Dane v. Unitedhealthcare Ins. Co.

401 F.Supp.3d 231

Mark DANE, Individually and on Behalf of All Others Similarly Situated, Plaintiff,

v.UNITEDHEALTHCARE INSURANCE COMPANY, et al., Defendants.

No. 3:18-cv-00792 (SRU)

United States District Court, D. Connecticut.

Signed June 24, 2019

Sean K. Collins, Sean K. Collins, Attorney at Law, Boston, MA, Christopher Chagas Gold, Dorothy Antullis, Stuart A. Davidson, Robbins Geller Rudman & Dowd LLP, Boca Raton, FL, Ex Kano S. Sams, II, Lionel Z. Glancy, Glancy Prongay & Murray LLP, Los Angeles, CA, Jeffrey O. McDonald, Louis N. George, Hassett & George, PC, Simsbury, CT, for Plaintiff.

Brian D. Boyle, Meaghan Vergow, O'Melveny & Myers, LLP, Washington, DC, Jean Elizabeth Tomasco, Theodore J. Tucci, Robinson & Cole, LLP, Hartford, CT, Jennifer Sokoler, O'Melveny & Myers LLP, Noah M Weissman, Bryan Cave Leighton Paisner LLP, New York, NY, James T. Shearin, Pullman & Comley, Bridgeport, CT, Jeffrey S Russell, Bryan Cave Leighton Paisner LLP, St. Louis, MO, for Defendants.

ORDER ON MOTION TO DISMISS

Stefan R. Underhill, United States District Judge

Plaintiff Mark Dane ("Dane"), individually and on behalf of all others similarly situated, brings this suit against Defendants AARP, Inc., AARP Services, Inc., AARP Insurance Plan, UnitedHealthCare Insurance Company and UnitedHealth Group, Inc.

Dane brings claims on behalf of a purported nationwide class of current and former insureds who purchased United Medigap coverage. Id. at ¶ 95. He asserts seven Connecticut-law causes of action: (1) violation of the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110b ; (2) breach of contract; (3) unjust enrichment; (4) breach of the implied covenant of good faith and fair dealing; (5) money had and received; (6) conversion; and (7) statutory theft. Id. at ¶¶ 118-169. He also asserts one District of Columbia claim: violation of the District of Columbia's Consumer Protection Procedures Act ("CPPA"), D.C. Code § 28-3904 et seq. Dane seeks a permanent injunction and declaratory relief that will end United's payments to AARP, as well as "disgorgement and restitution of all monies taken" from the class and paid to AARP. Pl.'s Mem., Doc. No. 70, at 6.

For the reasons set forth below, the motion to dismiss, Doc. No. 64, is granted, and the case is dismissed.

I. Standard of Review

A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) is designed "merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which might be offered in support thereof." Ryder Energy Distribution Corp. v. Merrill Lynch Commodities, Inc. , 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli , 616 F.2d 636, 639 (2d Cir. 1980) ).

When deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must accept the material facts alleged in the complaint as true, draw all reasonable inferences in favor of the plaintiffs, and decide whether it is plausible that plaintiffs have a valid claim for relief. Ashcroft v. Iqbal , 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Leeds v. Meltz , 85 F.3d 51, 53 (2d Cir. 1996).

Under Twombly , "[f]actual allegations must be enough to raise a right to relief above the speculative level," and assert a cause of action with enough heft to show entitlement to relief and "enough facts to state a claim to relief that is plausible on its face." 550 U.S. at 555, 570, 127 S.Ct. 1955 ; see also Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ("While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."). The plausibility standard set forth in Twombly and Iqbal obligates the plaintiff to "provide the grounds of his entitlement to relief" through more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (quotation marks omitted). Plausibility at the pleading stage is nonetheless distinct from probability, and "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the claims] is improbable, and ... recovery is very remote and unlikely." Id. at 556, 127 S.Ct. 1955 (quotation marks omitted).

II. Background

AARP is a Section 501(c)(4) tax-exempt nonprofit organization that advocates for seniors' interests, and United is an insurance corporation. See First Amended Complaint ("FAC"), Doc. No. 61, at ¶¶ 31, 35. United offers a Medigap insurance program to individual AARP members across the country. See id. In 1997, United and AARP entered into an agreement in which United licensed AARP's intellectual property, including the AARP name, trademarked logo, and membership list, to be used in the Medigap program. Id. at ¶ 13. United pays for the use of AARP's intellectual property. AARP Trust is a group policyholder for AARP Medigap, an insurance product of United. FAC, Doc. No. 61, at ¶ 33.

The principal issue raised in this case is whether a group policyholder can take a percentage cut of a member insured's monthly insurance payments that flow through the group plan on their way to the insurer other than for reimbursement of expenses in administering a group insurance plan. Defendants argue that the percentage cut is payment for an intellectual property license for use with the program in exchange for a royalty. Dane, however, contends that the percentage cut constitutes a "premium rebate", or kickback, in violation of state anti-rebating laws, including the Connecticut Unfair Insurance Practices Act ("CUIPA"), Conn. Gen. Stat. § 38a-815, et seq. , and the District of Columbia anti-rebating statute, D.C. Code § 31-2231.12. Dane seeks a permanent injunction and declaratory relief that will halt the alleged kickbacks from occurring in the future as well as disgorgement and restitution of all monies paid to AARP in violation of Connecticut law, District of Columbia law, and the health insurance policy.

III. Discussion

Dane argues the following: (1) AARP Trust is wholly dominated and controlled by AARP, Inc., and United pays AARP in the form of a "premium rebate"; (2) individual consumers, including himself, are harmed by Defendants' "scheme" because they are forced to absorb the costs of the inducement in the form of a 4.9% surcharge on top of premiums; (3) the most current version of the AARP kickback has been kept "secret and confidential"; (4) Defendants' reliance on the filed rate doctrine, which bars suits against regulated utilities grounded on the allegation that the rates charged by the utility are unreasonable, is misplaced because the case involves only state law claims; and (5) Defendants violated CUTPA or CPPA by mischaracterizing the alleged "premium rebate" to AARP as a royalty. Dane also raises several common law claims.

For the reasons that follow, I reject Dane's arguments and grant Defendants' motion to dismiss.

1. The AARP Royalty is not an Unlawful "Premium Rebate"

Connecticut's anti-rebate statute prohibits any "insurance company doing business in [Connecticut] from "pay[ing] or allow[ing] or offer[ing] to pay or allow, as inducement to insurance , any rebate of premium payable on the policy ... or any valuable consideration [ ]or inducement not specified in the policy of insurance." Conn. Gen. Stat. § 38a-825 (emphasis added). The District of Columbia's anti-rebate statute is similar. D.C. Code § 31-2231.12(a)(2).

The FAC does not provide facts to support a theory that a payment to AARP induces AARP members to choose United Medigap overage over other insurance options because individual insureds are not receiving any monetary award for choosing United. AARP is a distinct entity from AARP Trust, which is the group policyholder. See Agreement and Declaration of Trust ("Agreement"), Doc. No. 61-4, at §§ 2.1, 2.3. AARP Trust reimburses United only for administrative expenses, rather than for "referrals". See Agreement, Doc. No. 61-4, at §§ 4.2, 6.1, 6.2.

The payments that AARP makes to United are for use of AARP's intellectual property. See Agreement, Doc. No. 61-4, at § 6.1 ("AARP shall be entitled to receive an allowance for AARP's sponsorship ... and the license to use the AARP Marks.").

The alleged rebate is not paid to the ultimate insureds, so United cannot be said to be influencing individual insured's purchasing decisions. Because Dane does not plausibly allege that policyholder AARP Trust is induced in any way, the royalty payment cannot plausibly be viewed as a premium rebate.

2. Dane's "Premium Rebate" Claim is Barred by the Filed Rate Doctrine

Even if Dane's premium rebate theory were plausible, the filed rate doctrine precludes this lawsuit.

"The filed rate doctrine bars suits against regulated utilities grounded on the allegation that the rates charged by the utility are unreasonable." Wegoland Ltd. v. NYNEXT Corp. , 27 F.3d 17, 18 (2d Cir. 1994). It holds that any rate approved by the governing regulatory agency is "per se reasonable and unassailable in judicial proceedings brought by ratepayers." Id. The Second Circuit has held that "two companion principles lie at the core of the filed rate doctrine: first, that legislative bodies design agencies for the specific purpose of setting uniform rates, and second, that courts are not institutionally well suited to engage in retroactive rate-setting." Id. at 19 (quoting Roussin v. AARP, Inc. , 664 F. Supp. 2d 412, 415 (S.D.N.Y. 2009), aff'd sub nom. Roussin v. AARP , 379 F. App'x 30 (2d Cir. 2010) ). In addition, "the doctrine is applied strictly to prevent a plaintiff from bringing a cause of action even in the face of apparent inequities whenever either the nondiscrimination strand or the nonjusticiability strand underlying the doctrine is implicated by the cause of action the plaintiff seeks to pursue." Roussin , 664 F. Supp. 2d. at 415.

As a threshold matter, Connecticut's Department of Insurance ("CID") regulates and has...