United States District Court, D. Connecticut
MC1 HEALTHCARE, INC., d/b/a MOUNTAINSIDE TREATMENT CENTER Plaintiff
UNITED HEALTH GROUP, INC., et al. Defendants
MEMORANDUM OF DECISION RE: MOTION TO DISMISS AND
MOTION TO STRIKE THE AMENDED COMPLAINT [ECF N0. 55]
A. DOOLEY UNITED STATES DISTRICT JUDGE.
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(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.
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.)
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.)
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.)
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.
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.
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.
Motion to Dismiss
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” is properly
analyzed under Rule 12(b)(6), not Rule 12(b)(1).
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).
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 ...