Renaissance Ranch Outpatient Treatment v. Golden Rule Insurance Company et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM and Memorandum in Support

D. UtahOctober 13, 2016

Bryon J. Benevento (5254) Kimberly Neville (9067) DORSEY & WHITNEY LLP 136 South Main Street, Suite 1000 Salt Lake City, UT 84101-1685 Telephone: (801) 933-7360 Email: benevento.bryon@dorsey.com neville.kimberly@dorsey.com Attorneys for Defendants IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION RENAISSANCE RANCH OUTPATIENT TREATMENT, INC., a Utah corporation, Plaintiff, v. GOLDEN RULE INSURANCE COMPANY, UNITED HEALTHCARE SERVICES, INC., UNITED HEALTHCARE OF UTAH, INC., and UNITEDHEALTHCARE LIFE INSURANCE COMPANY; Defendants. DEFENDANTS’ MOTION TO DISMISS; SUPPORTING MEMORANDUM Civil No. 2:16-cv-00872 Judge David Nuffer Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 1 of 21 ii TABLE OF CONTENTS RELIEF SOUGHT AND SPECIFIC GROUNDS FOR MOTION ............................................... vi STATEMENT OF FACTS .......................................................................................................... viii ARGUMENT ...................................................................................................................................1 I. Plaintiff’s Common Law Claims (Counts 1-7) Must Be Dismissed Because They Are Preempted by ERISA. ..................................................................1 II. Plaintiff’s ERISA Claims (Counts 8-9) Fail as a Matter of Law. ...............................4 A. Plaintiff Lacks Standing to Sue as an “Assignee” of the Insureds. .............4 B. Plaintiff’s Claim for Breach of ERISA Fiduciary Duty (Count 8) Separately Fails as a Matter of Law. ............................................................6 CONCLUSION ..............................................................................................................................11 Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 2 of 21 iii TABLE OF AUTHORITIES Page(s) Cases Aetna Health Inc. v. Davila, 5420 U.S. 200 (2004) .................................................................................................................1 ASI, LLC v. Boulder Administration Servs., Inc., 2012 U.S. Dist. Lexis 85590 ..................................................................................................4, 5 Balistreri v. Pacifica Police Dept., 901 F.2d 696 (9th Cir. 1990) .....................................................................................................1 Benson v. Prudential Fin., Inc., 2007 U.S. Dist. Lexis 68096 (D.N.M. 2007) .............................................................................7 Bixler v. Foster, 596 F.3d 751 (10th Cir. 2010) ...................................................................................................1 Callery v. United States Life Ins. Co., 392 F.3d 401 (10th Cir. ) ...........................................................................................................7 Central States v. Neurobehavioral Assocs., P.A., 906 F.2d 985 (4th Cir. 1990) .....................................................................................................3 Chastain v. AT&T, 558 F.3d 1177 (10th Cir. 2009) ...............................................................................................10 Copeland v. Geddes Fed. Sav. & Loan Assn., 62 F.Supp.2d 673 (N.D. N.Y. 1999) ..........................................................................................8 Dobbs v. Anthem Blue Cross and Blue Shield, 600 F.3d 1275 (10th Cir. 2010) .............................................................................................1, 3 Gibbons v. Qwest, 2012 U.S. Dist. Lexis 171981 ................................................................................................2, 3 Hansen v. Harper Excavating, Inc., 641 F.3d 1216 (10th Cir. 2011) ...............................................................................................10 Hurley v. Dyno Nobel, Inc., 2014 U.S. Dist. Lexis 126907 ................................................................................................8, 9 Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 3 of 21 iv IHC Health Systems v. Railserve Employee Benefits Plan, 2007 U.S. Dist. Lexis 77988 ......................................................................................................6 Jacobsen v. Qwest Corp., 2008 U.S. Dist. Lexis 111903 (D.N.M. 2008) ...........................................................................8 Jon N. v. Blue Cross Blue Shield of Massachusetts, Inc., 2008 U.S. Dist. Lexis 35464 ..................................................................................................5, 6 Karls v. Texaco, Inc., 139 Fed. Appx. 29 (2005) ..........................................................................................................1 Lefler v. United HealthCare of Utah, Inc., 72 Fed. Appx. 818 (10th Cir. 2003) ...........................................................................................7 McDonald v. Nationwide Title Clearing, Inc, 2016 U.S. App. Lexis 16456 (10th Cir. 2016) ...........................................................................9 Mein v. Pool Co. Disabled Int’l Employee Long Term Disability Benefit Plan, 989 F. Supp. 1337 (D.N.M. 1998) .........................................................................................3, 6 Phillippus v. Aetna Life Ins. Co., 2010 U.S. Dist. Lexis 79055 (D.Colo. 2010).............................................................................7 Ross v. Weyerhauser Co., 2012 U.S. Dist. Lexis 4713 (D. Okla. 2012)..............................................................................3 Salzer v. SSM Health Care of Oklahoma Inc., 762 F.3d 1130 (10th Cir. 2014) .................................................................................................2 Shaw v. Delta Airlines, Inc., 463 U.S. 85 (1983) .....................................................................................................................2 St. Francis Regional Medical Center v. Blue Cross and Blue Shield of Kansas, Inc., 49 F.3d 1460 (10th Cir. 1995) ...........................................................................................4, 5, 6 Straub v. Western Union Telegraph Co., 851 F.2d 1262 (10th Cir. 1988) .................................................................................................3 Varity Corp. v. Howe, 516 U.S. 489 (1996) ...............................................................................................................6, 7 Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136 (9th Cir. 2003) ...................................................................................................1 Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 4 of 21 v Yarbary v. Martin, Pringle, Oliver, Wallace, & Bauer, LLP, 643 Fed. Appx. 813 (10th Cir. 2016) ...................................................................................4, 10 Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 5 of 21 vi Pursuant to Rule 12 of the Federal Rules of Civil Procedure, Defendants Golden Rule Insurance Company, United HealthCare Services, Inc., UnitedHealthCare of Utah, Inc. and UnitedHealthCare Life Insurance Company (collectively, “Defendants”) move the Court for an order dismissing the Plaintiff’s Complaint for lack of standing, failure to state a claim upon which relief may be granted, and lack of subject matter jurisdiction. RELIEF SOUGHT AND SPECIFIC GROUNDS FOR MOTION This Court should dismiss the Plaintiff’s Complaint because each of the Plaintiff’s claims fail as a matter of law. As discussed below, this case is a reimbursement dispute between an out- of-network health care provider and a group of health insurers. Plaintiff contends that it provided substance abuse treatment services to 28 patients, and that it was not appropriately reimbursed for services by the patients’ health care plans. Plaintiff further agrees that it has no direct contractual relationship with the Defendants, and therefore, is only allowed to proceed as an alleged assignee of the individual patients. Unfortunately, the fundamental problem with the Plaintiff’s Complaint is that it attempts to sue as an assignee of 28 different patients who have different health plans that contain different provisions and that are subject to different regulatory schemes. However, instead breaking out the patients’ claims into ERISA and ERISA-exempt categories, or identifying which claims or legal theories are attributable to which of the four Defendants, Plaintiff simply asserts a collective claim for more than $1.9 million against all Defendants under a hodge-podge of nine different legal theories. Plaintiff’s claims are flawed in numerous respects, and should be dismissed for the following reasons: First, Plaintiff’s common law claims (Counts 1-7) should be dismissed because they are preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”). Plaintiff’s Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 6 of 21 vii Complaint states that the “majority” of its claims seek reimbursement for services rendered to a patient that was insured by an employer-sponsored health plan. These claims are governed by ERISA, which completely preempts any state law claims that are based upon an inadequate payment of plan benefits. Thus, Counts 1-7 should be dismissed as a matter of law to the extent they seek reimbursement of claims covered by ERISA plans. Second, Plaintiff’s ERISA claims (Counts 8-9) must be dismissed for lack of standing. Federal law provides that an ERISA claim may only be brought by a beneficiary or participant of the plan – i.e., the individual patients. The plans that Plaintiff attempts to sue upon, however, contain an anti-assignment provision, which prohibits the patient from transferring their benefits or rights to a non-network provider. Moreover, federal law recognizes that §502(a)(3) does not allow for individual recovery, but instead, may only be invoked to secure equitable relief on behalf of the plan. As such, Plaintiff’s ERISA claims fail as a matter of law. Finally, the Court should dismiss any pendent state law claims for lack of subject matter jurisdiction, or alternatively, require the Plaintiff to replead those claims to identify the Court’s basis for asserting jurisdiction. Although the Plaintiff does not clearly articulate which patients are at issue in its Complaint or whether their individual health plans are governed by ERISA, its pleading appears to suggest that there may be a few patients who are insured by ERISA-exempt health insurance policies. Assuming that is the case, the Court would lack subject matter jurisdiction over any such claims since the Plaintiff has no viable federal question claims and the case names a non-diverse defendant, UnitedHealthCare of Utah, Inc. At a minimum, these claims should be re-pled to address the Court’s basis for asserting jurisdiction. For these reasons, Plaintiff’s Complaint should be dismissed as a matter of law. Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 7 of 21 viii STATEMENT OF FACTS The following facts are alleged in the Plaintiff’s Complaint or set forth in the attached exhibits to the Complaint. Defendants accept these allegations as true for purposes of this motion only: 1. Plaintiff Renaissance Ranch Outpatient Treatment, Inc. is a Utah corporation that maintains its principal place of business in Salt Lake County, Utah.1 Plaintiff operates an outpatient substance abuse treatment facility that provides services to patients suffering from drug and alcohol addiction.2 2. According to the Complaint, Plaintiff is an out-of-network provider, meaning that it does not have any contracts with the Defendant health insurance companies.3 Thus, all services provided by the Plaintiff are only reimbursed pursuant to the terms of the insurance policies held by the individual patients.4 3. Plaintiff alleges that it has provided services to approximately 28 patients5 and that it is owed approximately $1,952,244.50 for unpaid insurance claims.6 Plaintiff further alleges that the “majority of the claims at issue are covered under group employer-based health plans and are therefore subject to ERISA.”7 4. Plaintiff does not state which particular patients are insured by which particular health plans, nor does it identify which of these plans are subject to ERISA. Likewise, Plaintiff 1 See Complaint at ¶ 1. 2 Id. at ¶ 14. 3 Id. at ¶ 18. 4 Id. 5 Based upon the Complaint, it appears that 11 patients were insured by Golden Rule, while 17 were insured by a United HealthCare entity. Id. at ¶¶ 35, 42. 6 Id. at ¶ 54. 7 Id. at ¶ 23. Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 8 of 21 ix does not identify which Defendant is liable under which legal theories. Instead, Plaintiff collectively asserts a global claim against all Defendants under nine different legal theories, including: (i) breach of contract; (ii) breach of the covenant of good faith and fair dealing; (iii) unjust enrichment; (iv) fraud; (v) negligent misrepresentation – prior authorization; (vi) negligent misrepresentation – provision of medical records; (vii) declaratory judgment; (viii) breach of ERISA fiduciary duties; and (ix) recovery of benefits under ERISA. 5. In factual terms, each of the Plaintiff’s claims seeks the same substantive relief. Plaintiff contends that it has received an assignment of benefits from each of the individual insureds, and that it is entitled to approximately $1,952,244.50 for unpaid insurance benefits.8 6. Although Plaintiff does not identify the health care plans that purportedly cover the claims at issue in this lawsuit, it does attach a few “exemplar” plans to its Complaint. One of the exemplar health plans contains an anti-assignment provision that prohibits the patient from assigning any benefits to a non-network provider. Specifically, the plan states: You may not assign your Benefits under the Policy to a non-Network provider without our consent. When an assignment is not obtained, we will send the reimbursement directly to you (the Subscriber) for you to reimburse them upon receipt of their bill. We may, however, in our discretion, pay a non-Network provider directly for services rendered to you. In the case of any such assignment of Benefits or payment to a non-Network provider, we reserve the right to offset Benefits to be paid to the provider by any amount that the provider owes us. When you assign the Benefits under the Policy to a non-Network provider with our consent, and the non-Network provider submits a claim for payment, you and the non-Network provider represent and warrant the following: • The Covered Health Services were actually provided. • The Covered Health Services were medically appropriate.9 8 Id. at ¶¶ 50, 57-58, 63, 72, 88, 97, 100(b). 9 See Complaint, Ex. A (Docket Entry No. 2-3 at Page 43 of 245). Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 9 of 21 x 7. Another exemplar plan contains a similar provision, which states: ASSIGNMENT: We will reimburse a hospital or health care provider if: A. Your health insurance benefits are assigned by you in writing; and B. We approve the assignment. Any assignment to a hospital or person providing the treatment, whether with or without our approval, shall not confer upon such hospital or person, any right or privilege granted to you under the policy except for the right to receive benefits, if any, that we have determined to be due and payable.10 8. Plaintiff’s Complaint asserts federal question jurisdiction under ERISA, and supplemental jurisdiction over any state law pendent claims.11 Plaintiff’s Complaint names a Utah-based defendant, UnitedHealthCare of Utah, Inc., which is alleged to be a Utah corporation with a principal place of business in Salt Lake County, Utah.12 10 See Complaint, Ex. A (Docket Entry No. 2-3 at Page 203 of 245) (emphasis in original). 11 Id. at ¶ 9. 12 Id. at ¶ 6. Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 10 of 21 1 ARGUMENT Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a trial court may dismiss any cause of action that fails to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6) may be based on either “a lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.”13 Although the allegations of material fact are construed in the light most favorable to the claimant, the Court is “not required to accept as true conclusory allegations” or assume the truth of “legal conclusions [that] are cast in the form of factual allegations.”14 As discussed above, Plaintiff’s Complaint fails for a host of legal reasons, including: (i) preemption by ERISA; (ii) lack of standing; and (iii) lack of subject matter jurisdiction. I. Plaintiff’s Common Law Claims (Counts 1-7) Must Be Dismissed Because They Are Preempted by ERISA. This Court should dismiss the Plaintiff’s common law claims (Counts 1-7) because they are preempted by ERISA. The United States Supreme Court has previously recognized that “[t]he purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans. To this end, ERISA includes expansive preemption provisions which are intended to ensure that employee benefit plan regulation would be ‘exclusively a federal concern.’”15 Thus, “ERISA preempts state law claims that ‘relate to any employee benefit plan.’”16 13 Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). 14 Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003); see also Bixler v. Foster, 596 F.3d 751, 756 (10th Cir. 2010) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)). 15 Aetna Health Inc. v. Davila, 5420 U.S. 200, 208 (2004) (quoting Alessi v. Raybestos-Manhattan, Inc., 541 U.S. 504, 523 (1981); citing ERISA §514, 29 U.S.C.S. § 1144). 16 Dobbs v. Anthem Blue Cross and Blue Shield, 600 F.3d 1275, 1279 (10th Cir. 2010) (quoting 29 U.S.C. § 1144(a)); see also Karls v. Texaco, Inc., 139 Fed. Appx. 29, *8 (2005) (“It is well-established, however, that “common law tort and breach of contract claims are preempted by ERISA if the factual basis of the cause of action involves an employee benefit plan.”) (quoting Settles v. Golden Rule Ins. Co., 927 F.2d 505, 509 (10th Cir. 1991)). Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 11 of 21 2 The Supreme Court and Tenth Circuit have repeatedly recognized the expansive scope of ERISA’s preemption.17 Accordingly, both Congress and the federal courts have construed the phrase “related to” in its broadest sense, to preempt any claim that “has a connection with or reference to [an ERISA] plan.”18 The federal courts have previously developed a two-part test for determining whether a claim is preempted by ERISA. Specifically, the courts will consider whether: (1) an individual, at some point in time, could have brought his claim under ERISA; and (2) there is another legal duty implicated by the defendant’s actions.19 State law claims that merely “‘provide an alternative cause of action to employees to collect benefits protected by ERISA’ have been ruled preempted.”20 Here, Plaintiff concedes that the “majority of the claims at issue are covered under group employer-based health plans and are therefore subject to ERISA.”21 Nevertheless, Plaintiff attempts to assert seven different state common law claims seeking to recover the benefits purportedly owed under these insureds’ health care plans. These claims are preempted for any patients who were insured by an ERISA plan, since ERISA provides the exclusive remedy to recover unpaid plan benefits. 17 See Shaw v. Delta Airlines, Inc., 463 U.S. 85, 96 (1983) (“the breadth of [§1144(a)’s] pre-emptive reach is apparent….”; Salzer v. SSM Health Care of Oklahoma Inc., 762 F.3d 1130, 1134 (10th Cir. 2014) (quoting Hansen v. Harper Excavating, Inc., 641 F.3d 1216, 1221 (10th Cir. 2011) (“Only a few federal statutes so pervasively regulate their respective areas that they have complete preemptive force; ERISA is one.”)) 18 Shaw, 463 U.S. at 96-97. 19 Salzer, 762 F.3d at 1134 (citing Davila, 542 U.S. at 210). 20 Gibbons v. Qwest, 2012 U.S. Dist. Lexis 171981, *7 (D. Utah 2012, Judge Nuffer) (citing Monarch Cement Co. v. Lone Star Indus., Inc., 982 F.2d 1448, 1452 (10th Cir. 1992)). 21 See Complaint at ¶ 23. Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 12 of 21 3 In similar cases, the federal courts have uniformly dismissed common law claims that seek recovery of benefits under an ERISA plan. For example, in Gibbons v. Qwest,22 a case recently decided by this Court, a plaintiff brought suit to recover short-term disability benefits that were denied by her employer and ERISA plan sponsor. The plaintiff brought suit under a variety of legal theories, including declaratory relief, recovery of ERISA plan benefits, and breach of contract.23 This Court dismissed the common law claim, finding that it was “merely an alternative vehicle to attempt to collect benefits under an ERISA plan.”24 The Tenth Circuit reached a similar conclusion in Dobbs v. Anthem Blue Cross and Blue Shield,25 a case involving a claim for “fraud-as-to-benefits.” In Dobbs, the plaintiff asserted a common law claim for fraud, alleging that Anthem had “‘represented that its Blue Preferred policy allowed insureds to see any Blue Cross Blue Shield Preferred Provider and receive coverage at in-network levels,’ but that ‘the statements were false.’”26 The Tenth Circuit concluded that the claim was preempted because it was based upon Anthem’s alleged failure to abide by the terms of the plan.27 Other federal courts have reached a similar conclusion with respect to various common law claims.28 22 2012 U.S. Dist. Lexis 171981 (D. Utah 2012) 23 Id. at *1. 24 Id. at *7. 25 600 F.3d 1275 (10th Cir. 2010). 26 Id. at 1286. 27 Id. As a side note, the Dobbs Court also remanded the case as there was an open question concerning whether the health plan at issue was a governmental-sponsored plan. 28 Straub v. Western Union Telegraph Co., 851 F.2d 1262, 1264 (10th Cir. 1988) (negligent misrepresentation claims preempted by ERISA); Central States v. Neurobehavioral Assocs., P.A., 906 F.2d 985, 994 (4th Cir. 1990) (unjust enrichment claim preempted by ERISA); Ross v. Weyerhauser Co., 2012 U.S. Dist. Lexis 4713, *6 (D. Okla. 2012) (fraud and breach of contract claims preempted by ERISA); Mein v. Pool Co. Disabled Int’l Employee Long Term Disability Benefit Plan, 989 F. Supp. 1337, 1344 (D.N.M. 1998) (stating that ERISA preempts state law claims based on breach of contract, fraud, or negligent misrepresentation). Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 13 of 21 4 The same concepts apply to the case at hand. Here, Plaintiff asserts seven common law claims ranging from breach of contract, to unjust enrichment, to fraud, each of which seeks to recover payment for unpaid / underpaid health plan benefits.29 Plaintiff concedes that the “majority” of these patients are insured by plans that are governed by ERISA, which provides the exclusive avenue for recovery of any allegedly unpaid benefits. Accordingly, Plaintiff cannot proceed on these claims as an assignee of ERISA-plan beneficiaries, and the common law claim must be dismissed as a matter of law. II. Plaintiff’s ERISA Claims (Counts 8-9) Fail as a Matter of Law. A. Plaintiff Lacks Standing to Sue as an “Assignee” of the Insureds. This Court should also dismiss the Plaintiff’s ERISA claims (Counts 8-9) because the Plaintiff lacks standing to assert claims under ERISA. The ERISA civil enforcement provision states that a civil action may only be brought by a “participant or beneficiary” of the employer- sponsored plan.30 Under the statute, a “participant” is defined an “employee or former employee … who is or may become eligible to receive a benefit”; while a “beneficiary” is defined 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.”31 Importantly, Plaintiff does not claim to be a participant or beneficiary of the plan, nor does it claim to have any direct contracts with the Defendants. Rather, Plaintiff only claims 29 Id. at ¶¶ 50, 57-58, 63, 72, 88, 97, 100(b). 30 29 U.S.C. § 1132(a)(1); St. Francis Regional Medical Center v. Blue Cross and Blue Shield of Kansas, Inc., 49 F.3d 1460 (10th Cir. 1995); see also Yarbary v. Martin, Pringle, Oliver, Wallace, & Bauer, LLP, 643 Fed. Appx. 813, *6 (10th Cir. 2016) (“only plaintiffs who are properly considered 'participants' or 'beneficiaries' have standing to sue under ERISA §502(a)(1)" – ERISA's civil enforcement provision”.) 31 29 U.S.C. §1002(7) and § 1002(8); see also ASI, LLC v. Boulder Administration Servs., Inc., 2012 U.S. Dist. Lexis 85590 at *5-6 (D.Utah 2012, Judge Nuffer). Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 14 of 21 5 standing to sue as an “assignee” of the patients under a written assignment of benefits.32 The exemplar plans that Plaintiff attaches to its complaint, however, contain an anti-assignment provision that prohibits the patient from assigning their benefits to an out-of-network provider.33 The Tenth Circuit has previously concluded that “ERISA preempts state law on the issue of the assignability of benefits” and that the parties are free to contract with respect to the assignability of plan benefits.34 Thus, “anti-assignment clauses in ERISA health insurance contracts have been held to be valid and binding.”35 This Court previously addressed this identical issue in the case of ASI, LLC v. Boulder Administration Services, Inc., 2012 U.S. Dist. Lexis 85590 (D. Utah 2012). In Boulder, the plaintiff submitted a claim for health insurance benefits for services rendered to a patient injured in an automotive accident. The plan’s administrator submitted the claim for an independent medical review to assess the medical necessity of the treatment, and ultimately denied coverage based upon the reviewer’s determination.36 The plaintiff challenged the decision and filed suit under ERISA, acting in its capacity as an authorized assignee of the patient. This Court granted summary judgment on the claim, finding that the “express language of the plan prohibited the assignment of benefits” to the plaintiff entity.37 Accordingly, the Court concluded that the plaintiff lacked standing under ERISA, relying upon the Tenth Circuit’s 32 See Complaint at ¶ 12, ¶ 19, and Ex. C. 33 See Complaint, Ex. A (Docket Entry No. 2-3) at Page 43 of 245; Page 203 of 245. 34 St. Francis, 49 F.3d at 1464. 35 Jon N. v. Blue Cross Blue Shield of Massachusetts, Inc., 2008 U.S. Dist. Lexis 35464 (D. Utah 2008, *3 (Judge Kimball) (citing St. Francis, 49 F.3d at 1464). 36 Boulder, 2012 U.S. Dist. Lexis 85590 at *3. 37 Id. at *7-8. Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 15 of 21 6 decision in St. Francis Regional Medical Center v. Blue Cross and Blue Shield of Kansas, Inc.38 Other decisions within this district have reached the same conclusion when faced with the same fact pattern.39 Here, Plaintiff’s Complaint suffers from the same legal deficiency. Plaintiff does not have standing to sue as a plan participant or beneficiary, and consequently, cannot bring this action unless the plan authorizes an assignment of benefits. Plaintiff, however, has not pled any facts suggesting that the patients’ health care plans authorize an assignment of benefits to an out- of-network provider, and to the contrary, the face of the complaint demonstrates that such an act is prohibited.40 Accordingly, Counts 8-9 should be dismissed as a matter of law. B. Plaintiff’s Claim for Breach of ERISA Fiduciary Duty (Count 8) Separately Fails as a Matter of Law. As discussed above, Plaintiff lacks standing to pursue any ERISA claim. However, in the event the Court concludes otherwise, the Plaintiff’s claim for breach of ERISA fiduciary duty (Count 8) should still be separately dismissed because it is deficient under the law. In particular, Plaintiff’s claim fails because: (1) it is duplicative of its claim for recovery of benefits, and therefore, improper under Varity v. Howe and its progeny; and (2) the Plaintiff is only permitted 38 Id. 39 Jon N., 2008 U.S. Dist. Lexis 35464 at *3 (enforcing anti-assignment provision and dismissing claims for lack of standing); IHC Health Systems v. Railserve Employee Benefits Plan, 2007 U.S. Dist. Lexis 77988, *8-9 (D.Utah 2007, Judge Stewart) (same). 40 Interestingly, Plaintiff has not attached the individual patient’s plans to the Complaint or identified the specific plans complaint, but instead, relies upon “exemplar” policies that may not even be applicable to the claims in dispute. Defendants expect that the actual plans would contain similar anti-assignment provisions, as these provisions are commonplace within the health care industry. However, for purposes of this motion, Defendants accept the allegations of the Plaintiff’s complaint and its accompanying exhibits as true, and assume that the exemplar provisions accurately form of the basis of its claim. At a minimum, the Court should require the Plaintiff to re-plead its claim to identify the proper plans so that the parties may assess the validity of any alleged assignment. Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 16 of 21 7 to invoke the referenced section to seek recovery on behalf of the plan. Thus, Plaintiff’s claim for breach of ERISA fiduciary duties fails as a matter of law. 1. Plaintiff’s Breach of Fiduciary Duty Claim Fails as a Matter of Law Because it is Duplicative of its Claim for Recovery of Plan Benefits. As noted above, ERISA’s civil enforcement provision, 29 U.S.C. § 1132(a)(1), only permits a plan participant or beneficiary to pursue a civil action for recovery of plan benefits.41 That same section, however, also permits a participant or beneficiary to bring an action for breach of fiduciary duty: (A) to enjoin any act or practice which violates any provision of [ERISA] 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 [ERISA] or the terms of the plan.42 Although the United States Supreme Court recognizes that the statute authorizes a claim for breach of fiduciary duty under certain circumstances, it has referred to this provision as a “catchall provision” that acts as a “safety net” to provide appropriate equitable relief to address violations that are not adequately addressed by other portions of the statute.43 Thus, the federal courts have concluded that if a Plaintiff states a cognizable claim for recovery of benefits under ERISA, it cannot bring a separate claim for breach of ERISA fiduciary duties.44 Likewise, 41 29 U.S.C. § 1132(a)(1)(B). 42 29 U.S.C. § 1132(a)(3). 43 Varity Corp. v. Howe, 516 U.S. 489, 512 (1996). 44 Lefler v. United HealthCare of Utah, Inc., 72 Fed. Appx. 818, 826 (10th Cir. 2003); Phillippus v. Aetna Life Ins. Co., 2010 U.S. Dist. Lexis 79055, *17-18 (D.Colo. 2010) (dismissing claim for breach of ERISA fiduciary duty); Benson v. Prudential Fin., Inc., 2007 U.S. Dist. Lexis 68096, *12-13 (D.N.M. 2007) (dismissing fiduciary duty claims and collecting federal authorities) Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 17 of 21 8 Plaintiff cannot be awarded monetary damages as a form of “equitable relief” against the fiduciary.45 Here, Plaintiff’s claim for breach of fiduciary duty is simply a tack-on to its claim for recovery of plan benefits, which is impermissible under the law. Indeed, the only relief sought by this claim is monetary – to “recover benefits due” under the terms of the insureds’ health plans.46 As such, Plaintiff fails to state a claim for breach of ERISA fiduciary duties and the claim should be dismissed as a matter of law. 2. Plaintiff Cannot Sue For Individual Relief Under § 502(a)(3); Instead Any Recovery Must Be On Behalf of the Plan. In addition, Plaintiff’s claim for breach of ERISA fiduciary duties must also be dismissed because the statute only authorizes relief for the benefit of the plan – not its individual participants, and certainly not third-party health care providers. The federal case law uniformly recognizes that ERISA’s fiduciary duty provisions are “primarily concerned with the possible misuse of plan assets, and with remedies that would protect the entire plan, rather than the rights of an individual beneficiary….”47 Thus, ERISA’s fiduciary duty provision “does not authorize any relief except for the plan itself.”48 The United States District Court for the District of Utah recently dismissed a similar claim in the case of Hurley v. Dyno Nobel, Inc., a case involving recovery of pension benefits. 45 Callery v. United States Life Ins. Co., 392 F.3d 401, 409 (10th Cir.) (“[I]n a suit by a beneficiary against a fiduciary, the beneficiary may not be awarded compensatory damages as ‘appropriate equitable relief’ under § 502(a)(3) of ERISA.”) 46 See Complaint at ¶ 107. 47 Hurley v. Dyno Nobel, Inc., 2014 U.S. Dist. Lexis 126907, *22-24 (D. Utah 2014, Judge Shelby) (quoting Varity Corp. v. Howe, 516 U.S. at 509; citing Mass Mutual Life Ins. Co. v. Russell, 473 US. 134, 142-144 (1985)); see also Copeland v. Geddes Fed. Sav. & Loan Assn., 62 F.Supp.2d 673, 678 (N.D. N.Y. 1999) (§502 does not allow participant to sue for breach of fiduciary duty on his own behalf; it only allows relief to the plan itself and not individual plan participants); Jacobsen v. Qwest Corp., 2008 U.S. Dist. Lexis 111903 *14 (D.N.M. 2008) (dismissing claim for breach of fiduciary duty). 48 Id. Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 18 of 21 9 In Hurley, the plaintiffs filed suit in their individual capacities and as plan participants, alleging that the defendant miscalculated certain pension payments owed to them. Judge Robert Shelby granted summary judgment on all claims, including a claim for breach of fiduciary duty, finding that ERISA’s fiduciary duty provisions to do not allow for individual recovery.49 In particular, the Court noted that: The Supreme Court is clear that these provisions do not contemplate individual claims for benefits under a defined benefits plan. Rather, these sections only allow Plaintiffs to bring claims for relief for the plan itself.50 In this instance, Plaintiff is not asserting any claims on behalf of the plans, but instead, seeks individual monetary recovery.51 This is not an appropriate case for a fiduciary duty claim, and according, Count 8 should be dismissed as a matter of law. III. Plaintiff Should Be Required To Replead Any Pendant State Law Claims to Clarify the Court’s Basis For Asserting Subject Matter Jurisdiction. Finally, this Court should dismiss any remaining pendant state law claims for lack of subject matter jurisdiction, or alternatively, require the Plaintiff to replead those claims to identify the Court’s basis for asserting subject matter jurisdiction. As the Court is aware, “[f]ederal courts are courts of limited jurisdiction and require both constitutional and statutory authority in order to adjudicate a case.”52 Typically, the Court may only assert jurisdiction over cases involving: (i) a substantial federal question; or (ii) complete diversity of citizenship 49 Hurley, 2014 U.S. Dist. Lexis 126907, *22. 50 Id. at *24. 51 See Complaint at ¶ 107. 52 McDonald v. Nationwide Title Clearing, Inc., 2016 U.S. App. Lexis 16456, * 3 (10th Cir. 2016) (quoting Estate of Harshman v. Jackson Hole Mountain Resort Corp., 379 F.3d 1161, 1164 (10th Cir. 2004)). Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 19 of 21 10 between parties from different states.53 “The burden of establishing subject matter jurisdiction is on the party asserting jurisdiction.”54 In this instance, Plaintiff’s Complaint asserts that the Court possesses subject matter jurisdiction over the case under ERISA, a statute that gives rise to a substantial federal question.55 Plaintiff further asserts that the “majority of the claims at issue are covered under group employer-based health plans and are therefore subject to ERISA.”56 Although Plaintiff does not expressly state, presumably the remaining “minority” of its claims pertain to the reimbursement of services rendered to patients with non-ERISA insurance. For the reasons discussed above, Plaintiff’s ERISA claims must be dismissed because the Plaintiff lacks standing to assert these claims.57 The Tenth Circuit recognizes that if a plaintiff lacks standing under ERISA, then the complaint must also be dismissed on jurisdictional grounds.58 Specifically, the Court has stated: The requirement that a litigant have standing under § 502(a) in order for his or her complaint to be removable under complete preemption has a jurisdictional dimension. “The express grant of federal jurisdiction in ERISA is limited to suits brought by certain parties” outlined in § 502. “Therefore, the requirement of § 502 is both a standing and a subject matter jurisdictional requirement.”59 Importantly, Plaintiff does not identify any other grounds for subject matter jurisdiction over if the ERISA claim dismissed. Although the Complaint suggests that some portion of the claim may be based upon non-ERISA plans, those common law claims are asserted against a 53 Id. at *4 54 Id. at *3 (quoting Montoya v. Chao, 296 F.3d 952, 955 (10th Cir. 2002). 55 See Complaint at ¶ 9. 56 Id. at ¶ 23. 57 See Section II.A infra. 58 Yarbary, 643 Fed. Appx. 813 at*6; Hansen v. Harper Excavating, Inc., 641 F.3d 1216, 1222 (10th Cir. 2011); Chastain v. AT&T, 558 F.3d 1177, 1183-84 (10th Cir. 2009). 59 Id. (quoting Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 21 (1983); Felix v. Lucent Techs., Inc., 387 F.3d 1146, 1160 n.14 (10th Cir. 2004)). Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 20 of 21 11 Utah-based party, United HealthCare of Utah, Inc., and therefore, not subject to the Court’s diversity jurisdiction.60 Accordingly, any pendant state law claims should be dismissed as a matter of law, or at a minimum, re-pled for purposes of identifying the Court’s basis for asserting jurisdiction. CONCLUSION For the reasons set forth above, the Defendants respectfully request that the Court dismiss the Plaintiff’s Complaint as a matter of law. DATED this 13th day of October, 2016. Dorsey & Whitney LLP By: Kimberly Neville Bryon J. Benevento Kimberly Neville Attorneys For Defendants 60 Defendants question why UnitedHealthCare of Utah, Inc. has been named at all. Case 2:16-cv-00872-DN Document 11 Filed 10/13/16 Page 21 of 21