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Hartford Healthcare Corp. v. Anthem Health Plans, Inc.

United States District Court, D. Connecticut

November 1, 2017

HARTFORD HEALTHCARE CORP., et al., Plaintiffs,
v.
ANTHEM HEALTH PLANS, INC., Defendant.

          RULING RE: MOTION TO DISMISS AMENDED COMPLAINT (DOC. NO. 61)

          Janet C. Hall United States District Judge.

         I. INTRODUCTION

         The plaintiffs, Hartford Healthcare Corporation, its affiliated hospitals, and patient Carlos David Gonzalez, filed the Amended Complaint against the defendant, Anthem Health Plans, Inc., on October 19, 2017. See Amended Complaint ("Am. Compl.") (Doc. No. 42). In it, the plaintiffs raise eight counts against Anthem under the Patient Protection and Affordable Care Act ("ACA"), Employee Retirement Income Security Act ("ERISA"), Connecticut statutes, and state contract and quasi-contract law. See Id. On October 23, 2017, Anthem filed an Emergency Motion to Dismiss the Amended Complaint. See Emergency Motion to Dismiss Amended Complaint ("Mot. to Dismiss") (Doc. No. 62).

         For the reasons set forth below, Anthem's Motion to Dismiss is GRANTED, and the Amended Complaint is dismissed.

         II. PROCEDURAL BACKGROUND

         On October 5, 2017, the original plaintiffs, Hartford Healthcare Corporation and its affiliated hospitals, filed a Complaint against Anthem, advancing four counts in which they alleged that Anthem violated the Affordable Care Act ("ACA") and Conn. Gen. Stat. § 38a-477aa. See Complaint ("Compl.") (Doc. No. 1). The Complaint sought relief in the form of a declaratory judgment that Anthem had violated the aforementioned statutes and a permanent injunction to prohibit Anthem from reimbursing its members and instead to require it to make payments to Hartford Healthcare directly. See Id. On the same day, the plaintiffs also filed a Motion for Preliminary Injunction and Temporary Restraining Order. See Motion for Preliminary Injunction and Temporary Restraining Order (Doc. No. 9). Pursuant to Federal Rule of Civil Procedure 65(a)(2), the court issued a Scheduling Order advancing the Motion for Preliminary Injunction to a bench trial on the merits to begin on November 1, 2017. See Scheduling Order (Doc. No. 24) at 1.

         Defendant Anthem filed an Emergency Motion to Dismiss on October 16, 2017. See Emergency Motion to Dismiss (Doc. No. 31). Prior to responding to the Motion to Dismiss, the plaintiffs filed an Amended Complaint, in which they added as an additional plaintiff Carlos David Gonzalez, who alleges he is a member of a health plan governed by ERISA and for which Anthem serves as a claims administrator. See Am. Compl. at ¶ 53. In addition to the previous four counts under the ACA and Conn. Gen. Stat. § 38a-477aa, the Amended Complaint also added four additional counts-two under ERISA and two under state contract and quasi-contract law. See id., at ¶¶ 87-149.

         Defendant Anthem then filed an Emergency Motion to Dismiss the Amended Complaint on October 23, 2017, which is now the Motion before the court. See Mot. to Dismiss. In light of the pending Motion, the court held a Scheduling Conference on October 27, 2017, and converted the bench trial originally scheduled for November 1, 2017, into an oral argument on the merits of the motion, with trial to follow if the Motion to Dismiss was denied. The plaintiffs filed a Memorandum in Opposition to the Motion to Dismiss the Amended Complaint on October 31, 2017. See Memorandum in Opposition to Motion to Dismiss Amended Complaint ("Mem. in Opp.") (Doc. No. 80). The court heard oral argument on the Motion to Dismiss the Amended Complaint on November 1, 2017.

         III. FACTS[1]

         Hartford Healthcare is an integrated health system that includes the affiliated hospitals also named as plaintiffs. See Am. Compl. at ¶¶ 7-12. Anthem is a health insurance issuer in the state of Connecticut. See Id. at ¶¶ 21-23. Until September 30, 2017, Hartford Healthcare was a network provider for Anthem, and Anthem reimbursed Hartford Healthcare directly for the benefits it provided to Anthem's members and beneficiaries. See id., at ¶ 26.

         The participating provider agreement between Hartford Healthcare and Anthem having expired, effective October 1, 2017, Hartford Healthcare became an out-of-network provider for Anthem. See Id. at ¶ 28. Hartford Healthcare alleges that it decided not to renew the agreement because Anthem was only willing to renew under lower reimbursement rates that Hartford Healthcare considered unfair. See Id. Anthem announced that, beginning October 1, 2017, it would no longer reimburse Hartford healthcare directly for benefits provided to Anthem members and beneficiaries. See Id. at ¶ 32. Instead, Anthem would make those payments to its members and beneficiaries, who would pay Hartford Healthcare. See Id. at ¶ 33.

         Plaintiff Carlos David Gonzalez is a member of a health plan governed by ERISA; Anthem serves as the claims administrator for his plan. See Id. at ¶ 53. Gonzalez and his family members have received emergency care at Hartford Hospital in the past and anticipate doing so again in the near future. See Id. at ¶ 54. The plaintiffs argue that patients, like Gonzalez, will suffer as a result of Anthem's new reimbursement procedure because they will have the responsibility of reviewing the benefits paperwork, depositing the reimbursement checks in their own bank accounts, arranging for payment to Hartford Healthcare, and pursuing any challenges and appeals for incorrect payments. See id., at ¶¶ 42-44. The plaintiffs allege that patients are ill-equipped to handle this process. See Id. at ¶ 45. They argue that these burdens may cause patients "to delay their emergency medical care, to seek care at hospitals farther away than Hartford Healthcare's facilities, or to seek care from an outpatient urgent care center when hospital care is medically necessary, " resulting in irreparable harm to the patients. Id. at ¶ 46.

         The plaintiffs also allege that Hartford Healthcare will suffer the following harms as a result of Anthem's new reimbursement procedure. First, Hartford Healthcare will have to wait longer for reimbursements, with greater likelihood that payments may be lost because patients will act as a middleman. See id., at ¶ 48. Additionally, Hartford Healthcare will need to spend resources to monitor reimbursement payments, make payment arrangements with patients, and education them about appeal rights. See Id. at ¶ 49. Finally, Hartford Healthcare will suffer a loss of income when patients choose to delay care or go to in-network hospitals. See Id. at ¶ 50.

         IV. LEGAL STANDARD

         A. Rule 12(b)(1) Lack of Subject Matter Jurisdiction

         Under Federal Rule of Civil Procedure 12(b)(1), "[a] case is properly dismissed for lack of subject matter jurisdiction . . . when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). The plaintiff bears the burden of proving the existence of subject matter jurisdiction by a preponderance of the evidence, Id. In contrast to Rule 12(b)(6), the court is not limited under Rule 12(b)(1) to the complaint itself, but may also consider evidence outside the pleadings, such as affidavits. Kamen American Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986); DiCesare v. Town of Stonington, No. 15-CV-1703 (VAB), 2017 WL 1042056, at *1 (D. Conn. Mar. 17, 2017).

         When the Rule 12(b)(1) motion is based solely on the complaint and its attached exhibits, the court must accept as true all factual allegations in the complaint and draw all reasonable inferences in favor of the plaintiff. See Carter v. Healthport Techs., LLC, 882 F.3d 47, 56-57 (2d Cir. 2016); Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005). However, when the defendant makes a fact-based Rule 12(b)(1) motion by introducing evidence beyond the pleadings, "the plaintiffs will need to come forward with evidence of their own to controvert that presented by the defendant 'if the affidavits submitted on a 12(b)(1) motion . . . reveal the existence of factual problems' in the assertion of jurisdiction." Carter, 882 F.3d at 57.

         B. Rule 12(b)(6) Failure to State a Claim

         Federal Rule of Civil Procedure 8(a) requires a complaint to plead "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). Under Rule 12(b)(6), to survive a motion to dismiss for failure to state a claim, that plain statement must allege facts sufficient to state a plausible claim for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). "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). While this plausibility standard does not require probability, it is not satisfied by "a sheer possibility that a defendant has acted unlawfully" or by facts that are "merely consistent with a defendant's liability." Id. (internal quotation marks omitted).

         In deciding a motion to dismiss under Rule 12(b)(6), the court must accept all material factual allegations of the complaint as true and draw all reasonable inferences in favor of the plaintiff. See Hemi Grp.. LLC v. City of New York, 559 U.S. 1, 5 (2010); Jaghory v. N.Y. State Dep't Educ., 131 F.3d 326, 329 (2d Cir. 1997). However, the court is not required to accept as true a "legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986); Timm v. Faucher, No. 3:16-CV-00531 (VAB), 2017 WL 1230846, at *6 (D. Conn. Mar. 31, 2017). In those instances, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. The court may consider "only the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings, and matters ...


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