Creative Care, Inc. v. Connecticut General Life Insurance Company et al

NOTICE OF MOTION AND MOTION to Dismiss Complaint

C.D. Cal.May 1, 2017

DEFENDANTS’ NOTICE OF MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EMILY COSTIN (SBN 240414) ALSTON & BIRD LLP 950 F Street, NW Washington, DC 20004 Telephone: 202-239-3695 Facsimile: 202-239-3333 E-mail: emily.costin@alston.com ELIZABETH A. SPERLING (SBN 231474) ALSTON & BIRD LLP 333 South Hope Street, 16th Floor Los Angeles, CA 90071-1410 Telephone: 213-576-1000 Facsimile: 213-576-1100 E-mail: elizabeth.sperling@alston.com Attorneys for Defendants CIGNA HEALTH CORPORATION CONNECTICUT GENERAL LIFE INSURANCE COMPANY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CREATIVE CARE, INC., Plaintiff, v. CIGNA HEALTH CORPORATION, CONNECTICUT GENERAL LIFE INSURANCE COMPANY, and DOES 1 through 20, Inclusive, Defendants. Case No. 2:16-cv-09056-DMG-AGR Assigned to: Hon. Dolly M. Gee DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS PURSUANT TO F.R.C.P. 12(b)(6) [Filed concurrently with Memorandum of Points and Authorities; Proposed Order] Date: June 2, 2017 Time: 9:30 a.m. Dept.: Courtroom 8C, 8th Floor Complaint Filed: December 6, 2016 Case 2:16-cv-09056-DMG-AGR Document 20 Filed 05/01/17 Page 1 of 4 Page ID #:75 -1- DEFENDANTS’ NOTICE OF MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO THE HONORABLE COURT, ALL PARTIES, THEIR ATTORNEYS OF RECORD, AND THE CLERK OF THIS COURT: PLEASE TAKE NOTICE THAT on Friday, June 2, 2017 at 9:30 a.m. at the United States Courthouse, 350 West 1st Street, Los Angeles, CA, 90012, Courtroom 8C, 8th Floor, or as soon thereafter as the matter may be heard, Defendants Cigna Health Corporation and Connecticut General Life Insurance Company (collectively, “Cigna” or “Defendants”) will move this Honorable Court for an order dismissing the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The Complaint should be dismissed because Plaintiff, a health care provider, lacks standing to bring this lawsuit under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Plaintiff is not a statutory “beneficiary” within the meaning of ERISA’s enforcement provisions and, therefore, cannot bring claims for benefits on its own behalf. D.B. Healthcare, LLC v. Blue Cross Blue Shield of Arizona, Inc., ---F.3d ---, 2017 WL 1075050, *4 (9th Cir. Mar. 22, 2017). In addition, Plaintiff has not sufficiently pled that it was “assigned” the rights to bring the ERISA § 502(a)(1)(B) claim asserted in this lawsuit. Moreover, even if Plaintiff had the requisite right to sue, the Complaint should be dismissed for failure to state a plausible claim under ERISA. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plaintiff fails to identify the specific employee benefit plans or the terms of the plans purportedly at issue. Further, Plaintiff has failed to exhaust its administrative remedies under ERISA, which is required in this Circuit. This Motion is made following the conference of counsel pursuant to L.R. 7-3 which took place on April 24, 2017. Despite meeting and conferring with Plaintiff’s counsel regarding this Motion, Plaintiff was unwilling to amend or dismiss the action, necessitating the instant Motion. This Motion is based upon this Notice of Motion and Motion; the concurrently filed Memorandum of Points and Authorities; all pleadings on record in Case 2:16-cv-09056-DMG-AGR Document 20 Filed 05/01/17 Page 2 of 4 Page ID #:76 -2- DEFENDANTS’ NOTICE OF MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 this case; and upon such other and further evidence and matters that the Court may properly consider. DATED: May 1, 2017 Respectfully submitted, ALSTON & BIRD LLP By: /s/ Emily S. Costin Emily S. Costin (State Bar No. 240414) 950 F St., NW Washington, DC 20004 Telephone: (202) 239-3300 Facsimile: (202) 239-3333 Emily.costin@alston.com and Elizabeth Sperling (State Bar No. 231474) 333 South Hope Street, 16th Floor Los Angeles, CA 90071-1410 Telephone: 213-576-1000 Facsimile: 213-576-1100 Elizabeth.sperling@alston.com Counsel for Defendants Case 2:16-cv-09056-DMG-AGR Document 20 Filed 05/01/17 Page 3 of 4 Page ID #:77 -3- DEFENDANTS’ NOTICE OF MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CERTIFICATE OF SERVICE I hereby certify that on May 1, 2017 I caused a copy of DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS PURSUANT TO F.R.C.P. 12(b)(6) to be served upon counsel in the manner described below: Via the Court’s CM/ECF system: Gary L Tysch Law Offices of Gary L Tysch 16133 Ventura Boulevard Suite 580 Encino, CA 91436-2411 Telephone: 818-995-9555 Facsimile: 818-995-9550 gltysch@pacbell.net Counsel for Plaintiff CREATIVE CARE, INC. /s/ Elizabeth A. Sperling Elizabeth A. Sperling Attorneys for Defendants CIGNA HEALTH CORPORATION and CONNECTICUT GENERAL LIFE INSURANCE COMPANY Case 2:16-cv-09056-DMG-AGR Document 20 Filed 05/01/17 Page 4 of 4 Page ID #:78 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EMILY COSTIN (SBN 240414) ALSTON & BIRD LLP 950 F Street, NW Washington, DC 20004 Telephone: 202-239-3695 Facsimile: 202-239-3333 E-mail: emily.costin@alston.com ELIZABETH A. SPERLING (SBN 231474) ALSTON & BIRD LLP 333 South Hope Street, 16th Floor Los Angeles, CA 90071-1410 Telephone: 213-576-1000 Facsimile: 213-576-1100 E-mail: elizabeth.sperling@alston.com Attorneys for Defendants CIGNA HEALTH CORPORATION CONNECTICUT GENERAL LIFE INSURANCE COMPANY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CREATIVE CARE, INC., Plaintiff, v. CIGNA HEALTH CORPORATION, CONNECTICUT GENERAL LIFE INSURANCE COMPANY, and DOES 1 through 20, Inclusive, Defendants. Case No. 2:16-cv-09056-DMG-AGR Assigned to: Hon. Dolly M. Gee MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS PURSUANT TO F.R.C.P. 12(b)(6) [Filed concurrently with Notice of Motion and Motion; Proposed Order] Date: June 2, 2017 Time: 9:30 a.m. Dept.: Courtroom 8C, 8th Floor Complaint Filed: December 6, 2016 Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 1 of 22 Page ID #:79 i MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page(s) I. INTRODUCTION ............................................................................................. 1 II. LEGAL STANDARD ........................................................................................ 2 III. ARGUMENT..................................................................................................... 2 A. Plaintiff Does Not Have A Right To Sue Under ERISA........................... 2 1. Plaintiff Is Not A “Beneficiary” Under ERISA. ............................. 3 2. Plaintiff Has Not Sufficiently Pled That It Was “Assigned” The Rights To Bring The ERISA Claim Asserted In This Lawsuit. ......................................................................................... 5 B. Plaintiff Has Failed To State A Claim For Benefits Under ERISA. .......... 7 1. Plaintiff Has Not Alleged A Plausible Claim For Benefits Under ERISA § 502(a)(1)(B) And The Cigna Plans....................... 7 2. Plaintiff Has Not Sufficiently Alleged That Cigna Is Acting As The “Plan Administrator” With Respect To Any Of The Unspecified Self-Funded Plans At Issue. ..................................... 10 3. Plaintiff Has Failed To Exhaust Administrative Remedies. .......... 11 a. Exhaustion Is Mandatory. .................................................. 11 b. Exhaustion Would Not Be Futile. ...................................... 12 IV. CONCLUSION ............................................................................................... 15 Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 2 of 22 Page ID #:80 ii MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) FEDERAL CASES AlllianceMed LLC v. Aetna Life Ins. Co., No. 16-cv-2435, 2017 WL 394524 (D. Ariz. Jan. 30, 2017) .................................... 6 Almont Ambulatory Surgery Ctr., LLC v. United Health Grp., Inc., 99 F. Supp. 3d 1110, 1130 (C.D. Cal. 2015) ................................................... 6, 8, 9 Amato v. Bernard, 618 F.2d 559 (9th Cir. 1980) ........................................................................... 12, 14 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .............................................................................. 2, 6, 7, 9, 12 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................................... 2, 6, 7, 9 BioHealth Med. Lab., Inc. v. Conn. Gen. Life Ins. Co., No. 1:15-cv-23075-KMM, 2016 WL 375012 (S.D. Fla. Feb. 1, 2016) .................. 14 Brown v. BlueCross BlueShield of Tenn., Inc., 827 F.3d 543 (6th Cir. 2016) ................................................................................... 4 Cameron Manor, Inc. v. United Mine Workers of Am., 575 F. Supp. 1243 (W.D. Pa. 1983) ........................................................................ 3 Care First Surgical Ctr. v. ILWU-PMA Welfare Plan, No. 14-cv-01480 MMM AGRX, 2014 WL 6603761, at *10 (C.D. Cal. July 28, 2014) ......................................................................................................... 6 Cohen v. Horizon Blue Cross Blue Shield of N.J., No. 15-cv-4525, 2015 WL 6082299 (D.N.J. Oct. 15, 2015) .................................... 7 Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir. 2011) (en banc) ............................................................... 10 D.B. Healthcare, LLC v. Blue Cross Blue Shield of Arizona, Inc., ---F.3d ---, 2017 WL 1075050 (9th Cir. Mar. 22, 2017) .................. 1, 2, 3, 4, 5, 6 Desert Valley Hosp., Inc. v. Wal-Mart Stores, Inc., Nos. EDCV 11-01584 VAP (OPx), EDCV 11-01585 VAP (OPx), 2012 WL 833000, *3 (C.D. Cal. March 9, 2002) .................................................. 12 Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 3 of 22 Page ID #:81 iii MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Diaz v. United Agr. Emp. Welfare Benefit Plan & Trust, 50 F.3d 1478 (9th Cir. 1995) ..................................................................... 11, 12, 13 Donovan v. Dillingham, 688 F.2d 1367 (11th Cir.1982) (en banc) ................................................................ 8 Eden Surgical Ctr. v. B. Braun Med., Inc., 420 Fed. App’x. 696 (9th Cir. 2011) ....................................................................... 6 Forest Ambulatory Surgical Assocs., L.P. v. United Healthcare Ins. Co., No. 10-cv-04911-EJD, 2011 WL 2748724 (N.D. Cal. July 13, 2011) ........... 7, 8, 9 Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1 (1983).................................................................................................... 3 Franco v. Conn. Gen. Life Ins. Co., 818 F. Supp. 2d 792 (D.N.J. 2011) .......................................................................... 7 Grasso Enters., LLC v. Express Scripts, Inc., 809 F.3d 1033 (8th Cir. 2016) ................................................................................. 4 Grenell v. Ups Health & Welfare Package, 390 F. Supp. 2d 932 (C.D. Cal. 2005) ................................................................... 13 Harris Tr. & Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (2000) ................................................................................................ 2 Health Ins. Plans v. Hudgens, 742 F.3d 1319 (11th Cir. 2014) ............................................................................. 10 Hobbs v. Blue Cross Blue Shield of Ala., 276 F.3d 1236 (11th Cir. 2001) ............................................................................... 5 In re Managed Care Litig., 298 F. Supp. 2d 1259 (S.D. Fla. 2003) .................................................................. 13 In re WellPoint, Inc. Out-of-Network UCR Rates Litig., 903 F. Supp. 2d. 880 (C.D. Cal. 2012) .................................................................... 6 Misic v. Bldg. Serv. Employees Health & Welfare Tr., 789 F.2d 1374 (9th Cir. 1986) (per curiam) ............................................................ 5 Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 4 of 22 Page ID #:82 iv MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NJSR Surgical Ctr., L.L.C. v. Horizon Blue Cross Blue Shield of N.J., Inc., 979 F. Supp. 2d 513 (D.N.J. 2013) .......................................................................... 7 Pa. Chiropractic Ass’n v. Indep. Hosp. Indem. Plan, Inc., 802 F.3d 926 (7th Cir. 2015) ................................................................................... 4 Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir. 2004) .................................................................................... 5 Peacock Med. Lab, LLC v. UnitedHealth Grp. Inc., No. 14-cv-81271, 2015 WL 5118122 (S.D. Fla. Sept. 1, 2015) ............................. 10 Progressive Spine & Orthopaedics, LLC v. Empire Blue Cross Blue Shield, No. 16-cv-1649, 2017 WL 751851 (D.N.J. Feb. 27, 2017) ...................................... 7 Response Oncology, Inc. v. MetraHealth Ins. Co., 978 F. Supp. 1052 (S.D. Fla. 1997) ....................................................................... 10 Rojas v. Cigna Health & Life Ins. Co., 793 F.3d 253 (2d Cir. 2015) .................................................................................... 4 Rush Prudential HMO, Inc. v. Moran, 536 U.S. 255 (2002) ................................................................................................ 3 Sanctuary Surgical Ctr., Inc. v. Conn. Gen. Life Ins. Co., No. 11-cv-80800, 2012 WL 28263 (S.D. Fla. Jan. 5, 2012) ................................ 8, 9 Shaw v. Delta Airlines, Inc., 463 U.S. 85 (1983) .................................................................................................. 3 Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1289 (9th Cir. 2014) cert denied ..................................................... 4 United Healthcare of Ariz. v. Spinedex Physical Therapy USA, Inc., --- U.S. ----, 136 S.Ct. 317 (2015) ................................................................ 4, 10 Ward v. Alt. Health Delivery Sys., Inc., 261 F.3d 624 (6th Cir. 2001) ................................................................................... 4 Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 5 of 22 Page ID #:83 v MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE CASES In re Managed Care Litig., No. 00-cv-1334-MD, 2009 WL 742678 (S.D. Fla. Mar. 20, 2009) .......................... 8 FEDERAL STATUTES 29 U.S.C. § 1002(8) ..................................................................................................... 3 29 U.S.C. § 1002(16) ................................................................................................. 11 29 U.S.C. § 1132(a). .................................................................................. 1, 3, 5, 7, 10 Employee Retirement Income Security Act of 1974 ........................................... passim Employee Retirement Income Security Act of 1974 § 502(a) ......................... 1, 2, 3, 5, Employee Retirement Income Security Act of 1974 § 502(a)(1)(B) ............... 1, 7, 9, 10 RULES Federal Rule of Civil Procedure 8(a) ............................................................................ 2 Federal Rule of Civil Procedure 12(b)(6) ..................................................................... 2 OTHER AUTHORITIES David Goldin, Survey: External Review Process Options for Self-Funded Health Insurance Plans, 2011 Colum. Bus. L. Rev. 429, 440 (2011) ..................... 10 Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 6 of 22 Page ID #:84 1 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION Plaintiff is a health care facility providing medical, mental health, and rehabilitation services for patients suffering from addiction. Plaintiff is an “out-of- network,” “non-participating” provider who has not contracted with Cigna.1 Plaintiff rendered unspecified healthcare services to the patients at issue, who are allegedly members of Cigna plans. Plaintiff is now attempting to step into the shoes of these patients and recover their alleged health benefits from Cigna. Plaintiff pleads a sole count, seeking benefits under Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”), 29 U.S.C. § 1132(a)(1)(B). Plaintiff does not have a right to bring a claim for relief under ERISA § 502(a)(1)(B). The Ninth Circuit recently made clear that health care providers, such as Plaintiff, “are not ‘beneficiaries’ within the meaning of § 502(a) of ERISA and may not bring suit under ERISA in that capacity.” D.B. Healthcare, LLC v. Blue Cross Blue Shield of Arizona, Inc., ---F.3d ---, 2017 WL 1075050, *4 (9th Cir. Mar. 22, 2017). Plaintiff’s conclusory statements that it has been “assigned” benefits-without more-does not plausibly demonstrate or adequately plead that it has a derivative right to sue. Accordingly, Plaintiff cannot bring its ERISA claim against Cigna by purportedly stepping into the shoes of Cigna members. Even if Plaintiff did have the requisite right to sue, Plaintiff has not stated a plausible claim for relief under ERISA. Plaintiff has not linked any of the Cigna members to any specific ERISA-governed employee benefit plans, nor has it alleged any facts showing that any of the unspecified employee benefit plans covered any of the unspecified services at issue. Moreover, Plaintiff alleges no facts to demonstrate that the Cigna members actually belong to employee benefit plans governed by ERISA as opposed to state law. Indeed, there are no facts alleged in the Complaint that support Plaintiff’s bald assertion that all of the Cigna members belong to ERISA- 1 Defendants Cigna Health Corporation and Connecticut General Life Insurance Company are collectively referred to herein as “Cigna” or “Defendants.” Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 7 of 22 Page ID #:85 2 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 governed plans. Even if Plaintiff had alleged such facts, Plaintiff has not sufficiently pled that it has exhausted its administrative remedies before suing in federal court, which is required in the Ninth Circuit. There is no reason for Plaintiff’s action to continue. Plaintiff cannot address the defects in its Complaint by re-pleading. The Court should therefore dismiss Plaintiff’s Complaint with prejudice. II. LEGAL STANDARD Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed if it fails to state a claim upon which relief can be granted. “[T]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted); Fed. R. Civ. P. 8(a). “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. In short, “Rule 8(a)(2) still requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief,” and the “factual allegations must be enough to raise a right to relief above the speculative level.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56, n.3 (2007). III. ARGUMENT A. Plaintiff Does Not Have A Right To Sue Under ERISA. “ERISA’s civil enforcement provisions specify which categories of individuals and entities may enforce each of the statute’s protections.” D.B. Healthcare, 2017 WL 1075050, at *3. Section 502(a) of ERISA “demonstrates Congress’ care in delineating the universe of plaintiffs who may bring certain civil actions.” Harris Tr. & Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 247 (2000). Specifically, ERISA “does not provide anyone other than participants, beneficiaries, or fiduciaries with an Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 8 of 22 Page ID #:86 3 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 express cause of action.” Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 27 (1983).2 There are good policy reasons for that rule. ERISA is “designed to promote the interests of employees and their beneficiaries in employee benefit plans.” Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90 (1983). Limiting the universe of plaintiffs with the right to sue advances “ERISA’s policy of inducing employers to offer benefits by assuring a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders and awards when a violation has occurred.” Rush Prudential HMO, Inc. v. Moran, 536 U.S. 255, 379 (2002). Health care providers, such as Plaintiff, are not included in the list of entities with a statutory right to sue. Indeed, “there is no indication that Congress intended by [the ERISA] statute to insure that health care facilities be paid.” Cameron Manor, Inc. v. United Mine Workers of Am., 575 F. Supp. 1243, 1245-46 (W.D. Pa. 1983). Nonetheless, Plaintiff alleges it has standing under ERISA based on two arguments: (1) it is a statutory “beneficiary” under ERISA, and (2) it is an assignee of Cigna members. (Compl. ¶ 36.) Both of these arguments fail. 1. Plaintiff Is Not A “Beneficiary” Under ERISA. Plaintiff alleges it has standing as a “beneficiary” under ERISA, 29 U.S.C. § 1002(8).3 (Compl. ¶¶ 22, 36.) However, the Ninth Circuit has held, and recently reiterated, that health care providers are not “beneficiaries” within the meaning of ERISA’s enforcement provisions. D.B. Healthcare, 2017 WL 1075050, at *4 citing 2 ERISA 502(a) states that a “civil action may be brought-(1) by a participant or beneficiary - (A) for the relief provided for in subsection (c) of this section, or (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;. . . (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.” 29 U.S.C. § 1132 (a)(1),(3). 3 “Beneficiary” is defined in ERISA as a “person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.” 29 U.S.C. § 1002(8). Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 9 of 22 Page ID #:87 4 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1289 (9th Cir. 2014) cert denied, United Healthcare of Ariz. v. Spinedex Physical Therapy USA, Inc., --- U.S. ----, 136 S.Ct. 317 (2015) (“[As] a non- participant health care provider, [Spinedex] cannot bring claims for benefits on its own behalf. It must do so derivatively, relying on its patients’ assignments of their benefits claims.”). The Ninth Circuit’s recent holding in D.B. Healthcare is “consistent with the decisions of other circuits, which have uniformly concluded that health care providers are not “beneficiar[ies]” for ERISA purposes.” Id., 2017 WL 1075050, at *5; see Brown v. BlueCross BlueShield of Tenn., Inc., 827 F.3d 543, 545-46 (6th Cir. 2016) (quoting Ward v. Alt. Health Delivery Sys., Inc., 261 F.3d 624, 627 (6th Cir. 2001)) (“[t]he fact that [a healthcare provider] may be entitled to payment from [an insurance company] as a result of [its] clients’ participation in an employee plan does not make [it] a beneficiary for the purpose of ERISA standing . . . . This position is consistent with every other circuit that has considered the issue.”); Grasso Enters., LLC v. Express Scripts, Inc., 809 F.3d 1033, 1040 (8th Cir. 2016) (“While Plaintiffs may be entitled to direct payments from ESI by operation of one or more ERISA plans, direct payment is simply a convenient way to reimburse health care providers, whereas the statutory term beneficiary ‘clearly refers to those individuals who share in the benefits of coverage-medical services and supplies covered under their health care policy.’”) (citation omitted); Rojas v. Cigna Health & Life Ins. Co., 793 F.3d 253, 257-58 (2d Cir. 2015) (“’Beneficiary,’ as it is used in ERISA, does not without more encompass healthcare providers. Although the term ‘benefit’ is not defined in ERISA, we are persuaded that Congress did not intend to include doctors in the category of ‘beneficiaries.’”) (internal citations and footnotes omitted); Pa. Chiropractic Ass’n v. Indep. Hosp. Indem. Plan, Inc., 802 F.3d 926, 930 (7th Cir. 2015) (“We need not distort the word ‘beneficiary’ in order to enable medical providers to contract for and enforce procedural rules about how insurers pay for medical care. [Medical Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 10 of 22 Page ID #:88 5 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 providers] are not ‘beneficiaries’ as ERISA uses that term . . .”); Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004) (“We conclude that the Hospital could not have brought its claims under § 502(a) because the Hospital does not have standing to sue under that statute.”); Hobbs v. Blue Cross Blue Shield of Ala., 276 F.3d 1236, 1241 (11th Cir. 2001) (“Healthcare providers such as physician assistants generally are not considered ‘beneficiaries’ or ‘participants’ under ERISA.”). Indeed, if the mere receipt of payment were sufficient to confer a direct “beneficiary” right to sue under ERISA, then all paid healthcare providers would automatically obtain a right to sue under ERISA, regardless of whether they had received valid assignments of benefits. Such a holding would deviate from well- settled law concerning ERISA standing. Thus, Plaintiff-a health care provider-is not a “beneficiary” within the meaning of § 502(a) of ERISA and may not bring suit under ERISA in that capacity. D.B. Healthcare, 2017 WL 1075050, at *5.4 2. Plaintiff Has Not Sufficiently Pled That It Was “Assigned” The Rights To Bring The ERISA Claim Asserted In This Lawsuit. Although a health care provider like Plaintiff does not have a statutory right to sue under ERISA, it may have a derivative right to pursue a claim for ERISA benefits when based on a “valid assignment” from a plan participant or beneficiary. D.B. Healthcare, 2017 WL 1075050, at *6; Misic v. Bldg. Serv. Employees Health & Welfare Tr., 789 F.2d 1374, 1378 (9th Cir. 1986) (per curiam) (concluding that a health care provider had standing to sue in place of his assignors, pursuant to “valid assignments” of the right to reimbursement under a health care plan). “[C]ourts must look to the language of an ERISA assignment itself to determine the scope of the 4 Plaintiff also seemingly claims standing as a “third-party beneficiary” of the subject policies, plans and contracts by which its patients were insured or covered by Defendants. (Compl. ¶¶ 22, 36.) However, “third party beneficiary” is not one of the enumerated plaintiffs with standing to sue under ERISA § 502(a), 29 U.S.C. § 1132(a). Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 11 of 22 Page ID #:89 6 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 assigned claims.” In re WellPoint, Inc. Out-of-Network UCR Rates Litig., 903 F. Supp. 2d. 880, 896 (C.D. Cal. 2012) citing Eden Surgical Ctr. v. B. Braun Med., Inc., 420 Fed. App’x. 696, 697 (9th Cir. 2011) (noting that the “question [was] whether the plan participants assigned Eden the right to sue for statutory penalties” and concluding that the language of the assignments did not encompass the right to bring claims under § 1132(c)). Examination of the specific language of the assignment is necessary to determine whether the claims advanced by a health care provider are “within the scope of the assignments on which it relies.” D.B. Healthcare, 2017 WL 1075050, at *7. To that end, health care providers claiming to have a right to pursue ERISA claims based on a “valid assignment” generally include the particular language of the assignment in the complaint, or attach the assignment document itself, so the court may perform this analysis.5 Here, Plaintiff does not quote any language from the purported assignments in its Complaint, nor does it attach a copy of the alleged assignments to the Complaint. Rather, Plaintiff summarily alleges that it has a right to sue because “CCI was assigned the rights and remedies of its Patients to pursue claims and enforce the rights of the Patients under those plans and contracts by which its Patients were insured or covered by Defendants.” (Compl. ¶ 36; see also ¶ 4 (“The Patients have assigned all of their rights to payment from Cigna to CCI. The Patients have also assigned all of their rights to recover the benefits owed to them by Cigna to CCI.”)) These conclusory statements fall short of the plausible pleading required under Iqbal and Twombly and are not sufficient to support the notion that Plaintiff has a derivative right to bring the claim asserted in this lawsuit. See Care First Surgical Ctr. v. ILWU- 5 See, e.g., AlllianceMed LLC v. Aetna Life Ins. Co., No. 16-cv-2435, 2017 WL 394524 (D. Ariz. Jan. 30, 2017) (analyzing text of the purported “assignment” which was attached to the complaint to determine whether plaintiff is properly assigned standing to bring claims); Almont Ambulatory Surgery Ctr., LLC v. United Health Grp., Inc., 99 F. Supp. 3d 1110, 1130 (C.D. Cal. 2015) (plaintiffs provided the “text” of the assignments that purportedly gave them various rights and the court examined the specific text of assignment language to determine whether provider had standing). Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 12 of 22 Page ID #:90 7 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PMA Welfare Plan, No. 14-cv-01480 MMM AGRX, 2014 WL 6603761, at *10 (C.D. Cal. July 28, 2014) (Care First alleges that “[p]rior to receiving medical care from Care First, the Plan Participants assigned their benefits and ERISA representative rights under the Plan to Care First.” This language, standing alone, is insufficient to allege that CC and DC assigned Care First the right to bring the claims it asserts in this lawsuit.)6 Because Plaintiff has not plausibly alleged the existence of a “valid assignment,” Plaintiff does not have a derivative right to bring the ERISA claim asserted in this lawsuit. B. Plaintiff Has Failed To State A Claim For Benefits Under ERISA. 1. Plaintiff Has Not Alleged A Plausible Claim For Benefits Under ERISA § 502(a)(1)(B) And The Cigna Plans. ERISA § 502(a)(1)(B) allows for recovery of “benefits due under the terms of” an ERISA plan. See 29 U.S.C. § 1132(a)(1)(B). “To state a claim under that section, a plaintiff must allege facts that establish the existence of an ERISA plan as well as the provisions of the plan that entitle it to benefits.” Forest Ambulatory Surgical Assocs., L.P. v. United Healthcare Ins. Co., No. 10-cv-04911-EJD, 2011 WL 2748724, at *5 (N.D. Cal. July 13, 2011).7 “Failure to identify the controlling ERISA 6 See also Progressive Spine & Orthopaedics, LLC v. Empire Blue Cross Blue Shield, No. 16-cv-1649, 2017 WL 751851, at *5 (D.N.J. Feb. 27, 2017) (“A conclusory statement merely alleging that a provider was assigned plan benefits from its patients does not plausibly demonstrate standing.”); Cohen v. Horizon Blue Cross Blue Shield of N.J., No. 15-cv-4525, 2015 WL 6082299, at *3 (D.N.J. Oct. 15, 2015) (finding no valid assignment of benefits when the “[c]ourt [was] left with nothing more than conclusory recitations of the legal standard, which is insufficient under Iqbal and Twombly”); NJSR Surgical Ctr., L.L.C. v. Horizon Blue Cross Blue Shield of N.J., Inc., 979 F. Supp. 2d 513, 522-23 (D.N.J. 2013) (“The complaint alleges no more than that ‘the Patients provided assignments of benefits to the Plaintiffs.’ That conclusory allegation . . . falls short of what is required to withstand a motion to dismiss.”); Franco v. Conn. Gen. Life Ins. Co., 818 F. Supp. 2d 792, 811 (D.N.J. 2011) (“Simply asserting that . . . subscribers have assigned their . . . plan benefits fails to plausibly establish that each provider plaintiff has obtained at least one actual assignment of a patient’s right to assert a claim for benefits and pursue litigation under ERISA.”). 7 A plan under ERISA is established if a reasonable person “‘can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 13 of 22 Page ID #:91 8 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 plans makes the Complaint unclear and ambiguous.” Id. citing In re Managed Care Litig., No. 00-cv-1334-MD, 2009 WL 742678, at *3 (S.D. Fla. Mar. 20, 2009). Accordingly, “[a] plaintiff who brings a claim for benefits under ERISA must identify a specific plan term that confers the benefit in question.” Almont Ambulatory Surgery Ctr., LLC v. United Health Grp., Inc., 99 F. Supp. 3d 1110, 1155 (C.D. Cal. 2015) citing Sanctuary Surgical Ctr., Inc. v. Conn. Gen. Life Ins. Co., No. 11-cv-80800, 2012 WL 28263, at *3 (S.D. Fla. Jan. 5, 2012). In Sanctuary Surgical, the Southern District of Florida dismissed a similar type of action brought against Cigna by a provider seeking benefits for member claims based on an assignment of benefits from each member. In testing the sufficiency of the allegations in the complaint as to the plaintiffs’ claim for benefits, the court noted that application of the pleading requirements for a benefits claim meant that “plaintiffs must at least identify the specific plan provisions under which coverage is conferred with respect to each of the 996 derivative ERISA claims identified in its complaint, and to allege sufficient facts to plausibly show the services rendered to each patient were indeed covered under that particular plan.” Sanctuary Surgical, 2012 WL 28263, at *3 (emphasis removed). The Sanctuary Surgical court found that this standard had not been met by the plaintiffs in that case. The plaintiffs cited six exemplar summary plan descriptions and two certificates of coverage “which arguably encompass[ed] coverage for the MUA procedures at issue,” and alleged that “none of the six exemplar plans contain language that specifically excludes MUAs from coverage.” Id. at *3-6. However, the court found this unavailing, as the plaintiffs had failed to cite to relevant exclusionary language that would allow the court “to determine whether the MUAs were actually covered services even under the six exemplar summary plan descriptions which plaintiffs selectively cite[d],” and did not provide any support “for the speculative allegation, purportedly made ‘upon information and receiving benefits.’” Forest Ambulatory, 2011 WL 2748724, at *5 citing Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir.1982) (en banc). Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 14 of 22 Page ID #:92 9 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 belief,’ that all 300 of the plans at issue contain[ed] ‘similar’ coverage language.” Id. at *6. Plaintiff’s Complaint is even more deficient than the one dismissed in Sanctuary Surgical. Plaintiff claims that Cigna “failed” and “refused to pay” benefits for unspecified services rendered for each of the members at issue, in supposed “violation of the terms of the subject Plans, policies, Explanation of Coverage documents and other benefit plans, Summary Plan Descriptions and insurance agreements.” (Compl. ¶¶ 32, 36.) Yet, nowhere in the Complaint does Plaintiff plead that all of the employee benefit plans at issue are governed by ERISA. It is entirely plausible on the facts alleged in the Complaint that some of the members belong to non-ERISA plans that would instead be subject to the laws of the state of California, or states other than California. Moreover, Plaintiff makes no effort whatsoever to match the members’ health benefit claims with specific employee benefit plans, and does not allege any facts showing that any of the employee benefit plans covered any of the services at issue.8 Absent allegations about the specific plans at issue, and the specific plans’ terms, such generalized, boilerplate allegations of “nonpayment” fall far short of the threshold for plausibility established by Iqbal and Twombly. Plaintiff’s complete failure to allege the terms of the Cigna plans purportedly at issue “mandates” dismissal of its claim for benefits under ERISA § 502(a)(1)(B) with prejudice. Forest Ambulatory, 2011 WL 2748724, at *5 (finding the “alleged violations are insufficient without reference to the terms of the controlling plans,” and that these failings mandated dismissal of an ERISA cause of action); Almont Ambulatory, 99 F. Supp. 3d at 1159 (dismissing 8 Plaintiff cannot plead coverage by alleging that it was told in phone conversations with Cigna that benefits were available for the performed services. (Compl. ¶¶ 18-19; 23-24). Such allegations are irrelevant as to whether coverage exists under the terms of the plans. See Sanctuary Surgical, 2013 WL 149356, at *1-7 (dismissing claim for benefits based on failure to plead coverage despite plaintiffs’ assertion that United confirmed coverage during preauthorization telephone calls). The issue in a claim for benefits under ERISA § 502(a)(1)(B) is whether the terms of the plan provide coverage, and assurances allegedly made over the telephone are not terms of the plan. Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 15 of 22 Page ID #:93 10 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 complaint for failure to allege the “terms of the plan that provide coverage for each of the procedures at issue”). 2. Plaintiff Has Not Sufficiently Alleged That Cigna Is Acting As The “Plan Administrator” With Respect To Any Of The Unspecified Self-Funded Plans At Issue. Further, in this Circuit, proper defendants under § 1132(a)(1)(B) for improper denial of benefits “include ERISA plans, formally designated plan administrators, insurers or other entities responsible for payment of benefits, and de facto plan administrators that improperly deny or cause improper denial of benefits.” Spinedex, 770 F.3d at 1297 citing Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir. 2011) (en banc). Unless an entity has the authority to administer claims, fund benefits, or determine eligibility for benefits, it is not a proper defendant in a § 502(a)(1)(B) claim. Id. (finding CHS was not a proper defendant because it had no involvement in the payment or denial of benefits). Here, Plaintiff simply alleges that the health plans at issue are “administered and/or insured” by Cigna. (Compl. ¶ 5.) Plaintiff also claims that “some” of the members belong to “insured” plans, and “some” of the members belong to “self- funded” plans. (Compl. ¶¶ 11-12.)9 These allegations are insufficient. Plaintiff has not adequately pled facts for Cigna and this Court to determine which of the disputed member claims are made under self-funded plans. See Response Oncology, Inc. v. MetraHealth Ins. Co., 978 F. Supp. 1052, 1065 (S.D. Fla. 1997) (“In 27 of the 49 9 There is a distinction between “self-funded” and “insured” employee benefit plans. Peacock Med. Lab, LLC v. UnitedHealth Grp. Inc., No. 14-cv-81271, 2015 WL 5118122, at *6 (S.D. Fla. Sept. 1, 2015). In a “self-funded” plan, rather than contracting out an employee’s health insurance to an outside source, employers instead assume direct financial responsibility for the costs of the employee’s claims. See generally, David Goldin, Survey: External Review Process Options for Self- Funded Health Insurance Plans, 2011 Colum. Bus. L. Rev. 429, 440 (2011). Employers providing self-funded plans often contract with third-party administrators (“TPA”), like Cigna, to provide administrative oversight of the plan. See e.g., Am.’s Health Ins. Plans v. Hudgens, 742 F.3d 1319, 1324 (11th Cir. 2014) (“A TPA’s administrative duties might include processing claims, paying claims, and managing the everyday functioning of a plan.”). Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 16 of 22 Page ID #:94 11 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ERISA claims, Plaintiff has failed to plead which claims are self-insured and which claims are fully insured . . . Failing to allege whether the claims were self-insured or fully-insured makes Plaintiff’s Complaint unclear, and ambiguous . . . Therefore, the 27 claims which Plaintiff has failed to allege as self-insured or fully-insured plan should be dismissed from this cause of action.”). Moreover, Plaintiff’s Complaint provides no factual basis whatsoever to support a finding that Cigna has been designated as the “plan administrator”10 for any of the unspecified, self-funded plans at issue in which Cigna is not the “insurer.” Plaintiff has not attached a single copy of a plan identifying Cigna as the “plan administrator,” or containing language delegating such administrative authority to Cigna. Indeed, with respect to the “self-funded” plans (id. at ¶ 12), it is equally plausible that the employer and plan sponsor of any one of the unspecified plans at issue functioned in the “plan administrator” role. Because Plaintiff has not identified a single plan conferring such authority upon Cigna, Plaintiff’s bare allegations are insufficient to plausibly suggest that Cigna was acting as the “plan administrator” with respect to any one of the unspecified, self-funded plans at issue. 3. Plaintiff Has Failed To Exhaust Administrative Remedies. a. Exhaustion Is Mandatory. Prior to bringing an ERISA claim in federal court, a plaintiff must exhaust administrative remedies under the relevant benefit plan. Diaz v. United Agr. Emp. Welfare Benefit Plan & Trust, 50 F.3d 1478, 1483 (9th Cir. 1995). “Although not explicitly set out in the statute, the exhaustion doctrine is consistent with ERISA’s background, structure and legislative history and serves several important policy considerations, including the reduction of frivolous litigation, the promotion of 10 The plan “administrator” is defined in ERISA as: “(i) the person specifically so designated by the terms of the instrument under which the plan is operated; (ii) if an administrator is not so designated, the plan sponsor; or (iii) in the case of a plan for which an administrator is not designated and a plan sponsor cannot be identified, such other person as the Secretary may by regulation prescribe.” 29 U.S.C. § 1002(16). Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 17 of 22 Page ID #:95 12 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 consistent treatment of claims, the provision of a non-adversarial method of claims settlement, the minimization of costs of claim settlement and a proper reliance on administrative expertise.” Id. (citing Amato v. Bernard, 618 F.2d 559, 566-68 (9th Cir. 1980)). “[F]ederal courts have the authority to enforce the exhaustion requirement in suits under ERISA, and [ ] as a matter of sound policy they should usually do so.” Amato, 618 F.2d at 568. Here, Plaintiff summarily alleges that it has “exhausted any and all claims review, grievance, administrative appeals, and appeals requirements” in “compliance with the terms of the subject Plans.” (Compl. ¶ 8.)11 However, Plaintiff fails to identify a single, specific claim that has actually completed (or attempted to complete) the administrative review process pursuant to the appeals procedure of any specific plan which are, admittedly, “different” for each member. (Compl. ¶ 15.) In this regard, Plaintiff’s allegation that it has complied with the administrative exhaustion “requirements” of the “terms” of the plans is belied by its concurrent admission that it does not “possess” or even have “access to” any of the pertinent plan documents. (Compl. ¶ 25.) Accordingly, Plaintiff’s threadbare recital that it has “exhausted” administrative remedies is insufficient to survive a motion to dismiss. Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). b. Exhaustion Would Not Be Futile. In the “alternative,” Plaintiff alleges that all “review, appeal, administrative grievances, or complaint procedures” should be deemed “futile.” (Compl. ¶ 8.) Where a plaintiff asserts exhaustion of administrative remedies would have been futile, “bare assertions of futility are insufficient,” and the exception requires more 11 Because Plaintiff is attempting to “step into their patients’ shoes, it is required-as its patients otherwise would have been-to exhaust any administrative remedies prescribed in the plans before bringing suit to recover benefits.” Desert Valley Hosp., Inc. v. Wal-Mart Stores, Inc., Nos. EDCV 11-01584 VAP (OPx), EDCV 11-01585 VAP (OPx), 2012 WL 833000, *3 (C.D. Cal. March 9, 2002). Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 18 of 22 Page ID #:96 13 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 than speculation regarding the outcome of an administrative appeal. Diaz, 50 F.3d at 1485; see also Grenell v. Ups Health & Welfare Package, 390 F. Supp. 2d 932, 935 (C.D. Cal. 2005) (requiring a plaintiff “to explain why an appeal of the claim denial would have been futile”). As the Ninth Circuit explained, the futility exception to the exhaustion doctrine “is designed to avoid the need to pursue an administrative review that is demonstrably doomed to fail.” Id. at 1485. Thus, the Court found the futility exception was not applicable where “delinquency in pursuing an internal appeal prevented the possibility of an administrative look at the merits, and the record contains nothing but speculation to suggest the administrators would have reached a preconceived result in that respect.” Id. Plaintiff’s conclusory allegations of “futility” are particularly insufficient here. There are only ten patients at issue. Yet, Plaintiff has not identified a single claim where the administrative process was even attempted, much less exhausted, under the terms of any of these ten patients’ specific employee benefit plans. Indeed, Plaintiff does not attach a single plan document or correspondence (i.e., claim letter, claim denial letter, appeal letter or appeal denial letter) to its Complaint to demonstrate this alleged “futility” of exhausting the administrative process. Plaintiff also contends it was denied meaningful access to administrative review of its claims. (Compl. ¶ 8.) At its core, however, Plaintiff’s complaint is that Cigna does not provide a special administrative procedure for providers to “mass appeal” individual benefit claims. Similar arguments have previously been rejected. See In re Managed Care Litig., 298 F. Supp. 2d 1259, 1295-96 (S.D. Fla. 2003) (“At bottom, this is an argument that the administrative procedures are effectively too much of a hassle to merit the Plaintiffs’ trouble, and thus, with no allegations that the plan procedures provide no remedy, is insufficient for a successful invocation of the exception [to exhaustion].”). ERISA does not require special accommodations for health care providers to “mass appeal,” nor is such arrangement feasible given the individual nature of each medical claim. Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 19 of 22 Page ID #:97 14 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff ignores that each of the claims alleged in the Complaint is an individual claim, ostensibly brought “in the shoes of” an individual plan participant, seeking benefits under a particular ERISA benefit plan for medical benefits in a particular set of circumstances. Plaintiff is thus required to submit separate administrative appeals for each claim. Instead, Plaintiff chose to dump ten patients’ disputed claims into the hands of this Court in one Complaint. In doing so, Plaintiff seeks to transfer the burden to this Court of sorting through the merits of each of these individual claims - which are for different types of services, under admittedly “different” yet unspecified and unidentified employee benefit plans. (Compl. ¶ 15.) That is inconsistent with Ninth Circuit precedent that expressly requires the Plaintiff to exhaust its administrative remedies for each individual claim in accordance with the terms of the specific plan at issue. Amato, 618 F.2d at 567 (Exhaustion of administrative remedies is required “to help reduce the number of frivolous lawsuits under ERISA; to promote the consistent treatment of claims for benefits; to provide a nonadversarial method of claims settlement; and to minimize the costs of claims for all concerned.”). Exhaustion is a critical first step to allow Cigna to consider the claims on an individual level prior to facing a group lawsuit. The Chief Judge of the Southern District of Florida recently dismissed a similar type of action brought by toxicology laboratories against Cigna for failure to exhaust administrative remedies. See BioHealth Med. Lab., Inc. v. Conn. Gen. Life Ins. Co., No. 1:15-cv-23075-KMM, 2016 WL 375012 (S.D. Fla. Feb. 1, 2016) (“BioHealth I”). Rejecting plaintiffs’ bald allegations of “futility” and an attempt to challenge the administrative process, Chief Judge Moore noted that administrative exhaustion would result in a detailed review of specific claims under the relevant plan provisions, create an administrative record, and narrow any issues remaining for litigation, all without burdening the court. Id. at n.2. For the same reasons set forth in BioHealth I, the Court should dismiss Plaintiff’s ERISA claim based on Plaintiff’s failure to exhaust. Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 20 of 22 Page ID #:98 15 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. CONCLUSION For all the foregoing reasons, Plaintiff’s Complaint should be dismissed. DATED: May 1, 2017 Respectfully submitted, ALSTON & BIRD LLP By: /s/ Emily S. Costin Emily S. Costin (State Bar No. 240414) 950 F St., NW Washington, DC 20004 Telephone: (202) 239-3300 Facsimile: (202) 239-3333 Emily.costin@alston.com and Elizabeth Sperling (State Bar No. 231474) 333 South Hope Street, 16th Floor Los Angeles, CA 90071-1410 Telephone: 213-576-1000 Facsimile: 213-576-1100 Elizabeth.sperling@alston.com Counsel for Defendants Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 21 of 22 Page ID #:99 16 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CERTIFICATE OF SERVICE I hereby certify that on May 1, 2017 I caused a copy of MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS PURSUANT TO F.R.C.P. 12(b)(6) to be served upon counsel in the manner described below: Via the Court’s CM/ECF system: Gary L Tysch Law Offices of Gary L Tysch 16133 Ventura Boulevard Suite 580 Encino, CA 91436-2411 Telephone: 818-995-9555 Facsimile: 818-995-9550 gltysch@pacbell.net Counsel for Plaintiff CREATIVE CARE, INC. /s/ Elizabeth A. Sperling Elizabeth A. Sperling Attorneys for Defendants CIGNA HEALTH CORPORATION and CONNECTICUT GENERAL LIFE INSURANCE COMPANY Case 2:16-cv-09056-DMG-AGR Document 20-1 Filed 05/01/17 Page 22 of 22 Page ID #:100 [Proposed] Order (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CREATIVE CARE, INC., Plaintiff, v. CIGNA HEALTH CORPORATION, CONNECTICUT GENERAL LIFE INSURANCE COMPANY, and DOES 1 through 20, Inclusive, Defendants. Case No. 2:16-cv-09056-DMG-AGR Assigned to: Hon. Dolly M. Gee [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION TO TO DISMISS PURSUANT TO F.R.C.P. 12(b)(6) [Filed concurrently with Notice of Motion and Motion and Memorandum of Points and Authorities] Case 2:16-cv-09056-DMG-AGR Document 20-2 Filed 05/01/17 Page 1 of 3 Page ID #:101 -1- [Proposed] Order (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER Defendants Cigna Health Corporation and Connecticut General Life Insurance Company (“Cigna”) have moved this Court for an order dismissing the Complaint pursuant to Federal Rules of Civil Procedure, Rule 12(b)(6). Defendants’ Motion to Dismiss was heard on June 2, 2017. The appearances of counsel are as reflected in the record. Having considered the parties’ papers, oral argument, and other pleadings and papers filed herein, the Court orders as follows: WHEREFORE, IT IS HEREBY ORDERED, that Defendants’ Motion to Dismiss is GRANTED in its entirety. The Complaint is hereby Ordered DISMISSED WITH PREJUDICE, without leave to amend. IT IS SO ORDERED. DATED: ____________ _________________________________ Hon. Dolly M. Gee United States District Judge Case 2:16-cv-09056-DMG-AGR Document 20-2 Filed 05/01/17 Page 2 of 3 Page ID #:102 -2- [Proposed] Order (Case No. 2:16-cv-09056-DMG-AGR) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CERTIFICATE OF SERVICE I hereby certify that on May 1, 2017 I caused a copy of [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION TO TO DISMISS PURSUANT TO F.R.C.P. 12(b)(6) to be served upon counsel in the manner described below: Via the Court’s CM/ECF system: Gary L Tysch Law Offices of Gary L Tysch 16133 Ventura Boulevard Suite 580 Encino, CA 91436-2411 Telephone: 818-995-9555 Facsimile: 818-995-9550 gltysch@pacbell.net Counsel for Plaintiff CREATIVE CARE, INC. /s/ Elizabeth A. Sperling Elizabeth A. Sperling Attorneys for Defendants CIGNA HEALTH CORPORATION and CONNECTICUT GENERAL LIFE INSURANCE COMPANY Case 2:16-cv-09056-DMG-AGR Document 20-2 Filed 05/01/17 Page 3 of 3 Page ID #:103