contract and negligence. Dkt. No. 10 at 13–14. It also added two new Total
14 Wound Care entities as “third party plaintiffs”—TWC Kansas and TWC Texas—and purported to
15 file a “third-party complaint” against Bellevue Medical on their behalf. Id. at 8. The Court
16 subsequently ordered TWC Oklahoma to show cause why TWC Texas’s and TWC Kansas’s
17 claims should not be stricken or dismissed, because those entities were not properly joined and
18 were not proper third-party plaintiffs. Dkt. No. 23. In response, TWC Oklahoma voluntarily
19 dismissed TWC Texas and Kansas from this action, Dkt. No. 24, leaving TWC Oklahoma as the
20 sole defendant in this action and its counterclaims as the only claims against Bellevue Medical.
21 In those counterclaims, TWC Oklahoma (which the Court will resume referring to as just
22 “TWC”) alleges that Bellevue Medical breached the Operative Service Agreement because it
23 submitted several claims incorrectly, which led to denials, and then failed to resubmit those claims.
24 Dkt. No. 10 at 10. According to TWC, this violated Section 5 of the Agreement, which provided
1 that the parties “will comply with all applicable laws and regulations, including but not limited to,
2 laws and regulations (and government interpretations thereof) relating to billing, coding, and
3 submission of claims to the Medicare and Medicaid programs.” Id. In addition, Bellevue Medical
4 would invoice TWC for claims that had been denied and then refuse to provide detailed invoice
5 breakdowns. Id. at 10–11. TWC alleges that Bellevue Medical’s improper billing practices led it
6 to suffer financial losses.
7 TWC also alleges that Bellevue Medical breached a separate Credentialing Agreement
8 entered into in September 2021, under which Bellevue Medical agreed to license and credential
9 TWC’s providers to meet state and payor standards. Id. at 11. Bellevue Medical allegedly failed
10 to do so accurately or on time, which led to unbilled work and claims being denied or processed
11 as out-of-network. Id.
12 On August 15, 2023, TWC submitted a written notice to Bellevue Medical terminating the
13 Operative Billing Agreement. Id. at 11. Bellevue Medical acknowledged the termination notice
14 two days later, on August 17. Id. Just over a month later, on September 25, Bellevue Medical’s
15 Chief Experience Officer stated that it had not, in fact, received a termination notice and demanded
16 a $607,016 termination fee. Id. at 12. TWC maintains that it does not owe a termination fee based
17 on Section 6 of the Agreement, which provides that no fee is due with proper notice. Id.
18 After terminating the agreement with Bellevue Medical, TWC hired Intelligent Health
19 Techs for billing. Id. But Bellevue Medical would not release TWC’s medical records and data
20 from its electronic medical record system unless TWC paid it $28,000. Id. TWC alleges that even
21 after it paid, Bellevue Medical continued to withhold the records, jeopardizing its compliance with
22 potential Medicare audits. Id. TWC alleges that Bellevue Medical’s refusal to release the medical
23 records violated Section 10 of the Operative Services Agreement, which requires that Bellevue
24 Medical make records available to the federal government. Id.
1 Based on these allegations, TWC seeks damages of at least $6,740,176 for Bellevue
2 Medical’s breach of contract and negligence. Id. at 13–14.
3 II. DISCUSSION
4 A. Jurisdiction
5 The Court has jurisdiction over this action under 28 U.S.C. § 1332 because Bellevue
6 Medical and TWC are diverse from each other and the amount in controversy exceeds $75,000.
7 Bellevue Medical is a limited liability company with two members, both of whom are natural
8 persons and citizens of Washington. Dkt. No. 27 at 2. TWC is a limited liability company with
9 four members, all natural persons and citizens of Oklahoma. Id.; Dkt. No. 8 at 1. Therefore,
10 Bellevue Medical is a citizen of Washington and TWC is a citizen of Oklahoma. Bellevue Medical
11 is seeking damages in excess of $550,000, which satisfies the jurisdictional amount-in-controversy
12 threshold. Dkt. No. 27 at 5.
13 B. TWC’s Negligence Counterclaim is Dismissed with Leave to Amend
14 1. Legal Standard
15 When deciding a motion under Federal Rule of Civil Procedure 12(b)(6), a court must
16 assume the truth of the pleading’s factual allegations and credit all reasonable inferences arising
17 from those allegations. Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007). The court “need not
18 accept as true conclusory allegations that are contradicted by documents referred to in the
19 [pleading].” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
20 Instead, the plaintiff must point to factual allegations that “state a claim to relief that is plausible
21 on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible
22 “when the plaintiff pleads factual content that allows the court to draw the reasonable inference
23 that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
24 (2009). Although “detailed factual allegations” are not required, a complaint must include “more
1 than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. A pleading “that offers
2 ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not
3 do.’” Id. (quoting Twombly, 550 U.S. at 555).
4 2. The Negligence Claim Does Not Allege an Independent Duty
5 Bellevue Medical seeks to dismiss TWC’s negligence counterclaim as duplicative of its
6 breach of contract counterclaims. Specifically, it argues that the duplicative negligence claim is
7 “improper under the Washington independent duty doctrine, which prohibits the maintenance of a
8 negligence or other tort claim where there is no tort duty arising independently of the parties’
9 contract.” Dkt. No. 15 at 2. According to Bellevue Medical, TWC relies “entirely for [its]
10 negligence claim on the existence and terms of the billing and credentialing agreements described
11 in [its] Counterclaims” and “cannot show the existence of any tort duty binding upon [Bellevue
12 Medical] that arises independently of those agreements.” Id. TWC responds that the independent
13 duty doctrine requires courts to first define the scope of the contractual duties before dismissing
14 tort claims as duplicative, and the scope of Bellevue Medical’s contractual duties under the
15 Operative Service Agreement is a factual question, meaning that dismissal at this stage is
16 premature. Dkt. No. 17 at 3–4.
17 Under Washington law, “[t]he independent duty doctrine is an analytical framework that
18 is used to determine whether one party to a contract can bring tort claims against another party to
19 the contract.” Donatelli v. D.R. Strong Consulting Eng'rs, Inc., 312 P.3d 620, 627 (Wash. 2013).
20 The doctrine “will allow a plaintiff to pursue tort claims against a defendant when the plaintiff can
21 prove defendant’s ‘breach of a tort duty arising independently of the terms of the contract.’” Id.
22 (quoting Eastwood v. Horse Harbor Found., Inc., 241 P.3d 1256, 1262 (Wash. 2010)).
23 TWC correctly cites Donatelli for the proposition that the independent duty doctrine
24 requires courts to first determine the scope of contractual duties before deciding whether a tort
1 claim is duplicative. Dkt. No. 17 at 4. The Washington Supreme Court in Donatelli emphasized
2 that a tort duty must arise independently of the contract, and that this analysis depends on
3 understanding the contract’s terms. 312 P.3d at 624. It follows that if factual disputes exist about
4 the contract’s scope, then it could be premature to dismiss a tort claim under the independent duty
5 doctrine. But Donatelli’s instruction to interpret the operative contract’s scope prior to dismissing
6 a tort claim on independent duty doctrine grounds presupposes that there are other, non-contractual
7 duties that might apply.
8 Donatelli itself involved a professional services contract with an engineering firm, and the
9 court recognized that engineers owe a professional duty of care independent of contractual
10 obligations, 312 P.3d at 624–25, similar to the professional duties owed by medical or legal
11 professionals. This professional duty allowed the negligence claim to survive pending clarification
12 of the contract’s scope. Id. at 625. By contrast, TWC’s counterclaim does not allege that Bellevue
13 Medical, as a medical billing services provider, owed a recognized professional duty under
14 Washington law. See generally Dkt. No. 10 at 8–16. Nor does it invoke a separate statutory or
15 common law duty. See id. Instead, the negligence claim is a near verbatim copy of the contract
16 claims. It restates the contractual duty (while deleting any express reference to the contracts)
17 without identifying any other source of duty besides the contracts.
18 Breach of Contract Claims Negligence Claim
(Dkt. No. 10 at 13) (Dkt. No. 10 at 14)
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¶ 26: Bellevue Medical “materially breached ¶ 34(a): Bellevue Medical breached its duty
20 the Agreement” by “submitting a significant by “submitting a significant number of
number of claims erroneously that resulted in claims erroneously that resulted in them
21 them being denied[.]” being denied[.]”
22 ¶ 26: Bellevue Medical “materially breached ¶ 34(b): Bellevue Medical breached its duty
the Agreement” by “failing to resubmit those by “failing to resubmit those denied
23 denied claims[.]” claims[.]”
¶ 26: Bellevue Medical “materially breached ¶ 34(c): Bellevue Medical breached its duty
24 the Agreement” by “failing to provide by “failing to provide breakdowns of its
1 breakdowns of its erroneous invoices[.]” erroneous invoices[.]”
2 ¶ 26: Bellevue Medical “materially breached ¶ 34(d): Bellevue Medical breached its duty
the Agreement” by “invoicing TWO for claims by “invoicing Total Wound Care for claims
3 that were denied.” that were denied[.]”
4 ¶ 30: Bellevue Medical “materially breached ¶ 34(e): Bellevue Medical breached its duty
the Credentialing Agreement when . . . it failed by “failing to properly submit provider
5 to properly submit provider credentialing in a credentialing in a timely and accurate
timely and accurate manner[.]” manner.”
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7 Because the negligence claim merely restates the contractual obligations, it is barred by the
8 independent duty doctrine. See Steadman v. Green Tree Servicing, LLC, No. C14-0854JLR, 2015
9 WL 2085565, at *12 (W.D. Wash. May 5, 2015) (“Because this duty, by definition, is identical to
10 [defendant’s] contractual duties, the independent duty doctrine bars a negligence claim predicated
11 on this duty”). Perhaps it is true that interpreting the two relevant contracts—the Operative Service
12 Agreement and Credentialing Agreement—involves factual questions, but that is beside the point.
13 There are only contractual duties alleged here, meaning that the Court does not need to interpret
14 either contract to determine which duties alleged are contractual and which are independent.
15 Because TWC’s negligence claim does not allege that Bellevue Medical owed an independent
16 duty—whether statutory or common law—it is barred by the independent duty doctrine and
17 dismissed.2
18 3. Leave to Amend is Granted
19 Bellevue Medical asks this Court to dismiss TWC’s negligence claim with prejudice and
20 without leave to amend. Dkt. No. 15 at 7. TWC responds that it should be afforded leave to amend
21 in the event the Court dismisses its negligence claim. Dkt. No. 17 at 5.
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2 As other courts have noted, in situations where there are only contractual duties alleged, the negligence claim can be
23 dismissed for failure to plead an essential element (the existence of a duty), and so is properly dismissed regardless of
whether the independent duty doctrine applies. Steadman, 2015 WL 2085565, at *12 n.10 (holding in the alternative
24 that “regardless of whether the independent duty doctrine applies to Mr. Steadman’s negligence claim, the court finds
that Mr. Steadman’s claim fails for an inability to establish a duty of care owed by Green Tree to Mr. Steadman.”).
1 The deadline to amend pleadings in this case was May 29, 2025. Dkt. No. 13 (scheduling
2 order). Bellevue Medical’s motion was noted for consideration prior to that deadline, Dkt. No. 15,
3 and TWC’s alternative request for leave to amend was submitted within the deadline set by the
4 Court’s scheduling order, Dkt. No. 17 at 5. Accordingly, the liberal amendment procedures
5 afforded by Rule 15 govern the request. AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d
6 946, 952 (9th Cir. 2006).
7 Rule 15(a)(2) directs district courts to “freely give leave when justice so requires.” As the
8 language of the rule suggests, the standard for leave to amend is “very liberal.” AmerisourceBergen
9 Corp. v. Dialysist W., Inc., 465 F.3d 946, 951 (9th Cir. 2006). This is because “the underlying
10 purpose of Rule 15 [is] to facilitate [a] decision on the merits, rather than on the pleadings or
11 technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (quotation
12 modified).
13 A district court should deny leave to amend “only if there is strong evidence of undue
14 delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies
15 by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance
16 of the amendment, or futility of amendment[.]” Sonoma Cnty. Ass'n of Retired Emps. v. Sonoma
17 Cnty., 708 F.3d 1109, 1117 (9th Cir. 2013) (quotation modified). Evaluation of these factors
18 “should be performed with all inferences in favor of granting the motion [to amend].” Griggs v.
19 Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999). However, the amendment factors are not
20 entitled to equal weight. Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003)
21 (per curiam). The Ninth Circuit has repeatedly emphasized that prejudice “carries the greatest
22 weight” and is “the touchstone of the inquiry under [R]ule 15(a).” Id. (internal quotation marks
23 omitted); see also, e.g., Brown v. Stored Value Cards, Inc., 953 F.3d 567, 574 (9th Cir. 2020).
24 Indeed, there is a presumption in favor of amendment absent prejudice or a “strong showing” under
1 the remaining four factors. Eminence Cap., 316 F.3d at 1052. The party opposing amendment
2 bears the burden of showing that amendment is not warranted. Hedglin v. Swift Transp. Co. of
3 Ariz., No. C16-5127-BHS, 2016 WL 8738685, at *1 (W.D. Wash. Nov. 15, 2016).
4 Granting leave to amend is appropriate here. Bellevue Medical does not argue that it will
5 be prejudiced by allowing TWC to amend its counterclaims, focusing only on futility. See Dkt.
6 No. 15 at 7. The Court disagrees that an amendment would be futile. Moreover, there has been no
7 undue delay or bad faith, and this would be TWC’s first amendment. Thus, the Court grants TWC
8 leave to amend its negligence counterclaim, including by restyling its negligence claim as one for
9 negligent misrepresentation, if it so chooses. Dkt. No. 17 at 5–6.3
10 III. CONCLUSION
11 For the reasons explained above, the Court GRANTS IN PART Bellevue Medical’s partial
12 motion to dismiss, Dkt. No. 15, and dismisses TWC’s negligence counterclaim without prejudice
13 and with leave to amend. Any amended counterclaims must be filed by August 5, 2025, and should
14 reflect the dismissal of Total Wound Care of Texas and Total Would Care of Kansas from this
15 action. Dkt. No. 25. TWC must also attach a redlined version in compliance with Local Civil Rule
16 15(a).
17 Dated this 22nd day of July, 2025.
18 A
19 Lauren King
United States District Judge
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22 3 Bellevue Medical argues that any negligent misrepresentation claim would be barred by the integration clause in the
Operative Services Agreement. Dkt. No. 18 at 2, 6. However, “courts generally defer consideration of challenges to
23 the merits of a proposed amended pleading until after leave to amend is granted and the amended pleading is filed.”
Clarke v. Upton, 703 F. Supp. 2d 1037, 1043 (E.D. Cal. 2010); see, e.g., Puget Soundkeeper All. v. APM Terminals
Tacoma LLC, 545 F. Supp. 3d 893, 897–98 (W.D. Wash. 2021) (declining to find that amendment was futile and
24 concluding that the issue was “better suited for a fully-briefed dispositive motion”).