Omega Hosp., LLC v. United Healthcare Servs., Inc., CIVIL ACTION NO. 16-00560-JWD-EWD

389 F.Supp.3d 412

OMEGA HOSPITAL, LLC

v.UNITED HEALTHCARE SERVICES, INC. and United Healthcare of Louisiana, Inc.

CIVIL ACTION NO. 16-00560-JWD-EWD

United States District Court, M.D. Louisiana.

Signed April 29, 2019

Filed April 30, 2019

Paul A. Lea, Jr., Covington, LA, for Omega Hospital, LLC.

Errol J. King, Jr., Layna C. Rush, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Baton Rouge, LA, Gregory F. Jacob, Pro Hac Vice, O'Melveny & Myers, LLP, Washington, DC, for United Healthcare of Louisiana Inc., United HealthCare Services, Inc.

RULING

JOHN W. deGRAVELLES, JUDGE

This matter comes before the Court on Omega Hospital, LLC's ("Omega" or "Plaintiff") motion for reconsideration of the Court's September 11, 2018 ruling on United Healthcare Services, Inc. and United Healthcare of Louisiana, Inc.'s (collectively "United" or "Defendants") motion to dismiss and motion for leave of court to amend its complaint. (Doc. 92). The September 11, 2018 ruling (Doc. 90) on United's motion to dismiss (Doc. 67) dismissed all remaining claims by Omega against United for alleged violations of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA") and Louisiana state law. United opposes Omega's motion for reconsideration and motion for leave of court to amend. (Doc. 94). Omega filed a reply. (Doc. 99). After carefully considering the law and the parties' arguments, the Court grants Omega's Rule 15(a) motion for leave of court to amend and denies Omega's Rule 59(e) motion for reconsideration.

I. Relevant Facts and Procedural History

Omega filed its complaint on August 24, 2016. (Doc. 1). Omega is a hospital and surgical center that treats patients whose healthcare benefit plans are insured and/or administered by United. Omega treats United's insureds on an out-of-network basis, which means that Omega does not have a pre-existing provider contract with United. Omega, as the assignee of a class of its patients, alleged that United violated ERISA and Louisiana state law in an alleged scheme for reimbursement and recoupment of alleged overpayments made by United. (Doc. 1). United responded with a motion to dismiss under Rule 12(b)(1) and 12(b)(6) on November 1, 2016. (Doc. 11). United's initial motion to dismiss was opposed by Omega (Doc. 20), and oral argument was heard¹ on August 10, 2017. (Doc. 35).

The ruling on United's initial motion to dismiss was issued by Judge Brady on September 22, 2017. (Doc. 37). This Court denied United's motion under Rule 12(b)(1) and found that Omega had standing to proceed with its claims of violation of ERISA and state law. Specifically, the Court found that Omega had sufficiently plead a valid assignment. (Doc. 38 at 4-6). Under Rule 12(b)(6), the Court found that "Omega's Complaint lack[ed] necessary specificity and fail[ed] to provide proper factual support of certain allegations." (Doc. 38 at 6-7). The Court allowed Omega time to "amend its Complaint to allege with specificity the dates of service and claim numbers at issue with respect to the identified patients". (Doc. 38 at 7). United was, in turn, ordered to provide all plan information within a designated time period. Omega was then further ordered to amend its Complaint to "clarify and specify the class it purports to represent". (Doc. 38 at 7). Finally, with regard to Omega's claims pursuant to state law, the Court dismissed the state law claims brought on behalf of ERISA-plan participants. The Court also dismissed the state law claims brought on behalf of non-ERISA plan participants without prejudice subject to Omega's leave to amend those allegations. (Doc. 38 at 9).

On October 20, 2017, Omega amended its Complaint pursuant to the Court's Order. (Doc. 41).

Following a re-assignment of this matter to Judge deGravelles, United filed its second motion to dismiss. (Doc. 67). United sought dismissal based on the following grounds: (1) Omega lacked standing to bring this case; (2) Omega failed to exhaust administrative remedies; (3) Omega failed to state plausible ERISA claims; (4) the Court lacked supplemental jurisdiction over Omega's state law claims; and (5) alternatively, Omega's state law claims were implausible and the breach of contract claim was preempted by ERISA. (Doc. 67-1). Omega opposed the motion and did not seek leave of court to amend its Complaint a second time. (Doc. 76).

After an analysis of Omega's amended Complaint, the arguments of the parties, and the law, the Court granted United's second motion to dismiss in part and denied it in part. (Doc. 90). The Court found that: (1) United's anti-assignment provisions were invalidated by La. Rev. Stat. § 40:2010, (Doc. 90 at 14), and La. Rev. Stat. § 40:2010 was not preempted by Gobeille v. Liberty Mutual Ins. Co. , ––– U.S. ––––, 136 S.Ct. 936, 194 L.Ed.2d 20 (2016), (Doc. 90 at 18); (2) an assignment may confer both authorized representative and assignee status to a provider, such as Omega, (Doc. 90 at 20); (3) Omega lacked standing to assert any ERISA claims on LL's behalf and those claims were dismissed without prejudice, (Doc. 90 at 22); (4) Omega lacked derivative standing to assert its Section 502(a)(3)(A) breach of fiduciary duty claim seeking prospective relief and Section 502(a)(3)(B) breach of fiduciary duty claim seeking unjust enrichment due to United's failure to comply with the terms of the Plans because the assignment did not contain express reference to fiduciary duty claims or future rights, (Doc. 90 at 27); (5) Omega sufficiently alleged that exhaustion should be excused due to United's failure to provide meaningful access to administrative remedies, (Doc. 90 at 30); (6) Omega's 29 U.S.C. § 1132(A)(1)(B) claim was dismissed because Omega did not plausibly plead that it is entitled to benefits recouped by cross-plan offsetting, (Doc. 90 at 32-33); (7) Omega's Section 503 claim was dismissed because Omega alleged that United is the "Plan Administrator", not the "Plan", (Doc. 90 at 35-36); and (8) Omega's claims of breach of contract and negligent misrepresentation were dismissed because the Court declined to exercise supplemental jurisdiction over the remaining state law claims. (Doc. 90 at 36).

Omega's current motion requests that the Court reconsider its ruling on the following grounds: (1) Omega inartfully plead the activity engaged in by United and the injury caused by United's "recoupment scheme"; (2) the Court accepted United's version of events which was contrary to Omega's contentions; (3) the United States Supreme Court decision of Montanile v. Board of Trustees of Nat. Elevator Industry Health Plan , ––– U.S. ––––, 136 S.Ct. 651, 193 L.Ed. 2d 556 (2016), vindicates Omega's theory for recovery; and (4) the Court may have erred legally regarding the express assignment of the claim for breach of fiduciary duty. (Doc. 92-1 at 2). Additionally, Omega argues that it amended its Complaint in response to the Court's September 22, 2017 ruling, which included a specific scope of amendment. Omega suggests that because the ruling did not address any issue with Omega's legal theory and did not order Omega to name the assignments from patients whose accounts were used as the vehicle for United to recover the overpayments, Omega did not take the liberty of making such amendments. Therefore, Omega also moves the Court under Rule 15(a) to grant it leave of court to amend the Complaint to correct the pleading deficiencies "identified by the Court". (Doc. 92-1 at 2).

United opposes Omega's motion under Rule 59(e) and under Rule 15(a). (Doc. 94). United argues that Montanile has "no bearing" on United's offsetting practices, and offsetting is permissible under ERISA and upheld by the courts. (Doc. 94 at 3-4). United also argues that no one is injured when United recoups overpayments; therefore, Omega's claims are implausible. (Doc. 94 at 4-5). United maintains that Omega has no standing for fiduciary breach claims. (Doc. 94 at 5-7). Finally, United opposes Omega's motion to amend its complaint as any amendment would be futile. (Doc. 94 at 7-10).

Omega filed a reply arguing that: (1) United has mischaracterized Omega's claims in order to support United's position that Omega lacks standing. Omega's benefit claim seeks simply to recover benefits once paid on behalf of its representative patients but now taken away through a retroactive benefit redetermination. Omega's assignments provide derivative standing in the same manner that Omega could have pursued if United had issued the retroactive explanation of benefits initially. Omega cites to Peterson v. Unitedhealth Group, Inc. , 242 F.Supp.3d 834 (D. Minn. 2017), which is almost identical to the instant matter, but has previously been distinguished by this Court in its September 11, 2018 ruling. (Doc. 99 at 1-2). (2) The Fifth Circuit Court of Appeals, in Manuel v. Turner Industries Group, L.L.C. , 905 F.3d 859 (5th Cir. 2018), recognized Montanile in its decision. Manuel suggests that United cannot pursue equitable relief to recoup overpayments absent an ability to trace the overpaid funds to their source. Omega argues that United recouped against Omega's general assets and not the specific traceable funds it allegedly overpaid. Omega urges the Court to reconsider its prior analysis in light of Montanile , Manuel , and Estate of Barton v. ADT Sec. Services Pension Plan , 837 F.3d 1014 (9th Cir. 2016). (Doc. 99 at 3-6). (3) The Court improperly construes 29 U.S.C. § 1133 in finding that claims under this section only apply to the plan, and not to plan administrators. Omega argues that this is contrary to legal authority from the Fifth Circuit Court of Appeals. (Doc. 99 at 8). (4) Omega argues five specific amendments that it is prepared to make that will "easily cure" the remaining defects, and this amendment is "favored in the interest of justice". (Doc. 99 at 7-8 and 10).

II. Discussion

A. Standard for Motion for Reconsideration under Rule 59(e)

While the Federal Rules of Civil Procedure do...