Chee Vang v. State Farm Mut. Auto. Ins. Co.

CHEE VANG, YEE VANG, MAO LEE, & YENG HER, as mother of J.Y., a minor, on behalf of themselves and all others similarly situated, Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant.

No. 20-cv-1260-JES-TSH

United States District Court, C.D. Illinois

December 2, 2021

ORDER AND OPINION

James E. Shadid United States District Judge

This matter is now before the Court on Defendant State Farm Mutual Automobile Insurance Company's Motion (Doc 17)^[1] to Dismiss Amended Complaint for Lack of Standing and for Failure to State a Claim and Memorandum (Doc. 18) in Support Plaintiffs' Response (Doc. 21) in Opposition to Defendant's Motion, and Defendant's Reply (Doc. 23).

Background

The following facts are taken from Plaintiff's Complaint which the Court accepts as true for the purposes of a motion to dismiss. Bible v. United Student Aid Funds, Inc. 799 F.3d 633, 639 (7th Cir. 2015).

The Parties and Automobile Insurance

Defendant State Farm Mutual Automobile Insurance Company is an insurance company incorporated under the laws of Illinois, with its principal place of business in Bloomington, Illinois. Doc. 15, ¶ 25. Defendant sells automobile insurance, which includes policies for health care. Id., ¶ 26. Such “health care” includes bodily injury protection, medical payments known as Personal Injury Protection (“PIP”), uninsured motorist benefits, underinsured motorist benefits, and liability payments for bodily injuries arising from automobile accidents. Id. Most states require automobile insurers to provide coverage for medical expenses incurred because of an automobile accident, such as liability insurance, which covers bodily injury to another or PIP benefits, which covers healthcare expenses incurred by the insured or passengers. Id., ¶ 28. Some states, including Minnesota, have adopted “no-fault” statutes that require insurance companies to compensate injuries suffered in automobile accidents within a particular time period. Id., ¶¶ 30, 32, 35. All named Plaintiffs^[2] are citizens of Minnesota who were insured by State Farm under “no-fault” automobile policies. Id., ¶¶ 19-23. They are of the Hmong ethnicity, which is a group of people based in East and Southeast Asia that began immigrating to the United States in the 1970s. Id., ¶ 24.

Dr. Lee and TIN Diversion

Plaintiffs were involved in automobile accidents in 2017 and 2018 while insured under no-fault automobile insurance policies issued by Defendant that included PIP coverage mandated by Minnesota's No-Fault Act. Id., ¶¶ 19-23, 118, 133, 49. Each of them received treatment for their injuries in the months following the accidents from the same chiropractor, Dr. Jer Lee, at the Chiro Health Clinic in Minnesota. Id., ¶¶ 119, 135, 151. State Farm delayed paying Dr. Lee's bills under their PIP coverage because “State Farm had secretly imposed a TIN diversion or TIN block on Dr. Lee and Chiro Health Clinic.” Id., ¶ 165. TIN (taxpayer identification number) blocks and diversions are tools State Farm uses while investigating potential provider fraud. Id., ¶¶ 79-81. State Farm uses its tools to identify providers with certain “treatment patterns, sharp increases in billing, or high volume of billing” as potential “projects” overseen by State Farm's anti-fraud Multi-Claim Investigation Units (“MCIUs”). Id., ¶¶ 57-58, 63. State Farm identifies “projects” by tracking “how much a particular provider has billed State Farm, ” “usage of certain Current Procedure Technology (“CPT”) codes, ” and “the frequency with which medical providers have patients in common.” Id., ¶¶ 73, 76, 78. State Farm tracks this information using its Potential Fraud Management Tool (“PFMT”) and Value Assessment Tool (“VAT”). Id., ¶¶ 70- 72. State Farm uses its PFMT and VAT to identify “which doctors cause State Farm to pay the most in automobile-accident bodily-injury claims.” Id., ¶ 72. All claims involving a “project” provider are routed to MCIU staff who can issue a TIN diversion. Id., ¶¶ 79-80. Once a diversion is issued, any bill from that provider is routed to MCIU staff for review. Id., ¶ 80. TIN diversions allow MCIU staff to investigate potential fraud before paying a provider, while TIN blocks bar any payment to the provider. Id., ¶¶ 81, 91.

Plaintiffs claim State Farm once instructed personnel in an unidentified internal document that, “one of the factors in deciding whether a particular provider is ‘suspect' is whether the provider's patients ‘are from an immigrant community.'” Id., ¶¶ 5, 98. Plaintiffs quote this document twice in their Complaint, but they chose not to identify the document they quote from, when this occurred, whether this document is still in effect, or whether this was one of the factors State Farm used when it chose to secretly impose a TIN diversion or block on Dr. Lee. Plaintiffs allege that State Farm's approach to investigating potential provider fraud is intended “to avoid payment of claims for treatment to State Farm policyholders and insureds who are racial or ethnic minorities” by targeting providers who are minorities or immigrants or serve those communities. Id., ¶¶ 5, 79. Plaintiffs also allege State Farm is harassing insureds to put doctors that serve immigrant and minority communities out of business. Id., ¶ 66.

The Class

Plaintiffs seek to represent a class consisting of the following individuals:

All persons in the United States who had coverage under a policy issued by Defendant for medical or chiropractic expenses and who sought payment for services for medical or chiropractic expenses (or had another person seek payment under the person's policy) from a provider that was subjected to a TIN diversion or TIN block by Defendant[]

Id. ¶ 172.

Plaintiffs initially filed this putative class action against State Farm in the United States District Court for the District of Arizona on November 6, 2018. See Chee Vang et al, v. State Farm Mutual Automobile Insurance Company, No. CV-18-03870-PHX-DWL, 2019 WL 1676150 (D. Ariz. Apr. 17, 2019). On December 18, 2018, Defendant filed a motion to dismiss for lack of personal jurisdiction and for failure to state a claim. Id. at *2. Thereafter, Plaintiffs filed an amended complaint and Defendant filed another motion to dismiss for lack of personal jurisdiction and for failure to state a claim. Id. On April 17, 2019, the district court dismissed Plaintiffs' amended complaint for lack of personal jurisdiction under Rule 12(b)(2). See Id. at *4-6. Over a year later, Plaintiffs filed this action on July 10, 2020 asserting the same claims. Doc. 1. On August 24, 2020, State Farm moved to dismiss Plaintiffs' complaint for lack of standing and for failure to state a claim. Doc. 10. Plaintiffs responded by filing the Amended Class Action Complaint (the "Complaint") on September 21, 2020. Doc. 15.^[3] On October 5, 2020, Defendant filed another Motion to Dismiss the Complaint. Doc. 17.

Legal Standard

Under Fed.R.Civ.P. 12(b)(1), a defendant may move to dismiss claims over which the district court lacks subject-matter jurisdiction, including claims for which the parties lack Article III standing. Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009). Such challenge can take the form of a facial attack or factual attack. Bazile v. Fin. Sys. of Green Bay, Inc., 983 F.3d 274, 279 (7th Cir. 2020) (citing Apex, 572 F.3d at 443-44). In evaluating a facial attack, the Court must accept all well-pleaded facts as true and draw all reasonable inferences in the plaintiff's favor to determine whether the allegations support an inference that the elements of standing exist. Id.; see Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015) (holding the 12(b)(6) plausibility standard applies in 12(b)(1) facial challenges). In contrast, the plaintiff does not have these benefits where the Court considers a factual attack to jurisdiction. Bazile, 983 F.3d at 279. “[T]he court may consider and weigh evidence outside the pleadings to determine whether it has power to adjudicate the action.” Id. (citing Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co., 137 S.Ct. 1312, 1316 (2017); Craftwood II, Inc. v. Generac Power Sys., Inc., 920 F.3d 479, 481 (7th Cir. 2019)).

A motion to dismiss pursuant to Rule 12(b)(6) challenges whether a complaint sufficiently states a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). The Court accepts well-pleaded allegations in a complaint as true and draws all permissible inferences in favor of the plaintiff. See Bible, 799 F.3d at 639. To survive a motion to dismiss, the complaint must describe the claim in sufficient detail to put defendant on notice as to the nature of the claim and its bases, and it must plausibly suggest that the plaintiff has a right to relief. Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 555 (2007). A complaint need not allege specific facts, but it may not rest entirely on conclusory statements or empty recitations of the elements of the cause of action. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The allegations “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.

Discussion

Plaintiffs bring claims under Section 1557 of the Patient Protection and Affordable Care Act (“ACA”), 42 U.S.C. § 18116, and Title 42 U.S.C. § 1981 alleging Defendant developed an elaborate nationwide scheme to avoid paying claims from members of racial and ethnic minorities and immigrant communities across the United States. Doc. 15, at 41, 44; Doc. 21, at 8. Section 1557 of the ACA prohibits discrimination based on the grounds prohibited by Title VII, Title IX, the Age Discrimination Act, and the Rehabilitation Act. 42 U.S.C. § 18116(a). The ACA provides, “an individual...