Lifestream Complete Senior Living Incorporated et al v. Arizona Healthcare Cost Containment System et al

MOTION to Dismiss Case

D. Ariz.September 26, 2016

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 Logan T. Johnston, # 009484 JOHNSTON LAW OFFICES, P.L.C. 1402 E. Mescal Street Phoenix, AZ 85020 Telephone: (602) 452-0615 Email: ltjohnston@live.com Attorney for Defendant Thomas Betlach UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA LIFESTREAM COMPLETE SENIOR LIVING, INC. et al, Plaintiffs, v. THOMAS BETLACH in his official capacity as the Director of the ARIZONA HEALTHCARE COST CONTAINMENT SYSTEM; SOUTHWEST CATHOLIC HEALTH NETWORK, INC. d/b/a MERCY CARE PLAN, MERCY CARE ADVANTAGE, MERCY CARE LONG TERM CARE, an Arizona Non Profit Corporation; UNITEDHEALTHCARE OF ARIZONA INSURANCE COMPANY, d/b/a ARIZONA PHYSICIANS IPA, INC, an Arizona Corporation; BANNER HEALTH, INC., d/b/a BANNER HEALTH NETWORK,an Arizona Non Profit Corporation;; CIGNA HEALTHCARE OF ARIZONA, INC., an Arizona Corporation, and LIFEPRINT HEALTH, INC., a Delaware Corporation; Defendants. No. 2:16-cv-00589-PHX-NVW DEFENDANT BETLACH’S MOTION TO DISMISS Defendant Thomas Betlach, in his official capacity as Director of the Arizona Health Care Cost Containment System (“AHCCCS”), hereby moves pursuant to Rule Case 2:16-cv-00589-NVW Document 35 Filed 09/26/16 Page 1 of 6 2 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 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the Third Amended Complaint as to him for failure to state a claim upon which relief may be granted. I. Standard for a Motion to Dismiss On a motion to dismiss for failure to state a claim, “Review is limited to the contents of the complaint.” Buckey v. County of Los Angeles, 968 F.2d 791, 794 (9th Cir.), cert. denied, 506 U.S. 999 (1992). To 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. 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. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and quotation marks omitted). Mere conclusions couched as factual allegations are not sufficient to state a cause of action. Papasan v. Allain, 478 U.S. 265, 286 (1986); see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir. 1988). II. Count One Fails to State a Claim against the Director AHCCCS is Arizona’s Medicaid agency. AHCCCS contracts with a number of health plans, including some of the other Defendants. These plans provide services to AHCCCS recipients through networks of healthcare providers. Plaintiffs are facilities that contract with some of these health plans. The Third Amended Complaint opens by alleging this case is about Director Betlach’s “failure” to “afford Medicaid benefits to residents in a long-term care facility in compliance with the federal rules and regulations of the United States.” Case 2:16-cv-00589-NVW Document 35 Filed 09/26/16 Page 2 of 6 3 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 Nevertheless, Director Betlach is barely mentioned in the complaint and only Count One alleges any wrongful act by him. Count One alleges, first, that the Director is violating 42 C.F.R. §§ 447.45(d)(1) because he permits the other Count One Defendants to require their networks of providers, including the Plaintiffs, to submit their claims in less than one year from the date of the service being billed. Second, the complaint suggests (¶ 14) that the “contracts of adhesion” the Plaintiffs entered into with the other Count One Defendants are imputed to the Director. Third, the Complaint alleges (¶ 31) the Director “has failed to provide a system which ensures that medical assistance will be available, including at least the care and services to all individuals meeting specified financial eligibility standards, as required under 42 U.S.C. § 1396a(a)(10).” The Complaint fails to state a claim on any of these theories. Though the Complaint cites a variety of statutes and rules, the only one on which the Plaintiffs rely in Count One is “42 U.S.C. § 447.45(d)(1)(d).” We assume the Plaintiffs mean 42 C.F.R. § 447.45(d)(1)(d), which provides, “Timely processing of claims. (1) The Medicaid agency must require providers to submit all claims no later than 12 months from the date of service.” (Emphasis added.) The Plaintiffs read this rule to require that providers must have a full 12 months from the date of service to file their claims, rather than the shorter periods of time their contracts with the other Count One Defendants allow. They read the rule in effect to say providers may submit claims “no sooner than 12 months” after a service. On its Case 2:16-cv-00589-NVW Document 35 Filed 09/26/16 Page 3 of 6 4 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 face, however, the rule is a limitation of the maximum length of time between service and claim submission, not the minimum. “No later than 12 months” from the date of service is a flexible rule that permits Medicaid to allow claims submission up to a year after the service. The Plaintiffs’ interpretation that it requires the Director to give Plaintiffs a full year to submit claims has no basis or support. See Berg v. Colorado State Dep’t of Social Servs., 694 P.2d 1291, 1292 (Colo. Ct. App. 1984) (upholding state’s 180-day limit). Using the discretion allowed by the federal rule, the Director has promulgated A.A.C. R9-22-705.B.2 and 3. These rules require timely claims submission by providers and they set deadlines, which may be shortened by contract: 2. Unless a shorter time period is specified in subcontract, a contractor shall not pay a claim for a covered service unless the claim is initially submitted within one of the following time limits, whichever is later: a. Six months from the date of service or for an inpatient hospital claim, six months from the date of discharge; or b. Six months from the date of eligibility posting. 3. Unless a shorter time period is specified in subcontract, a contractor shall not pay a clean claim for a covered service unless the claim is submitted within one of the following time limits, whichever is later: a. Twelve months from the date of service or for an inpatient hospital claim, 12 months from the date of discharge; or b. Twelve months from the date of eligibility posting. (Emphasis added.) These rules are not challenged by the Plaintiffs. The other Count One Defendants have apparently contracted with the Plaintiffs for shorter claims submission deadlines. If, as Count One alleges, the Plaintiffs’ Case 2:16-cv-00589-NVW Document 35 Filed 09/26/16 Page 4 of 6 5 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 subcontracts are “contracts of adhesion,” that is not something for which the Director has any responsibility. The Complaint alleges no role the Director had in writing those contracts or in forcing, requiring, or inducing the Plaintiffs to enter into those contracts. Finally, the allegation that the Director is violating 42 U.S.C. § 1396a(a)(10), which is merely a lengthy list of the various services Medicaid provides, by not ensuring that services are provided is a conclusory statement that is not supported by any factual allegation. AHCCCS is clearly providing Medicaid services to almost 2,000,000 people in Arizona. The Third Amended Complaint does not identify anyone who has been denied Medicaid services. CONCLUSION The Third Amended Complaint fails to state any claim against Director Betlach and should be dismissed as to him. RESPECTFULLY SUBMITTED this 26th day of September, 2016. JOHNSTON LAW OFFICES P.L.C. By: /s/Logan Johnston Logan T. Johnston 1402 E. Mescal Street Phoenix, AZ 85020 Attorney for Defendant Betlach Case 2:16-cv-00589-NVW Document 35 Filed 09/26/16 Page 5 of 6 6 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 The undersigned hereby certifies that on September 26, 2016, he electronically transmitted the attached document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Julia M. Prinz, Esq. P.O. Box 2267 Pinetop, Arizona 85935 juliaprinz@gmail.com Attorney for Plaintiffs Andrew S. Gordon (003660) Shelley Tolman (030945) COPPERSMITH BROCKELMAN PLC 2800 North Central Avenue, Suite 1200 Phoenix, Arizona 85004 agordon@cblawyers.com stolman@cblawyers.com Attorneys for Defendant Southwest Catholic Health Network dba Mercy Care Plan, Mercy Care Advantage, and Mercy Care Long Term Care Robert H. McKirgan Lewis Roca Rothgerber Christie LLP 40 N Central Avenue, Suite 1900 Phoenix, Arizona 85004 RMcKirgan@LRLaw.com Attorneys for Banner Health, Inc. John West Lewis Roca Rothgerber Christie LLP 40 N Central Avenue, Suite 1900 Phoenix, Arizona 85004 JWest@lrrc.com Attorneys for CIGNA Healthcare of Arizona, Inc. Meridyth Andresen Bryan Cave Two North Central Avenue, Suite 2200 Phoenix, Arizona 85004-4406 mmandresen@BryanCave.com Attorneys for UnitedHealthcare of Arizona, Inc. and Lifeprint Health, Inc. s/Logan Johnston Case 2:16-cv-00589-NVW Document 35 Filed 09/26/16 Page 6 of 6