The opinion
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8 UNITED STATES DISTRICT COURT
9 FOR THE EASTERN DISTRICT OF CALIFORNIA
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11 DERRICK ADAMS, et al., No. 2:23-cv-01773-DJC-JDP
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Plaintiffs,
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v. ORDER
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EXPERIAN INFORMATION SOLUTIONS,
15 INC., et al.,
16 Defendants.
17
18 Pending before the Court is Defendants’ Motion to Dismiss Plaintiffs’ Second
19 Amended Complaint. Plaintiffs allege that Defendants violated the Sherman Antitrust
20 Act, the California Cartwright Act, and engaged in tortious interference with existing
21 contracts under California and New Jersey law. Defendants move to dismiss on the
22 grounds that Plaintiffs failed to allege antitrust standing and failed to plausibly allege
23 facts supporting their tortious interference with contracts claims. For the reasons
24 discussed below, the Court GRANTS IN PART AND DENIES IN PART Defendants’
25 Motion to Dismiss.
26 BACKGROUND
27 The facts and procedural history are largely known to the Parties. However,
28 Plaintiffs have altered the Second Amended Complaint in a few ways. First, Plaintiffs
1 add AmeriFinancial Solutions, as a plaintiff to this case.1 AmeriFinancial Solutions is a
2 collection agency that works with multiple medical practices to assist them in
3 collecting payment of unpaid medical bills from patients. (SAC (ECF No. 60) ¶ 27.)
4 Specifically, AmeriFinancial Solutions has served as the collection agency for Plaintiff
5 Cape Emergency Physicians in New Jersey and for other medical practices operating
6 out of several different states — including California. (Id.) The collection agencies
7 make a profit when patients pay a bill that the medical provider sent to the collection
8 agency. (Id. ¶ 44.) Specifically, the SAC alleges that the collection agency receives a
9 percentage of the medical debt it is able to collect. (Id.)
10 Second, Plaintiffs add claims for tortious interference with contract under
11 California and New Jersey law. These claims are brought by each Medical Provider
12 Plaintiff (“MPP”). Plaintiff Adams brings the claim under California law and Plaintiff
13 Cape Emergency Physicians brings the claim under New Jersey law.
14 Third, Plaintiffs include additional allegations about the nature of the
15 relationship between the MPPs and the collection agencies. In particular, MPPs
16 explain that if patients do not pay their bills, medical practices use accounts-
17 receivable services as their “agents” to further attempt to collect payment from unpaid
18 patients. (See id. ¶¶ 30, 38.) The accounts-receivable services could be employees of
19 the medical practice itself, or it could be a collection agency such as AmeriFinancial
20 Solutions. (Id. ¶ 30.) The MPPs here use third-party collection agencies if patients do
21 not pay their bills. (Id. ¶ 31.) To furnish data to a credit reporting agency, the
22 furnishing entity must complete an application with that agency, execute a contract,
23 and complete an onboarding process. (Id. ¶ 38.) The MPPs decided that a collection
24 agency would furnish data about medical bills to Defendants if the efforts to contact
25 patients failed to obtain payment. (Id. ¶ 40.) Plaintiffs allege there are contracts with
26 collection agencies that authorize the collection agencies to furnish such data. (Id.)
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1 For purposes of this Order, the Court also refers to AmeriFinancial Solutions as the “Collection Agency
28 Plaintiff”.
1 Should the collection agency fail to collect from the patient, and not furnish the data
2 to the Defendants, as instructed by the MPPs, “the [MPPs] would each choose a
3 different collection agency.” (Id. ¶ 41.)2
4 This Court previously granted Defendants’ Motion to Dismiss Plaintiffs’ First
5 Amended Complaint. (Jan. Order (ECF No. 59).) Plaintiffs then filed a Second
6 Amended Complaint with four causes of action for violations of the Sherman Antitrust
7 Act, California’s Cartwright Act, and for alleged tortious interference with existing
8 contracts under California and New Jersey Law. Defendants filed the instant Motion
9 to Dismiss Plaintiffs’ Second Amended Complaint (Mot. Dismiss (ECF No. 73)). The
10 matter is fully briefed (Opp’n (ECF No. 77); Reply (ECF No. 79)). The Court ordered
11 the matter submitted without oral argument pursuant to Local Rule 230(g). (ECF No.
12 81).
13 LEGAL STANDARD
14 A party may move to dismiss for “failure to state a claim upon which relief can
15 be granted[.]” Fed. R. Civ. P. 12(b)(6). The motion may be granted if the claim lacks “a
16 cognizable legal theory” or if its factual allegations do not support a cognizable legal
17 theory. Godecke v. Kinetic Concepts, Inc., 937 F.3d 1201, 1208 (9th Cir. 2019)
18 (citation omitted). The court assumes all factual allegations are true and construes
19 “them in the light most favorable to the nonmoving party.” Steinle v. City & Cnty. of
20 San Francisco, 919 F.3d 1154, 1160 (9th Cir. 2019) (citation omitted). If the allegations
21 do not “plausibly give rise to an entitlement to relief[,]” the motion must be granted.
22 Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (“Iqbal”).
23 A complaint need contain only a “short and plain statement of the claim
24 showing that the pleader is entitled to relief[,]” Fed. R. Civ. P. 8(a)(2), not “detailed
25 factual allegations,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“Twombly”).
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2 Additionally, since the time between this Court’s previous dismissal of Plaintiffs’ complaint, the CFPB
27 published a final rule prohibiting CRAs from including any medical debt on consumer reports provided
to creditors in most circumstances. However, the rule’s effective date has been delayed. (See Opp’n at
28 3 citing 791 F. Supp. 3d 720 (E.D. Tex. 2025) (Notice (ECF No. 23).)
1 But this rule demands more than unadorned accusations; “sufficient factual matter”
2 must make the claim at least plausible. Iqbal, 556 U.S. at 678. In the same vein,
3 conclusory or formulaic recitations of elements do not alone suffice. See id.
4 DISCUSSION
5 I. Sherman Act
6 Defendants contend that Plaintiffs again fail to allege antitrust standing.
7 Specifically, Defendants argue that Plaintiffs’ injury is not the type of injury antitrust
8 laws were intended to remedy, does not flow from the alleged conduct, is indirect and
9 is speculative. Plaintiffs argue that the SAC remedies the Court’s prior concerns about
10 antitrust standing because it includes a collection agency plaintiff that personally
11 furnished data to the Defendants under contracts with them and expounds on the
12 relationship between medical providers and Defendants.
13 A. Antitrust Standing
14 Under Section 1 of the Sherman Antitrust Act, all conspiracies in the restraint of
15 trade are illegal. 15 U.S.C. § 1. Actions for damages under the Sherman Act are
16 authorized by Section 4 of the Clayton Antitrust Act. 15 U.S.C. § 15(a); City of Oakland
17 v. Oakland Raiders, 20 F. 4th 441, 455 (9th Cir. 2021). Section 4 provides that “any
18 person who shall be injured in his business or property by reason of anything
19 forbidden in the antitrust laws may sue therefor. . .and shall recover threefold the
20 damages by him sustained[.]” Am. Ad. Mgmt., Inc., v. Gen. Tel. Co. of California, 190
21 F.3d 1051, 1054 (9th Cir. 1999) (citing 15 U.S.C. § 15(a) (1999)). Although broad in
22 scope, courts have read limitations into the language of Section 4 premised on the
23 idea that “Congress did not intend [it] to have such an expansive scope.” Id. (citation
24 omitted). The Supreme Court has identified certain factors for determining whether
25 antitrust standing exists: “(1) the nature of the plaintiff’s alleged injury; that is, whether
26 it was the type the antitrust laws were intended to forestall; (2) the directness of the
27 injury; (3) the speculative measure of the harm; (4) the risk of duplicative recovery; and
28 (5) the complexity in apportioning damages.” Oakland Raiders, 20 F.4th at 455
1 (citation omitted). A court “need not find in favor of the plaintiff on each factor,” id. at
2 1055–56, but, antitrust injury is mandatory, see Cargill v. Monfort of Colorado, Inc., 479
3 U.S. 104, 109–10,110 n.5 (1986). 3
4 1. Antitrust Injury
5 An antitrust injury is “of the type the antitrust laws were intended to prevent and
6 that flows from that which makes defendants’ acts unlawful.” Atl. Richfield Co. v. USA
7 Petroleum Co., 495 U.S. 328, 334 (1990) (citation omitted). The Ninth Circuit has
8 identified four requirements for an antitrust injury: “(1) unlawful conduct, (2) causing
9 an injury to the plaintiff, (3) that flows from that which makes the conduct unlawful, and
10 (4) that is of the type the antitrust laws were intended to prevent.” Am. Ad. Mgmt., 190
11 F.3d 1055. In the previous Order, this Court found that the first two requirements of
12 antitrust injury: (1) unlawful conduct (2) causing injury to the plaintiff were satisfied.
13 Thus, the Court focuses on the remaining two requirements.
14 Previously, this Court held that Plaintiffs failed to allege an antitrust injury
15 because “it is unclear whether the ‘devalued service’ injuries suffered by Plaintiffs are
16 the result of ‘that which makes the defendants’ conduct unlawful – the alleged
17 horizontal agreement – or from the third party’s decisions to use one of the other
18 mechanisms it has at its disposal.” (Jan. Order at 16.) Defendants contend that the
19 addition of AmeriFinancial Solutions, a collection agency, does not change the Court’s
20 prior finding that the injury here does not flow from that which makes the conduct
21 unlawful. Plaintiffs argue that the Collection Agency Plaintiff, and additional
22 allegations about their relationship with the MPPs, removes any concern because the
23 collection agencies do not make an independent decision to furnish the medical-debt
24 information but instead are directed to do so by the MPPs. Thus, the MPPs’ injury
25 would not occur but for the Defendants’ alleged conspiracies.
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3 Apart from challenging antitrust standing, Defendants do not contest in this Motion that Plaintiffs have
28 plausibly alleged the existence of a horizontal conspiracy under Section 1 of the Sherman Act.
1 Considering first the Collection Agency Plaintiff, the Court finds it plausible that
2 the devalued service injury flows from the alleged unlawful conduct. Unlike the MPPs,
3 the collection agencies appear to have a direct relationship with the Defendants.
4 Specifically, the SAC alleges that the Collection Agency Plaintiff has personally
5 furnished medical-debt information to Defendants, (SAC ¶ 28), and that to provide
6 medical data to a credit reporting agency the furnishing entity executes a contract and
7 takes on an obligation to furnish “full files on a monthly basis” to the credit reporting
8 agency (id. ¶ 36).
9 The argument surrounding the MPPs is less straightforward. In the SAC,
10 Plaintiffs provide additional allegations about the alleged agency relationship
11 between the medical providers and the collection agents. The Restatement of Agency
12 explains that “[a]gency is the fiduciary relationship that arises when one-person (a
13 ‘principal’) manifests assent to another person (an ‘agent’) that the agent shall act on
14 the principal’s behalf and subject to the principal’s control, and the agent manifests
15 assent or otherwise consents so to act.” Restatement (Third) of Agency § 1.01.
16 “Although the precise details of the agency relationship need not be pleaded to
17 survive a motion to dismiss, sufficient facts must be offered to support a reasonable
18 inference that an agency relationship existed.” Kristensen v. Credit Payment Servs., 12
19 F. Supp. 3d 1292, 1301 (D. Nev. 2014) (citing Iqbal, 556 U.S. at 696).
20 Here, Plaintiffs contend that the MPPs have contracts with collection agencies
21 that authorize the furnishing of medical-debt data about medical bills to the
22 Defendants. (SAC ¶ 40.) Plaintiffs further contend that the medical providers are
23 recognized as the owners of the debt (id. ¶ 38) and that data furnished to the
24 Defendants includes the medical provider’s name as the original creditor of the debt.
25 As such, the MPPs are alleged to “remain[] in control of the decisions whether to send
26 a particular unpaid bill to a collections agent and whether the authorize the collections
27 agent to furnish the data to the [Defendants].” (Id. ¶ 39.) Additionally, Plaintiffs allege
28 that if a collection agency does not furnish the data as directed, the medical provider
1 will “switch collection agencies.” (Opp’n at 6 citing SAC ¶¶ 28, 31, 36, 41.) Because
2 the medical providers are essentially the ones dictating whether the collection agency
3 furnishes data, there is “no independent decision” that the collection agencies make
4 as to whether to furnish the data. (Id.)
5 The Court finds that the MPPs have failed to allege a plausible agency
6 relationship such that the injury in question would flow from that which makes the
7 alleged conduct illegal. In particular, the Court is skeptical about the level of control
8 the medical providers exercise over the collection agencies. There is no doubt the
9 medical providers authorize the collection agencies to share the medical debt
10 information with the Defendants. (SAC ¶ 39.) However, authorizing the collection
11 agency, and directing the collection agency, are different. While the collection
12 agencies may have an incentive to abide by the medical providers’ wishes, the agency
13 still has a number of tools at its disposal and likely still selects the tool that it believes
14 will ensure repayment most effectively. This independence suggests that the
15 collection agency is not an agent of the medical providers. Moreover, the allegation
16 that the medical provider can switch collection agencies if the agency does not do
17 what the medical provider requests is indicative of the agency’s independence: if
18 there were a true agency relationship, the medical provider would simply direct them
19 to report delinquent debt to the credit agencies. Without plausibly establishing an
20 agency relationship here, the Court finds that the same issues exist as in the previous
21 Complaint.
22 The Court turns next to the issue of whether each Plaintiff participates in the
23 market that they allege Defendants restrained: the market for reporting medical-debt
24 information. Previously, the Court found that the allegations did not indicate that
25 Plaintiffs “were participants of, or suffered injury in, the relevant market.” (Jan. Order
26 at 18.)
27 Here, the Court disagrees with the Defendants’ characterization that Collection
28 Agency Plaintiff is “not injured by being unable to supply medical-debt information to
1 the Defendants.” (Mot. Dismiss at 13.) Plaintiffs specifically allege that the contractual
2 relationship between the Defendants and the collection agencies require supplying a
3 certain amount of information. (SAC ¶¶ 28, 36.) As such, the Court is satisfied that the
4 Collection Agency Plaintiff participates in the relevant market. For the reasons
5 discussed above, the Court again rejects the MPPs’ arguments that they are in the
6 market because they are the principals in an alleged agency relationship.
7 Additionally, Plaintiffs argue that the circumstances in Amarel v. Connell, 102
8 F.3d 1494 (9th Cir. 1996), resemble the instant set of facts. In Amarel, the Ninth Circuit
9 found that an antitrust injury existed where rice farmer plaintiffs alleged participation
10 in a market by virtue of “participation contracts” such that the defendants’ predatory
11 pricing harmed them by depressing prices below their costs. Id. at 1059. But there
12 are a few important differences between the rice farmer plaintiffs in Amarel and the
13 MPPs. First, unlike the MPPs, the Ninth Circuit recognized that the rice farmer plaintiffs
14 were suppliers as well as competitors in the relevant market. Id. at 1510 (“[P]laintiffs
15 and defendants, while not identical entities, are nonetheless competitors in a
16 particular market segment: the market for milled rice.”). Here, there is no comparable
17 allegation — the MPPs could only be considered “suppliers.” Thus, although not
18 dispositive, the rice farmers participation in the market is far more evident than the
19 MPPs here. Additionally, the payment arrangement in Amarel provided the rice
20 farmers with a share of the profits of the sale of the milled rice to the defendant buyer.
21 Id. 1510. Here, the MPPs do purport not receive any renumeration whatsoever from
22 the provision of medical-debt information between the collection agency and the
23 Defendants. (See SAC ¶ 36.) Rather, any benefit for the MPPs appears to be
24 experienced in the market for debt-collection services, because the payment is such
25 that the collection agencies receive a portion of the profit of the bills ultimately paid
26 by the patients to the medical providers. Thus, the MPPs are not participants in the
27 relevant market for purposes of establishing an antitrust injury. Thus, the MPPs fail to
28
1 allege antitrust injury. The Court proceeds with the inquiry as to the Collection
2 Agency Plaintiff.
3 2. Directness of the Injury
4 Previously, this Court recognized that “although not alone dispositive, the
5 pleadings indicate that there are more direct victims of Defendants’ allegedly
6 anticompetitive behavior.” (Jan. Order at 20.) In particular, the Court explained that
7 the most direct victims of the alleged conspiracy here would be consumers who
8 purchase the credit reports. Defendants argue that Plaintiffs’ injuries are too indirect
9 because they involve an attenuated chain of causation that depends on the
10 intervening decision of patients and collection agencies. Plaintiffs, positioning
11 themselves as suppliers in the relevant market, contend that the patients do not create
12 an issue of indirectness because patients do not sit between the medical providers
13 and the Defendants in sharing the medical-debt information.
14 To establish directness, courts “look[ ] to whether [the plaintiff’s] alleged injury
15 was the direct result of [the defendant’s] allegedly anticompetitive conduct.” Am. Ad.
16 Mgmt., 190 F.3d at 1058. This factor considers “the chain of causation between [the
17 plaintiff’s] injury and the alleged restraint in the market. . . .” Id. (citation omitted).
18 “The harm may not be ‘derivative and indirect’ or ‘secondary, consequential, or
19 remote.’” Theme Promotions, Inc., v. News Am. Mktg. FSI, 546 F.3d 991,1004 (9th Cir.
20 2008) (citations omitted).
21 The Parties dispute the nature of the alleged injury here, and their discussions
22 of directness vary accordingly. Defendants argue that the injury here turns on patients
23 paying their bills. (MTD at 8.) Plaintiffs contend that their injury is a devalued medical-
24 debt reporting service. (Opp’n at 4–5.) Under the Defendants’ classification of the
25 injury, it appears that the harm is indirect — whether or not medical providers and
26 collection agencies are injured in that instance is based on whether patients pay their
27 bills. See, e.g., Pac. Recovery Sols. v. United Behav. Health, 481 F. Supp. 3d 1011,
28 1022 (N.D. Cal. 2020) (“Plaintiffs allege that their own injury arises only to the extent
1 that their patients do not pay the amounts that defendant does not
2 reimburse. . .[a]ccordingly, plaintiffs’ injuries appear to be derivative of injuries that
3 their patients allegedly suffered as a result of defendants’ alleged conspiracy.”).
4 Under the devaluation of service injury, Plaintiffs allege that Defendants, via an alleged
5 agreement, stopped reporting certain types of medical-debt information on their
6 consumer reports. As a result, Plaintiffs contend that they experience a devalued
7 service from Defendants, which removed an incentive for patients to repay their bills.
8 Because the Collection Agency Plaintiff has alleged that the patients are not the
9 source of the injury, it is plausible that the harm they experience is not indirect.
10 However, it is still clear that the most direct harm would be to those who purchase
11 Defendants’ credit reports, without the relevant medical-debt information, who would
12 now be paying for an allegedly lower quality report. Thus, this consideration weighs
13 slightly against a finding antitrust standing.
14 3. Speculative Nature of the Injury
15 The speculative nature of the injury considers whether the Plaintiff’s “damages
16 are only speculative.” Am. Ad. Mgmt., 190 F.3d at 1059. In Associated General
17 Contractors of California v. California State Council of Carpenters, the Supreme Court
18 found the damages claim in question to be speculative because (1) the alleged injury
19 was indirect and (2) the alleged effects . . . may have been produced by independent
20 factors.” 459 U.S. 519, 541 (1983). Defendants argue that the theory of Plaintiffs’
21 injury is too speculative because it depends on the actions of independent actors, and
22 because Plaintiffs have not shown that the market in which they participate is
23 inextricably intertwined with the asserted market. Plaintiffs contend that they have
24 sufficiently alleged non-speculative measure of their harm.
25 Here, the harm that the Plaintiffs experience does not appear to be speculative.
26 Plaintiffs contend that due to the devalued service by the Defendants, the incentive for
27 patients to pay their medical bills has been removed. As a result, there are increased
28 costs that the Plaintiffs experience. Although the exact amount is speculative, the
1 injury itself does not appear to be — it is plausible that there is a devalued service for
2 suppliers of medical debt information where Defendants are alleged to have agreed
3 to stop reporting certain types of information. See Don Copeland v. Energizer
4 Holdings, Inc., 716 F. Supp. 3d 749, 771 (N.D. Cal. 2024) (“That damages may be
5 complex to measure does not mean they are speculative.”) (citation omitted). Thus,
6 this factor counsels in favor of finding antitrust standing.
7 4. Remaining Factors
8 “The risk to be avoided under [the duplicative recovery factor] is that potential
9 plaintiffs may be in a ‘position to assert conflicting claims to a common fund. . .thereby
10 creating the danger of multiple liability for the fund.’” Am. Ad. Mgmt., 190 F.3d at
11 1059 (citation omitted). Defendants argue that the Plaintiffs’ case risks duplicative
12 recovery, Plaintiffs argue that there is no risk of duplicative recovery because each
13 Plaintiff suffers a different sort of damage. Here, the Collection Agency Plaintiff is
14 alleged to be a “distinct economic entity” with financial interests different from the
15 MPPs’ financial interests. As such, it is not apparent at this stage that there would be
16 issues of duplicative recovery because the Collection Agency Plaintiffs have its own
17 separate, although closely related, financial interests from the MPPs.
18 Lastly, Plaintiffs contend that there will be no complexity in apportioning
19 damages because the collection agencies each suffer their own increased costs to
20 collect payment, and the contracts between medical providers and collection
21 agencies already apportion the percentage of payment that the collection agencies
22 will receive. Defendants argue that there will be difficultly in apportioning damages
23 due to different reporting practices that collection agencies engage in. Here, the
24 issue of apportionment between Plaintiffs does not appear to be an issue because
25 there are alleged to be certain percentages that indicate the amount each Plaintiff is
26 entitled to receive. Thus, neither factor weighs against finding antitrust standing.
27 Accordingly, the Court DENIES Defendants’ Motion to Dismiss as it pertains to
28 the Collection Agency Plaintiffs on the Sherman Act cause of action. However, the
1 medical provider plaintiffs have failed to allege claims under the Sherman Act and the
2 Cartwright Act4, and the Motion to Dismiss these claims is GRANTED as to these
3 Plaintiffs.
4 II. Tortious Interference with Existing Contracts
5 Defendants also seek to dismiss the MPPs’ claims for tortious interference with
6 contract. Defendants contend that Plaintiffs fail to plead facts that satisfy their
7 purported claims. The MPPs argue that they have sufficiently alleged their claims.
8 A. California
9 Plaintiff Adams brings a cause of action against Defendants for tortious
10 interference with existing contracts under California law. Tortious interference with
11 existing contracts under California law requires: “(1) a valid contract between plaintiff
12 and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s
13 intentional acts designed to induce a breach or disruption of the contractual
14 relationship; (4) actual breach or disruption of the contractual relationship; and (5)
15 resulting damage.” Honey Bum, LLC v. Fashion Nova, Inc., 63 F.4th 813, 824–25 (9th
16 Cir. 2023) (citations omitted). Generally, it is not necessary that the Defendant’s
17 conduct is wrongful apart from the interference with the contract itself. Ixchel Pharma,
18 LLC v. Biogen, Inc., 9 Cal. 5th 1130, 1141, 1148 (2020). Defendants contend that
19 Plaintiff Adams has failed to plead each of the elements but only presents arguments
20 as to the first three requirements.
21 ////
22 ////
23 ////
24
4 Plaintiff Adams and the MPP subclass in California also brings a cause of action for violations of
25 California’s Cartwright Act. Generally, the “analysis under the Cartwright Act mirrors the analysis under
the Sherman Act.” Flaa v. Hollywood Foreign Press Ass’n, 55 F.4th 680, 688 (9th Cir. 2022). Because
26 the MPPs fail to allege antitrust injury, the Court dismisses the second cause of action. See Metro-
Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 269 F. Supp. 2d 1213, 1224 (C.D. Cal. 2003) (“It is clear,
27 for instance, that the Cartwright Act’s more expansive standing provision does not dispense with the
requirement that an antitrust plaintiff allege an injury of the type the antitrust laws were intended to
28 prevent and that flows from that which makes defendants’ acts unlawful.” (citation omitted).
1 1. Valid Contract
2 A claim for tortious interference with contract requires the “existence of a
3 legally binding contract.” See Ixchel Pharma, LLC, 9 Cal. 5th at 1141. The plaintiff
4 must identify the “terms of the contract ‘third party or parties with whom they
5 contracted, and the nature and extent of their relationship with that party or parties.’”
6 Tripharma, LLC v. First Fruits Bus. Ministry, LLC, No. 8:21-cv-01806-JVS-JDEx, 2023 WL
7 2695476, at *8 (C.D. Cal. Feb. 15, 2023) (internal quotations and citations omitted).
8 The SAC alleges that Plaintiff Adams entered into “valid contracts” with patients
9 that “require patients to pay for the medical services they receive, including the
10 portion beyond what is covered by health insurance or another payor.” Moreover,
11 Plaintiff Adams points to allegations that “Defendants received data showing specific
12 patients had medical bills owed to specific medical providers, including [Plaintiff
13 Adams] in particular,” (id. citing SAC ¶¶ 31, 38) and “Defendants even relied on this
14 information about contractually obligated debts to calculate the statistic in their press
15 release that their joint measure will remove nearly 70% of medical collection debt
16 tradelines from consumer credit reports,” (id. citing SAC ¶ 45), to support his claim.
17 The Court finds that these allegations sufficiently allege the existence of a valid
18 contract. The SAC states the parties to the alleged contracts: Plaintiff Adams and
19 “patients”; the terms of the contract: that patients would pay Plaintiff Adams in
20 exchange for medical services they receive from him — including the portion not
21 covered by health insurance or another payor; and the nature of the contract: a
22 contract for medical services between a doctor and patient. Defendants do not
23 dispute the existence of a valid contract between Plaintiff Adams and the patient
24 group but instead contend that there is no “specific contract” identified. However,
25 that is not necessary here because it is clear which group of individuals are being
26 referenced. Thus, the fact that Plaintiff Adams has not included specific contracts with
27 patients is not fatal to his claim at this stage in the proceedings.
28 ////
1 2. Knowledge of the Contracts
2 Defendants also contend that Plaintiff Adams has not established that
3 Defendants had knowledge of the contracts with patients. Plaintiff Adams argues that
4 he need not list the specific contracts Defendants knew about. The defendant must
5 know of the existence of the contract. See Pac. Gas & Elec. Co. v. Bear Stearns & Co.
6 50 Cal.3d 1118, 1126 (1990); 5 B.E. Witkin, Summary of California Law, Torts § 848
7 (11th ed. 2023); Restatement (Second) of Torts § 766, cmt. i (1979)(“the actor must
8 have knowledge of the contract with which he is interfering and of the fact that he is
9 interfering with the performance of the contract.”).
10 Here, the allegations sufficiently allege knowledge of the contracts between
11 Plaintiff Adams and the third parties. The SAC states that Defendants “knew that
12 patients had contractual obligations to pay medical providers but had not yet paid”
13 because “Defendants possessed detailed data showing the existence of contracts
14 between medical providers and patients.” (SAC ¶ 140.) Moreover, Defendant’s data
15 included identification of specific patients with unpaid bills and “the medical
16 provider’s name as the original creditor of the debt.” (Id. ¶ 38.) Defendants are
17 alleged to also have relied on this information to calculate the statistic in their press
18 release that their “joint measures will remove nearly 70% of medical collection debt
19 tradelines from consumer credit reports.” (Id. ¶ 45.) Taken together, these allegations
20 indicate that Defendants had more than a generalized knowledge of the contracts.
21 The fact that the Defendants possess specific data identifying the amount of debt
22 owed by patients suggests knowledge of the contracts between MPPs and patients.
23 The cases cited by Defendants include allegations with less information than is
24 provided here. See In re Aluminum Warehousing Antitrust Litig., No. 1:13-md-02481-
25 KBF, 2014 WL 4743425, at *4 (S.D.N.Y. Sept. 15, 2014) (dismissing an intentional
26 interference claim were plaintiff alleged that knowledge existed due to defendants’
27 role as participants in the aluminum industry); Trindade v. Reach Media Grp., LLC, No.
28 5:12-cv-04759-PSG, 2013 WL 3977034, at *15 (N.D. Cal. July 31, 2013) (finding that
1 knowledge had not been alleged where the complaint indicated a general knowledge
2 that defendant was a party to a contract rather than allegations of specific contracts or
3 any details about the contracts). Moreover, that the specific contracts are not
4 identified is not necessarily dispositive because “intent can certainly be inferred if the
5 defendant knows that contractual relations with a third party exist” even if “the specific
6 identity of the contractual party” is unknown. Sebastian Int’l Inc., v. Russolillo, 162 F.
7 Supp. 2d 1198, 1203–04 (C.D. Cal. 2001). Thus, the Court finds that the second
8 element has been met.
9 3. Intent to Interfere
10 To show that defendants engaged in an intentional act designed to induce a
11 breach or disruption of a contractual relationship, a plaintiff must allege that the
12 interference was “known to [defendant] to be a necessary consequence of his action.”
13 Quelimane Co., v. Stewart Title Guar. Co., 19 Cal.4th 26, 56 (1998).
14 The SAC alleges that Defendants’ alleged conspiracies
15
Removed a major incentive for patients to pay their medical
16 bills, and encouraged and persuaded patients not to pay
their medical bills by (a) promoting a flawed rationalization
17 that medical debt is less worthy of repayment because it
can be unexpected or incurred involuntarily, and (b)
18
indicating to patients that they no longer need to worry
19 about paying their medical bills because Defendants were
removing the negative consequence of nonpayment.
20
21 (SAC ¶ 141.) This is supported by allegations that Defendant’s advertisements explain
22 that reporting debts cause more payment and quicker payment. (Id. ¶¶ 32, 35, 74.)
23 Accordingly, the Court finds it plausible that Defendants had some understanding that
24 by eliminating certain aspects of debt-reporting, there may be a decrease in payment
25 to Plaintiff. Thus, this element is satisfied.
26 Because Defendants do not specifically challenge the final two elements, the
27 Court DENIES Defendants’ Motion to Dismiss Plaintiff Adams’ claim for of tortious
28 interference with contract under California law.
1 B. New Jersey
2 Plaintiff Cape Emergency Physicians brings a similar cause of action against
3 Defendants for tortious interference with existing contracts under New Jersey law.
4 The New Jersey cause of action is similar to the California cause of action. The
5 required elements are: (1) the plaintiff must have a protected interest; (2) the
6 defendant must have behaved with “malice” — that is, the defendant must have
7 intentionally interfered with that protected interest without justification; (3) there must
8 be a reasonable likelihood that the anticipated benefit from the protected interest
9 would have been realized but for the interference; and (4) economic damage must
10 have resulted. Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 751–52
11 (1989).
12 The Parties provide largely the same arguments as to the New Jersey tortious
13 interference claim, and the Courts analysis is largely the same. On the issue of
14 “malice”, Defendants argue that Plaintiffs have not shown that Defendants
15 intentionally sought to induce a breach of the alleged contracts. Plaintiff argues that
16 malice exists because the alleged conspiracies are unlawful. Here, the SAC appears
17 to acknowledge a justification for the Defendants’ conduct in an effort to improve the
18 financial well-being of patients who take on medical debt unexpectedly. (SAC ¶¶ 81–
19 82.) However, even where a valid justification exists, such conduct cannot be
20 employed through fraudulent, dishonest or illegal methods. Plaintiff contends that
21 the Defendants’ conduct is an unlawful horizontal conspiracy. At this stage, these
22 allegations appear sufficient to state a claim for tortious interference.
23 CONCLUSION
24 For the reasons discussed above the Court GRANTS IN PART AND DENIES IN
25 PART Defendants’ Motion to Dismiss (ECF No. 73). Defendants’ Motion to Dismiss is
26 granted as to dismissal of Plaintiff Adams from the First Cause of Action and as to
27 dismissal of the Second Cause of Action. Defendants’ Motion is DENIED as to
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1 | dismissal of Plaintiff AmeriFinancial Solutions and as to dismissal of the Third and
2 | Fourth Causes of Action.
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A IT IS SO ORDERED.
5 | Dated: December 3, 2025 “Daniel A CoD tto—
Hon. Daniel alabretta
6 UNITED STATES DISTRICT JUDGE
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