Saloojas, Inc. v. Aetna Health of California, Inc.

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 SALOOJAS, INC., Case No. 22-cv-02887-JSC 8 Plaintiff, ORDER RE: MOTION TO DISMISS v. [9] Re: Dkt. No. 25 10 AETNA HEALTH OF CALIFORNIA, INC, Defendant. [12] 13 Plaintiff, a healthcare provider, brings a putative class action against an insurer for 14 underpaying for COVID tests provided to its insureds.1 (Dkt. No. 1.)2 Before the Court is 15 Defendant’s motion to dismiss.3 (Dkt. No. 25.) After carefully considering the briefing, and 16 having vacated the scheduled hearing, see N.D. Cal. Civ. L.R. 7-1(b), the Court GRANTS the 17 motion. 18 COMPLAINT ALLEGATIONS 19 Plaintiff has operated seven specimen collection sites to provide COVID testing. Plaintiff 20 is outside Defendant’s provider network. It alleges Defendant has incorrectly adjudicated and 21 denied the majority of Plaintiff’s claims for reimbursement for providing COVID testing to 22 members of Defendant’s insurance plans and “Employer Plans” administered by Defendant. [23] 1 After briefing on this motion was complete, Plaintiff filed a “corrected copy” of its complaint. [24] (Dkt. No. 31.) Because the new copy was not redlined, the Court does not know how it differed 25 from the original and does not consider it. See Civil Standing Order for District Judge Jacqueline Scott Corley (Revised April 11, 2022), https://www.cand.uscourts.gov/wp26 content/uploads/judges/corley-jsc/JSC-Civil-Standing-Order-April-2022.pdf, at 3. 2 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the 27 ECF-generated page numbers at the top of the documents. 1 Plaintiff asserts that under Sections 3201 and 3202(a)(2) of the Coronavirus Aid, Relief, 2 and Economic Security (“CARES”) Act and Section 6001 of the Families First Coronavirus 3 Response Act (“FFCRA”), Defendant must reimburse “an amount that equals the cash price for 4 such Covid Testing services as listed by the [out-of-network] provider on its public internet 5 website or to negotiate a rate/amount to be paid that is less than the publicized cash price,” 6 “without the imposition of cost-sharing, prior authorization or other medical management 7 requirements.” (Dkt. No. 1 ¶¶ 12–13.) Plaintiff’s billed services include “the doctor COVID 8 medical visit CPT [Code] 99203,” “the additional urgent care walkin charge CPT CODE S9088,” 9 “the patient optional Covid swab collection fee CPT [Code] G2023,” and “the patient optional fee 10 for the emergency COVID protective equipment CPT CODE 99072.” (Id. ¶ 48.) Defendant has 11 denied or underpaid Plaintiff’s claims for arbitrary reasons, set up unfair administrative appeals 12 procedures, and fraudulently profited from the COVID public health emergency. It has created a 13 burdensome scheme of requesting medical records from Plaintiff for the purpose of denying as 14 many claims as possible, which amounts to improperly imposing medical management 15 requirements as a condition of reimbursement. Finally, Defendant has assessed co-pays and 16 deductibles against its insureds in violation of Section 3203 of the CARES Act, as indicated on 17 Explanations of Benefits received by Plaintiff. 18 Plaintiff brings claims under Section 3202(a)(2) of the CARES Act and Section 6001 of 19 the FFCRA; Section 502(a)(1)(B) of the Employee Retirement Income Security Act (“ERISA”); 20 the Racketeer Influenced and Corrupt Organizations Act (“RICO”); promissory estoppel; 21 injunctive relief; and California’s Unfair Competition Law (“UCL”). (Id. ¶¶ 54–105.) Plaintiff 22 represents a putative nationwide class of “[a]ll persons, businesses and entities who were and are 23 out of network providers of Covid testing services and covered by the CARES and FFRCA ACTs 24 for payment by Aetna of their posted prices for rendered Covid Testing services to the Defendant 25 Aetna’s insured.” (Id. ¶ 24.) 26 This case is related to five earlier-filed cases in which Plaintiff sought reimbursement from 27 Defendant for COVID testing five individual patients pursuant to the CARES Act. The Court 1 private right of action for Plaintiff to seek reimbursement of its posted cash price. Saloojas, Inc. v. 2 Aetna Health of Cal., Inc., Nos. 22-cv-01696-JSC, 22-cv-01702-JSC, 22-cv-01703-JSC, 22-cv3 01704-JSC, 22-cv-01706-JSC, 2022 WL 2267786 (N.D. Cal. June 23, 2022), appeals docketed, 4 Nos. 22-16035, 22-16036, 22-16037, 22-16038, 22-16034 (9th Cir. July 18, 2022).4 The Court 5 granted leave to amend based on Plaintiff’s argument that it could amend to state a claim under 6 ERISA. However, Plaintiff did not file an amended complaint in any of the five cases, and instead 7 appealed them. 8 DISCUSSION 9 Defendant moves to dismiss all claims for failure to state a claim.5 10 I. CARES Act & FFCRA 11 Plaintiff’s first claim fails as a matter of law. There is no private right of action to enforce 12 Section 3202(a)(2) of the CARES Act or Section 6001 of the FFCRA by requiring Defendant to 13 pay Plaintiff’s posted cash price. The Court incorporates the analysis from its order granting 14 motions to dismiss in the five related cases. Saloojas, 2022 WL 2267786 , at *2–5; accord GS 15 Labs, Inc. v. Medica Ins. Co., No. 21-cv-2400 (SRN/TNL), 2022 WL 4357542 , at *2–11 (D. 16 Minn. Sept. 20, 2022). Defendant’s motion to dismiss is granted as to this claim. Because the 17 defect lies in the legal theory, the dismissal is without leave to amend. See Yagman v. Garcetti, [18] 852 F.3d 859, 863 (9th Cir. 2017). 19 II. ERISA 20 Plaintiff’s second claim cites ERISA Section 502(a)(1)(B). Defendant moves to dismiss 21 for lack of statutory standing, for failure to exhaust, and for failure to state a claim for benefits or 22 equitable reformation. [25] 4 (Case No. 22-cv-01696-JSC, Dkt. No. 24; Case No. 22-cv-01702-JSC, Dkt. No. 23; Case No. 22-cv-01703-JSC, Dkt. No. 20; Case No. 22-cv-01704-JSC, Dkt. No. 21; Case No. 22-cv-0170626 JSC, Dkt. No. 23.) 5 The Court construes Plaintiff’s second-filed opposition as a notice of errata and considers that 27 version rather than the first-filed. (Dkt. No. 32; see Dkt. Nos. 26, 28.) If Defendant has any A. Standing [1] ERISA provides for a federal cause of action for civil claims aimed at 2 enforcing the provisions of an ERISA plan. To have standing to state a claim under ERISA, a plaintiff must fall within one of ERISA’s nine 3 specific civil enforcement provisions, each of which details who may bring suit and what remedies are available. [4] 5 Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1288 (9th 6 Cir. 2014) (cleaned up). ERISA Section 502(a)(1)(B) provides that “[a] civil action may be 7 brought . . . by a participant or beneficiary . . . to recover benefits due to him under the terms of his 8 plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits 9 under the terms of the plan.” 29 U.S.C. § 1132 (a)(1)(B). 10 As a matter of statutory standing, healthcare providers are neither “participants” nor 11 “beneficiaries” and do not have direct authority to sue “to recover payments due them for services 12 rendered, or otherwise to enforce [ERISA’s] protections.” DB Healthcare, LLC v. Blue Cross 13 Blue Shield of Ariz., Inc., 852 F.3d 868, 875 (9th Cir. 2017) (“Health care providers’ patients are 14 thus the ones who receive ERISA health benefits, not the providers themselves.”). Thus, Plaintiff 15 is not a participant or beneficiary entitled to sue under ERISA Section 502(a)(1)(B). See Murphy 16 Med. Assocs., LLC v. Cigna Health & Life Ins. Co., No. 3:20cv1675(JBA), 2022 WL 743088 , at 17 *2–6 (D. Conn. Mar. 11, 2022) (applying this rule to provider seeking reimbursement for COVID 18 testing). 19 A provider may nonetheless have statutory standing if a beneficiary has assigned her right 20 to reimbursement to the provider. See Spinedex, 770 F.3d at 1289 (“As a non-participant health 21 care provider, Spinedex cannot bring claims for benefits on its own behalf. It must do so 22 derivatively, relying on its patients’ assignments of their benefits claims.”). “To determine the 23 scope of the assignment, a court must look to the language of an ERISA assignment itself.” 24 Creative Care, Inc. v. Conn. Gen. Life Ins. Co., No. CV 16-9056-DMG (AGRx), 2017 WL 25 5635015, at *2 (C.D. Cal. July 5, 2017) (cleaned up). Thus, to allege statutory standing, a 26 provider must “at bare minimum . . . allege the specific language of the assignment itself.” County 27 of Monterey v. Blue Cross of Cal., No. 17-CV-04260-LHK, 2019 WL 343419 , at *6 (N.D. Cal. 1 Here, Plaintiff alleges only, “Many of the members of plans either insured or administered 2 by [Defendant] who received Covid Testing services from Plaintiff executed assignment of 3 benefits documents.” (Dkt. No. 1 ¶ 68.) It does not allege the existence of any specific ERISA4 governed plan or the language of any specific assignment. Cf. Murphy Med., 2022 WL 743088 , at 5 *6–7 (D. Conn. Mar. 11, 2022) (concluding complaint adequately alleged patients assigned 6 plaintiff standing to seek benefits but not equitable reformation). Therefore, the complaint fails to 7 allege that Plaintiff has statutory standing by virtue of assignment. See County of Monterey, 2019 8 WL 343419 , at *6 (dismissing claim for same defect). 9 Plaintiff also asserts that the CARES Act and FFCRA “have given [out-of-network] 10 providers of Covid Testing services standing to sue self-funded health plans subject to ERISA,” 11 “obviat[ing] the need for a provider to obtain a specific assignment of ERISA benefits from a 12 member of a health plan subject to ERISA to be entitled to seek reimbursement from the health 13 plan for Covid Testing services.” (Dkt. No. 1 ¶¶ 69–70.) That is not correct as a matter of law. 14 Plaintiff points to no specific text in either statute purporting to amend ERISA’s requirements for 15 statutory standing. See Bank of Am. Corp. v. City of Miami, Fla., 137 S. Ct. 1296, 1303 (2017) 16 (noting that statutory standing “is an issue that requires us to determine, using traditional tools of 17 statutory interpretation, whether a legislatively conferred cause of action encompasses a particular 18 plaintiff’s claim” (cleaned up)). 19 Moreover, the CARES Act and FFCRA’s references to ERISA, see Saloojas, 2022 WL 20 2267786, at *2–4, support the opposite conclusion from Plaintiff’s argument. They suggest that 21 the CARES Act and FFCRA incorporate and harmonize with ERISA’s enforcement scheme. 22 CARES Act Section 3202(a) requires “[a] group health plan or a health insurance issuer providing 23 coverage of items and services described in [FFCRA] section 6001(a) . . . with respect to an 24 enrollee” to “reimburse the provider of the diagnostic testing” according to the CARES Act. Pub. 25 L. 116–136, § 3202 (Mar. 27, 2020), 134 Stat. 367 . FFCRA Section 6001, in turn, provides that 26 “[a] group health plan and a health insurance issuer offering group or individual health insurance 27 coverage . . . shall provide coverage, and shall not impose any cost sharing (including deductibles, 1 requirements,” for certain services. Pub. L. 116–127, § 6001(a) (Mar. 18, 2020), 134 Stat. 178 . 2 Further, it provides that “‘group health plan’; ‘health insurance issuer’; ‘group health insurance 3 coverage’, and ‘individual health insurance coverage’ have the meanings given such terms” in 4 ERISA Section 733, among other statutes. Id. § 6001(d). Thus, there is no legal support for 5 Plaintiff’s contention that the CARES Act and FFCRA have obviated the need for a provider to 6 obtain assignment in order to seek reimbursement under ERISA. 7 * * * 8 Defendant’s motion to dismiss is granted as to this claim. With respect to the argument 9 that Plaintiff need not allege assignment, the defect lies in the legal theory and the dismissal is 10 without leave to amend. See Yagman, 852 F.3d at 863 . With respect to Plaintiff’s failure to allege 11 a valid assignment, it is not absolutely clear that the defect could not be cured with additional 12 facts, so the dismissal is with leave to amend. See Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 13 2000). The Court need not address Defendant’s alternative bases to dismiss Plaintiff’s ERISA 14 claim. 15 III. RICO 16 Plaintiff’s third claim arises under the RICO Act, 18 U.S.C. § 1962 (c). Defendant moves 17 to dismiss for failure to comply with Federal Rule of Civil Procedure 9’s heightened pleading 18 requirements. 19 The RICO Act makes it “unlawful for any person employed by or associated with any 20 enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct 21 or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of 22 racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962 (c). “The terms of the Civil 23 RICO statute permit [a]ny person injured in his business or property by reason of a violation of § 24 1962 to recover treble damages.” City of Almaty v. Khrapunov, 956 F.3d 1129, 1132 (9th Cir. 25 2020). To state a civil RICO claim, a plaintiff must allege facts showing each defendant engaged 26 in “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as 27 predicate acts) (5) causing injury to plaintiff’s business or property.” Living Designs, Inc. v. E.I. 1 activity is any act indictable under several provisions of Title 18 of the United States Code,” 2 identified at 18 U.S.C. § 1961 (1). Turner v. Cook, 362 F.3d 1219, 1229 (9th Cir. 2004) (cleaned 3 up). “To plead a RICO pattern, at least two predicate acts of racketeering activity need to be 4 alleged.” Synopsis, Inc v. Ubiquiti Networks, Inc., 313 F. Supp. 3d 1056, 1077 (N.D. Cal. 2018). 5 RICO claims based on predicate acts of fraud or “grounded in” fraud must comply with the 6 heightened pleading requirements of Rule 9(b). Edwards v. Marin Park, Inc., 356 F.3d 1058 , 7 1066 (9th Cir. 2004) (“Rule 9(b)’s requirement that ‘in all averments of fraud or mistake, the 8 circumstances constituting fraud or mistake shall be stated with particularity’ applies to civil 9 RICO fraud claims.” (cleaned up)); Vess v. Ciba–Geigy Corp., 317 F.3d 1097 , 1103–04 (9th Cir. 10 2003) (“In some cases, the plaintiff may allege a unified course of fraudulent conduct and rely 11 entirely on that course of conduct as the basis of a claim. In that event, the claim is said to be 12 ‘grounded in fraud’ or to ‘sound in fraud,’ and the pleading of that claim as a whole must satisfy 13 the particularity requirement of Rule 9(b).”). 14 Plaintiff alleges: 15 The pattern of racketeering activity under 18 U.S.C. § 1961 (1) and (5) . . . includes [Defendant’s] multiple, repeated, and continuous use of 16 the mails and wires in furtherance of the Improper Record Request Scheme, meritless claims and appeals processes, its disinformation 17 campaign in violation of 18 U.S.C. §§ 1341 and 1343, and embezzlement and/or conversion of self[-]funded plans assets 18 through its CRS Benchmark Program6 in violation 18 U.S.C. § 664 . 19 (Dkt. No. 1 ¶ 83.) 18 U.S.C. §§ 1341 (mail fraud), 1343 (wire fraud), and 664 (embezzlement 20 from employee benefit plan) are predicate acts contemplated by 18 U.S.C. § 1961 (1). However, 21 Plaintiff’s allegations are fatally conclusory. Plaintiff does not allege facts supporting a 22 reasonable inference that Defendant engaged in mail fraud, wire fraud, or embezzlement, or facts 23 sufficient to give Defendant fair notice of the basis for its RICO claim. See Ashcroft v. Iqbal, 556 24 U.S. 662 , 678 (2009) (explaining that Rule 12(b)(6) requires the plaintiff to plead “factual content 25 that allows the court to draw the reasonable inference that the defendant is liable for the 26 misconduct alleged”). Nor does Plaintiff “detail with particularity the time, place, and manner of [27] 1 each act of fraud,” “the role of each defendant in each scheme,” and “why the statement or 2 omission complained of was false and misleading.” Mostowfi v. i2 Telecom Int’l, Inc., 269 F. 3 App’x 621, 624 (9th Cir. 2008) (unpublished) (cleaned up). Thus, the RICO claim fails to comply 4 with Rule 9(b). 5 Accordingly, Defendant’s motion to dismiss is granted as to this claim. It is not absolutely 6 clear that the defect could not be cured with additional facts, so the dismissal is with leave to 7 amend. See Lopez, 203 F.3d at 1127 . 8 IV. Promissory Estoppel 9 Under California law, the elements of promissory estoppel are: “(1) a promise clear and 10 unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) the reliance 11 must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured 12 by his reliance.” Advanced Choices, Inc. v. State Dep’t of Health Servs., 107 Cal. Rptr. 3d 470 , 13 479 (Cal. Ct. App. 2010). 14 Plaintiff alleges Defendant “undertook conduct that conveyed to Plaintiff that coverage for 15 COVID testing would be afforded to its members, but then arbitrarily adjudicated claims and 16 refused to issue proper reimbursements when the claims were submitted.” (Dkt. No. 1 ¶ 87.) That 17 falls short of alleging “a promise clear and unambiguous in its terms.” Advanced Choices, 107 18 Cal. Rptr. 3d at 479. The complaint does not allege facts supporting a reasonable inference that 19 Defendant made a clear and unambiguous promise to pay Plaintiff a certain amount for COVID 20 testing its insureds. See Iqbal, 556 U.S. at 678. Rather, the gist of the complaint is that Defendant 21 was legally required to pay the posted cash price, not that it ever promised Plaintiff to do so. 22 Because the first element is lacking, Plaintiff fails to state a claim for promissory estoppel. Cf. 23 Aton Ctr., Inc. v. Blue Cross & Blue Shield of N.C., No. 3:20-cv-00492-WQH-BGS, 2020 WL 24 4464480, at *5 (S.D. Cal. Aug. 3, 2020) (“Plaintiff’s failure to allege sufficient facts to establish 25 the treatment Defendant promised to pay for and the patients Defendant promised to pay for 26 precludes Plaintiff’s promissory estoppel claim.”); Summit Estate, Inc. v. Cigna Healthcare of 27 Cal., Inc., No. 17-CV-03871-LHK, 2017 WL 4517111 , at *6 (N.D. Cal. Oct. 10, 2017) (“[Plaintiff 1 policies issued by Defendants provided for reimbursement of substance abuse treatment services at 2 the UCR. Under California law, these representations by Defendants—which are merely 3 representations about the terms of certain insurance policies—do not amount to a clear and 4 unambiguous promise by Defendants to pay for substance abuse treatment services at the UCR.”). 5 Accordingly, Defendant’s motion to dismiss is granted as to this claim. It is not absolutely 6 clear that the defect could not be cured with additional facts, so the dismissal is with leave to 7 amend. See Lopez, 203 F.3d at 1127 . The Court need not address Defendant’s alternative bases to 8 dismiss Plaintiff’s promissory estoppel claim. 9 V. Injunctive Relief 10 Plaintiff styles its fifth claim “injunctive relief (non-ERISA).” (Dkt. No. 1 ¶¶ 94–98.) An 11 injunction is a form of relief, not a substantive claim creating liability. See Jensen v. Quality Loan 12 Serv. Corp., 702 F. Supp. 2d 1183, 1201 (E.D. Cal. 2010). It may properly appear in a 13 complaint’s prayer for relief, not as a claim or cause of action. Accordingly, Defendant’s motion 14 to dismiss this claim is granted, without leave to amend. See, e.g., Milyakov v. JP Morgan Chase 15 Bank, No. C-11-02066, 2011 WL 3879503 , at *3 (N.D. Cal. Sept. 2, 2011). To the extent 16 injunctive relief appears in the complaint’s prayer for relief, (Dkt. No. 1 at 35–37), it is not 17 dismissed or stricken on this basis. 18 VI. UCL 19 California’s UCL prohibits “unlawful, unfair or fraudulent” business practices. Cal. Bus. 20 & Prof. Code § 17200. The statute “is written in the disjunctive,” establishing three varieties or 21 prongs of unfair competition. Cel-Tech Comms., Inc. v. L.A. Cellular Telephone Co., 973 P.2d 22 540 (Cal. 1999) (cleaned up). Plaintiff’s claim invokes all three. (Dkt. No. 1 ¶¶ 99–105.) 23 Under the UCL, “[p]revailing plaintiffs are generally limited to injunctive relief and 24 restitution”; they “may not receive damages.” Cel-Tech, 973 P.2d at 539. A plaintiff “must 25 establish that she lacks an adequate remedy at law before securing equitable restitution for past 26 harm under the UCL.” Sonner v. Premier Nutrition Corp., 971 F.3d 834, 844 (9th Cir. 2020). 27 Thus, at the pleading stage, a plaintiff seeking injunctive or other equitable relief under the UCL in 1 Plaintiff fails to allege that damages would inadequately redress the harms caused by 2 Defendant. The crux of the complaint is that Defendant has not reimbursed Plaintiff for its posted 3 cash price of COVID testing. There are no factual allegations supporting a reasonable inference 4 that injunctive relief is needed in addition to reimbursement. See Iqbal, 556 U.S. at 678; Summit 5 Estate, 2017 WL 4517111 , at *12 (“[S]ix of Plaintiff’s other causes of action—for breach of 6 express contract, breach of implied contract, intentional misrepresentation, negligent 7 misrepresentation, fraudulent concealment, and negligent failure to disclose—allow Plaintiff to 8 recover monetary damages. . . . [B]ecause Plaintiff’s UCL cause of action relies upon the same 9 factual predicates as Plaintiff’s legal causes of action—that Defendants said they would reimburse 10 Plaintiff for substance abuse treatment services at the UCR, but later paid a lower rate—it must be 11 dismissed.” (cleaned up)). Indeed, Plaintiff’s UCL claim reiterates that the main harm is failure to 12 reimburse. (See Dkt. No. 1 ¶ 104 (“The Defendant Aetna have failed to publicly acknowledge the 13 wrongfulness of their actions and provide the complete relief required by the statute and pay 14 Plaintiff for the rendered Covid Testing Services as required by law.”).) To the extent Plaintiff 15 asserts injunctive relief is necessary to stop Defendant’s campaign to mislead the public, the 16 complaint does not allege facts supporting a reasonable inference of such a campaign or facts 17 sufficient to give Defendant fair notice of the basis for the claim. See Iqbal, 556 U.S. at 678. 18 Accordingly, Defendant’s motion to dismiss is granted as to this claim. It is not absolutely 19 clear that the defect could not be cured with additional facts, so the dismissal is with leave to 20 amend. See Lopez, 203 F.3d at 1127 . The Court need not address Defendant’s alternative bases to 21 dismiss Plaintiff’s UCL claim. 22 CONCLUSION 23 Defendant’s motion to dismiss is GRANTED. Plaintiff’s claim under the CARES Act and 24 FFCRA and claim for injunctive relief are dismissed without leave to amend. Plaintiff’s ERISA 25 claim is dismissed without leave to amend regarding the argument that Plaintiff need not allege 26 assignment as a matter of law. The ERISA claim is dismissed with leave to amend to add factual 27 allegations, if there is a good faith basis for doing so, regarding assignment. Plaintiff’s RICO 1 Plaintiff may file an amended complaint on or before October 31, 2022. 2 This Order disposes of Docket No. 25. 3 IT IS SO ORDERED. 4 || Dated: September 30, 2022 5 ’ ne [6] ACQUELINE SCOTT CORLEY 7 United States District Judge [12] © [16] = 17 Z 18