Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc.

99 F.Supp.3d 1110

ALMONT AMBULATORY SURGERY CENTER, LLC, et al.

v.UNITEDHEALTH GROUP, INC., et al.

No. CV–14–02139–MWF VBKx.

United States District Court, C.D. California.

Signed April 10, 2015.

Daron L. Tooch, Eric David Chan, Bryce William Woolley, Hooper Lundy and Bookman PC, Los Angeles, CA, for Almont Ambulatory Surgery Center, LLC, et al.

Bryan Scott Westerfeld, Larry A. Walraven, Nicole Elizabeth Wurscher, Walraven and Westerfeld LLP, Aliso Viejo, CA, Stephen P. Lucke, Andrew J. Holly, Heather M. McCann, Kirsten Schubert, Michelle S. Grant, Rabea Jamal Zayed, Timothy E. Branson, Dorsey and Whitney LLP, Minneapolis, MN, for UnitedHealth Group, Inc.

Proceedings (In Chambers): ORDER GRANTING EMPLOYER AND PLAN DEFENDANTS' OMNIBUS MOTION TO DISMISS PLAINTIFFS' AMENDED COMPLAINT UNDER FED. R. CIV. P. 12(B)(6), AS WELL AS 12(B)(2), (4), AND (5), 20(A) AND 28 U.S.C. § 1404(A) [1062] [1070] [1071] [1072] [1075] [1077] [1078] [1080] [1081] [1082] [1083] [1084] [1085] [1086] [1088] [1089] [1090] [1091] [1092] [1093] [1094] [1095] [1096] [1097] [1098] [1100] [1101] [1105] [1106] [1107] [1108] [1109] [1110] [1112] [1113] [1114] [1115] [1116] [1117] [1118] [1119] [1121] [1123] [1124] [1128] [1130] [1131] [1132] [1133] [1134] [1135] [1136] [1137] [1138] [1139] [1140] [1141] [1142] [1144] [1145] [1146] [1147] [1149] [1152] [1154] [1155] [1156] [1157] [1159] [1160] [1161] [1162] [1163] [1164] [1165] [1168] [1182] [1203] [1298] [1377] [1378]

MICHAEL W. FITZGERALD, District Judge.

Before the Court is the Employer and Plan Defendants' Omnibus Motion to Dismiss Plaintiffs' Amended Complaint Under Fed.R.Civ.P. 12(b)(6), as well as 12(b)(2), (4), and (5), 20(A) and 28 U.S.C. § 1404(a). (Docket No. 1062). The Court notes that this master memorandum simply addresses arguments common to many of the Employer and Plan Defendants. However, the Court will refer to this document as the “Omnibus Motion,” and will apply the reasoning expressed herein to the pending motions submitted by individual Employer and Plan Defendants. The Court read and considered the papers on the Omnibus Motion (as well as Employer and Plan Defendant Supplemental Memoranda), and held a hearing on April 1, 2015. For the reasons stated below, the Court GRANTS the Motion.

The Omnibus Motion is GRANTED with leave to amend.

Count I is brought pursuant to 29 U.S.C. § 1132(a)(1)(B) (also referred to as ERISA § 502(a)(1)(B)) to recover benefits under the terms of the various plans implicated in this action (in addition to related relief under this provision). The Court rules that Count I fails to adequately state a claim for benefits under the terms of the relevant plans. However, it is quite likely that the deficiencies in Count I can easily be corrected; it is a close call whether the First Amended Complaint (“FAC”) is sufficient. Therefore, the Omnibus Motion as to this Count is GRANTED with leave to amend.

Count II is brought pursuant to 29 U.S.C. § 1132(a)(2) (ERISA § 502(a)(2)), alleging various breaches of fiduciary duty and seeking removal of United as a plan administrator and/or claims administrator for the plans at issue or, alternatively, an order compelling United to honor the terms of the plans.

Count III is brought pursuant to 29 U.S.C. § 1132(a)(3) (ERISA § 502(a)(3)) for injunctive and other equitable relief to address Defendants' purported breaches of fiduciary duties; among the relief sought in connection with this Count is an order requiring the Defendants to timely re-process claims and provide a full and fair review of both past and future claims.

Count V is brought pursuant to 29 U.S.C. § 1132(a)(3) (ERISA § 502(a)(3)) and seeks plan reformation to correct purported discrimination against morbidly obese participants.

Count VI is brought pursuant to 29 U.S.C. § 1132(a)(3) (ERISA § 502(a)(3)) and seeks the equitable remedy of surcharge due to purported breaches of fiduciary duty.

Count VII is brought for production of documents pursuant to 29 U.S.C. §§ 1024(b), 1104, 1133(2), as well as statutory and injunctive relief pursuant to 29 U.S.C. § 1132(c)(1) (ERISA § 502(c)(1)), and equitable relief pursuant to 29 U.S.C. § 1132(a)(3) (ERISA § 502(a)(3)).

As a jurisdictional issue, the Court rules that Plaintiffs' alleged assignment does not confer standing for these ERISA Counts. Consequently, the Omnibus Motion as to Counts II, III, V, VI, and VII is GRANTED with leave to amend. Although the Court is not convinced that Plaintiffs could plead additional facts to alter this conclusion, they will be provided an opportunity to do so.

Count IV, based on estoppel, is brought against United only. It is therefore not addressed in this Order except to help explain the Court's reasoning in regard to standing.

The Omnibus Motion as to Count VIII is GRANTED with leave to amend. Count VIII is brought pursuant to the UCL. This Count purportedly seeks to redress, inter alia, United's allegedly discriminatory behavior against members of ERISA plans, as well as United's improper payment methods and violations of ERISA. The Count also seeks redress for misrepresentations United allegedly made to Plaintiffs regarding payment for claims. The relief sought in connection with this Count is an injunction enjoining Defendants from engaging in further unfair business practices, as well as disgorgement of any money that has been acquired from Plaintiffs by virtue of the unfair practices. However, even if Plaintiffs allegedly suffered their own injuries, it is clear that they are seeking to recover derivatively on behalf of their assignors in a way that contravenes the holding of Amalgamated Transit Union, Local 1756 v. Superior Court (“Amalgamated Transit”), 46 Cal.4th 993, 95 Cal.Rptr.3d 605, 209 P.3d 937 (2009), that such derivative UCL actions must be brought as class actions. In re WellPoint, Inc. Out–of–Network UCR Rates Litig., 903 F.Supp.2d 880, 897–98 (C.D.Cal.2012).

The Omnibus Motion as to Count IX is GRANTED with leave to amend. Count IX seeks declaratory relief. The Court rules that this Count is completely preempted by ERISA. As such, this Count is converted into an ERISA Count and will rise and fall with the asserted ERISA Counts that it duplicates.

In the process of granting the Omnibus Motion, the Court has rejected or declined to adjudicate particular arguments. For instance, the Court has rejected arguments that: the Employer Defendants are not proper defendants at this stage in the litigation for an ERISA benefits Count; particular forum selection clauses mandate transfer at this time; and joinder is improper.

In general, the Court does not view most plan terms as having been presented in a way that renders them cognizable at present. The Court is quite sympathetic to Defendants' argument that Plaintiffs did not object to presentation of summary plan descriptions (“SPDs”) when this was discussed in a colloquy with the Court on August 6, 2014. The Court also notes that some of the SPDs here may constitute the terms of the plans themselves. However, pursuant to the Supreme Court's decision in CIGNA Corp. v. Amara, 563 U.S. 421, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011), the Court does not have power to consider the SPDs as plan terms without evaluating whether the SPDs constitute the plan in each instance. The Court further observes that some Defendants arguably have presented the relevant plan documents for consideration. However, for the reasons discussed below, it is largely unnecessary at present to rely on these terms.

I. BACKGROUND

On March 20, 2014, Plaintiffs initiated this action by filing a Complaint (Docket No. 1). Plaintiffs subsequently filed the FAC on June 16, 2014 (Docket No. 840), which is the current operative pleading.

A. Parties

Plaintiffs in the present action consist of: (1) thirteen ambulatory surgery centers that provide Lap–Band surgeries and services; and (2) Independent Medical Services, Inc., which is a physicians' medical group. (FAC ¶¶ 15, 48–49).

Defendants include: (1) UnitedHealth Group, Inc., a health insurance company that allegedly did business in California through its subsidiaries; (2) UnitedHealthcare Insurance Company; and (3) United HealthCare Services, Inc. (Id. ¶¶ 50–52). Defendant OptumInsight, Inc. (also called “Optum” or “Ingenix”) is also a wholly-owned subsidiary of UnitedHealth, and served as a “Special Investigations Unit” for the claims at issue. (Id. ¶¶ 53, 915). The FAC refers to these four Defendants collectively as “United” or the “United Defendants.” (Id. ¶ 54).

The other Defendants are ERISA plans (the “Plan Defendants”) and the employers (the “Employer Defendants”) who sponsor those ERISA plans. (Id. ¶¶ 58848). The FAC refers to these Defendants, along with “the Administrators of the ERISA Plans,” as the “ERISA Plan Defendants.” (Id. ¶ 849).

B. Plaintiffs' Standing

Plaintiffs allegedly have standing as assignees of their patients' benefits. (Id. ¶ 871). Every patient purportedly signed an “Assignments of Rights and Benefits,” assigning the patients' health insurance benefits and an array of related rights to their providers (i.e., Plaintiffs). (Id. ¶¶ 871–73). The Assignment allegedly authorizes Plaintiffs to “take all action necessary to pursue benefits claims on the patient's behalf.” (Id. ¶ 871).

Plaintiffs believe that Defendants' plans do not preclude assignment because during Plaintiffs' course of dealings with Defendants, “neither United nor Defendants ever referenced any anti-assignment provisions of any plan, ever refused to communicate with Plaintiffs based on any such anti-assignment provisions, ever refused to process any of Plaintiffs' claims based on any such anti-assignment provisions, or ever refused to pay any of Plaintiffs' claims based on any such anti-assignment provisions.” (Id. ¶ 875). Plaintiffs also allege that, to the extent the plans have anti-assignment provisions, Defendants have waived the right to assert those provisions. (Id. ¶ 879).

C. United Defendants and ERISA Plan Defendants

The FAC alleges that...