Bunker v. Cigna Health Mgmt., Inc.

JACK BUNKER & CHERYL BUNKER, Plaintiffs, v. CIGNA HEALTH MANAGEMENT, INC., SKYLINE HEALTHCARE, LLC, andARLINGTON CARE AND REHABILITATION CENTER, LLC, Defendants.

4:19-CV-04128-LLP

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA SOUTHERN DIVISION

June 24, 2020

MEMORANDUM OPINION AND ORDER DENYING MOTION TO DISMISS, GRANTING MOTION TO STRIKE JURY DEMAND, AND DENYING MOTION TO SERVE BY PUBLICATION

Pending before the Court are Cigna's motion to dismiss Plaintiffs' claim for breach of fiduciary duty and motion to strike jury demand. Doc. 11. Also pending before the Court is Plaintiffs' motion to serve defendant Skyline by publication. Doc. 21. For the foregoing reasons, Cigna's motion to dismiss is denied and Plaintiffs' motion to serve by publication is denied.

FACTS

The facts, as alleged in the Complaint will be accepted as true for purposes of this Motion to Dismiss. Cheryl Bunker was employed by Arlington Care and Rehabilitation Center ("Arlington Care") for 17 years. Doc. 1, ¶ 8. It is alleged that upon information and belief, Skyline Healthcare, LLC ("Skyline") purchased Arlington Care on or before January 1, 2017. Doc. 1, ¶ 9. Beginning on or about January 1, 2017, Skyline offered medical insurance to employees of Arlington Care through Skyline's Healthcare Medical Plan ("the Plan"). Doc. 1, ¶ 10. This was a self-insured health plan and was funded by both employee contributions and Skyline Healthcare. Doc. 1, ¶¶ 11; 12-1. Skyline began failing to pay claims as early as September 2017 and stopped funding the plan to cover claims prior to December 2017. Doc. 1, ¶¶ 12, 13.

In the present case, it appears that Skyline is designated in the Plan as the Plan Administrator. Doc. 12-1 at 45. Under the terms of the Plan, Skyline, as Plan Administrator, has "maximum legal discretionary authority to construe and interpret the terms and provisions of the Plan, to make determinations regarding issues which relate to eligibility for benefits, and to decide disputes which may arise relative to a Plan Participant's rights, and to decide questions of Plan interpretation and those of fact relating to the Plan." Doc. 12-1 at 42. The Plan's terms further provide that benefits are subject to exclusions and limitations "including, but not limited to, the Plan Administrator's determination that: care and treatment is Medically Necessary; that charges are Usual and Reasonable; the services, supplies and care are not Experimental and/or Investigational." Doc. 12-1 at 2. "Medically Necessary care and treatment is recommended or approved by a Physician; is consistent with the patient's conditions or accepted standards of good medical practice; is medically proven to be effective treatment of the condition; is not performed mainly for the convenience of the patient or provider of medical services; is not conducted for research purposes; and is the most appropriate level of services which can be safely provided to the patient." Doc. 12-1 at 16. The Plan provides that the "Plan Administrator has the discretionary authority to decide whether care or treatment is Medically Necessary." Doc. 12-1 at 16.

Although Skyline is the designated Plan Administrator, the terms of the Plan provide that "administration is provided through a Third-Party Claims Administrator." Doc. 12-1 at 45. The "Third Party Claims Administrator" is not defined under the terms of the Plan. The Complaint alleges that upon information and belief, Cigna was the Claims Administrator for the plan. Doc. 1, ¶ 14. The Plan's designated Claims Administrator appears to be American Plan Administrators, LLC. Doc. 12-1 at 45.

The Plan provided that Mr. Bunker was required to obtain precertification of Medical Necessity for his surgery through the utilization review program. Doc. 12-1 at 10. The Plan provides that "[t]he purpose of the [utilization review program] is to determine what charges may be eligible for payment by the Plan. . . . If a particular course of treatment or medical service is not certified, it means that either the Plan will not pay for the charges or the Plan will not consider that course of treatment as appropriate for maximum reimbursement under the Plan." Doc. 12-1 at 10. The Plan provides that before a beneficiary "enters a Medical Care Facility on a non-emergency basis or receives other listed medical services, the utilization review administrator will, in conjunction with the attending Physician, certify the care as appropriate for Plan reimbursement." Doc. 12-1 at 10.

Cheryl Bunker's husband, Jack Bunker, was insured under Skyline's health Plan. Doc. 1, ¶ 15. Mr. Bunker was diagnosed in 2017 with cancer and underwent surgery on or about December 15, 2017. Doc. 1, ¶ 16. By letter dated December 1, 2017, Mr. Bunker received notice from CignaHealth Management, Inc. ("Cigna"), a "licensed utilization review agency [that] performs the medical management functions for [the Plan]," that "we have authorized a request for medical necessity received on [November 30, 2017]." Doc. 1-1. The letter further provided that:

1. When we receive your medical claim(s), we will need to make sure your health care professionals performed only services we approved. If extra services were performed that were not medically necessary, Cigna or your health plan may not pay for them. This means you will have to pay the total cost for any extra services.

2. This letter is not a guarantee that your plan will pay for the services. You must be enrolled in the plan and eligible for benefits on the date you received the service. Please see your plan documents for details about your coverage. You are responsible for your share of any copayments, coinsurance, or other costs.

Doc. 1-1.

In reliance upon the approval letter from Cigna, and without notice that Skyline had stopped funding the Plan, Mr. Bunker underwent the approved surgery on December 15, 2017. Doc. 1, ¶ 31. Had they been informed that their claims may not be paid, Plaintiffs allege that they would have sought other insurance coverages prior to the date of the surgery. Doc. 1, ¶ 32. Plaintiffs' medical bills totaling at least $73,266.04 incurred between September 2017 and April 30, 2018, including, but not limited to, payment for the December 15, 2017, surgery remain unpaid. Doc. 1, ¶¶ 19, 22.

On July 22, 2019, Plaintiffs filed a Complaint with jury demand against Cigna, Skyline, and Arlington Care for breach of ERISA fiduciary duty. Doc. 1.

STANDARD OF REVIEW

In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the factual allegations of a complaint are assumed true and construed in favor of the plaintiff, "even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely." See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007) (internal quotations omitted). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (internal citations omitted). The complaint must allege facts, which, when taken as true, raise more than a speculative right to relief. Id.;Benton v. Merrill Lynch & Co., Inc., 524 F.3d 866, 870 (8th Cir. 2008). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but has not 'show[n]'—'that the pleader is entitled to relief.'" Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (citing Fed. R. Civ. P. 8(a)(2)). "Determining whether a complaint states a plausible claim for relief is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. (citation omitted).

When considering a motion to dismiss under Rule 12(b)(6), the court generally must ignore materials outside the pleadings, but it may consider "'some materials that are part of the public record or do not contradict the complaint,' as well as materials that are 'necessarily embraced by the pleadings.'" Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citations omitted). In general, material embraced by the complaint include "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleadings." Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012).

DISCUSSION

Pending before the Court are Cigna's motion to dismiss Plaintiffs' claim for breach of fiduciary duty and motion to strike jury demand. Also pending before the Court is Plaintiffs' motion to serve defendant Skyline by publication.

I. Motion to Dismiss - Breach of Fiduciary Duty

In the present case, Plaintiff alleges that Cigna worked with Skyline to administer its benefits plans and in doing so, was in a fiduciary relationship with Plaintiffs and was thus required to exercise the fiduciary duties of care, skill, prudence, and diligence. Plaintiffs allege that Cigna breached its fiduciary duties because it knew or should have known that Skyline was not paying any health insurance benefits and had a fiduciary duty not to mislead Plaintiffs that their claims would be paid if they were enrolled in the Plan and eligible for benefits on the date Mr. Bunkers received medical services. Plaintiffs allege that had Cigna not breached its fiduciary duties, they would have sought other insurance coverage prior to the date of the surgery. Plaintiffs' medical bills for the surgery remain unpaid. Plaintiffs allege that they seek the equitable remedy of surcharge to redress Cigna's alleged breaches of fiduciary duty.

A claim for breach of fiduciary duty under ERISA requires the plaintiff to prove: (1) that the defendant is a plan fiduciary; (2) that the defendant breached its fiduciary duty; and (3) that the breach...