Surgery Ctr. of Viera, LLC v. Cigna Health & Life Ins. Co.

SURGERY CENTER OF VIERA, LLC, Plaintiff, v. CIGNA HEALTH AND LIFE INSURANCE COMPANY, INC.;HOME DEPOT MEDICAL AND DENTAL PLAN;and HOME DEPOT, USA INC., Defendants.

Case No. 6:20-cv-152-Orl-37EJK

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

July 23, 2020

ORDER

Before the Court is Defendants' motion to dismiss Plaintiff Surgery Center of Viera, LLC's ("SCV") Complaint (Doc. 1). (Doc. 16 ("Motion").) SCV opposes. (Doc. 25.) On review, the Court will grant the Motion in part and dismiss SCV's claims as preempted by the Employee Retirement Income Security Act ("ERISA") but it will give leave to amend some claims.

I. BACKGROUND¹

SCV is a medical provider in Florida. (Doc. 1, ¶ 2.) Defendant Home Depot Medical and Dental Plan ("Plan") is a self-funded employee benefit plan.² (See Doc. 1,¶¶ 4, n.2, 22; Doc. 1-4, pp. 45, 64). Defendant Home Depot USA, Inc. administers and sponsors the plan (Doc. 1, ¶ 4), while Defendant Cigna Health and Life Insurance Company, Inc. ("Cigna") handles the claim processing. (See, e.g., id. ¶¶ 10-12.)

D.B. was insured by the Plan, which was governed by the Plan's insurance contract ("Plan contract"). (Id. ¶ 8; see also id. ¶ 25, 25 n. 4; Docs. 1-1 to 1-4.) The Plan covers hospital care, outpatient services, and surgery. (Doc. 1 ¶ 22.) D.B., who suffered from chronic back pain, went to SCV for surgery. (Id. ¶ 9.) After, SCV billed Cigna $396,347—but Cigna refused to pay the full amount, claiming the allowable cost of the surgery was only $75,847.88. (Id. ¶¶ 10-11.) Cigna reduced some costs based on their facility bill review program while others were denied because the surgery was considered experimental or not medically necessary;³ it did not explain other cost denials. (Id. ¶¶ 12-13, 18-20.) Defendants breached the Plan contract by not covering these costs and by refusing SCV's requests for documentation and information on the denials and underpayment. (Id. ¶¶ 23-25.) Defendants' later denials of SCV's appeals also breached the Plan contract. (Id. ¶¶ 28-29.) Under the re-pricing agreement developed by Cigna to which SCV agreed ("Provider Agreement"),⁴ SCV claims it is entitled to $209,087.72 from Cigna, at a minimum—although SCV says other re-pricing mechanisms, including usingpublicly available databases and regional rates, would be "fair game" given Defendants' breaches of the Plan contract. (Id. ¶¶ 33-34, 34 n.7; see also Doc. 1-5.)

SCV sued for breach of contract, unjust enrichment, quantum meruit, and violations of Florida Statute § 627.64194. (Doc. 1, ¶¶ 36-69.) Defendants move to dismiss the Complaint. (Doc. 16.) With Plaintiff's response (Doc. 25), the matter is ripe.

II. LEGAL STANDARDS

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." A complaint "does not need detailed factual allegations," but "requires more than labels and conclusions." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

III. ANALYSIS

Defendants move to dismiss the Complaint, arguing the claims are preempted by ERISA.⁵ (Doc. 16.) Let's first discusses ERISA's preemption scheme before addressing Defendants' arguments.

A. ERISA Preemption

There are two types of ERISA preemption: complete preemption or super preemption; and defensive preemption or conflict preemption. Butero v. Royal MaccabeesLife Ins. Co., 174 F.3d 1207, 1211-12 (11th Cir. 1999); see also Conn. State Dental Ass'n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1344 (11th Cir. 2009) [hereinafter Anthem].

Complete preemption "arises from Congress's creation of a comprehensive remedial scheme" under 29 USC § 1132 for adjudicating employee benefit rights under ERISA plans. Butero, 174 F.3d at 1211. Claims completely preempted by ERISA fall under federal question jurisdiction—even if only state common law claims are asserted. See Borrero v. United Healthcare of N.Y., Inc., 610 F.3d 1296, 1301 (11th Cir. 2010) (citing Aetna Health Inc. v. Davila, 542 U.S. 200, 209 (2004)). It is a judicially recognized exception to the well-pleaded complaint rule. Anthem, 591 F.3d at 1344. Defensive preemption, on the other hand, is not jurisdictional and cannot serve as a basis for removal. Id. It originates in ERISA's express preemption provision under 29 U.S.C. § 1144(a) and is an affirmative defense for any state law claim. Id.; Butero, 174 F.3d at 1212.

This case was filed in federal court based on diversity jurisdiction—so the Court need not decide if the claims are completely preempted. (See Doc. 1, ¶ 5.) Instead, in their Motion, Defendants assert defensive preemption, arguing SCV's claims "relate to" an ERISA plan. (Doc. 16, pp. 5-12.) SCV contends there isn't preemption here, noting recent case law has established a critical distinction between "right of payment" versus "rate of payment" cases. (Doc. 25, pp. 4-8.) SCV argues if a provider and insurance company dispute how much the insurance company owes the provider, as opposed to whether it owes any money at all, it is considered a "rate of payment dispute" and is not preempted by ERISA. (Id.) Only cases where the right to payment is disputed are preempted. (Id.)And SCV argues this is a rate of payment case. (Id.)

This argument is a bait-and-switch. True—recent case law has established the rate/right distinction, but only in complete preemption cases where the issue was subject matter jurisdiction. See Anthem, 591 F.3d at 1344-50; Borrero, 610 F.3d at 1301. Something SCV takes pains to obscure. (See Doc. 25, p. 7 (quoting Gables as "Only 'right of payment' disputes are subject to . . . preemption")); cf. Gables Ins. Recovery, Inc. v. United Healthcare Ins. Co., No. 13-21137-CIV-KING, 2013 WL 12141255, at *2 (S.D. Fla. May 22, 2013) (full quote: "Only 'right of payment' disputes are subject to complete preemption") (emphasis added)). This "hide the ball" selective editing invites the Court into error by intentionally conflating the jurisdictional analysis necessary in removal cases with the "related to" analysis appropriately applied to defensive preemption claims.

The existence of defensive preemption is "separate and distinct" from complete preemption. Ervast v. Flexible Prods. Co., 346 F.3d 1007, 1012 (11th Cir. 2003). The sources of complete versus defensive preemption are different sections of ERISA. See Butero, 174 F.3d at 1211-12. And while each can inform the other's analysis, "complete preemption is not dependent on the existence of defensive preemption," and vice versa. Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1281 n. 14 (11th Cir. 2005) (emphasis in original). Complete preemption, from which SCV took the right/rate test, is narrower than defensive ERISA preemption, "which broadly supersedes any and all State laws insofar as they relate to any ERISA plan." Id. at 1281 (quotation marks and citation omitted) (emphasis in original); see also Johnson v. Unum Provident, 363 F. App'x 1, 3 (11th Cir. 2009)("Even if a claim is not subject to super preemption, it may be subject to 'defensive preemption.'"). In Anthem, where the Eleventh Circuit adopted the right/rate distinction, the court specified it was only discussing complete preemption, not defensive preemption, noting the two "are not coextensive." 591 F.3d at 1344. In fact, almost all of SCV's cited authority discusses complete preemption on motions to remand⁶—and SCV does not explain why the standard for complete preemption on remand should apply to defensive preemption on a motion to dismiss. (See Doc. 25, pp. 4-8.) Likely because it shouldn't.

The key question in the complete preemption context—from where the right/rate distinction is drawn—differs from that of defensive preemption. In complete preemption remand cases, courts are determining subject matter jurisdiction, asking if the claims could be recast as ERISA civil enforcement claims. See Butero, 174 F.3d at 1212; Anthem, 591 F.3d at 1344. Borrero, which elaborated on Anthem's right/rate distinction, explained that for complete preemption, "[u]ltimately, [courts] ask whether the [plaintiff] could havebrought his claim under ERISA['s civil enforcement provision]." 610 F. 3d at 1303-04 (quotation marks and citation omitted) (emphasis in original). But the question is different for defensive preemption, which springs from express statutory language preempting state laws that "relate to" ERISA. Butero, 174 F.3d at 1211, 1215. Defensive preemption "is ultimately a question of congressional intent." Jones v. LMR Int'l, Inc., 457 F.3d 1174, 1179 (11th Cir. 2006). The answer is even more telling: the sweep of defensive preemption is broad, "applying well beyond those subjects covered by ERISA itself." Id. (emphasis added). And, by implication, "well beyond" those claims completely preempted. See id.; Borrero, 610 F. 3d at 1303-04. So the court's defensive preemption analysis is not limited to the narrow right/rate test and the question remains: are SCV's claims defensively preempted.⁷

B. Defensive Preemption

SCV asserts four claims against Defendants: breach of contract; unjust enrichment; quantum meruit; and violations of Florida's insurance code, Florida Statute § 627.64194. (Doc. 1.) Defendants argue all the claims are defensively preempted (see Doc. 16, pp. 5-11); SCV is silent on this issue (see Doc. 25). Defendants are correct.

ERISA's express preemption provision "supersede[s] any and all State lawsinsofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a) (emphasis added). "Relate to" is "given its broad common-sense meaning, such that a state law relates to a benefit plan in the normal sense of the phrase, if it has a connection with or reference to such a plan." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47 (19...