Spine & Neurosurgery Assocs. v. UnitedHealthcare Ins. Co.

SPINE & NEUROSURGERY ASSOCIATES, a medical corporation, Plaintiff, v. UNITEDHEALTHCARE INSURANCE COMPANY, a Connecticut Corporation;and DOES 1-20, inclusive, Defendant.

No. 2:19-cv-00115-TLN-DB

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

February 21, 2020

ORDER

This matter is before the Court on Defendant UnitedHealthcare Insurance Company's ("Defendant") Motion to Dismiss and Motion to Strike. (ECF No. 7.) For the reasons set forth below, the Court GRANTS Defendant's Motion to Dismiss and DENIES the Motion to Strike as moot.

I. FACTUAL AND PROCEDURAL BACKGROUND

On December 13, 2018, Plaintiff Spine & Neurosurgery Associates ("Plaintiff") initiated this action in the Superior Court of California, County of Placer, asserting causes of action for: (1) Violation of California Health and Safety Code Section 1371.4 ("§ 1371.4"); (2) Violation of California Insurance Code Section 790.03, also called the Unfair Insurance Practices Act ("UIPA"); and (3) Violation of California Business & Professions Code Section 17200, also called the Unfair Competition Law ("UCL"). (ECF No. 1-3 at ¶ 33.) Specifically, Plaintiff alleges that on October 16 and 18, 2017, it provided emergency medical treatment and services to a patient who was insured by Defendant at the time, but that Defendant reimbursed only a small portion of the billed amount and failed to pay the remaining balance owed for the treatment provided despite repeated written requests.¹ (Id. at ¶¶ 8-16.)

Defendant removed the action to federal court based on diversity jurisdiction pursuant to 28 U.S.C. §§ 1141(b) and 1146.² (ECF No. 1.) On February 20, 2019, Defendant filed the instant Motion to Dismiss, seeking to dismiss the Complaint in its entirety under Federal Rule of Civil Procedure ("Rule") 12(b)(6), on the basis that Plaintiff failed to state a claim upon which relief can be granted. (ECF No. 7.) Plaintiff opposed the Motion and Defendant replied. (ECF Nos. 10, 12.)

II. STANDARD OF LAW

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Federal Rule of Civil Procedure 8(a) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). Under notice pleading in federal court, the complaint must "give the defendant fair notice of what the claim . . . is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). "This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

/// On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give Plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege "'specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Twombly, 550 U.S. at 570. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556).

Nevertheless, a court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Moreover, it is inappropriate to assume that the plaintiff "can prove facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 697 (quoting Twombly, 550 U.S. at 570). Only where a plaintiff has failed to "nudge[] [his or her] claims . . . across the line from conceivable to plausible," is the complaint properly dismissed. Id. at 680. While the plausibility requirement is not akin to a probability requirement, it demands more than "a sheer possibility that a defendant has acted unlawfully." Id. at 678. This plausibility inquiry is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

/// If a complaint fails to state a plausible claim, "[a] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 484, 497 (9th Cir. 1995)); see also Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009) (finding no abuse of discretion in denying leave to amend when amendment would be futile). Although a district court should freely give leave to amend when justice so requires under Rule 15(a)(2), "the court's discretion to deny such leave is 'particularly broad' where the plaintiff has previously amended its complaint." Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)).

III. ANALYSIS

A. First Cause of Action: Violation of § 1371.4

California Health and Safety Code § 1371.4 governs compensation for emergency care services and requires health plans to reimburse emergency services providers. See § 1371.4(b). Plaintiff claims Defendant violated § 1347.4 by failing to provide reimbursement to Plaintiff for emergency services provided to its insured. (ECF No. 1-3 at ¶ 21.) Defendant moved to dismiss the claim because "Section 1371.4 does not create a standalone private right of action." (ECF No. 7-1 at 10-13). Plaintiff opposes Defendant's motion, on the basis that it has "tied" this cause of action to its UCL claim, and California law permits Plaintiff to bring a UCL claim for violations of § 1371.4. (ECF No. 10 at 5.) The Court finds Plaintiff's arguments to be unavailing.

The California Supreme Court recognized that a "violation of a state statute does not necessarily give rise to a private cause of action." Lu v. Hawaiian Gardens Casino, Inc., 50 Cal. 4th 592, 596 (2010).³ Whether a party has a right to sue for the violation of a statute depends on whether the Legislature has "manifested an intent to create such a private cause of action" under the statute. Id. (citing Mordi-Shalal v. Fireman's Fund Ins. Companies, 46 Cal. 3d 287, 305 (1988)). Indeed, "when neither the language nor the history of a statute indicates an intent tocreate a new private right to sue, a party contending for judicial recognition of such a right bears a heavy, perhaps insurmountable burden of persuasion." Id. at 601 (citing Crusader Ins. Co. v. Scottsdale Ins. Co., 54 Cal. App. 4th 121, 133 (1997)).

Several California appellate and federal district courts have directly concluded, or support the conclusion, that § 1371.4 does not create a standalone private right of action. See Dignity Health & Northridge Hosp. Med. Ctr. v. Local Initiative Health Care Auth., No. BC583522, 2017 WL 5957000, at *4-5 (Cal. Super. Ct. Sept. 8, 2017) (finding § 1371.4 did not create a standalone private right of action and granting summary adjudication of standalone claim for violations of § 1371.4), aff'd, 44 Cal. App. 5th 144;⁴ Cal. Pac. Reg'l Med. Ctr. v. Global Excel Mgmt., Inc., No. 13-cv-00540 NC, 2013 WL 2436602, at *2-8 (N.D. Cal. June 4, 2013) (analyzing language and legislative history of § 1371.4 and concluding it did not create a private cause of action); John Muir Health v. Global Excel Mgmt., No. C-14-04226, 2014 WL 6657656, at *3-6 (N.D. Cal. Nov. 21, 2014) (granting motion to dismiss standalone § 1371.4 claim); Regents of the Univ. of Cal. v. Global Excel Mgmt., Inc., 2010 WL 5175034, at *4 (C.D. Cal. Dec. 10, 2010) (same). Based on the foregoing authority, this Court finds § 1371.4 does not create a standalone private right of action.

Further, Plaintiff's contention that its standalone claim under § 1371.4 survives dismissal because it is "tied" to Plaintiff's Third Cause of Action for a violation of the UCL is unpersuasive. Plaintiff's reliance on Bell v. Blue Cross of California, 131 Cal. App. 4th 211, 216 (2005) and Centinela Freeman Emergency Medical Associates, 1 Cal. 5th 994, 1001-02 (2016) is similarly misguided. (ECF No. 10 at 4-5.) Neither Bell nor Centinela stands for the proposition that § 1371.4 creates a private right of action as a standalone claim, but rather that a plaintiff may pursue a private action for alleged violations of the statute under another claim or at common law. Bell, 131 Cal. App. 4th at 216 (plaintiff could state a claim for § 1371.4 violations as violation ofUCL and/or a quantum meruit claim); Centinela Freeman Emergency Medical Associates, 1 Cal. 5th at 1001-02 (plaintiff could seek recovery for breach of duty created by § 1371.4(e) under negligence theory). While Plaintiff may state a...