Skipper v. CareFirst BlueChoice, Inc.

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MATTHEW SKIPPER, et al., Plaintiffs, v. CAREFIRST BLUECHOICE, INC., Defendant.

Civ. No. DLB-21-1022

United States District Court, D. Maryland

March 8, 2023

MEMORANDUM OPINION

DEBORAH L. BOARDMAN, UNITED STATES DISTRICT JUDGE

Matthew and Jamie Skipper filed this putative class action under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d), against CareFirst BlueChoice, Inc. (“CareFirst”) alleging the insurance company improperly excluded coverage for embryo thawing. ECF 1. The plaintiffs assert claims for breach of contract and negligent misrepresentation and seek a declaratory judgment and damages. ECF 21.^[1] CareFirst filed a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and under Rule 12(b)(6) for failure to a state claim. ECF 22. The plaintiffs opposed the motion, ECF 23, and CareFirst replied, ECF 24. A hearing is not necessary. See Loc. R. 105.6 (D. Md. 2021). Because the Court lacks subject matter jurisdiction CareFirst's motion to dismiss is granted, and the plaintiffs' second amended complaint is dismissed without prejudice.

I. Background

In 2016, Matthew and Jamie Skipper obtained a health insurance policy from CareFirst. ECF 21, ¶ 15. The policy provides coverage for “Assisted reproductive technologies,” which includes in-vitro fertilization (“IVF”), where less costly methods have failed. Id. ¶ 17. Before they were insured with CareFirst, the Skippers sought fertility treatment and attempted several cycles of intrauterine insemination without success. Id. ¶¶ 18-19. Jamie Skipper then underwent several egg retrieval and fresh transfer cycles, which were also unsuccessful, and the Skippers' physician advised that they should create and freeze embryos for transfer. Id. ¶¶ 20-24. In 2016, while insured by another carrier, the Skippers created and froze four embryos and transferred two of the frozen embryos, which resulted in a successful pregnancy. Id. ¶¶ 24-25.

In 2018, the Skippers secured prior authorization from CareFirst to proceed with an IVF transfer cycle with the remaining frozen embryos. Id. ¶ 26. CareFirst approved coverage for the IVF procedure but denied coverage for thawing the embryos, even though the embryos had to be thawed before the transfer. Id. ¶¶ 30-32; see also ECF 1-2 (CareFirst estimate of charges). The Skippers personally covered the $900 cost of thawing. ECF 21, ¶ 33. They appealed the denial and filed a complaint with the Maryland Insurance Administration (“MIA”). Id. ¶¶ 36-38. In May 2021, CareFirst sent a new explanation of benefits covering the embryo thawing and issued payment directly to the Skippers' physicians, and the MIA case was closed. Id. ¶¶ 40-43. The Skippers allege that CareFirst should have reimbursed them directly, rather than make payment to their physicians, and assert they lost the use of the funds for a period of years. Id. ¶¶ 44-46.

The Skippers filed this lawsuit on behalf of a class defined as:

All persons in the State of Maryland who, within three years prior to the date of the commencement of this action, did not receive coverage for embryo thawing but did receive it for other IVF-related expenses pursuant to a Care[F]irst health insurance policy issued in Maryland that purports to cover “pregnancy-related benefits.”

Id. ¶ 47. They seek actual damages, attorney's fees and costs, and an award of pre- and postjudgment interest, as well as injunctive and declaratory relief “directing coverage of embryo thawing as part of coverage of other IVF-related expenses.” Id. ¶ 16.

The plaintiffs allege that the Court has subject matter jurisdiction over this action under CAFA because at least one class member and CareFirst are citizens of different states, there are 100 or more potential class members, and the aggregate amount in controversy exceeds $5 million. Id. ¶ 5. CareFirst moves to dismiss for lack of subject matter jurisdiction because the plaintiffs have not sufficiently alleged the numerosity or amount in controversy thresholds required under CAFA. ECF 22.

II. Standard of Review

“Federal courts are courts of limited jurisdiction[,]” possessing “only that power authorized by Constitution and statute.” Robb Evans & Assocs., LLC v. Holibaugh, 609 F.3d 359, 362 (4th Cir. 2010) (quoting Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994)). The plaintiff bears the burden of establishing subject matter jurisdiction, and it is presumed that a federal court lacks jurisdiction over a case until the plaintiff demonstrates the contrary. Kokkonen, 511 U.S. at 377; see also United States v. Poole, 531 F.3d 263, 274 (4th Cir. 2008) (“A court is to presume . . . that a case lies outside its limited jurisdiction unless and until jurisdiction has been shown to be proper.”).

“A motion to dismiss based on lack of subject matter jurisdiction pursuant to Rule 12(b)(1) raises the question of whether the Court has the competence or authority to hear the case.” Davis v. Thompson, 367 F.Supp.2d 792, 799 (D. Md. 2005). When, as here, the defendant asserts a facial challenge to subject matter jurisdiction “by contending that, even assuming that the allegations are true, the complaint fails to set forth facts upon which jurisdiction is proper,” the plaintiff “is afforded the same procedural protections as he would receive under a Rule 12(b)(6) consideration[.]” Durden v. United States, 736 F.3d 296, 300 (4th Cir. 2013) (quoting Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009)) (internal quotation marks omitted); see also Kenny v. Wilson, 885 F.3d 280, 287 (4th Cir. 2018) (applying the Rule 12(b)(6) standard on a facial challenge to jurisdiction). When ruling on a Rule 12(b)(6) motion, the Court must accept the allegations as true and draw all reasonable inferences in favor of the pleader. Williams v. Kincaid, 45 F.4th 759, 765, 777 (4th Cir. 2022). But the Court does not accept “legal conclusions couched as facts or unwarranted inferences, unreasonable conclusions, or arguments.” United States ex rel. Taylor v. Boyko, 39 F.4th 177, 189 (4th Cir. 2022) (quoting United States ex rel. Nathan v. Takeda Pharms. N. Am., Inc., 707 F.3d 451, 455 (4th Cir. 2013)). Merely reciting a claim's elements “and supporting them by conclusory statements does not meet the required standard.” Sheppard v. Visitors of Va. State Univ., 993 F.3d 230, 234 (4th Cir. 2021) (quoting ACA Fin. Guar. Corp. v. City of Buena Vista, 917 F.3d 206, 212 (4th Cir. 2019)). On a Rule 12(b)(6) motion, the Court “does not resolve contests surrounding facts, the merits of a claim, or the applicability of defenses.” Ray v. Roane, 948 F.3d 222, 226 (4th Cir. 2020) (quoting Tobey v. Jones, 706 F.3d 379, 387 (4th Cir. 2013)).

While CAFA's “provisions should be read broadly,” the plaintiff still must plausibly allege jurisdiction. See Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81, 89 (2014) (holding that a removing defendant invoking jurisdiction under CAFA “need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold”); accord Scott v. Cricket Commc'ns, LLC, 865 F.3d 189, 194 (4th Cir. 2017).^[2]

III. Analysis

A federal district court has jurisdiction under CAFA if three requirements are satisfied: (1) the parties are minimally diverse in citizenship, i.e., “any member of a class of plaintiffs is a citizen of a State different from any defendant;” (2) the number of proposed class members is 100 or more; and (3) the aggregate amount in controversy exceeds $5 million. 28 U.S.C. § 1332(d). A conclusory invocation of CAFA is insufficient to establish subject matter jurisdiction without specific factual allegations that allow the court to draw reasonable inferences of the jurisdictional prerequisites. See Scott, 865 F.3d at 195 (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). CareFirst does not dispute there is minimal diversity; the plaintiffs are citizens of Maryland and CareFirst is a citizen of the District of Columbia. The dispute lies in whether the plaintiffs have plausibly alleged numerosity and an amount in controversy over $5 million.

The plaintiffs argue the Court can plausibly infer from the following allegations that there are over 100 class members and the amount in controversy exceeds $5 million. They allege that “Care[F]irst purports to provide health insurance to 3.4 million individuals and employers in Maryland, the District of Columbia, and Northern Virginia.” ECF 21, ¶ 4. “Nationwide, in 2018, 74.3% of more than 107,000 embryo transfer cycles involved frozen embryo transfers.” Id. ¶ 10. And “[m]ore than 6,000 embryo transfers were performed in Maryland in 2018.” Id. ¶ 14. The Skippers paid “$900 of their marital funds to cover the cost of thawing.” Id. ¶ 33. Finally, they concede that “the exact number of the members of the Class are unknown to [them] at this time,” but they allege that “membership in the Class may be ascertained from the records maintained by [CareFirst]” and that they “are informed and believe that the Class includes hundreds of members.” Id. ¶ 49.

The Court can reasonably infer from these allegations that there are more than 100 potential class members, but the same cannot be said for the amount in controversy. The amount in controversy is calculated by multiplying the number of potential class members by the average damages each class member sustained. As to the number of potential class members, the Court must be able to reasonably infer, at the very least, how many people in Maryland were insured by CareFirst during the relevant period. The allegations on this front fall short. While the plaintiffs allege that CareFirst insures 3.4 million individuals and employers in the District of Columbia, Maryland, and Virginia, ...