Inc. v. United Health Group, Inc.

          MEMORANDUM OF DECISION RE: MOTION TO DISMISS AND MOTION TO STRIKE THE AMENDED COMPLAINT [ECF N0. 55]

          KARI A. DOOLEY UNITED STATES DISTRICT JUDGE.

         The Plaintiff, MC1 Healthcare Inc., d/b/a Mountainside Treatment Center (“Mountainside”), is a healthcare services provider that has treated individuals who are beneficiaries under benefit plans covered and/or administered by the seven Defendants^[1](collectively, “United”). In the Amended Complaint, Mountainside asserts five causes action, each challenging United's efforts to recoup purported overpayments it made to Mountainside. United has moved to dismiss this action pursuant Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim. United has also moved pursuant to Rule 12(f) to strike Paragraphs 16 through 18 of the Amended Complaint. For the reasons set forth below, the Motion to Dismiss is GRANTED in part and DENIED in part and the Motion to Strike is GRANTED in part and DENIED in part.

         Factual Allegations

          For purposes of this motion, the Court accepts the allegations in the Amended Complaint as true and they are set forth as follows. Mountainside is a healthcare services provider that provides treatment for, among other things, substance abuse. (Amended Compl. at ¶¶ 2-3.) Prior to providing such services, Mountainside requires its prospective patients to sign a contract that contains the following “Assignment of Benefits” provision:

Assignment of Benefits

***

Permission to Bill

I, [patient's name], permit Mountainside Treatment Center, to bill my insurance company for any facility and professional charges rendered during my treatment stay.

Assignment of Benefits

I, [patient's name], am requesting that my Insurance company submit any payment related to my care at this rendering facility to the Mountainside Treatment Center at PO Box 717, Canaan, CT 06018.

Authorization to Appeal

I, [patient's name], authorize Mountainside Treatment Center to appeal any adverse decisions provided by my insurance company on my behalf.

(Id. at ¶ 23.)

         If the prospective patient has insurance, Mountainside calls the insurance company to confirm that the proposed treatment is covered under the terms of the relevant policy or benefit plan. (Id. at ¶ 24.) Mountainside also intermittently contacts the insurance company for additional approvals as the patient's treatment regimen progresses towards discharge. (Id.) Mountainside relies on the insurance company's approvals in determining the percentage or amount of the services costs that need to be billed directly to the patient. (Id.)

         During the relevant time period, Mountainside provided services to beneficiaries of benefit plans covered and/or administered by United. (Id. at ¶¶ 18-21.) Mountainside does not have a contract with United and is an out-of-network provider under the plans. (Id. at ¶ 22.) When billing United, Mountainside used a “UB04” form, which indicates that payment is requested pursuant to an assignment. (Id. at ¶ 28.) Initially, United tendered payment to Mountainside for covered services. (Id.) On or about May 5, 2017, however, United sent a letter to Mountainside accusing it of improperly billing services on an “unbundled” basis rather than a “bundled” basis. (Id. at ¶ 29.) On May 25, 2017, Mountainside responded that, as an out-of-network provider, it was not required to bundle or unbundle any of its services. (Id. at ¶ 31.) Thereafter, United began recouping its purported overpayments by not paying for services for other insureds (“offsetting”), including services provided to insureds who are not members of the same plans under which the alleged overpayments were made (“cross-plan offsetting”). (Id. at ¶ 32.)

         Procedural History

         On November 14, 2017, Mountainside initiated this action. On March 26, 2018, United filed its first motion to dismiss for largely the same reasons asserted in the instant motion to dismiss. On April 13, 2018, the parties reached a stipulation whereby Mountainside would file an amended complaint, which it did on April 30, 2018.

         The Amended Complaint is the operative complaint. Like the original complaint, it seeks declaratory, monetary, and injunctive relief pursuant to § 502(a) of the Employee Retirement Income Security Act (“ERISA”), codified at 29 U.S.C. § 1132 (Count One). (Amended Compl. at ¶¶ 38-44.) It also contains four state law claims for violation of the Connecticut Unfair Trade Practices Act (“CUTPA”) and Connecticut Unfair Insurance Practices Act (“CUIPA”) (Count Two), negligent misrepresentation (Count Three), promissory estoppel (Count Four), and unjust enrichment (Count Five). (Id. at ¶¶ 45-62). Each count of the Amended Complaint seeks payment for services rendered and in doing so challenges United's right to recoup the disputed fees. Count One and Count Two further challenge United's use of cross-plan offsetting for its recoupments.

         United moves to dismiss this action in its entirety on several grounds. With respect to the ERISA claim, United principally argues that Mountainside, as a provider, cannot assert a claim under ERISA. With respect to the state law claims, United argues that Mountainside has failed to plead these claims adequately. Alternatively, United argues that ERISA preempts each of these claims. The Court will address each of United's arguments as necessary.

         United's Motion to Dismiss

         Standard of Review

         As an initial matter, United originally moved to dismiss Count One of the Amended Complaint for lack of standing pursuant to Rule 12(b)(1). United's challenge, however, is to Mountainside's “statutory standing” - i.e., its ability to assert a claim under ERISA - not its constitutional standing under Article III of the United States Constitution. “The Supreme Court has recently clarified . . . that what has been called ‘statutory standing' in fact is not a standing issue, but simply a question of whether the particular plaintiff has a cause of action under the statute. This inquiry does not belong to the family of standing inquiries because the absence of a valid cause of action does not implicate subject-matter jurisdiction, i.e., the court's statutory or constitutional power to adjudicate the case.” Am. Psychiatric Ass'n v. Anthem Health Plans, Inc., 821 F.3d 352, 359 (2d Cir. 2016) (citations omitted; ellipses omitted; internal quotation marks omitted). Accordingly, United's motion to dismiss Count One for lack of “statutory standing”^[2] is properly analyzed under Rule 12(b)(6), not Rule 12(b)(1).

         To survive a motion to dismiss filed pursuant to Rule 12(b)(6), “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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 557). Legal conclusions and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are not entitled to a presumption of truth. Iqbal, 556 U.S. at 678. Nevertheless, when reviewing a motion to dismiss, the court must accept well-pleaded factual allegations as true and draw “all reasonable inferences in the non-movant's favor.” Interworks Sys. Inc. v. Merch. Fin. Corp., 604 F.3d 692, 699 (2d Cir. 2010).

         Count One: ERISA

         United first challenges Mountainside's ability to assert claims based on its patients' rights under their benefit plans and ERISA, arguing that the “Assignment of Benefits” form does not transfer any of the patients' rights to Mountainside. Mountainside counters that this form constitutes a legal assignment of its patients' rights under their plans and, therefore, confers derivative standing to sue under ERISA. For purposes of the motion to dismiss, it is deemed true that all of Mountainside's patients executed the Assignment of Benefits form detailed above. Therefore, if United is correct that the Assignment of Benefits form does not convey any rights under ERISA, whatever claims Mountainside purports ...