Physicians Surgery Center of Chandler v. Cigna Healthcare Incorporated

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Physicians Surgery Center of Chandler, No. CV-20-02007-PHX-MTL 10 Plaintiff, ORDER 11 v. 12 Cigna Healthcare Incorporated, et al., 13 Defendants. [14] 15 Before the Court is Defendants Cigna Healthcare Inc., Cigna Health and Life 16 Insurance Co., Connecticut General Life Insurance Co., and Cigna Healthcare of 17 Arizona’s (collectively, “Cigna”) Motion to Dismiss (the “Motion”). (Doc. 16.) This 18 Motion is fully briefed and was discussed at oral argument. The Court resolves the 19 Motion as follows. 20 I. BACKGROUND 21 Plaintiff Physicians Surgery Center of Chandler (“PSCC”) operates in Arizona and 22 is led by a group of physicians specializing in many kinds of surgeries. (Doc. 1 ¶¶ 16– 23 17.) During all relevant times, Cigna acted either as a healthcare insurer or “third party 24 administrator” of various employers’ healthcare plans, which includes processing and 25 paying claims under various healthcare insurance policies. (Id. ¶¶ 4–10.) Cigna offers 26 health insurance plans that differentiate between coverage for medical treatment provided 27 by “(i) in-network providers who have negotiated discounted rates with the insurer, and 28 (ii) out-of-network providers.” (Id. ¶ 18.) PSCC is an out-of-network provider and has no 1 negotiated rates with Cigna. (Id. ¶ 19.) Nonetheless, PSCC provided, and continues to 2 provide, medical services to Cigna subscribers. (Id. ¶ 20.) Cigna’s plans allow 3 subscribers to receive healthcare from out-of-network providers like PSCC. (Id. ¶ 21.) 4 Many of these plans are governed by the Employee Retirement Income Security Act 5 (“ERISA”). (See, e.g., id. ¶¶ 12, 32, 38.) 6 PSCC “discloses to all of its patients who are Cigna subscribers that PSCC is an 7 out-of-network provider.” (Id. ¶ 22.) Before PSCC treats a patient, it engages Medical 8 Practice Solutions (“MPS”), its medical billing company, to “ascertain a patient’s 9 eligibility for care and verify the patient’s plan benefits.” (Id. ¶ 23.) MPS first uses intake 10 information provided by the patient’s referring medical provider to create a “Benefits/Pre 11 Authorization Verification” form for each surgical procedure. (Id. ¶ 24.) MPS then 12 contacts Cigna by telephone to obtain more information to evaluate the patient’s 13 eligibility for services. (Id. ¶ 25.) During this call, Cigna does not provide any 14 information that PSCC could use to predict how much Cigna will pay, or not pay, for the 15 services it renders for the patients. (Id. ¶ 26.) After this information collection process, 16 MPS reviews the data and determines whether the patient is eligible for surgical services 17 and, if so, the surgical procedure is scheduled. (Id. ¶ 27.) 18 On the day of the surgical procedure, PSCC collects a “surgical deposit” from the 19 patient and “requires that all patients who are Cigna subscribers sign multiple documents 20 whereby the subscriber agrees to be personally responsible for all charges.” (Id. ¶¶ 28– 21 29.) For example, one form that all patients must sign, entitled “Conditions of Service,” 22 contains a provision regarding “Assignment of Insurance or Health Plan Benefits to the 23 Facility.” (Id. ¶ 30.) That form states that the “undersigned assigns and hereby 24 authorizes . . . direct payment to the facility of all insurance and plan benefits otherwise 25 payable to/or on behalf of the patients for this facility and for these outpatient services, at 26 a rate not to exceed the facilities regular charges.” (Id.) Another form that PSCC requires 27 all patients to sign is entitled “Facility Fee Information.” (Id. ¶ 31.) In relevant part, the 28 Facility Fee Information form provides, “Assignment of Benefits: I hereby authorize 1 payment directly to [PSCC] the benefits payable to me, but not to exceed the balance of 2 the charges for this period of outpatient services.” (Id.) PSCC also requires patients to 3 sign a standardized form entitled “Assignment of ERISA Benefits and Rights, 4 Appointment of Representative.” (Id. ¶ 32.) That form assigns the patient’s ERISA rights 5 and plan benefits including “any legal process relating to a claim submitted on my behalf 6 for health insurance benefits.” (Id.) 7 After the surgical procedure, MPS submits the claim to Cigna. (Id. ¶ 33.) PSCC 8 and Cigna then agree on the terms of payment. (Id. ¶ 34.) After, MPS attempts to 9 calculate the amount of the patient’s co-pay or deductible remaining due at the time the 10 claim was submitted, and once that amount is determined, MPS seeks payment of that 11 amount from the patient. (Id.) “As a condition of final settlement and payment of a claim, 12 Cigna . . . requires PSCC to agree to refrain from billing for services provided but not 13 paid for by Cigna.”1 (Id. ¶ 35.) If an agreement is made, PSCC will not engage in balance 14 billing, but if not, “then MPS will attempt to collect the balance due from the patient.” 15 (Id.) 16 In October 2018, PSCC received a letter from Cigna that it had “conducted an 17 internal audit and determined that PSCC had damaged Cigna in an amount of 18 $777,482.41 by allegedly engaging in ‘fee forgiveness.’” (Id. ¶ 36.) Cigna alleged that 19 PSCC engaged in fee forgiveness “by not consistently billing Cigna subscribers their full 20 out-of-network cost share responsibility . . . and/or balance amounts.” (Id. ¶ 37.) The 21 letter also noted that “a flag has been placed that will deny claims” until Cigna “can 22 verify that the affected customers have paid their applicable cost share and balance 23 amounts per their benefit agreement,” and “Cigna will continue to deny claims until 24 [PSCC] can establish proof of payments by patients to [Cigna’s] satisfaction.” (Id. ¶ 38.) 25 Cigna has therefore denied all claims submitted by PSCC based on this fee forgiveness 26 policy.2 (Id. ¶ 39.) PSCC alleges that it “does not engage in ‘fee forgiveness’ as PSCC 27 1 This process is also known as “balance billing.” (Id. ¶ 35.) 2 Cigna purportedly bases its fee forgiveness policy on language in many of its benefits 28 plans that exclude from coverage charges for which subscribers are not billed or for which they are not obligated to pay. (Id. ¶ 40.) See also N. Cypress Med. Ctr. Operating 1 understands Cigna to define the term” and Cigna has withheld these payments “to create 2 leverage against PSCC for the amount Cigna is claiming pursuant to its internal audit.” 3 (Id. ¶¶ 42–43.) As of August 2020, PSCC alleges that Cigna has “improperly withheld 4 approximately $5.6 million dollars,” which has not been paid and remains due. (Id. 5 ¶¶ 44–45.) PSCC then filed the instant action. (Doc. 1.) Cigna soon thereafter filed the 6 Motion. (Doc. 16.) 7 II. LEGAL STANDARD 8 To survive a motion to dismiss, a complaint must contain “a short and plain 9 statement of the claim showing that the pleader is entitled to relief” such that the 10 defendant is given “fair notice of what the . . . claim is and the grounds upon which it 11 rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 545 , 555 (2007) (quoting Fed. R. Civ. P. 12 8(a)(2); Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint does not suffice “if it 13 tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, [14] 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556). Dismissal under Rule 15 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence of 16 sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police 17 Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). A complaint, however, should not be dismissed 18 “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of 19 the claim that would entitle it to relief.” Williamson v. Gen. Dynamics Corp., 208 F.3d 20 1144, 1149 (9th Cir. 2000). 21 In deciding motions to dismiss, the court must accept material allegations in the 22 complaint as true and construe them in the light most favorable to the plaintiff. North Star 23 Int’l v. Arizona Corp. Comm’n, 720 F.2d 578, 580 (9th Cir. 1983). “Indeed, factual 24 challenges to a plaintiff’s complaint have no bearing on the legal sufficiency of the 25 allegations under Rule 12(b)(6).” See Lee v. City of Los Angeles, 250 F.3d 668 , 688 (9th [26] 27 Co., Ltd. v. Cigna Healthcare, 952 F.3d 708 , 711 (5th Cir. 2020), cert. denied, 141 S. Ct. 1053 (2021) (“Cigna interpreted this language as its refusal to countenance a provider's 28 ‘fee forgiveness,’ on the ground that such practices desensitize insureds to the higher cost of out-of-network medical care.”). 1 Cir. 2001). Additionally, review of a Rule 12(b)(6) motion is “limited to the content of 2 the complaint.” North Star Int’l, 720 F.2d at 581 . 3 III. DISCUSSION 4 PSCC asserts nine claims for relief. The first four are derivative claims brought on 5 behalf of Cigna’s health plan members as their alleged assignee: Count One – “Failure to 6 Properly Pay Benefits in Violation of ERISA, 29 U.S.C. § 1132 (a)(1)(B)”; Count Two – 7 “Breach of Fiduciary Duties of Loyalty and Due Care Under ERISA, 29 U.S.C. 8 § 1132(a)(3)”; Count Three – “Failure to Provide Full and Fair Review Under ERISA”; 9 and Count Four – “Breach of Contract.” (Doc. 1 ¶¶ 46–74.) The remaining counts are 10 brought as direct claims in PSCC’s own capacity: Count Five – “Breach of Duty of Good 11 Faith and Fair Dealing”; Count Six – “Unjust Enrichment”; Count Seven – “Violation of 12 Arizona’s Prompt Pay Statute”; Count Eight – “Consumer Fraud in Violation of A.R.S. 13 § 44-1521 et seq.”; and Count Nine – “Conversion.” (Id. ¶¶ 75–111.) Cigna moved to 14 dismiss each claim for a failure to state a claim under Rule 12(b)(6) of the Federal Rules 15 of Civil Procedure. (Doc. 16.) 16 A. Federal Derivative Claims 17 Cigna makes several arguments that the derivative claims fail to state plausible 18 claims for relief. (Doc. 16.) First, Cigna argues that the derivative claims fail because 19 PSCC has not pleaded specific plan language. (Id. at 3–4.) Cigna then argues that, even if 20 PSCC alleged the plan language, Counts One through Three cannot proceed because 21 PSCC did not exhaust the administrative remedies under the ERISA plans at issue. (Id. at 22 4–5.) Next, an “anti-assignment” provision in certain ERISA and non-ERISA policies, 23 Cigna argues, precludes PSCC from suing as an alleged assignee of “those Cigna plan 24 members whose plan includes an anti-assignment provision.” (Id. at 5–7.) Cigna finally 25 argues that Counts Two and Three must be dismissed because PSCC has an adequate 26 remedy under Count One and cannot seek duplicative relief. (Id. at 7–8.) PSCC contends 27 that these arguments are meritless, and, at this stage, each derivative claim should 28 proceed. (Doc. 19.) 1 As a threshold matter, PSCC contends that it has standing to bring these derivative 2 claims through its patients’ assignments. (See Doc. 1 ¶¶ 28–32.) The Court agrees. See 3 Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282 , 4 1289 (9th Cir. 2014) (“As a non-participant health care provider, Spinedex cannot bring 5 claims for benefits on its own behalf. It must do so derivatively, relying on its patients’ 6 assignments of their benefits claims.”). PSCC has alleged the operative assignment 7 language. These allegations are sufficient, at this stage, to plausibly assert derivative 8 standing. If Cigna discovers that assignment language limits PSCC’s ability to pursue 9 certain claims, it can raise that argument in a later motion. See Simi Surgical Ctr., Inc v. 10 Connecticut Gen. Life Ins. Co., No. 2:17-CV-02685-SVW-AS, 2018 WL 6332285 , at *4 11 (C.D. Cal. Jan. 4, 2018). With that in mind, the Court will address each argument in turn. 12 1. Specific Plan Language 13 PSCC’s first cause of action is for violation of ERISA § 502(a)(1)(B). (Doc. 1 14 ¶¶ 46–51.) That section provides, in relevant part, that “[a] civil action may be brought by 15 a participant or beneficiary . . . to recover benefits due to him under the terms of his plan, 16 to enforce his rights under the terms of the plan, or to clarify his rights to future benefits 17 under the terms of the plan.” 29 U.S.C. § 1132 (a)(1)(B). “To state a claim under 18 § 502(a)(1)(B), a plaintiff must allege facts that established (1) the existence of an ERISA 19 plan as well as (2) the provisions of the plan that entitle it to benefits.” Reiten v. Blue 20 Cross of California, No. 2:19-cv-05274-AB-AFMx, 2020 WL 1032371 , at *2 (C.D. Cal. 21 Jan. 23, 2020) (citation omitted). “A plan is established if a reasonable person ‘can 22 ascertain the intended benefits, a class of beneficiaries, the source of financing, and 23 procedures for receiving benefits.’” Id. (citation omitted). “Accordingly, a plaintiff who 24 brings a claim for benefits under ERISA must identify a specific plan term that confers 25 the benefit in question.” Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., 26 Inc., 99 F. Supp. 3d 1110, 1155 (C.D. Cal. 2015) (internal quotation marks omitted). 27 Indeed, a Ninth Circuit panel recently affirmed a district court’s finding that a plaintiff 28 failed to state a claim because it did not “identify: (i) any ERISA plan . . . ; or (ii) any 1 plan terms that specify benefits that the defendants were obligated to pay but failed to 2 pay.” Glendale Outpatient Surgery Ctr. v. United Healthcare Servs., Inc., 805 Fed. App’x 3 530, 531 (9th Cir. 2020). That court affirmed dismissal because the deficiencies were 4 “exacerbated” by the plaintiff’s decision “to lump 44 separate events . . . into a single set 5 of generalized allegations.” Id. 6 Cigna argues that PSCC “made no attempt to identify any of the plans at issue or 7 establish an entitlements [sic] to benefits under those plans.” (Doc. 16 at 3.) In response, 8 “PSCC concedes it has not pled specific plan language that [it] did not possess, but 9 [argues] that does not justify outright dismissal at the pleading stage.” (Doc. 19 at 2.) 10 PSCC points to one out-of-circuit case to support this position––Innova Hospital San 11 Antonio, Ltd. Partnership v. Blue Cross, 892 F.3d 719 (5th Cir. 2018). In Innova, a 12 plaintiff failed to plead specific plan language, even after the district court gave it a 13 chance to fix that pleading deficiency. Id. at 724 . The plaintiff argued that it could not 14 plead that language because the insurers had the plans at issue and would not respond to 15 its discovery requests. Id. In their amended complaint, the plaintiff outlined its efforts to 16 obtain plan documents from the insurers. Id. at 725 . Ultimately, internet research yielded 17 two plans, which the plaintiff used to plead representative plan language in the amended 18 complaint. Id. Along with that representative language, the plaintiff outlined plausible 19 allegations to show there was a denial of ERISA benefits but the district court found that 20 to be insufficient. Id. at 729–30. The Fifth Circuit reversed and found that these 21 allegations were enough to survive a motion to dismiss. Id. at 730–31. The court reasoned 22 that “ERISA plaintiffs should not be held to an excessively burdensome pleading 23 standard that requires them to identify particular plan provisions in ERISA contexts when 24 it may be extremely difficult for them to access such plan provisions.” Id. at 728 . 25 Innova is inapposite to this case. Nowhere in the Complaint does PSCC outline its 26 efforts to obtain plan documents from Cigna. Although PSCC has outlined other 27 allegations to aid its ERISA claims, it concedes it has not pleaded specific plan language [28] 1 or identified which patients are governed by which plans.3 Without that information, 2 PSCC cannot state a claim under Counts One, Two, or Three. See Glendale Outpatient 3 Surgery Ctr., 805 Fed. App’x at 531. If PSCC seeks refuge in Innova’s “exception” to 4 that pleading requirement, it must detail its efforts to obtain such documents in an 5 amended complaint. The Court agrees with Innova’s principle that an insurer cannot hide 6 behind these plans that are in its control but then turn around to argue that a plaintiff has 7 failed to plead specific language from those plans it will not share. If PSCC obtains only 8 some, but not all, of the plans at issue, pleading that representative plan language would 9 help it state a plausible claim for relief. On the other hand, if Cigna does not provide any 10 plan, “the Court will permit these allegations to be made ‘on information and belief.’” 11 Almont Ambulatory Surgery Ctr., LLC, 99 F. Supp. 3d at 1159 . The Court therefore 12 grants the Motion on Counts One, Two, and Three. But, as explained below, PSCC will 13 be granted leave to amend to cure these deficiencies. 14 2. Exhaustion 15 Cigna next argues that PSCC’s Counts One through Three should be dismissed for 16 failure to plead exhaustion of administrative remedies. (Doc. 16 at 4–5.) In general, 17 “before ERISA participants or beneficiaries can bring suit to recover plan benefits, they 18 must exhaust a plan’s internal claims procedure.” Mack v. Kuckenmeister, 619 F.3d 1010 , 19 1020 (9th Cir. 2010). Although ERISA plaintiffs must exhaust their administrative 20 remedies absent an exception, the Court agrees with PSCC that it is premature to resolve 21 this issue at the motion to dismiss stage. 22 “ERISA exhaustion . . . is traditionally pled as an affirmative defense.” Norris v. 23 Mazzola, No. 15-cv-04962-JSC, 2016 WL 1588345 , at *6 (N.D. Cal. Apr. 20, 2016) 24 (collecting cases). “No binding authority establishes whether an ERISA plaintiff must 25 affirmatively plead exhaustion of administrative remedies . . . .” Methodist Hosp. of S. 26 3 Apparently, about two months after PSCC filed its Complaint, it produced an Excel spreadsheet to Cigna of unpaid claims, “which includes information pertaining to 749 27 claims for services that [PSCC] provided to 249 unique patients and dates of services.” (Doc. 16 at 4.) This information also does not appear in the Complaint. If PSCC thinks 28 alleging this information would help clarify its ERISA claims, then it may put it in an amended complaint. 1 California v. Blue Cross of California, No. CV 09-5612 GAF (JCX), 2011 WL 2 13186107, at *5 (C.D. Cal. Mar. 8, 2011). The Supreme Court, however, has addressed 3 this issue in other areas. See Jones v. Bock, 549 U.S. 199 (2007). In Jones, the Court 4 explained that a plaintiff, suing under the Prison Litigation Reform Act (“PLRA”), need 5 not negate an affirmative defense in his complaint. See id. at 212, 216 (concluding that 6 “failure to exhaust is an affirmative defense under the PLRA, and that inmates are not 7 required to specially plead or demonstrate exhaustion in their complaints”). The Court 8 reasoned that given “the PLRA does not itself require plaintiffs to plead exhaustion, such 9 a result ‘must be obtained by the process of amending the Federal Rules, and not by 10 judicial interpretation.’” Id. at 217 (citation omitted).4 11 After Jones, a Ninth Circuit panel held that a motion to dismiss an ERISA denial12 of-benefits claim for failure to exhaust administrative remedies should be treated as an 13 unenumerated motion to dismiss. See Bilyeu v. Morgan Stanley Long Term Disability 14 Plan, 683 F.3d 1083, 1088 (9th Cir. 2012). This allowed courts to “rely on evidence 15 outside of the pleadings” and “resolve disputed issues of fact.” Norris, 2016 WL 16 1588345, at *5. Later, the Ninth Circuit in Albino v. Baca, sitting en banc, faithfully 17 applied Jones to overrule the circuit’s previous rule on how to treat a failure to plead 18 exhaustion. 747 F.3d 1162 (9th Cir. 2014) (en banc). Albino held that “a failure to 19 exhaust is more appropriately handled under the framework of the existing rules than 20 under an ‘unenumerated’ (that is, non-existent) rule.” Id. at 1166 . The court reasoned that 21 treating exhaustion this way better comports with Supreme Court precedent and the 22 Federal Rules of Civil Procedure. Id. Thus, the court held that a failure to exhaust “is an 23 affirmative defense that the defendant must plead and prove.” Id. (citation omitted).5 [24] 4 Importantly here, “[i]n ERISA cases, administrative exhaustion is not a statutory 25 pleading requirement, but a court-created affirmative defense.” Hendricks v. Aetna Life Ins. Co., No. CV19-06840-CJC(MRWX), 2019 WL 9054346 , at *3 (C.D. Cal. Nov. 7, 26 2019). 5 Although Albino did not explicitly overrule Bilyeu, it overruled several other decisions 27 that followed Bilyeu’s same holding. See Albino, 747 F.3d at 1169, 1171 . Thus, other courts agree that Albino “implicitly overruled prior cases such as Biyeu.” Tawater v. 28 Health Care Serv. Corp., No. CV 18-47-GF-BMM, 2018 WL 6310280 , at *6 (D. Mont. Dec. 3, 2018) (collecting cases). 1 District courts therefore have recognized that Albino’s reasoning “applies to 2 failure to exhaust in the ERISA context.” Tawater, 2018 WL 6310280 , at *6 (collecting 3 cases). With that holding governing the ERISA context, the Court rejects Cigna’s 4 contention that PSCC must plead exhaustion in its Complaint. See Rivera v. Peri & Sons 5 Farms, Inc., 735 F.3d 892, 902 (9th Cir. 2013) (noting that plaintiffs “ordinarily need not 6 plead on the subject of an anticipated affirmative defense”) (internal quotation marks 7 omitted). This Court therefore agrees with several other courts that the appropriate time 8 to address exhaustion issues is at the summary judgment stage. See Albino, 747 F.3d at 9 1171; see also Russell v. CVS Caremark Corp., No. CV-16-00284-PHX-PGR, 2017 WL 10 1090677, at *3–4 (D. Ariz. Mar. 23, 2017). 11 To be sure, Albino left open the possibility that courts can still address this issue at 12 the motion to dismiss stage in “the rare event that a failure to exhaust is clear on the face 13 of the complaint.” 747 F.3d at 1166 . The facts here do not suggest that is the case. 14 Whether a plaintiff properly exhausted administrative remedies turns on the plan 15 language. See Mack, 619 F.3d at 1020 . As the Ninth Circuit has noted, “a claimant need 16 not exhaust when the plan does not require it.” Spinedex Physical Therapy USA Inc. v. 17 United Healthcare of Ariz., Inc., 770 F.3d 1282, 1299 (9th Cir. 2014). To determine 18 whether a plan requires exhaustion, a court looks to whether it “contains language which 19 could reasonably be read as making optional the administrative appeals process.” Id. As 20 mentioned above, this Court, and PSCC, do not have access to evaluate the plan language 21 at issue. Without this plan language, the Court cannot decide at this stage of the 22 proceedings that this is a “rare event” in which a failure to exhaust appears on the face of 23 the complaint. 24 Because the Court cannot decide the exhaustion issue at this point, it need not 25 address the parties’ arguments about futility. (See Doc. 19 at 7–8; Doc. 24 at 4–5.) The 26 Court therefore denies this aspect of the Motion. See Puget Sound Surgical Ctr., PS v. 27 Aetna Life Ins. Co., No. C17-1190JLR, 2018 WL 4852625 , at *6 (W.D. Wash. Oct. 5, 28 2018). 1 3. Anti-Assignment Provision 2 As explained above, PSCC has adequately alleged standing to file its derivative 3 claims through assignment. (See Doc. 1 ¶¶ 29–32.) Cigna, however, argues that even if 4 that is true, “many of Cigna’s ERISA and non-ERISA policies include an ‘anti5 assignment’ provision that expressly precludes the member from assigning his or her 6 right to benefits under the plan, including any legal causes of action, to a third party.” 7 (Doc. 16 at 5.) PSCC responds by noting that it has alleged proper assignments and it is 8 premature to address the anti-assignment provision argument without analyzing the 9 specific plan provisions. (Doc. 19 at 8–12.) Cigna then, in its Reply, clarified that “Cigna 10 did not request the Court to dismiss specific ERISA claims based on anti-assignment 11 provisions; it demonstrated that the presence of anti-assignment provisions in many of the 12 plans is yet another reason to require plaintiff to meet its pleading burden by identifying 13 the ERISA plans at issue.” (Doc. 24 at 6.) 14 The Court agrees with Cigna insofar that the absence of the plans make it difficult 15 for this Court to analyze whether the alleged anti-assignment provisions deprive PSCC to 16 sue in a derivative capacity. See Emergency Physicians of St. Clare’s, LLC v. Horizon 17 Blue Cross Blue Shield of New Jersey, No. CV 19-12112, 2020 WL 2079286 , at *3 18 (D.N.J. Apr. 30, 2020) (“Plaintiff’s failure to identify the specific plans or policies that 19 are controlling is also problematic in that Defendant cannot determine whether its 20 relevant policies contained anti-assignment clauses.”). Although the Court has already 21 addressed that PSCC’s failure to plead specific plan language is due in part to a lack of 22 access to those documents, “anti-assignment language will generally not defeat standing 23 at the motion to dismiss stage.” NAMDY Consulting, Inc. v. Anthem Blue Cross Life & 24 Health Ins. Co., No. 18-CV-03243-SJO (MRWx), 2019 WL 1034320 , at *4 (C.D. Cal. 25 Jan. 15, 2019). It would be inappropriate here to address an anti-assignment argument 26 because this Court does not have access to these provisions and such an analysis would 27 hinge on the interpretation of each provision. See Almont Ambulatory Surgery Ctr., LLC, 28 99 F. Supp. 3d at 1150–51. Most importantly, because “Cigna did not request the Court 1 to dismiss specific ERISA claims based on anti-assignment provisions,” the Court need 2 not address the efficacy of this argument now.6 (Doc. 24 at 6.) 3 4. Counts Two and Three 4 Cigna’s final argument as to PSCC’s federal derivative claims argues that Counts 5 Two and Three must be dismissed because PSCC has an adequate remedy under Count 6 One and cannot seek duplicative relief. (See Doc. 16 at 7–8.) PSCC brings Counts Two 7 and Three under ERISA § 502(a)(3) for Breach of Fiduciary Duties and Failure to 8 Provide Full and Fair Review. (See Doc. 1 ¶¶ 57, 64.) It contends that “[p]leading in the 9 alternative this way is appropriate.” (Doc. 19 at 12.) Thus, according to PSCC, Counts 10 Two and Three survive the Motion. (Id.) 11 Section 502(a)(3) provides that a plan participant, or valid assignee, may bring a 12 civil action “(A) to enjoin any act or practice which violates any provision of this title or 13 the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such 14 violations or (ii) to enforce any provisions of this title or the terms of the plan.” 29 U.S.C. 15 § 1132(a)(3). Because § 502(a)(3) “act[s] as a safety net, offering appropriate equitable 16 relief for injuries caused by violations that § 502 does not elsewhere adequately remedy,” 17 relief is not available under § 502(a)(3) “where Congress elsewhere provided adequate 18 relief for a beneficiary’s injury.” Varity Corp. v. Howe, 516 U.S. 489, 512, 515 (1996). 19 “Thus, a claimant may not bring a claim for denial of benefits under § [502](a)(3) when a 20 claim under § [502](a)(1)(B) will afford adequate relief.” Castillo v. Metro. Life Ins. Co., [21] 970 F.3d 1224 , 1229 (9th Cir. 2020). The Ninth Circuit has clarified that claims under 22 § 502(a)(1)(B) and § 502(a)(3), however, “may proceed simultaneously so long as there 23 is no double recovery.” Moyle v. Liberty Mut. Ret. Benefit Plan, 823 F.3d 948, 961 (9th 24 Cir. 2016) (as amended); see also Castillo, 970 F.3d at 1229. As highlighted in Moyle, 25 this approach comports with the Federal Rules of Civil Procedure, which requires that 26 “[a] pleading that states a claim for relief must contain . . . a demand for the relief sought, [27] 6 The Court does not express a view on PSCC’s waiver argument because Cigna did not 28 move “to dismiss specific ERISA claims based on anti-assignment provisions.” (See Doc. 19 at 10–12.) 1 which may include relief in the alternative or different types of relief.” Fed. R. Civ. P. 2 8(a)(3). 3 PSCC acknowledges that it intends to plead these causes of actions “in the 4 alternative,” which is procedurally proper. (Doc. 19 at 12.) As other courts have noted, 5 the more appropriate timing to address this argument is at some point beyond the 6 pleading stage. See, e.g., Langemo v. Blue Cross of Idaho Health Serv., Inc., No. 1:197 CV-370 WBS, 2021 WL 1238370 , at *6 (D. Idaho Mar. 30, 2021) (“[T]he court is not 8 prepared at this early stage of litigation to determine whether or not recovery under 29 9 U.S.C. § 1132 (a)(1)(b) alone would provide appropriate and adequate relief for 10 plaintiff.”); see also Smith v. Cigna Health & Life Ins. Co., No. 3:20-CV-624-SI, 2021 11 WL 1895234 , at *2 (D. Or. May 11, 2021). PSCC is therefore permitted to proceed in 12 this fashion so long as there is no double recovery. See Moyle, 823 F.3d at 961 . 13 PSCC also contends that, contrary to Cigna’s arguments, Count Two has been 14 plausibly alleged. (See Doc. 19 at 4–6.) Even if Count Two was not dismissed for failing 15 to plead specific plan terms, there are still deficiencies that PSCC must cure before 16 alleging a plausible claim for relief. “A plaintiff asserting fiduciary misconduct under 17 § [502](a)(3) must allege ‘both (1) that there is a remediable wrong, i.e., that the plaintiff 18 seeks relief to redress a violation of ERISA or the terms of a plan, and (2) that the relief 19 sought is appropriate equitable relief.’” Talbot v. Reliance Standard Life Ins. Co., No. 20 CV-14-00231-PHX-DJH, 2018 WL 10419233 , at *19 (D. Ariz. Feb. 7, 2018), aff’d, 790 21 F. App’x 129 (9th Cir. 2020) (citation omitted). First, it is not clear what equitable relief 22 PSCC is seeking. It only alleges entitlement “to damages and equitable, injunctive and 23 declaratory relief.” (Doc. 1 ¶ 61.) PSCC gives no indication of what specific relief this 24 would entail. Relying on these legal conclusions is improper at the pleading stage. See 25 Ashcroft v. Iqbal, 556 U.S. 662 , 676–79 (2009). Second, PSCC has not demonstrated 26 what remediable wrong exists to the plan’s subscribers. Because PSCC is the assignee of 27 its patients’ § 502(a)(3) claims, it can only state a claim insofar as those subscribers have 28 a remediable wrong. See, e.g., Caulley v. Interprise/Sw. Interior & Space Design, Inc., 1 No. 3:20-CV-03077-X, 2021 WL 2376720 , at *3 (N.D. Tex. June 10, 2021) (“But [the 2 assignee] fails to demonstrate how the [subscriber] could have brought its claim under 3 section [502](a)(3) as a result of [the fiduciary’s] alleged violation.”). Third, to the extent 4 that PSCC seeks to pursue its § 502(a)(3) claim for violating the plans’ terms, that raises 5 similar issues raised above that cannot be addressed without the Court being aware of 6 those terms. See Smith v. Cigna Health & Life Ins. Co., No. 3:20-CV-624-SI, 2021 WL 7 1895234, at *2 (D. Or. May 11, 2021) (allowing a § 502(a)(3) claim to proceed only after 8 finding that an amended complaint “adequately alleges a violation of the plan’s terms”). 9 For these reasons, the Court will allow PSCC leave to amend to cure these deficiencies 10 and finds this as an additional basis to dismiss Count Two. 11 As a final point, Cigna argues that PSCC “has requested monetary damages in 12 Counts Two and Three,” which is not an available remedy under § 502(a)(3). (Doc. 16 at 13 8 (citing Doc. 1 ¶¶ 61, 66).) The Court agrees in part. Generally, “monetary relief is 14 improper under ERISA § 502(a)(3).” Meadows of Wickenburg Inc. v. United HealthCare 15 Ins. Co., No. CV-20-01285-PHX-SPL, 2020 WL 6290472 , at *3 (D. Ariz. Oct. 27, 2020). 16 The Supreme Court in CIGNA Corp. v. Amara, in dicta, left open the possibility that 17 certain monetary remedies may still be pursued. 563 U.S. 421 , 441–43 (2011). For 18 example, certain “surcharge” remedies possibly fall within the scope of the term 19 “appropriate equitable relief.” Id. at 442 . The Ninth Circuit has noted that monetary 20 compensation is not necessarily barred as a potential remedy “as long as the claim is 21 brought by a beneficiary against a plan fiduciary for losses resulting from a trustee’s 22 breach of duty or to prevent a trustee’s unjust enrichment.” McGlasson v. Long Term 23 Disability Coverage for All Active Full-Time & Part-Time Emps., 161 F. Supp. 3d 836 , 24 844 (D. Ariz. 2016) (citing Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 950 (9th 25 Cir. 2014)). Here, PSCC only asks for “damages” and does not specify what kind of 26 monetary relief it seeks. As mentioned below, PSCC will be given leave to amend and 27 must clarify what form of damages it seeks to collect under § 502(a)(3). The Court 28 therefore grants the Motion as to Count Two for failure to state a claim. 1 5. Conclusion 2 PSCC’s Counts One, Two, and Three fail to state a claim based on the lack of 3 pleading specific plan language. Count Two is also dismissed for failing to state a claim 4 because it has not plausibly alleged a remediable wrong or clarified its equitable relief. 5 As explained below, the Court will allow PSCC to cure these deficiencies in an amended 6 complaint. Because the Court has dismissed the only federal causes of actions in PSCC’s 7 Complaint, it must now determine whether it will continue to exercise supplemental 8 jurisdiction over PSCC’s remaining state-law claims. 9 B. State Claims 10 PSCC initially brought its ERISA claims under federal question jurisdiction and 11 its state-law claims through supplemental jurisdiction. (See Doc. ¶¶ 11–13.) The 12 threshold requirement for supplemental jurisdiction under 28 U.S.C. § 1367 (a) is not 13 satisfied because there is no longer a federal question and there is no diversity 14 jurisdiction. A district court has discretion to decline exercising supplemental jurisdiction 15 over state-law claims if it “has dismissed all claims over which it has original 16 jurisdiction.” 28 U.S.C. § 1367 (c). When exercising its discretion, the Court considers the 17 interest in “economy, convenience, fairness, and comity.” Acri v. Varian Assocs., Inc., [18] 114 F.3d 999, 1001 (9th Cir. 1997) (citation omitted). “[I]n the usual case in which all 19 federal-law claims are eliminated before trial, the balance of factors . . . will point toward 20 declining to exercise jurisdiction over the remaining state-law claims.” Carnegie-Mellon 21 Univ. v. Cohill, 484 U.S. 343 , 350 n.7 (1988). 22 The Court finds that the values of economy, convenience, fairness, and comity do 23 not favor retention of this matter. These factors may weigh toward exercising 24 supplemental jurisdiction if there is considerable procedural advancement, such that it 25 would be a waste of judicial resources or unfair to the parties to remand the matter. See, 26 e.g., In re Nucorp Energy Sec. Litig., 772 F.2d 1486, 1491 (9th Cir. 1985). There has not 27 been considerable procedural advancement here. It is also true that the balance of factors 28 may weigh in favor of exercising discretion to retain the claims when considerable time 1 was expended on the state-law claims before dismissing the federal law claims. See 2 Schneider v. TRW, Inc., 938 F.2d 986, 994 (9th Cir. 1991) (holding that it was not an 3 abuse of discretion to retain pendent claims after about thirty-two months). Although the 4 Court has limited familiarity with the facts and issues presented in this case, those 5 considerations align more with the “usual case in which all federal-law claims are 6 eliminated before trial” than the exceptional circumstance that would override 7 considerations of federalism and comity. Cohill, 484 U.S. at 350 n.7. The Court therefore 8 declines to exercise supplemental jurisdiction over Plaintiff’s state-law claims (Counts 9 Four through Nine) and will deny as moot the Motion’s arguments as to the state-law 10 claims.7 See Gilliam v. Galvin, No. CV 19-00127 JAO-RT, 2019 WL 3604592 , at *3–5 11 (D. Haw. Aug. 6, 2019) (dismissing the only federal cause of action, declining to exercise 12 supplemental jurisdiction over the remaining state-law claims, and granting the 13 defendants’ motion to dismiss with leave to amend). 14 C. Leave to Amend 15 PSCC asks this Court to grant leave to amend if it grants the “Motion in whole or 16 in part.” (Doc. 19 at 17.) Rule 15(a)(2) of the Federal Rules of Civil Procedure provides 17 that “[t]he court should freely give leave [to amend a pleading] when justice so requires.” 18 Fed. R. Civ. P. 15(a)(2). “The power to grant leave to amend . . . is entrusted to the 19 discretion of the district court, which ‘determines the propriety of a motion to amend by 20 ascertaining the presence of any of four factors: bad faith, undue delay, prejudice to the 21 opposing party, and/or futility.’” Serra v. Lappin, 600 F.3d 1191, 1200 (9th Cir. 2010) 22 (quotation omitted). District courts properly deny leave to amend if the proposed 23 amendment would be futile or the amended complaint would be subject to dismissal. Saul 24 v. United States, 928 F.2d 829, 843 (9th Cir. 1991). “[A] proposed amendment is futile 25 only if no set of facts can be proved under the amendment to the pleadings that would 26 constitute a valid and sufficient claim.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209 , 214 27 7 The Court therefore need not address the parties’ preemption arguments. (See Doc. 19 at 16; Doc. 24 at 12–13.) It is worth noting, however, that it may be helpful to the Court for 28 preemption purposes if PSCC clarifies in its amended complaint whether its state-law claims are asserted with respect to ERISA plans, non-ERISA plans, or both. (9th Cir. 1988). 2 Here, amendment would not be futile. PSCC can amend its complaint to include 3|| its efforts to obtain access to the plan documents at issue. If PSCC obtains only some, but 4|| not all, of the plans at issue, pleading that representative plan language would help it state 5 || a plausible claim for relief. On the other hand, if Cigna does not provide any plan, “the 6|| Court will permit these allegations to be made ‘on information and belief.’” Almont Ambulatory Surgery Ctr., LLC, 99 F. Supp. 3d at 1159 . As the Court noted above, PSCC 8 || can also further allege information that it has since provided Cigna in a spreadsheet but 9|| failed to include in its Complaint. As for Count Two specifically, PSCC can bolster its || allegations as to what remediable wrong exists and clarify its equitable relief, including 11 || “damages.” The Court therefore grants PSCC’s request for leave to amend. IV. CONCLUSION 13 Accordingly, 14 IT IS ORDERED granting in part and denying as moot in part Cigna’s Motion || to Dismiss (Doc. 16) as follows: 16 1. Cigna’s Motion as to the ERISA derivative claims (Counts One, Two, and 17|| Three) is granted for failure to state a claim, with leave to amend. 18 2. Cigna’s Motion as the remaining state-law claims (Counts Four, Five, Six, Seven, Eight, and Nine) is denied as moot. 20 IT IS FINALLY ORDERED that PSCC shall file an amended complaint, if it 21 chooses to do so, no later than August 20, 2021. If PSCC fails to file an amended 22 || complaint within this deadline, the Clerk of the Court shall enter judgment dismissing the 23 || case for the reasons indicated above. 24 Dated this 23rd day of July, 2021. [25] Michal T. Hburdle Michael T. Liburdi 28 United States District Judge -17-